Supply Chain Blog

“People know more than computers”. Especially about Demand Planning

Posted by Christian Cusworth on Mon, Apr 19, 2010

"We don't have a proper forecasting tool", "everyone has their own spreadsheet" "issues with the EDI interface", "the systems don't talk to each other", "the upload to our ERP system failed". How many more IT based excuses for poor demand planning must we hear before we realise that we don't really need computers at all.

 Systems don't talk to  each other

In this modern world of chronic over dependence on computers, furious tapping of blackberry's and the evolution of "text speak" we must at some point gather around, drop large 80's style monitors (remember those?) upon each others heads, and remember that these machines only facilitate the sharing of information or regurgitate what we humanoids have previously told them.

Required to succeed in Demand Planning for example is knowledge and awareness of consumers, products, markets, environment, competitors, trends and importantly a qualitative and concise communication process for sharing this information (S&OP), with the business. Remember that a change in demand is always the result of a human decision, so why bother relying on a computer to lead the planning process? Try communicating with humans; they make the decisions, at least for the moment.

Communication process for sharing information

If you prefer to receive this information by carrier pigeon, please go to your window and coo four times.

On next weeks blog - How to be successful at cooing for carrier pigeons.


Tags: S&OP, Forecasting & Demand Planning

If S&OP Fails - You can bet it’s because of people

Posted by Keith Marshall on Wed, Apr 14, 2010

In 24 years as a Supply Chain consultant in the FMCG business sector I have been part of many Sales & Operational Planning (S&OP) projects - working with clients to implement them has been relatively simple process but the difficulty is working with clients to get S&OP to deliver real business results in both End Markets and Regional Clusters.

Implementing S&OP is not a difficult task; it is a straight forward supply chain planning process that gives the company the benefits of working from one plan or as they say "one set of numbers".  Here then is one of the biggest issues managers' face - they have to subordinate their individual plans to the company plan and deliver their plan in a common format and agreed time to fit in with the company S&OP planning timeframe.

"Simples" I hear you say, but no it isn't, as one manager involved with the supply chain said " I have been in my silo for a good while now and I like it here I achieve my KPIs and get my annual bonus and not really worried about other areas of the supply chain  as long as they don't affect me.  I'm doing well because I always put a bit more in my plan for a rainy day and avoid stock outs which are my customer service KPI". 

 

    As the Managing Director my view is that S&OP is a great innovation as its going to simplify and standardise the planning process into one company plan that we can all buy into and the planning process will be more accurate and timely.  But well it should be for all the meetings that are involved with S&OP and the time they take.  I found many of my managers complaining about this and I have told them as I always do, that it is up to them to prioritise their time I cannot tell them what meetings they should go to.  When the consultants who managed the project briefed us on what was required I designated my Projects Manager to lead from our side and to update me on a regular basis.  This has happened and things seem to be going well but I try not to get too involved with the nitty-gritty and just attend the final meeting each month when I am around.

As the Supply Chain Director S&OP should be the answer to all of my prayers.  The benefits to the company available from the process are fantastic but I just wish all the other managers involved felt the same way about it and didn't just regard S&OP as my responsibility. In the beginning we all agreed a planning timetable that scheduled meetings each month for a rolling 18 month period and with the initial enthusiasm attendance was 100%. With the consultants on site for the "go live" and support period things went well and S&OP seemed to be quite easily manageable but after a while certain managers began to lose interest.  I tried to get support from the MD who stated at the last senior management meeting that he is solidly behind S&OP but most times sends the Projects Manager to represent him. 

As the IT Manager I have fought tooth and nail to get the company one of the latest ERP systems available. This system provides supply chain visibility from the suppliers warehouse to our factory and each step through to the distributors and wholesalers.  With the implementation of S&OP I have designed a common set of reports and databases that ensures we are all dealing with the same data for use with S&OP.  In the initial stages I asked for the managers input but this was so varied and contradictory I designed the reports myself.  Now I find in most of the meetings managers are presenting reports in "home grown" spreadsheet formats rather than using the designed system ha! - so much for one set of numbers.

As the Factory Planner I welcomed S&OP as it would reduce the number of plan changes on a daily and weekly basis but this has not happened as the new forecasting and demand planning processes have been developed from a set of rules derived from an "algorithm" that works in theory but misses out the old hand of experience that I used to use. Therefore I feel that my teams combined 45 years of forecasting and planning experience is now wasted and the opportunity to combine the new ways of working with our experience has been lost.

This is the first in a series of artices on the topic of S&OP by the author.  Further blogs will provide a more positive approach towards S&OP and explore what makes S&OP one of the most effective supply chain business processes.  Please feel free to comment and share experiences.

Tags: S&OP, Forecasting & Demand Planning, Keith Marshall

Romania Route To Market : You can’t blame it all on Distributors

Posted by Dave Jordan on Wed, Apr 14, 2010

You have great brands, a fantastic internal Supply Chain, tight financial control, top class HR and a top notch sales force - surely a recipe for success in Romania? Must be? Sadly, not always.

 

 Photo by Bogdan Suditu posted on Flickr

Blue chip companies with internal operational excellence continue to flounder when attempting to serve the Traditional Trade in Romania. Admittedly, this trade channel has reduced in importance over the past 5 years but it still accounts for a sizable portion of a market which will return to growth sooner or later. The high class, shiny international chains will continue to take share in urban areas but in a country as vast as Romania they will not conquer the rural market in the medium term. Producers need knowledgeable and reliable Route To Market partners to reach the smaller outlets.

There is no shortage of operators willing to be Distributors for big name clients but how many of them are really equipped and ready to do the job properly? Producers are guilty of placing their reputations and ultimately profits in the hands of enthusiastic amateurs. In the sporting definition amateurs do not get paid for their work and Distributors often do not get paid by producers when they fail to meet targets. However, instead of doing something about the short-comings of Distributors the Producers proudly celebrate securing penalties or better terms through negotiating against poor performance. What is the point of doing that? Instead of carping on about how poor these "partners" are why not get out there and help them?

You cannot build houses on sand yet Producers expect Distributors to swiftly dove-tail into their in-house processes, IT, style, ethics etc. Is it any wonder why so many Distributors have gone or are close to going under when they are not considered partners and in some cases are believed to be a hindrance? Distributors do not deliberately make mistakes that lead to reduced bonuses. They too are in business to make a few RON to take home at the end of the month. Producers need to look closely at the capability matrix offered by their Distributors (or potential Distributors) and in most cases this will not match up to requirements. Do something about this; build capability where it lacks and you will reap the benefits in having proactive partners going that extra kilometre to make a sale for you.

Those Producers who are in tune with their Distributors strengths and weaknesses AND do something about the latter will be in pole position with a Ferrari while less wise competitors are on row 2 with a horse and cart. The Route To Market can be a lot easier than you expect.

 

 

Oscar Supply chain Blog


Tags: Route to Market, Dave Jordan, CEE, Distribution