Supply Chain Blog

Yes, you can work in an FMCG Supply Chain and have a sense of humour

Posted by Dave Jordan on Mon, Jan 24, 2011

Frankly, if you do not have a sense of humour you will be lost in the Supply Chain. Seldom recognised, under paid, under graded, under stress and most of all, misunderstood. The only real fun is reading the sales force accuracy figures and the reasons for lost sales which never indicate culpability of Sales & Marketing.

Supply Chain HumorWhen you have time in between S&OP and other meetings spare a few minutes to read some of these articles. Kick off your shoes, put your feet up (if politically correct), treat yourself to a coffee from the posh machine on the Marketing floor and relax.

If you are musically-minded then you might tune into these articles. If you can think of any more then please add a comment to one of the blogs.

If you missed our Christmas series then please take a look at these articles which provide serious business messages in a light hearted way.

And finally, in case anyone has forgotten how badly the England football team played in South Africa you should read this blog which highlights the relevance of Vuvuzelas to S&OP. Germans, Algerians and Americans; enjoy!

When the reality of your day to day Supply Chain operation kicks back in you can always be thankful that at least you are not in HR!

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Tags: Route to Market, Dave Jordan, Humour, S&OP, Forecasting & Demand Planning, Distribution

FMCG International Key Accounts (IKA) and Traditional Trade (TT)

Posted by Dave Jordan on Tue, Jan 18, 2011

I regularly see headlines about how much the IKA sector has suffered in the recession. Expansion plans curtailed; fewer stores opening; CEE not a boom town now etc etc. The ongoing recession has delayed the onward march of the IKA and I think that is actually a good opportunity especially for TT and consumers.

Following the growth of International Key Accounts (IKA) seemsFMCG International Key Accounts  to be a top priority for the major players in FMCG markets. There product ranges and sku offerings are inevitably skewed towards the modern shopper who can take a bus or car ride to one of the sprawling “shopping cities”. By focusing on the upper end of the market producers and retailers are not tapping into a huge potential market which certainly aspires to modern attitudes even if in reality this is some way off. Producers appear to be saying “when you have some money then let me know and I’ll think about you”.

Certainly, in western European countries IKA in out of town shopping centres have almost seen off the smaller retailers or Traditional Trade (TT). However, as you travel east into CEE and beyond into Middle East you find that while IKA are firmly established there remains a significant proportion of TT business. The poorer infrastructure and continued reliance on subsistence agriculture eastwards in Europe means there are many millions of consumers who have never set foot in a Carrefour or Tesco or Asda. The critical population mass needed to support IKA’s outside of the larger cities suggests this is unlikely to change very soon. So how do the big name producers get closer to this untapped market which will one day understand and value brand loyalty and awareness?

Indeed some retailers appear to be getting the message and they are making significant changes to business models in order to capture the rural Rouble or the rustic RON. Mega Image, part of the Delhaize group has recently announced the opening of a Shop & Go concept. A similar approach has been adopted by an entrepreneur in Romania who expects to quickly develop a network of fixed and mobile outlets.

These approaches fill the void where the IKA cannot or will not tread. Ok, fair enough that might be for sound financial reasons but what about the producers? Will they adapt their offerings to fit into the local models? Not immediately that is for sure as most of them need the turning space and time of an aircraft carrier to change direction.

The answer for retailers may well be seen in the innovative Route To Market links above. For producers it is not rocket science either and to a certain degree they will already have resources deployed behind the TT sector. The problem is that this support rarely receives the attention and importance it deserves. Producers who spend just a little time and attention on their Route To Market strategies for TT will benefit from rapid paybacks in terms or real increases in sales and profits and perhaps most importantly, they sow the seeds of brand awareness and loyalty to untapped millions of consumers.

Give it a try; you will actually squeeze some growth out of Traditional Trade!

 

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Image credit: HikingArtist.com

Tags: Route to Market, Dave Jordan, CEE, Traditional Trade, Distribution, RTM Assessment Tool

Top 10 Signs Your Route To Market Distribution Programme Worked!

Posted by Dave Jordan on Fri, Jan 14, 2011

So you evaluated your distribution network and wait to see the promised results? What changed?

  1. You are selling more volume - no, not sales in but real Sales Out – and your bottom line looks far healthier.
  2. Your Distributors bring well thought-out and financially sound volume generating ideas that you adopt.
  3. Growth from the Traditional Trade channel is higher than in International Key Accounts.
  4. You don’t have crisis meetings with Distributors
  5. Distributor operations are firmly linked into your S&OP process.
  6. Your stock levels and charge on working capital are lower and stay low.
  7. Your sales teams say good things about your Distributors.
  8. You have more time for real value added work, e.g. directing Sales instead of fire-fighting.
  9. Distributors reach targets, take their reward and say “thank you”. They may even suggest a more stretching reward scheme!
  10. You get home early to see the kids at night!

What are you waiting for?

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Tags: Route to Market, Dave Jordan, S&OP, Distribution, RTM Assessment Tool

What has S&OP ever done for us? The role of the CEO

Posted by Michael Thompson on Tue, Jan 04, 2011

What has S&OP ever done for us?We have started a debate about S&OP - “What has S&OP ever done for us?”.  Our protagonists are REGINALD, the CEO of a multinational FMCG company and JACEK the new Head of Supply Chain Development at the same company.  Both do not believe that S&OP is really necessary but for different reasons.  MIKE (myself) is the Moderator.

I would like to Welcome Anne to the debate.  Anne is the CEO of a multinational brewing group and has her own S&OP experience.

MIKE (MODERATOR): I would like to welcome Anne to our debate. First let me start with a recap.  Reginald does not believe that S&OP is really necessary as it hasn’t produced any tangible benefits to date.  Jacek shares the same view but for a more technical reason - companies without S&OP are more flexible in their supply chain planning and can respond quickly to customer demand.  Implicit in Jacek’s view is that such companies have an integrated ERP system, well defined supply chain processes including responsiveness to order capture, and people capable of using them.  Is that a good summary?

JACEK (Head SC Dev): Yes, it’s not quite as simple as that but ... 

REGINALD (CEO): but Jacek has described an ideal world with no regard to local disagreements between departments ...

MIKE (MODERATOR): OK, but in summary have I captured your views?

JACEK (Head SC Dev): Yes

REGINALD (CEO): Yes

MIKE (MODERATOR): OK let’s continue.  I would like to invite Anne to share some of her experience with S&OP.  Anne has read the blogs.  Anne?

ANNE (CEO): Thank you.  Well I am afraid that I disagree with Reginald & Jacek.  In my experience S&OP has proved invaluable in running a business.  And whilst I agree in most part with Jacek’s technical analysis, I believe that S&OP can successfully coexist with an integrated supply chain. 

REGINALD (CEO): Invaluable?  Well it hasn’t done much for our organisation so far.

ANNE (CEO): Let me ask a question Reginald.  I read about your annual meeting.  What do other people think of S&OP at your company?

REGINALD (CEO): Views vary.  Some like it. Some don’t.

ANNE (CEO): And what do they think about the bosses view about S&OP?

REGINALD (CEO): I run an open company.  People know about my scepticism.

ANNE (CEO): And how often do you attend the S&OP meeting?

REGINALD (CEO): I believe in delegation. The S&OP meeting is run by our Supply Chain Director.  And to answer your question, I attend occasionally.

ANNE (CEO): With respect, Reginald, I believe that is one of the reasons that S&OP is not working for you.  S&OP is not just about supply chain.  It is about the entire business.  For example, you cannot ask the Head of Supply Chain to chair a debate between Sales and the factory about how much we planned to sell and how long we will be out of stock on certain SKUs.

REGINALD (CEO): Debate? All out war if last month is anything to go by.

ANNE (CEO): Precisely. And during the last war, what did you do?

REGINALD (CEO): Called an emergency meeting & knocked heads together.

ANNE (CEO): Attended by whom?

REGINALD (CEO): Sales Director, Supply Chain Director, Head of Planning, Head of Forecasting.  And a few others with laptops.

ANNE (CEO): And there was an argument about the forecast being inaccurate, too much stock of some SKUs & not enough of others ....

REGINALD (CEO): And the rest. And it was the same the month before last.

ANNE (CEO): What you probably had was an escalated version of a pre-S&OP meeting.  And I’ll bet that you came to some kind of agreement in the end after “heads were knocked together”.

REGINALD (CEO): Well yes. We did. But it happens every other month ...

JACEK (Head SC Dev): That’s because our processes are wrong and not aligned to our ERP system ...

ANNE (CEO): And it’s also because S&OP is not respected in your organisation.

REGINALD (CEO): What do you mean respected?

ANNE (CEO): You cannot expect S&OP to be taken seriously in your company if you do not take it seriously.  And taking it seriously includes chairing the S&OP meeting ...

REGINALD (CEO): Chairing?

ANNE (CEO): Yes chairing. And chairing every meeting. You are the boss.  Sales and costs are ultimately your responsibility.  S&OP is about optimising cost and service within the business.  The buck stops with you.

REGINALD (CEO): And what about all of this so called Integrated Supply Chain Planning? Where does that fit in?

JACEK (Head SC Dev):  The standard S&OP approach does not use or even ‘tolerate’ the dynamic, ‘fresh’ incoming data from order capture, for example, that promotes supply chain responsiveness within integrated supply chain planning .... 

MIKE (MODERATOR):Jacek, the technicalities please ....

ANNE (CEO): I have read what Jacek had to say & believe that he makes a series of very good points.  If you have a new ERP system, then use it properly.  It sounds like you need to redesign your supply chain planning processes.  Once that is done and people are trained – I include your customers and suppliers here - integrated supply chain planning and S&OP can go hand in hand.  As the processes starts to work properly and ERP begins to deliver what it is designed to deliver, the nature of S&OP will change. 

REGINALD (CEO): S&OP will change? How?

ANNE (CEO):  Yes S&OP will change. It will probably need to be highly structured and disciplined to start with.  Then as the process and systems begin to deliver and people start to believe in the information being produced, the S&OP process can become less rigid.  Eventually it may even serve as an operational and supply chain review and improvement forum.

ANNE (CEO): In any event, it sounds like you need to start off with a relaunch of S&OP. You need to reassert your operational authority on the business. S&OP can be just the platform you need.

SILENCE .....

MIKE (MODERATOR): Is that the silence of acceptance?

REGINALD (CEO): No. It is the silence of me thinking.

JACEK (Head SC Dev): And me.

REGINALD (CEO): Does that mean that if I go to S&OP meetings, everything will eventually be all right?

ANNE (CEO): Of course not. But leading, really leading an S&OP process is a good start for any CEO.

JACEK (Head SC Dev): I still think that S&OP can get in the way.

ANNE (CEO): But Jacek, have you ever seen it work in the way that I have described?  That is in a ‘light touch’ consensus process that supports supply chain and operational processes and that is supported by ERP?

JACEK (Head SC Dev):  And I thought that I was dreaming.

MIKE (MODERATOR): That’s it for now folks. Thank you.

What are your thoughts? 

As I mentioned in a previous blog, this series is based on nearly 20 years of supply chain experience as a consultant who has witnessed similar debates. My view? Call me Anne?

I’d welcome experience from other people.

 

In this series:


      Tags: Michael Thompson, ERP/SAP, S&OP, Forecasting & Demand Planning, Integrated Business Planning