Supply Chain Blog

Supply Chain Language; What are we really saying?

Posted by Dave Jordan on Mon, Jan 30, 2012

Supply Chain TerminologyIf you are honest you have probably sat bored in an airport lounge waiting for your inevitably delayed flight and listened in on a conversation. If the discussion topic is not one you are familiar with it can be as if you are listening to speech in a foreign language. Different businesses and functions within business use a variety of words and phrases to describe what they actually do and not all are obvious to outsiders.

I take a look at supply-chain speak here. Within the supply chain community we all know what is meant by the myriad of KPIs, disciplines, skills, terms etc but what do non-supply chain people hear?

Supply Chain – This is what DIY and hardware stores do.

Buying Contracts – The amount of shopping reduces.

Call-off - Cancel or postpone a sports fixture or other event.

Line Efficiency - How quickly the queue moves.

Changeover Time – How long it takes to select another TV channel.

Forecast – What weather presenters try and do.

Forecast Accuracy – How good the presenters are.

Forecast Bias – Regularly preferring one forecaster over another.

Case-fill – Done before leaving on a vacation.

Case Packer – The person who fills the above cases.

Shrink-wrap – A physiatrists’ coat.

Customer Service Levels – How many floors there are in the shopping mall.

Out of stock – No bouillon cubes in the kitchen.

Out of stocks – Released from mediaeval public humiliation.

Order Fulfillment – Telephone request for home delivered food.

Pallet – A flat wooden holder for artists paint.

Pallet Space – How much free space is left for more paint.

Pallet Utilisation – How often you use this for painting.

Spreadsheet – Used to protect carpets when painting.

Ok, that is enough. Thanks for reading this far but you probably should go and do some work now.

Tags: Dave Jordan, Humour, Supply Chain

FMCG Planning: a short history of technology advancement

Posted by Dave Jordan on Wed, Jan 25, 2012

All major companies run some sort of ERP to support their business whether they are FMCG, pharma, brewing or indeed anyone who “makes stuff”.  Many blue-chips have invested in big name software packages while others have gone for a cheap and cheerful locally built product. The big name offering is not always the most user friendly solution but then the made-to-measure option also has drawbacks, usually support and lack of flexibility. Anyway, getting to the point….

A discussion this week on supply chain planning had me thinking about how planning used to be done, Yes, ok go on, cue Mary Hopkin singing Those Were The Days – all young things should look  it up on YouTube.

Production Plan SmallI guess at some stage before type-writers the planning process must have been largely verbal with some lowly paid scribe scratching away with a quill on paper taking down orders from salesmen.  Manual addition would follow until a demand for raw and packaging materials was derived. After typing on corporate headed paper and receiving the company seal the various orders would be sealed in envelopes and posted. What sort of lead time would that process have offered? What on earth happened if there was to be a change or there was an error in the writing or – just a possibility – the sales department got the forecast wrong?

Typewriters will have improved the process a little but reliance on post would be the norm until the possibility of Telex popped up. This was still heavily reliant on manual intervention and of course the planning process itself remained rudimentary and paper based.

Communications eased with the arrival of the fax machine. At least now the lead time between order issue and receipt was a matter of minutes and changes could be made without waiting for the postman to call. Different departments could exchange information as long as a telephone line was available. Still, the task of finding and collating data would remain in the relative dark ages despite the arrival of table-sized calculators.

The computer arrives and provides a massive step forward. Now there was a bit of IT to support the number crunching process and make the order process far slicker.  Software to take account of history, market activities and launches facilitated business forecasting – not necessarily more accuracy, however.

Move ahead only a few more years and we have suppliers, producers and customers fully integrated with common IT, processes and data. Collaborative planning gets partners proactively working together for a common goal rather than being defensive and protective of their individual silos. Producers can see when a consumer buys their product at what time in which store and at what price – they probably know their names via the loyalty card scheme too! Salesmen know when shelves are empty and can send orders in real time from hand-held devices.

Technological innovation has brought planning a long way since the 1800’s and there is undoubtedly more to come. I wonder what is next.  So, while you tap away at your ERP interface spare a thought for how planning was carried out at times when a PC was a London Bobby, having a Wii in your living room was unacceptable and an iPad was still just a typing error. Start singing Mary.

Tags: Dave Jordan, ERP/SAP, S&OP, Forecasting & Demand Planning, Integrated Business Planning

Top 10 Recession Busting Supply Chain Resolutions for 2013

Posted by Dave Jordan on Mon, Jan 23, 2012

This seems like déjà-vue all over again! Only a handful of working days into the New Year and I am hearing the same old complaints about the economy and business in general being poor. Of course this is true and does not look like changing any time soon. However, there is one new recurring theme which popped up at various parties and gatherings over the holidays; “my company seems to do nothing different and just hopes business will improve”. Not going to happen, no way! Certainly learning by your mistakes is a powerful message but banging your head against a brick wall for what is approaching 4 years is a rather pointless and painful experience.

Those companies that identify failings and shortcomings in their supply chain AND do something about them will be best prepared when we exist recession. Exit we will but I have no idea when

New Year ResolutionI published a list of potential  supply chain resolutions a year ago. I know some people did pause for thought and then take decisive action and it is no coincidence they now have growing businesses. Growth in the current global economy? Yes!

Based on client feedback and analysis of “before and after” performance I list the same resolutions in order of short term impact on operational quality. If you have limited resources then choose from the top of the list.

  1. Route To Market – Has the march of the International Key Accounts stalled? Distributors may still be a large chunk of your business and they are capable of growth if you help them. Give your RTM a thorough service and your Distributors will serve you better.
  2. Sales & Operational Planning - If this is in place great, but there is no doubt you could improve it. If there is no S&OP you should try it! If you are not yet a believer of S&OP, try “What has S&OP ever done for us?".
  3. Reduced Stocks – the start of the year is a great time to remove that old stock. Why not give your sales a boost with some unexpected and low cost support using stock that will be otherwise written off? I detect numerous companies have “encouraged” stocks into the trade for year end and only the residual stock disposal operations will benefit.
  4. SKU Complexity – Did you study your complexity in 2011? Do you have any idea what complexity is doing to your business? Understand your sku complexity and check if it appropriate for your business.
  5. Improved Customer Service – A number of major global companies still do not measure CS to any degree of accuracy.  Companies that fool themselves on Customer Service rarely succeed.
  6. Proactive 3PLP’s – Are they meeting the agreed KPI’s? If they are then perhaps you need to review them and revise them upwards, again and again.
  7. Sales & Marketing Buy-in – This is still a problem, I fear. If only everyone in your company was aligned to the same plan and 100% mutually supportive. Think what sort of competitive edge that could provide.
  8. Use the ERP - Avoid spreadsheets like the plague! They undermine your business and waste time and effort. If you are considering a fresh implementation of an ERP then chose a partner with experience in the field. I mean real operational experience and not bought-in fresh out of university “experts”.
  9. Continuously Improve – If you are in the same position in 12 months time then you will be dropping towards the back of the pack and will be ill equipped to ride the crest of the post recession rally. Keep innovating and improving your Supply Chain.
  10. Supply Chain Awareness – I was not sure where to place this resolution but I leave it as a very important number 10. There is more to supply chain than trucks and sheds - Supply Chain is all about.

Check out the top 5 and then find an expert partner to lead you through the process of change for good. Don’t be in the same position this time next year; do something.

Tags: FMCG, Route to Market, Logistics Service Provider, Dave Jordan, CEO, Performance Improvement, Pharma, KPI, Traditional Trade, S&OP, Cost Reduction

Trying to run an FMCG company without a Supply Chain department?

Posted by Dave Jordan on Mon, Jan 16, 2012

Ok, now back on line after the holidays and some demanding project work. One of the first catch-up meetings I have had this year was with an FMCG MD. No name of course, but this is a medium sized player with a broad European base and I have disguised the identity to protect both of us.

I recall how many companies plodded along with what we now accept as supply chain functions lost amongst other departments, e.g. buying and logistics in finance, planning with sales – I am so pleased that the latter is no longer the case! Many years passed before all these essential elements of supply chain were brought under one department. Looking back it hardly seemed like rocket science but it was a painful process as empires were dismantled and recognition given to what is still an undervalued function.

DisintegrationAlthough many were dragged kicking and screaming into the newly created function there is no doubt those companies operating an integrated supply chain have seen huge benefits over many years. Nothing happened overnight of course, as slowly but surely blue-chip companies made massive strides in cost, efficiency, service and innovation. Is it naïve to believe that supply chain is now considered equally important as say finance or those darlings in sales?

So, you could imagine my jaw dropping when I heard from Mr no-name MD that this company has taken the decision to dissolve the supply chain and relocate elements across the other departments. The SC Director role just vanished off the top table in one fell swoop. There must be a leading edge reason for this bold and brave (yes, insert “crazy” and “stupid” if you wish) move and I waited for the disclosure of the divine inspiration.

There was none. The insight behind the decision was that the company wanted more control over various areas of business and believed that a dispersion of roles would achieve this. The fact that segregation of roles is necessary for auditable control and accountability has been at best over-looked.

Why would you make such a decision? Answers on a post card please as this one beats me. I am not suggesting supply chain development has finished and we have the ultimate design (far from it) but reverting to an 80’s model in an effort to improve control seems to be a contradiction.

 

Image credit: Super hq Wallpapers

Tags: FMCG, Route to Market, Dave Jordan, CEO, Supply Chain, S&OP, Forecasting & Demand Planning, Logistics Management