Supply Chain Blog

Global Supply Chains: Reliance on ERP data quality & accuracy

Posted by Dave Jordan on Tue, Feb 28, 2012

Everyone in multi-national companies will have experienced the “data request from head office”. Usually arriving at the most inconvenient time, with unclear instructions and no clear reason-why! These data collection campaigns are often managed by the latest rising star in the business and as soon as they move onwards and upwards someone else steps in and repeats the process! Frustrating!

Information ManagementHowever, companies who have invested in globally linked ERPs should not need to use the “rising star” process as HQ will be able to see everything and anywhere on the same network. Units of measure will be consistent as will calculation of S&OP KPI’s and financial measures. Add a currency conversion standard and you can collate global data with a high degree of speed and accuracy. What can happen when you are not using a common ERP? This could mean nothing at all or perhaps the worst case scenarios of a mix of multiple unrelated ERPs AND nothing at all!

A recent project involved collecting data from the regional offices of a global company. Each location was provided with a customised Excel-based data collection sheet and a set of instructions for completion. A selection of what came back?

  • Nothing
  • A screen shot from an ERP
  • A completely different data file
  • An S&OP data file
  • An annual budget submission
  • Partial completion with good data
  • Partial completion but with errors
  • Full completion with good data

Full completion with errors

Perfection was not anticipated – that could even be classed as suspicious - but the variety and quality of responses was unexpected. This was a company striving to make tough global decisions at the top table which could not assimilate coherent information. Repeated prompting and chasing only added to the data fog as data was contradicted or revised or over-written.

I am not suggesting everyone should invest in a 3-letter Germanic ERP system but some degree of consistency is necessary if you want to understand your status quo and measure the success of improvement initiatives and make decisions on global priorities. You need to remove the inevitable reluctance of employees with assets and jobs potentially under review to provide 100% unambiguous and accurate data. I am not a great fan of Excel solutions but in the absence of anything else it can be a useful tool in forcing decentralised teams to provide clean, accurate and actionable data. Such data can then be maintained in a centralised and secure data warehouse but this has to be managed……..

Data consistency and accuracy is paramount for global and regional ERPs to work and start repaying the investment cash but data management is usually foggy at best. Strangely, companies seem to avoid the importance of data until a wide-ranging ERP is on the horizon and then there is a last minute rush to appoint a Data Manager and team to ensure data used in the business actually reflects reality. Such a role might not appear “sexy” but it is one of the most important roles in any company intending to run a coherent global business. Grade the role appropriately and appoint a “data Rottweiler”!

If you’re not serious with data it comes back to bite you sooner or later!

Tags: FMCG, Dave Jordan, Performance Improvement, ERP/SAP, Supply Chain, S&OP

Recession affects FMCG warehouse capacity in CEE / Romania

Posted by Dave Jordan on Wed, Feb 22, 2012

The car bounced over the dirt road of potholes and approached the expansive, looming warehouse building that was once so full of life and bustling activity. Paper and plastic fast–food litter gathered up by the breeze blew across the distribution centre parking area and beyond to be fought over by boney, mongrel dogs. A short time ago the yard would not be a place for an idle visitor as liveried juggernauts and ant-like fork lift trucks toiled away around the clock. Noise, dust, fumes, shouting, revving, the hiss of pneumatic brakes; no more.

3PLPs in CEEEntrance to the office building was beyond the waiting room with its familiar mismatched furniture, faint smell of illicit smoke and the accompanying stale odour of tired drivers and their diesel machines. The subdued tip-tap of fingers on keyboards generating loading and transport documents supporting someone’s Route To Market had long gone. No more chattering from the tractor printer feeding on green/white paper from a seemingly endless box below. No camaraderie, no arrangements for the weekend, no telephones ringing; the only sound was the noticeably slowing tick-tock of the drink-branded plastic clock which in turn would slowly but surely grind to a halt at one precise second in time. The beige Ikea infrastructure unchanged from the last day of productive work.

The previously secure and “authorised personnel only” door into the storage area was propped open by a tightly rolled newspaper with the dusty headline recording the passage of 2 years of hope-filled EU membership. Spitting cats scattered rapidly fearing the entrance of their fast-food chasing canine enemies. Dirty yellow fork-life trucks sat huddled in one corner like juvenile play-ground gossips connected to chargers that no longer dispensed energy. The once firm, shiny black seats repaired and renovated with stretch-film, tape and cardboard. Names scratched into the truck paint revealing the identities of the long gone jockeys.

No beeping, no screech of rubber and no ecstatic laughing when a pallet falls and spills its liquid sku load. Once you could not see from one end of the building to the other as hundreds and thousands of cases, drums, IBCs and big bags filled the mega-Meccano skeleton. Now only the blue painted skeleton with orange boots remains taught and proud with the bumps and bruises of battle visible on the lower levels and a scattering of splintered wooden pallets, also blue.

The loading bays all had their shuttered eyes firmly closed to the outside world. Would they be ever be prised open again to receive and dispatch FMCG goods like foods, detergents, drinks and wine? For now the loading bays only received the attention of endlessly sweeping flocks of pigeons and what they generously leave behind.

The rusty padlock and chain were replaced with a clunk and the warehouse was empty again and for how long? The dogs chased the litter; the cats produced a litter and the pigeons left their telling mark on a once thriving warehouse in Romania.


Tags: Logistics Service Provider, Dave Jordan, Supply Chain, CEE, Logistics Management

Snow: a natural disaster that plays havoc with supply chains

Posted by Dave Jordan on Mon, Feb 20, 2012

If you ask people to list disasters that have seriously affected supply chains you will probably get answers including the usual suspects, e.g. earthquake, tsunami, flood, volcanic eruption etc. Rarely would you find snow in the list of answers yet in many ways it is one of the most damaging disasters for a supply chain.

I am not talking about the 5cm of snow which brings most of the UK to a grinding, sliding halt. In relative terms that is an inconvenience and the impact is usually short lived. There may be a few delays here and there but supply chains in countries like UK are not severely affected. Conversely, the Scandinavian countries know that heavy snow will fall and they are suitably prepared with sand and grit in the right places and winter tyres and chains compulsory.

Snow fall affecting supply chain in CEEWhile countries across southern Europe/Balkans always get snow the amount that has fallen this year has paralysed large swathes of territory. This has not been a few cm of snow but metres and metres of the stuff which has covered entire houses, schools and shops. Think about that as you angrily scrape ice of your car window in the morning.  At least you can get out of your house and can actually see your car. Entire roads are blocked by solid mountains of snow and there is no way through without some seriously heavy and tracked digging equipment. This leads to a number of implications for people running supply chains:

  1. Trucks are stranded on roads and the load in transit will certainly be late and may even expire depending on the nature of the product or raw material. Will it still be needed?
  2. Consumers may not be able to get to shops to buy products; certainly those reliant on rural traditional trade will struggle. Unreplenished, shops cease to be shops.
  3. Will consumers want the product you have carefully planned, prepared and advertised on TV? Certainly, buying habits will change temporarily as relative luxuries give way to must-have staples.
  4. Warehouses may become blocked – not only with snow but with product that cannot move or nobody needs.
  5. People, yes ordinary people, may not be able to reach their supply chain workplace or may be absent due to domestic priorities.
  6. The pressure on gas and electricity supplies may restrict factory and warehouse operations.
  7. Petrol and diesel supplies may not be available.

The list really is endless but this is simply a disaster in my book and one for which we do not prepare and probably cannot.

The snow will clear of course but what then? The only way snow clears is to melt into water and at approximately 10% water equivalent there is a colossal amount of water waiting to flow. Severe flooding will follow and those at the eastern end of the Danube will be at greatest risk.

FMCG companies in particular have an opportunity now. They can help those thousands of desperate people by clearing out their warehouses and making a donation. Is it really worth keeping that soap with the mis-printed label or the toothpaste with the wrong cap colour or the soups with the “special price” artwork that never made it to market? Take the opportunity of spring cleaning your supply chain saving money on storage costs and reducing working capital AND doing something worthwhile. If you make a donation you are likely to receive some sort of tax credit and that would be preferable to complete write off at a later date that attracts VAT!

Nice, white fluffy crystalline water ice is great fun for kids but plays havoc with peoples’ lives and supply chains.

 

Image credit: Bogdan Cristel / Reuters

Tags: FMCG, Dave Jordan, Supply Chain, CEE, Logistics Management

FMCG Supply Chain: Low Cost CEE Based Embedded Experts

Posted by Dave Jordan on Thu, Feb 16, 2012

When someone mentions Interim Management you might be one of many who immediately picture a crusty 50+ male wearing a suit Noah gave away at the Ark jumble sale (which now has worn leather patches on the elbows) and flying in from Western Europe to save the day! Oops, sorry if that rings a bell with anyone in particular; you know who you are!

Supply Chain Expertise in RomaniaQuoting from Wiki; Interim Management is the temporary provision of management resources and skills. Interim management can be seen as the short-term assignment of a proven heavyweight interim executive manager to manage a period of transition, crisis or change within an organization. In this situation, a permanent role may be unnecessary or impossible to find on short notice. Additionally, there may be nobody internally who is suitable for, or available to take up, the position in question.

“Heavyweight”, “executive” are terms which propagate an expensive-to-hire perception and while this is often incorrect and unfair many people shy away from using the valuable services of people who have bags of experience and skills. As people stumble up the seniority ladder they inevitably become less hands-on and more strategic and their ability to generate something like Forecast Bias and Accuracy KPIs from raw data diminishes simply because they do not do this on a day to day basis.

If you need someone to look ahead and guide your corporate ship through muddy waters over the next 3-5 years then check out the senior Interim possibilities. However, there is another approach and that is through bringing in specific expertise at the relevant seniority and skill level. If you need someone to set up a robust suite of KPI’s then why not embed someone in your business with those precise skills? They will be leather elbow-free and will be focussed on getting the particular task in hand completed and completed well. The task you require the embedded Supply Chain expert to carry out will be something they have achieved many times in your sector and in your country and in your language.

Embedding an expert comes with the same benefits of an Interim Manager, e.g. no appraisals, no pay rises, no career management etc, but at a significantly lower cost to the business. As in many aspects of life you tend to get what you pay for but the point here is that you should “pay for what you get” – no more, no less.

Consultancy fees are always an emotive subject but if you take time to look at the detail I am absolutely sure you would be surprised at the cost effective and highly skilled possibilities available, especially here in Romania. Click this link and have a think!

Tags: Interim Management, Dave Jordan, Performance Improvement, CEE

FMCG Regional Supply Chains ; Swiss Legal Entities & Local Op-Cos

Posted by Dave Jordan on Tue, Feb 14, 2012

In Europe at least, there is a fashion for creating a new supply chain legal entity and housing it in a friendly canton in Switzerland. The prime benefit is tax although operational and efficiency savings are often claimed to offset the nasty sounding “tax avoidance” motivation. Certainly, you cannot just put your name above a shed, buy an as-is desk from Ikea, install a phone and employ an office –sitter and meet the undoubted Swiss tax benefit requirements.

Supply Chain Operations in SwitzerlandYou really do have to locate your supply chain organisation in the tax beneficial location. This means the relocation of potentially large numbers of offices, employees and their families which is a challenge in itself but how does such a change affect the operation of the regional supply chain?

In theory the new Swiss legal entity takes ownership for the sourcing, supply planning and making, partial delivery logistics and support service elements of the chain and the actual stock until a 3rd party sale occurs. The satellite operations essentially concentrate on demand planning, secondary logistics and customer service from local distribution centre to customer. Sounds simple yet you still have to maintain one unbroken chain and frankly, customers do not see nor care about some far away alpine, snow-topped tax advantage.

The local face to the customer will always enjoy the wrath of retailers when product is delayed or unavailable or of poor quality and that is irrespective of whatever corporate model is in place. The local people still have to take the blame for problems which may have occurred in a factory in a different hemisphere. However, the key is ensuring the entire chain really is one slick and seamless operation from start to finish AND all the players feel part of the same team. You must have shared objectives with KPIs and equal pain and gain in the wallet at year end or failure is inevitable.

A centralised supply chain legal entity raises the importance of the local op-co S&OP working within a regional S&OP managed by the new supply chain entity. Only one working is simply not good enough. If you can generate a living team spirit in groups bound by shared objectives and integrated S&OP then you are more likely to have a supply chain ticking like a quality timepiece rather than cheese dripping off a fondue fork. Which is yours?

Tags: Customer service, FMCG, Dave Jordan, S&OP, Forecasting & Demand Planning, Logistics Management

Practical Guide to SKU Complexity: FA Premier League Results

Posted by Dave Jordan on Mon, Feb 13, 2012

You may recall I took a light-hearted look at the complexity of overpaid Premier League footballers and how they might be treated if they were skus in a business. There is a cost to having an sku on your books whether this is soup, a shampoo or a sulky soccer player. Using this simple quadrant approach I provided my views on who should be delisted and who needed to improve.

Driving out non value SKUs resized 600Now that the latest transfer window has closed, the shuffling stops and the agents return to their damp and dark holes for the rest of the season I take a look at the current status – if you do not measure, you cannot improve.

Driving out non value players resized 600Not too bad! Clearly, some top premiership managers have been visiting the Enchange blog and taking good note. Well done Sir Alex, Mr Dalglish and the other one with the scarf!

Despite being in the top right box Cesc Fabregas has been sold by Arsenal and that may be the prime reason why the trophy cabinet will remain empty at the Emirates this year. Not sure what to say about Tevez as he is on some sort of gardening leave. However, Manchester City has boughtat Harrods and they do not seem to miss him but you cannot help thinking, what if……?

Torres remains firmly in the bottom right box as to date he has only scored 4 goals all season. Yes, his overall play may be ok but he was bought at great expense to put the ball in the back of the net, oh, and not get sent off!

In summary, this quote from the previous blog is still valid and worthy of repetition: “Those players and skus that deliver value for invested capital are the ones that prolong their stays at the top teams. However, sooner or later every single player will outlive his usefulness, move on and be replaced by something new and more successful.”

This is as true for footballers as it is for skus in the FMCG, brewing and pharma businesses. A certain level of complexity is inevitable but too much can drag down sales and customer service.

Tags: SKU, FMCG, Dave Jordan, Humour, Performance Improvement, Supply Chain, Inventory Management & Stock Control

Supply Chain Visibility; Planning for IKA Customers

Posted by Dave Jordan on Thu, Feb 02, 2012

I came across an interesting problem on FMCG planning this week. The company in question was a blue- chip multi-national with well developed supply chain and business processes, e.g. a suite of relevant and stretching KPIs in place plus a living Sales & Operational Planning (S&OP) process. Marketing had even chipped in with an innovation and promotional plan for the following 12 months.

Sales had been dragged kicking and screaming to the S&OP table and had started to forecast sensibly, i.e. not just by brand or by geography but by sku and by customer/channel. If you provide a detailed forecast with sufficient horizon but stock is not available then SC Planning has to improve. Or does it?

Still, the familiar calls of a sales team complaining about “not delivered” and “lost IKA sales” were reverberating around the office. A perplexed SC team studied the KPIs, checked the ERP and discovered that for some major lines the sales were well over forecast. In most organisations a band of +/- 20% is typical but when the bias is consistently above forecast there is a problem to be solved. SC was aware of all the promotional activity and there were no new launches in the period yet key skus were running out of stock.

Open on the desk was a copy of the in-house promotional magazine for the IKA retailer. Flicking through revealed the likely reason for the bias and “lost sales”. The sales department and the retailer itself were organizing promotions and selling activity which was not on the SC radar yet drew from the same planned stocks. Attractive promotions and bulk buying offers on major skus inevitably led to shortages.SC VisibilityConversely, some in-store activity, e.g. promoting out stocks close to their sell-by date meant other skus were sold well below forecast which posed problems within the logistics network.

Do not take the “lost sales” complaint as the final word. From time to time check out the retailer magazines and see what is happening behind your back!

Tags: FMCG, Dave Jordan, ERP/SAP, S&OP, Forecasting & Demand Planning, Logistics Management