Supply Chain Blog

Space Constraints in a 3PLP FMCG/Pharma Warehouse

Posted by Dave Jordan on Tue, Jul 24, 2012

Possibly the most jaw-dropping and least welcome question I will ever hear. A question that brings me to the depths of despair certainly, rapidly and without warning. A question that is worse than being asked to appear on Big Brother – well almost.

Packed 3PLP Warehouse resized 600I will usually have spent hours packing and repacking stuff into the biggest Samsonite allowed in the hold. Folding, cramming and persuading all those absolutely necessary clothes and shoes into the holiday suitcase even though there were never worn! Socks stuffed inside shoes. T-shirts rolled up around that must have bottle of local prune spirit that would strip paint. Wet swimwear sealed in spider web-thin, cheap polythene shopping bags from the local grocery store to avoid buying the hotel beer at mortgage prices.

The old airline luggage stickers are removed and the cracked and expired personalised airline loyalty ID tags are secured again. Finally, after finding a very large bloke to sit on the suitcase while you zip it shut inch by inch you get the question from behind that all nominated case packers know only too well……

“Will this fit in?”

Well, it might have done had I known it was supposed to go in little bit earlier. And why is the last minute mystery piece always something substantial and awkwardly shaped like a hair dryer with a non-removable attachment? Ok, bring back the big bloke, feed him an extra burger and let’s get the hair dryer packed.

“Is that it, really? No more, nothing else?”

Who else suffers from this last minute, unplanned request for space in an already crowded environment? Yes, your 3PLP warehouse manager. The similarities are endless. Existing space filled with stuff that nobody needs or is even the wrong size/variant. Marketing “specials” that never really caught on in the market place and were quietly dropped despite the expense and effort of buying them. Damaged goods etc, etc, etc.

A warehouse that is reasonably full with what you planned to sell will struggle to cope with your month-end loading to make the numbers and unlock the hardly deserved sales bonuses. Sales and Marketing think that warehouse space is infinite and they are usually the culprits throwing in the last minute “hair dryer” request.

Once the warehouse is close to 100% full it stops acting as a functional distribution centre. Stock cannot be moved in or out in good time. Stock is not logged in correctly and anything left sitting on trucks for available space is prone to shrinkage and damage. Fork lift trucks go out of action as available spare batteries prove insufficient to compact 14 days of movements into the final few days of the month. People and IT systems become overloaded with transactions etc, etc, etc.  Why is this really a surprise?

If you have not sorted out your RTM and market activation yet then you are heading for this in the final months of the year and not even a burger guzzling big bloke will secure success.

 

Image credit: www.luggagepros.com

Tags: FMCG, Logistics Service Provider, Dave Jordan, CEE, Logistics Management, RTM Assessment Tool, Inventory Management & Stock Control

FMCG CEO : An important reunion with S&OP

Posted by Dave Jordan on Wed, Jul 18, 2012

Here at Missing Pieces/Fractured Families/Long Lost Family – delete as per local programming presented by irritating celebrity – we help people find family and friends they have not seen for many years. Often, we are a last resort after all other avenues have been tried and desperate people turn to us for one last shot at finding that long lost contact. When they have almost given up hope of re-establishing contact they come to us.

CEO discovers S&OP netsize resized 600Mr FMCG Chief Executive Officer was one such person who called our hotline and pleased for our help. Mr CEO had been searching for several years without success. E-mails, letters and internet searches came to frustrating dead ends and that is where can help. Using our expert team of researchers we took this difficult case on board and the search began. We have had many successes and an equal number of failures in our search efforts and this one would prove to be one of the most difficult. Not everybody wants to be found and if you have not been in contact for so long then there is possibly a good reason why.

Endless hours of research revealed several hot leads but none that led us to the desired target. We kept Mr CEO informed regularly but with each passing month the strain was beginning to tell and frustration was evident. Just when we were considering a case closure and with hope fading fast we made a promising discovery. Sometimes our work ends like this. We have searched across the globe yet the target is actually close by. On this occasion the long lost contact was in an office not far from the location of Mr CEO.

We met the target and showed them a video of the CEO making a plea to make contact once again and get involved in daily business life. After some careful thought we asked if a meeting with Mr CEO would be appropriate and we received a resounding “yes”.

We called Mr CEO and requested a meeting in his office to update him on the situation. We did not tell him about our discovery and carefully planned to reveal the long lost friend during an S&OP Board Meeting.

Prior to the Board meeting starting we updated Mr CEO and while he feared bad news we were able to tell him our search had been successful and we had found his long lost contact only a few offices away. Mr CEO kept cool but you could sense his emotion as the door creaked open and after a pause for effect the Sales Director walked in with a sales forecast! The first time the CEO had seen a sales forecast split by brand and by sku in ages.

The sales forecast and the CEO are now in monthly contact and planning for a much better sales future.

So there you have it. Another success for Missing Pieces/Fractured Families/Long Lost Family as I smugly close this weeks’ show.

Tags: FMCG, Dave Jordan, CEO, Performance Improvement, Supply Chain, S&OP, Forecasting & Demand Planning

FMCG distributor overstocking blocks more than your business

Posted by Dave Jordan on Tue, Jul 10, 2012

I spent most of last weekend slightly below ground in a hot, dirty, smelly hole without light and where you could not stand up properly. No, it was not the driver’s room at your 3PLP but it was the hole in the ground that provides water to the house.

No, piped municipality water has not quite reached where I rest my hat. My water is pumped up from several meters below ground and surprisingly this is currently without charge. However, I can see a helpful EU minion scribbling away at yet another ridiculous law to restrict how people live and breathe.

I had noticed that the pump was working extremely well lately. The pressure was very powerful and the car and the dog certainly benefitted from a high pressure cleanse. In fact, the morning shower was getting a little uncomfortable; very prickly actually. I should have known at the time that something was wrong and after a few hours sweating below ground it became clear that my pump had failed due to FMCG overstocking. Yes exactly, I mean Finely Milled Clogging Grains or sand as it is more widely known.

Previously above ground everything seemed to be going well. More and more water was obviously being pumped down the pipe and I had no cause for concern. Performance was good, if not improving and then without warning nothing, not even a dribble. The pump had collected so much unwanted material without me knowing that it eventually and literally ground to a halt. Suddenly, I had no water and I was not getting any cleaner crouching over my well, either.

Does this sound familiar in your FMCG business; particularly those relying on distributors for traditional trade success? Overstocking distributors is one of the easiest ways to sell more and more product when the demand is not present. If you provide sufficient incentives such as payment terms and discounts you can persuade distributor partners to overstock, i.e. loading the trade.  The gains are inevitably short term as eventually the market runs out of money and/or space and the products that people actually want cannot find their way to shop shelves.

When you load the trade you do not actually sell stock. Stock is not consumed and it sits there hidden from view until you are forced to bite the bullet and take a top and bottom line hit. CEO’s should ensure their Supply Chain and Finance colleagues provide accurate and timely data for stock held at distributors. Ideally this should be by direct IT linkage but an Excel file will suffice providing in-person checks are also carried out.

If your business appears to be motoring along and product is being pumped faster and faster into the market take a step back for a reality check before it is too late and certainly before you sign the sales bonus cheques. Switching off your Route To Market pump suddenly and without warning can get very smelly indeed.

 

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Tags: FMCG, Route to Market, Dave Jordan, Performance Improvement, CEE, Traditional Trade, Distribution, Inventory Management & Stock Control