Supply Chain Blog

FMCG Food Stocks Purchasing: Student House Supply Chain:

Posted by Dave Jordan on Fri, Aug 17, 2012

The student house. What a great idea to join with some university friends and rent a house together. This is far better than university halls as you can have parties 24/7 without security telling you to keep the noise down.  Ok, if you are still all singing badly to Bohemian Rhapsody using kitchen utensils as microphones at 4am your new house neighbours are likely to call the police sooner or later.

You share the monthly rent equally 4 ways even if the girl gets the attic flat with her own bathroom and the boys have to share a bathroom that will eventually give Domestos a run for its money. There will be a rota for doing the housework and making sure the black bin bags of lager cans and polystyrene-framed rotting take-away remnants are put outside every Wednesday.

But the refrigerator and the freezer are a totally different kettle of fish. Food ownership and the associated storage space are fiercely guarded and god forbid if anyone eats that cling-film wrapped tuna and mashed potato belonging to the girl. All hell breaks loose as accusation and counter accusation fly across the crumb covered and ketchup stained kitchen table. Traps are set to try and find the culprit. Cheese is weighed to ensure the bloke with the limp doesn’t slice off a piece to eat with his milk-free muesli at 2am after the pub.

So does sharing really save any money? Well, seeing as the students all eat the same sort of meals they could indeed save a few pennies for extra cider if they overcame their food protectionism and bought in bulk. Cheaper, simpler and a far fewer kitchen table fall outs. (However, I am not sure how good students are at forecasting!)

Corporate procurement Sounds so simple but even in big grown up companies we still see money wasted through failing to agglomerate demand and take advantage of economies of scale. Individual departments all have their own stationery stores. The sales force has a deal for buying diesel and petrol from one chain that is not shared with the Logistics team or 3PLPs – and why not the distributors? Why does every separate office in the company need to have their own and different brands of coffee making machine and coffee – I see this often!

Every time you buy in small quantities you pay a higher price – fact. You waste time with so many people involved in buying activities and suppliers take you for an expensive ride and don’t think they do not. Call it what you will but bulk buying or corporate procurement makes sense and money and particularly so in these gloomy economic times yet many businesses large and small ignore the opportunity. Or perhaps you do not need to save relatively low hanging finance?

Who eats tuna with mashed spuds anyway………..?

Image credit: iprole

Tags: Dave Jordan, Humour, Supply Chain, CEE, Cost Reduction, Inventory Management & Stock Control

FMCG RTM Distributor Network: Never a good time to assess?

Posted by Dave Jordan on Thu, Aug 02, 2012

There is never a good time to go on a residential training course or put the car in for an overdue lengthy service or the annual visit to the in-laws or even English homework - why was the American cowboy series High Chaparral so much more compelling – well it was for me anyway!

Route to Market AssessmentInstead, we all have “stuff to do” which seems vitally important at the decision making time but is usually irrelevant activity sub-consciously designed to put off “stuff” that really matters. You know what is really important and vital but you always seem to find something else to sort out before tackling that huge elephant in the room.

The largest elephant in the room in FMCG businesses with sizeable Traditional Trade (TT) businesses tends to be their Route To Market (RTM) Distributor network. While senior management teams grapple with indifferent sales in these difficult times they know that they could get more out of TT. TT outlets tend to be more accessible to those without cars or do not have the money to buy petrol to drive to the big cities. They still need to eat and drink though!

Perhaps companies do not realise that virtually everyone in the real world is trying to save every single penny. By “the real world“ I mean those who are not living on monstrous fortunes generated from “looking good”, kicking a ball or being the talentless off-spring of an aging pop celebrity. Nor am I talking about those millionaire politicians who occupy a parallel universe of comfort and wealth while the majority struggles along.

Oh, ok back to the point! You know you could generate extra sales and profit from TT but you do not bite the bullet and do something.  The excuses cover the whole calendar year:

  1. Oh no, not in the first quarter of the year when we are trying to overcome the year-end loading that made last year’s targets.
  2. Oh no, not when we are in the peak of spring cleaning in CEE.
  3. Easter? No, forget it.
  4. What about summer? Well, not for drinks and ice cream businesses as this is the peak season – if the World’s Greatest Salesman appears.
  5. Ok then what about Q4? No, of course, you will be busy loading the trade again.

And so the year starts again……….

Ok, it is never convenient but unless you step in and take a look at how you sell product in TT you are missing an elephant sized opportunity. If you really cannot assess and review your whole network then do it in bite-size chunks and maybe you can cover your network in a relatively short period rather like a cyclic stock count.

Distributors will value the attention you give them and a forum to raise problems and opportunities. Treat that TT elephant well because they never forget…….

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