Supply Chain Blog

FMCG/Brewing/Pharma CEO Performance Appraisal

Posted by Dave Jordan on Wed, Oct 24, 2012

FMCG/Brewing/Pharma CEO Performance Appraisal

Name: This Couldbeyou

Location: Anywhere

Role: CEO

Sector: FMCG/Brewing/Pharmaceutical

Summary of Performance

The local economy continues to struggle in the difficult global economic climate and perhaps consequently contributed to the annual results being below expectations. However, they were so far below expectations – and your commitment - that the economic conditions cannot be the only factor. The business was growing in price and volume terms - albeit low single digit -  so there was some momentum on which to build. The anticipated shift from Traditional Trade (TT) to International Key Accounts (IKA) did not materialise and in fact company performance was lower than last year in both channels and in all categories where we are present.

Major disruption has been caused by your failure to plan the ERP implementation and post go-live ramp up in sufficient detail. Roles and responsibilities were not clear and some of our top operators were simply not led. The organisational structure remained unchanged after the new ERP go-live and this is a clear error of judgment and ignorance.

Your company has paid lip-service to Sales & Operational Planning (S&OP).  This is the agreed global approach towards operational excellence yet the regional audit revealed that S&OP was not actually on the agenda of the top team and was considered a Supply Chain problem. In times of trouble the least you should be doing is implementing global strategy on time, in full and without debate.

This leads me nicely onto in-market execution. Our brands have simply not been available in sufficient quantities when consumers are ready to make a purchase. A Customer Service Level – our measure and not the stricter retailer measure – of 90% indicates a clear failing and incompetence in the approach to Route To Market (RTM).

You inherited a slowly growing business but the past 12 months have seen volume and value drop to the level of 3 years previously and you know this is not good enough. You also know I cannot allow this negative slide to continue unabated.

Development Plan

Areas for Development:

ERPThe organisation structure needs revising urgently to ensure roles, responsibilities and skills match the requirements of the new ERP.

S&OP – Rigorously implement S&OP, ensure this is the only business process in the company and you are visibly seen to be the leader.

RTM – Understand the IKA/TT trend dynamics in detail and assess your RTM network efficiency for capability to support agreed plans.     

 

RTM and S&OP integration e-book

Own Comments

I would like to return this business to sustainable growth before moving to lead a larger operation.

Career Planning – Company View

The kindest comment I can make is “let’s not go there now”.

Appraisee: This Couldbeyou

 

Appraisor: Mr Unhappy

 

 

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, CEO, Humour, Pharma, ERP/SAP, S&OP, RTM Assessment Tool

SC IT. The reality of ERP implementation and go-live preparedness

Posted by Dave Jordan on Mon, Oct 22, 2012

I am not a fan of reality TV at all. These programmes seem to promote the worst in people and you end up with “celebrities” who actually have no talent and in most cases, fewer brains. Seeking more than their usually allotted 15 minutes of fame they behave as outrageously as possible to be noticed – don’t these people have close friends to tell them the truth?

The worst version must be those talent shows where the previously never heard of “star” returns to be a judge of future celebrity wannabes. This can only result in a downwards spiral of any available real talent until you end up with an amoeba.

Keeping on theme for a moment I indulge in the kind of reality show I might actually watch and record  so I can see it all over again. What if overnight the England football and rugby union teams swapped sports and played against each other? Immediately; no training, no briefing, no knowledge of the rule book and no practice matches. Suddenly they are outside of their comfort zone and doing things they are not used to doing week in-week out.

I suspect the rugby boys would fare reasonably well at football but will probably be beaten eventually. A lot would depend on the interpretation of reasonable bodily contact by the referee. Footballers – the famous ones know who they are – are known to hit the ground as the slightest breeze blows by. The balletic grace of a professional footballer theatrically diving to win a penalty would not sit very well with a rugby team where a small, tracked farm vehicle is required to make them go to ground.

What about the other way around? Now that would be fun. The sight of a huge prop forward taking out an over paid, over hyped and over groomed soccer star would be good viewing. The lesser brained variety of soccer star would spend the entire match berating the referee that “the ball has deflated to a funny shape and that someone ruffled my hair”.

Supply Chain IT ERPThink about the chaos in the teams and the total lack of execution quality until they picked up a little more information and experience of doing something different. Think about how your business team tries to cope with a new ERP without the necessary training, hand-holding and go-live guidance. Good people are suddenly asked to work in a different roles, different ways on different IT and usually in far more time restricted operations. You cannot postpone your business until you get this sorted out and addressing it after go-live is really far too late.

You need to ensure your ERP project includes deep planning, training and preparation of all your people plus a period of intensive care provided by an expert third party. It is critical not to let the third party leave the building until you are satisfied you can play this new game yourself. Anything less and your recovery will be very slow indeed.

I avoided naming any names but in my vision of sports reality TV who would be the England football "hooker"? So many, many candidates!

Tags: Dave Jordan, Humour, Performance Improvement, ERP/SAP, Supply Chain, Integrated Business Planning

FMCG, Brewing & Pharmaceuticals: Try sharing 3PLPs

Posted by Dave Jordan on Mon, Oct 15, 2012

The proposal by the UK and other Commonwealth governments to share diplomatic missions and facilities around the world is perhaps initially surprising but for once in the world of diplomacy, it makes great sense. When most of the activities taking place in these outposts are extremely similar then there are strong cases for cost and efficiency savings. Even if the collaboration is limited to the mainly mundane consular activates which do not reflect policy of an individual state there will be significant synergies. Processes, systems, people, utilities and purchasing are all just a few of the areas where cost would be reduced.

Each country will still have its own policies and position on specific issues and within any combined mission there can and would be differences in approach and expectation. Equally there will be occasions when nationally sensitive issues are dealt with behind closed doors for at the end of the day they are different countries with varying priorities and values.

We have previously looked at the pros and cons of sharing one or more Distributor partners and the apparent reluctance to do so. By the time your product gets into the public domain in distribution there is very little confidentiality available. Confidentiality is always limited in FMCG, Pharma and Brewing as so many people are involved along the process of a new launch, for example. With the arrival of so much instant social media you can hardly keep anything out of the public eye – just ask a certain British princess. Still, few companies take the bold step of using the same Distributors.

If we retreat backwards along the Supply Chain the arguments for sharing 3PLP partners are even greater particularly in countries where quality partners are in short supply, eg CEE. Some companies do specify non-competitive clauses in their contracts but unless there are exceptional circumstances or a previous poor experience I think that is short sighted.

If a 3PLP provider exists who has a proven record of delivery in a certain country and/or sector then why not use that experience? Of course, the decision to share a logistics partner should not be taken lightly and many sensible and simple “Chinese Wall” safeguards need to be in place to prevent fall-out and business risk. Clearly defined procedures should address quality of employees, restriction of sensitive information and perhaps most of all, physical access.

This really can work and leave your resources free to win the sales battle in other areas. A little dose of diplomacy is all that you need.

 3PLPs in CEE E-Book

 

Tags: Brewing & Beverages, Logistics Service Provider, Logistica Management, Dave Jordan, Pharma, Supply Chain, CEE, Logistics Management, Sales, Outsourcing

5 Reasons to Improve FMCG Factory Performance in Recession

Posted by Dave Jordan on Thu, Oct 11, 2012

There remains so much discussion and debate around planning, S&OP and APO etc that the “make” element of Supply Chain has not had much air time. Regional and global strategies are reasonably well represented but it is what is actually going on inside factories that concerns me. The signals coming into factories ought to be much improved when you consider the time and money being spent on improving the demand input.

Factory performance and reliability in recessionPerhaps all factories are now at a peak of fitness and slickness and no further attention is necessary. I don’t think so.

Unless your factory is one of the lucky few who have benefitted from the closure of others and consolidation of volume your output may well be flat or dropping. The recession continues and producers are generally hanging on to over capacity for when the economy picks up – whenever that might be! Certainly, if you have made a heavy capital investment you will not be popular in suggesting a closure, write off or write down before any payback has materialised.

Factories can get lazy in low volume periods as the pressure is relatively low. There is enough time to cope with breakdowns, cleaning and variant changeovers and if the market is being supplied what is the problem?

  1. Efficiency improvements you have sweated over will be lost. Line operators will no longer be trying to push equipment capability to or even beyond name plate capacity.
  2. Initiatives such as disciplined TPM will suffer as the pressure is off and perhaps factory management is not so closely involved.
  3. Operators will be influencing downtime to maintain shift patters and payments – this will happen.
  4. Raw materials in and finished goods out processes become slack as the source and deliver colleagues share the malady. “I’ll move that finished goods pallet tomorrow.”
  5. When the market perks up again your factory will not be fit to ramp up and ably support increased demand.

You have to keep the pressure up.  Many FMCG  factories that have been advised of closure usually perform extremely well to the end; almost in defiance.

Athletes who do not train for a while lose their edge. Politicians become more honest during parliamentary recesses. Premier league footballers forget how to dive in the penalty area during the close season. The status quo is disrupted and it takes time to recover.

Adjust working patterns, work flexible shifts, refresh training but do anything to ensure you maintain pressure on performance and KPI targets – keep factory teams on their toes. If you keep your factory operating in top condition you will be ready for the keenly awaited boom.

No, I have no idea when that will be either!

Tags: FMCG, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain

FMCG/Pharma: How a wagging SKU tail knocks companies off-balance

Posted by Dave Jordan on Tue, Oct 09, 2012

When the biology teacher tells you humans have a tail your ears prick up and you wait for the punch line and inevitable student guffaw.  But it’s true! Our coccyx or tailbone is what remains of our lost tail.

All mammals have a tail at one point in their development; in humans, it is present for a period of 4 weeks, during stages 14 to 22 of human embryogenesis. This tail is most prominent in human embryos 31–35 days old. The tailbone, located at the end of the spine, has lost its original function in assisting balance and mobility, though it still serves some secondary functions, such as being an attachment point for muscles, which explains why it has not degraded further. Thanks Wiki!

Can you imagine living with a real live clearly defined tail? Think of all the designs we take for granted that would have to be redeveloped; denim jeans, SCUBA gear, even chairs.  Also, would the sight of Pippa Middleton with a tail flopping about down the Abbey have created quite such a stir?

Anyway, the key point is that the human tail has lost its “original function in assisting balance and mobility”. We do not need a tail to stand up, move or balance like many other mammals continue to do. Human development has not been matched in the worlds of FMCG and Pharmaceuticals. Here the sku tails flops around uncontrollably creating quite opposite effects to our ancient appendage, i.e. imbalance and immobility.

Despite all the wisdom that screams at companies to routinely evaluate and trim their sku tail few achieve operational excellence in this area. Take a look at your own tail and see which skus are really driving your performance – probably a surprising few along the lines of Pareto. What will be having a greater and negative effect on your performance will be a tail full of old, boring, tired, unprofitable skus that seem to stick like glue.

There always seems to be a “good” reason to keep certain skus and perhaps there are special range or regional cases but far too many companies endure tails that simply drain cash, take up space and the attention of valuable human resource. Why would you employ someone to work on unprofitable brands or skus? Get the best employees on the skus that work and help you grow.  Take a look at your own company; you may be shocked to find some employees are actually generating zero profit, at best!

If you desire growth in these difficult times then one way to help is not to allow your lengthy sku tail to“wag the dog”.

 

SKU Complexity Reduction

Tags: SKU, FMCG, Dave Jordan, Supply Chain, Forecasting & Demand Planning, Inventory Management & Stock Control

Is APO music to your Supply Chain ears.........ABBA?

Posted by Dave Jordan on Fri, Oct 05, 2012

There are many ways to link all the different planning activities in your FMCG company. This could be done with one single tool like the SAP Advanced Planning Optimiser or a host of other tools and packages.

SAP APO Small resized 600As with all IT you need to know how to use the software in order to get the best performance for your company and that is not always best provided by the IT supplier. If you need help with your consolidated planning system then Enchange is ready to assist.

In the lyrics below you can substitute the name of any IT package but APO does fit the tune well, I think.

With due reference to the original lyrics and music of ABBA.

Why why
Was our planning accurate no longer
It’s bad
And we knew we could not continue this way
Our products are not on the shelf
Poor data it speaks for itself
APO – No guessing on planning any more
APO – Now planning demand is not a chore
APO – We now know exactly what to do
APO – Smooth functioning  S&OP needs you
APO -  Finally planning with APO

We were
Using  monthly planning, but needed it longer
Oh yeah
Balancing planning right along the chain seems so right
So why did we ever refuse
It’s a win-win that we choose
APO – No guessing on planning any more
APO – Now planning demand is not a chore
APO – We now know exactly what to do
APO – Smooth functioning  S&OP needs you
APO -  Finally planning with APO

And now we see real proof
Our sales have shot through the roof
APO – No guessing on planning any more
APO – Now planning demand is not a chore
APO – We now know exactly what to do
APO – Smooth functioning  S&OP needs you
APO -  Finally planning with APO

Tags: Dave Jordan, Humour, ERP/SAP, Supply Chain, S&OP, Forecasting & Demand Planning