Supply Chain Blog

FMCG S&OP: Enabling change as good as the best CEO

Posted by Dave Jordan on Mon, Dec 17, 2012

Nearly the year end. Have you started planning for that party? Are the presents all sorted out? Cards ready before the final posting date? No, I thought not. All the fuss will be over before you know it and then January will see the usual raft of short-lived New Year resolutions made with all the best intentions.

What are the favourite resolutions? Top 3 contenders could be losing weight, stopping smoking and cutting down on booze. Exactly! Attempts to make any progress on these three challenges are futile after 14 days or so of excess in all cases. Having spent the holiday eating far too much and far too much of the worst possible food combinations hoping to make waistline inroads is very optimistic.

Sales & Operational PlanningWhen your behaviour has been defined and ingrained over a number of years making a sustainable change is extremely difficult. Yes, of course there are always exceptions but they are few and far between and they usually have the added incentive of impending death!

Similarly, imagine the difficulty and indeed resistance in implementing a new practice, way of working or IT in a company that has NEVER planned even remotely sensibly. Fire fighting, OOS, write offs and declining sales are some of the symptoms seen in FMCG & Pharmaceutical companies. Add a liberal sprinkling of failed “this one will work” initiatives and you can imagine the chaos under which some companies operate.

While a wise decision would be to introduce Sales & Operational Planning (S&OP) if you do not plan the change you will fail to reap the benefits. Asking your team to work in a different way will meet with scepticism and resistance if there is a history of failure.

Top 10 tips for facilitating S&OP change:

  1. The CEO needs to understand what S&OP is and how it operates. No, I really do mean the CEO should have thorough knowledge and not just top line awareness.
  2. Ensure your Board colleagues are equally briefed and committed.
  3. Attend only the meetings you should attend and give the junior team the space to grow.
  4. Appoint a dedicated employee to lead and ensure quality leadership. The person must be of the right seniority and with wide experience.
  5. Appoint a dedicated employee to run the discipline side of implementation and ongoing operation – at least in the early stages. This includes ensuring meeting calendars are set and meeting minutes are issued in a timely fashion.
  6. Train yourself and all employees. While a small number will be intimately involved in the S&OP meetings it is important everyone in the company knows what is happening and why.
  7. If you do not already have a KPI booklet or a Balanced Scorecard create one quickly so progress can be measured.
  8. Publish your KPIs widely and celebrate the success which will come after some time and effort.
  9. Review progress regularly and make any tweaks to the process to suit your changing needs and improving business.
  10. Never give up! S&OP will make a step change in how you operate and how you perform in the market place.

Will you resolve to make a change next year?

 

Image credit: HikingArtist.com

Tags: Dave Jordan, CEO, KPI, Supply Chain, S&OP, Cost Reduction, Inventory Management & Stock Control

FMCG Home Alone Demand Planning & Forecasting - Out of stock

Posted by Dave Jordan on Thu, Dec 13, 2012

Senior Management has again flown off to UK to visit the heiress and attempt to single-handedly bring the UK retail economy out of recession. Look out for a blip in Birmingham when the Q4 figures are released as the plastic is in for vigorous exercise. Expect plenty of “that’ll do nicely madam” as wife and daughter shop ‘til they drop.

This leaves me home alone with only our mad dog Mr. Patch who is scared of the dark for company.  I do not expect to have to create any elaborate anti-burglar contraptions and anyway it is not snowing yet and it has to snow to be really home alone. Why were those Home Alone movies always set in a snowy winter and why was it always a boy left behind?

Senior Management has left me with a food plan for two weeks - a daily menu Excel spreadsheet specifying what I should eat, when and where to find the same. I made a reasonable start trying to follow this discipline but then came up against a common FMCG/Brewing business problem. The fresh vegetables I was supposed to have last night were not there. No, not a burglary or even a sneaky theft by a dexterous Mr. Patch on a vegetarian quest but quite simply I had already consumed them.

Home Alone Demand Forecasting and Stock Outs

Either I had used too many in the days before or there was less there than senior management originally believed. The latter could never be the case so quite simply I had messed up the demand. The forecasted consumption had been exceeded without warning by more than the safety stock buffer. Supply was not equal to demand and there was consumer dissatisfaction!  No problem, I substituted with an aging packet of frozen peas. Not ideal and not what I wanted or was expecting but it will keep me going.

This poor forecasting experience was manageable but the next shortage was unexpected and harder to overcome. Somehow I had exhausted stocks of dog food and as it was in closed tins even mad Mr. Patch could not be the culprit. I was obviously being too generous and now had a hungry dog to feed. You try filling up a dog with a lettuce, leeks and a Linda McCartney Butternut Squash & Goats Cheese Tartlet.

Now I have to make an unscheduled food shopping visit to get the demand and supply back in line for human and hound.  Well, at least if Senior Management does not read this blog and  Mr. Patch does not grass me up I should get away with it! Your business might not be so fortunate to survive such poor demand forecasting.

Tags: Brewing & Beverages, Dave Jordan, Humour, Forecasting & Demand Planning, Inventory Management & Stock Control