Supply Chain Blog

FMCG/Pharma Supply Chains: Is face to face communication dead?

Posted by Dave Jordan on Mon, Apr 29, 2013

I took a look at how technology has changed the way Supply Chains work in a previous blog. During my recent trip to foreign parts – yes, Birkenhead and most of UK is foreign to me now – I saw modern technology in action like I have never seen before and this had me worried.

The setting is a small, cosy, Italian restaurant – no, not the one where I experienced the Pot Noodle Pasta Palaver. The tables were arranged in orderly lines and the majority taken by couples sitting opposite each other.  I guessed that some were unmarried as they had a certain air about them. Others had obviously been through the pain and pleasure of children while at this late stage of the evening there were no couples with children of any age so it was quite a romantic and relaxed atmosphere. Yes, I know I was in Birkenhead but still…

Did some of the younger males have something life changing to say to their prospective partners? Was it that the flickering candle reflecting off the remains of the minestrone soup made her eyes sparkle? Was he about to compliment her on having skin like finely mixed gnocchi? Or perhaps it was the big request to enter into debt sharing marital arrangement where possibly, they were raising the subject of one of those horrible pre-nuptial agreements where “till death us do part” couples decide who gets what WHEN they split.

Supply Chain communicationBeing people watchers we noticed that after each course was cleared away both partners at each table – not ours before you assume - immediately picked up their mobile devices and started tapping and finger-flicking away. Loading an image of a perfect dish onto Facebook and changing the status to “bloated”? Announcing to the world of an eagerly awaited or even unexpected engagement?

Although the number of people who knew life before mobile telephones reduces daily do you remember what it was like? During or after a pleasant dinner we would talk to each other or at least argue about something. Now it is silence punctuated by depressing button depressing.

A different country now, but I saw the same in a well known FMCG company this week. Rows of desks bristling with technology of all kinds including landline telephones – do they still count as technology? Anyway, many of the bright young things in this office were talking on mobile telephones to colleagues in the same office. Now, perhaps they have a telecoms deal that makes this free of charge within their corporate network but what effect does this have on business?

Working from home, hot-desk office policies and video conferencing quality have all played their part in reducing face to face touching distance interaction and meetings. When Blue Peter’s Shep was a pup you often never saw your colleagues in other offices or far flung locations. Now I am sure some people in the same office never see each other face to face!

I thought technology was supposed to ease and improve communication not get in the way. Face to face always wins in my book. Try taking your wife out for dinner and sitting in different restaurants. Where did I put that pre-nup?


Image courtesy of Grant Cochrane at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Dave Jordan, CEO, Humour, Performance Improvement, Pharma, Supply Chain

FMCG/Brewing/Pharma Factories : Manufacturing Golden Rules

Posted by Dave Jordan on Thu, Apr 25, 2013

When I was managing an FMCG factory in Saudi Arabia one of the most frustrating challenges was the lack of factory capability understanding of Sales & Marketing colleagues and some detached Board members. People who have never worked in factories tend to have little understanding of what can and cannot be done in terms of flexibility.  Commonly however, factory guys are their own worst enemies by always striving to meet S&M requirements by overcoming significant time and equipment hurdles.

If you are experiencing unfair pressure or you simply want to be very transparent about your factory capability then a set of Manufacturing Golden Rules will come in handy. Written simply and based on hard manufacturing reality this will diffuse and divert a large number of requests and allow colleagues to focus on what is possible in the short term.

FMCG ManufacturingThe aim of a Manufacturing Golden Rules booklet is to unambiguously state in-house manufacturing capabilities and limitations. This information should be widely circulated around the business to ensure the Marketing & Sales Organisation (MSO) and the S&OP process teams all have the same information and understanding. This provides one consistent voice from the factory and is designed to avoid misconceptions and misunderstanding in MSO staff. This operates in parallel with the Service Level Agreements (SLA) which should also be in place between MSO and SourcIng Units (SU).

This is a dedicated factory and we are committed to providing the lowest cost and highest flexibility in service. If we only had one SKU this factory would be able to meet all your needs 100% of the time with very little notice. We have more than 1 SKU and therefore we need to put these rules in place so everybody knows what we can do while ensuring optimum factory operation and supply surety.

Rules

  1. We make Bloggo and Brand X in the same mixers and filling lines so they cannot be produced at the same time.
  2. Liquid production will follow a light to dark colour approach to minimise or even avoid cleaning downtime between different products.
  3. The downtime between chemically different products is 1 hour.
  4. The downtime between variants of the same chemical base is 45 minutes.
  5. The minimum production length is one complete 8 hour shift
  6. Batch size is fixed and cannot be reduced.
  7. The factory will only accept planning communication and adjustment requests from the MSO Supply Planner as an output from the MSO S&OP.
  8. The plan for the following week must be frozen 1 week in advance. Any requirement for deviation due to RM/PM availability or factory downtime will be discussed between the SU and MSO planners only.
  9. New Product Development/Change (NPD) trials require 30 working days notice.
  10. NPD and product change first production runs assume that first shift output is unfit for sale. This includes new suppliers of the same material and change in supplier and/or supplier production site.
  11. One working day each month will be allocated to plant maintenance and/or staff training.
  12. The ABC filling line produces the following quantities of SKU pieces  per shift:                                                                                                           300ml       5000 piece
    1000ml     4000 pieces
    2000ml     3000 pieces 
  13. The XYZ filling line is also capable of filling the following SKUs with due adherence to the NPD/product change procedure: 100ml, 1500ml, 3000ml, 5000ml 
This is simply an example but you need to keep the list reasonably concise or people will not read through to the end. The more unnecessary debate and misunderstanding you remove from your processes the easier it will be to delight customers and consumers as often as possible.

Image courtesy of Stuart Miles at Freedigitalphotos.net

 

 

Tags: SKU, Brewing & Beverages, FMCG, Dave Jordan, Pharma, Manufacturing Footprint, S&OP

FMCG/Brewing/Pharma S&OP:Is Stodgy & ‘Orrible Pasta on your menu

Posted by Dave Jordan on Mon, Apr 22, 2013

I spent Easter in UK suffering the bitter cold, visiting the heiress and once more watching Tranmere Rovers lose live. Whether on TV or in person I have not seen them win for several years now so I am developing a jinx complex. This season they have actually played well but since the management team was awarded  extended contracts they have been on a downwards trend. I think there is a link.

While up north we stayed in a budget hotel of the type where you risk breaking the room window when putting the key in the lock. Nothing to complain about really as the place was clean and in the right location. From our no-frills lodging we could see a posh looking hotel across the road and it was from there sustenance was sought. The Italian restaurant looked interesting and vibrant so we sat in search of a plate of pasta pampering.

S&OP Food for thoughtChoices made and the dishes arrived reasonably quickly but equally rapid was the change in Senior Managements face after tasting the pasta. With due respect to that super student food that is Pot Noodle, the expensive pasta did not even reach that standard. The pasta maintained the shape of the pot it was “cooked” in and was extremely chewy. Add this to a dry and unappealing mix that was supposed to be sauce and madam was not at all happy. A dry sauce?

I then did something that could see my British passport revoked. I fully expect to feel a border control hand on my shoulder next time I walk through the green channel at Heathrow. When a waitress asked if everything was ok, I said “no”! Really, I said no rather than the usual stiff upper lip retort of “yes, fine thank you very much”. I think the waitress was more shocked than I as she grappled with a totally unexpected negative response. Her expression really was one of “I have no information on that”.

So, after experiencing Stodgy & ‘Orrible Pasta (i.e. S&OP - collective groan, thank you) I thought how lack of communication wastes huge amounts of time and money in FMCG, Brewing and Pharma businesses. This is not about people being honest but it is about being up front with timely relevant information. For example, think how much better your S&OP process could be if everyone turned up at the various meetings armed with the right knowledge and data to put some real momentum behind the company’s plans. No hidden agendas, no private scores to settle just plain speaking of the facts and agreement of associated actions which are then pursued.

If the required data is available and has been adequately studied before the meetings then you get a much slicker process and one that can provide an advantage over competitors who treat S&OP with lip service only. If you can generate a culture of real openness and polite directness within S&OP you are on to a sure winner. This would take some time to put in place but with careful and visible leadership from the top team table the chance of enhanced success in the mark-place would be within your grasp. Implementing an S&OP process in name only to tick a corporate “done” box is futile.

Get S&OP at the very top of your menu and don’t accept any complaints.

Image courtesy of debspoons at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Dave Jordan, CEO, Pharma, S&OP, Forecasting & Demand Planning

Sales & Operations Planning (S&OP) KPI Scorecard Improvement

Posted by Dave Jordan on Thu, Apr 18, 2013

I like S&OP. You have probably gathered as much from previous blogs but I genuinely do. I see the value in its implementation and more importantly, maintenance in numerous FMCG, brewing and pharmaceutical companies. Once you have taken the plunge and decided to stop wasting time, effort and cash you will wish you had listened earlier and made the enlightening change.

When you are on the inside looking out it is difficult to see exactly what is going wrong. The causes of lost sales or stock write-offs get blurred in a cacophony of inter-departmental blamestorming. Staff would rather the senior team continued to look outwards as this deflects attention from internal process and personal failures.

S&OP SymptomsNot having S&OP – or any other structured and documented way of working – would wreak havoc in real life, e.g.  the American Presidential Election - this process is chaotic enough but imagine what it would be like without any rules, regulations, networks and procedures. You would never reach a decision and just think how long Florida would take to conclude their count!

We have previously looked at the symptoms which indicate you would benefit from S&OP but what about the benefits? Not just the generic higher this and lower that and better whatever, but real tangible company benefits. No names no pack drill but here are actual KPI improvements taken from a recent piece of work:

    • 3% turnover increase through significant reduction in out of stock incidents.
    • Sales forecast accuracy improved from below 20% to above 80%.
    • 30% reduction in finished goods stock holding.
    • 60% reduction in write offs in-house
    • 90% reduction in stock write-off at distributors.
    • 100% reduction in lost sales.
    • 100% improvement in team work.

This list is not exclusive and these significant improvements are in addition to more modest parallel enhancements across the business. All this and more in a recession……………….!

 Just imagine how these numbers and your top and bottom lines would look when the recession finally – hopefully - eases and those small green growth shoots appear. A business with a robust S&OP operating with real team work to generate and then achieve one set of target numbers will be in pole position to take a greater share of the new market.

Of course, perhaps you are content to continue pushing water uphill fighting chaos, complexity and inefficiency on the way.  If so, you should be sure that customers and consumers will not be content with you and your service when spending power returns and ditch you!

Image courtesy of artur84 at http://www.freedigitalphotos.net

Tags: Customer service, Dave Jordan, KPI, Forecasting & Demand Planning

FMCG S&OP: Winning the Oxford-Cambridge University Boat Race

Posted by Dave Jordan on Mon, Apr 15, 2013

The Oxford versus Cambridge University boat race took place at the end of March and Oxford emerged as the victors. This is an historic event which has taken place every year since 1829 with the exception of the 2 World Wars and teams have contained many famous faces such as Matthew Pinsent the Olympian and Hugh – Dr House – Laurie although I prefer to remember the latter as a buffoon in Blackadder.

The race only involves a relatively small number of competitors but it is watched by thousands live and on TV. There have been dead heats, broken oars, sinkings and numerous controversies over the almost 200 years of racing. In 2012 we even saw the race stopped by a Neanderthal Nutter swimming between the boats.

Teamwork S&OPLarge crew squads train and compete to be selected in the final starting crews of 8 rowers plus a coxswain or cox for each team. After months of gruelling training and preparation the final cohesive and complementary team is selected. Eight tall, broad shouldered and muscle-bound crew members with sinews straining guided by a miniscule and necessarily lightweight cox battle it out along the Thames in London. There is also a men’s race.

From a standing start the boats strike out. The crews take their guidance from the cox and the leading stroke rower as they gain traction in the water and begin to move with increasing metronomic consistency. All oars break the water at exactly the same moment in order to propel the boat forward at the maximum speed their bodies will allow. Synchronisation of the power of 9 men or women is vital to ensure smooth movement through the water towards the finishing line.

Whether you are familiar with the race or not I hope you have this impressive team working image in your mind’s eye. What would happen if each of the team members did their own thing; made their own decisions? Eight oars crashing into the water at completely different moments. Oars hitting each other and even breaking into useless pieces. Rowers pulling muscles as they push against the water mass alone. The boat careering across the water in an undignified mess with the coxwain struggling to maintain a sensible course. And overall, not a hope of beating the completion and winning the race.

Does that sound like your current way your business operates? A host of different departments making decisions that may be right for their small area of responsibility but wholly wrong for the company?  Damaging silo behaviour wasting resources and affecting your ability to win in the market place? Frustrated staff waking up with the prime objectives of protecting their own backsides and making sure they find fault in other departments rather than attacking the competition?

If you are the coxswain or CEO of your business and you do not have a Sales and Operational Planning process in place you might not catch a crab but you may earn yourself an exit interview!

Image courtesy of Paul Martin Eldridge at freedigitalphotos.net

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

SKU complexity, on shelf availability & the race for the White House?

Posted by Dave Jordan on Thu, Apr 11, 2013

I have tried to understand how the USA presidential election system works and even after several elections I still struggle.The last few months when it comes down to one against one is fairly straightforward but the earlier jostling for position is a Rubik’s Cube in the dark wearing mittens. On top of that the process seems to go on and on forever.  In fact, there is a huge business infrastructure in place just waiting for the end of the previous presidential race to start the next one and jostling is already taking place amongst the hopefuls to finally replace Obama.

skus and osaWho knew who would win the 2012 contest? I was not sure USA was ready for someone called Obama to be the President but did they really want a Mitt? What next, a Hank or a John-Boy?

The early jostling for position in the pecking order sees several keen unknowns from a variety of official parties and lunatic fringe groups putting their hands up for election.  Only one gets the chance to run head to head with the incumbent President or the opposition party successor.

With being incredibly wealthy or able to attract financial support being the base requirement, a number of aspects come under consideration:

  1. Born in the USA?
  2. Attractive to all significant ethnic backgrounds?
  3. Will they get the young vote?
  4. Will they get the grey vote?
  5. Would women put an X against the name?
  6. Blue collar or white collar biased?
  7. Married with a family?
  8. No embarrassing family members?
  9. No skeletons in the cupboard?
  10. They didn’t inhale…….!

Whether or not the chosen candidate has significant political experience, the ability to run a country is really a long way down the list.

If you have too many candidates facing off against the incumbent then you will dilute the vote and lose focus. If you propose a candidate with little appeal to the majority of the population, you will lose. If you find they are not of the right quality, you will lose. The opposition has one opportunity to present their candidate to the population and if a poor choice is offered you will be waiting for years for another shot. Voters cannot choose both candidates.

This early jostling is an sku (several keen unknowns…..?) complexity reduction programme. You consider who has the best chance of a return and you put your efforts behind that sku to generate the best possible chance of success. Skus that people do not want or are of insufficient quality or just financially non-viable should be taken out of your offering.

FMCG/Drinks/Pharmaceutical companies only get one chance to impress a consumer and provoke a signal from the brain to raise an arm to pick their product off the shelf. Get this wrong and you wait a long time for the next opportunity.

Cast your vote for an sku complexity review and improve your chances against the opposition.

Image courtesy of Sailom at FreeDigitalPhotos

Tags: SKU, Brewing & Beverages, FMCG, Dave Jordan, Humour, Pharma

Improve your Supply Chain by celebrating “Out Of Stocks” (OOS)

Posted by Dave Jordan on Mon, Apr 08, 2013

Out of stocks? Excellent news and a huge relief for all!

A celebration party or at least a few drinks would be the next immediate priority but only after a bath or shower. Being sentenced to the stocks in medieval times was a very public humiliation but certainly low cost and probably more effective. Stocks were popular across the world and their official use did not die out until the early 1900’s.

Those found guilty of crimes would be locked in one uncomfortable position for days or weeks in all weathers. The fun part though was as the crimes were usually committed against the general public that same public took great delight in throwing as much – let’s call it “stuff” – at the stock incumbents. Anything was fair game to be thrown or poured over these local miscreants.

Inventory stocksThose who commit crimes today and benefit from soft Community Service Orders might think again if they were sentenced to sit in wooden stocks in the town opposite the pub they misbehaved in or shop windows they smashed. In fact, if the stocks were placed next to waste recycling skips and a fast food outlet you could make a thoroughly entertaining day out of it. “Hey kids, should we go to the beach or have a burger and throw waste at the prisoners?” My Marigold’s would be snapped on in seconds.

In FMCG/Brewing/Pharma-land being out of stocks (OOS) generates quite the opposite emotion. No celebration or relief, just the knowledge that a valuable consumer walked away with a competitor product. Consider the infrastructure you have employed to bring your product in front of the consumer face and the dismay should be heavy.

In all three sectors there are multiple alternative purchase options. If you want a chocolate snack then you want it now. If you want a beer or wine with dinner you are not going to wait until you return home. If you have a headache you are not going endure the pain until your regular paracetamol is available. Consumers make purchase decisions in real time and you do not receive a second chance.

There are many causes of OOS including pure human error or simple transport problems but regular OOS occurrences require a thorough review:

Forecast Accuracy – valuable if calculated by SKU and with data available quickly so reparative actions can be taken. Hearing about poor accuracy 6 weeks after it happened is a complete waste of time.

Sales & Operational Planning (S&OP) – is your process robust and takes innovation and demand from all channels into account? Do you operate to one set of numbers or are different departments chasing different targets?

Route to Market (RTM) – whether this is for Traditional Trade (TT) or Key Accounts (KA); is your deployment efficient and fit for purpose. When did you last assess the relevance of your network?

All these elements and more affect your ability to minimise OOS and maximize sales and all require team effort to drive success.

I leave you with a motivational thought. What if those responsible for OOS were placed in wooden stocks for a few hours in the canteen area? Pass me the Marigolds!

Image courtesy of Ambro at FreeDigitalPhotos

Tags: Dave Jordan, Humour, Inventory Management & Stock Control

You need more than speed for Route To Market (RTM) success.

Posted by Dave Jordan on Thu, Apr 04, 2013

In my D&E career I have lived and worked in many different countries on all continents except the Australia/New Zealand bits. Oh, and the North/South Poles of course – not a lot of demand for FMCG there, yet.  There is one recurring theme that seems to link D&E markets together and that is the standard of driving and this is directionally proportional to the standard of the road infrastructure.

Within this broad brush view on driving skills there is another even clearer relationship. In every country you will see people driving like complete lunatics to get to work as fast as possible. They will undertake, tail-gate, exercise the horn/lights and produce various arm, finger and hand movements all designed to get the “idiot” in front out of the way. This will almost certainly be while the driver is holding a mobile phone to his – and it usually is male – left ear with his right hand.

RTM Route To MarketThe relationship here is inversely proportional. After taking so many risks, upsetting other drivers and the inevitable onset of wrist arthritis, those who drive like Lewis Hamilton on drugs to get to the office invariably are the most unproductive and laziest employees. Ok, a bit of a generalsation but I have seen this so many times. Aggressive on the road yet ineffective at work. Travelling as fast as possible to do nothing!

Is your Route To Market (RTM) blighted by the same relationship? Do you have a distribution system that is rapid, slick and reliable? If you do, very well done but that is far from the end of the story. Getting your “stuff” into outlets is one matter but getting your “stuff” off the shelves particularly in Traditional Trade (TT) channels requires a little more thought and care.

Five frequent failing factors that undermine a well developed and supportive Supply Chain:

  1. OOS on shelf yet stock is in the outlet store.
  2. Dirty, dusty stock with quality defects.
  3. Coolers/display stands used by competitors and for general storage.
  4. Outdated POS materials on display – old logo, old positioning, old promotion etc.
  5. Close to or expired stock on shelf – no FIFO/FEFO stock rotation.

All of these and more, will trip up the logistical journey you have made from raw material to customer face. You may have sold stock to a customer but if you want success and growth you need a consumer to take your “stuff” home, use it and come back for more. This is where the sales force has to step up to the mark and be relentless and diligent in ensuring their “stuff” is present, presented well and continually re-stocked on shelves.

Getting sales staff to maintain vigilance and quality in store should be a major part of your reward and remuneration scheme – not just driving sales-in.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

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