Supply Chain Blog

FMCG Route To Market in D&E: Producer DC Errors Don’t Help

Posted by Dave Jordan on Tue, Jul 30, 2013

“There is always somebody worse off than you” is a commonly rolled out piece of wisdom when somebody thinks life is unfair or hard. In reality this wisdom applies to all but the most unhealthy, unfortunate or poorest people on the planet but in the context of FMCG RTM distribution in Developing & Emerging (D&E) markets this might not be true.

Take a moment to look at this FMCG RTM of Coca Cola in Africa. There is no sound I believe, but the pictures tell a very clear story about how difficult it can be to achieve efficient distribution even with fast moving big name brands. And you thought your Route To Market was difficult?

FMCG drinks D&E Africa Coke resized 600In more comfortable climates and infra-structures I have spent many hours; no it is probably days and possibly weeks listening to complaints about how difficult it is to achieve efficient FMCG distribution in D&E Traditional Trade (TT). Commonly the fault is always perceived to be with the distribution partner/s rather than the big name producers! 

The mere fact of having a signed distribution contract seems to absolve many producers of any responsibility for performance down the chain towards the hands of a purchasing consumer. They simply delegate responsibility to distributor organisations that may well be wholly unsuitable for the task in hand and this is usually true.

If FMCG producers have a love-hate relationship with what they quietly call “bullying Key Accounts” then they have a pointless hate-hate arrangement with TT distributors. It – whatever it may be - is always their fault yet in a majority of cases I have studied the real trigger of TT success lies within the producer capability.

Are distributors perfect? No, clearly not at all but are all producers? Producers with faltering RTM deployments should ensure their own house is in order before taking the big no-bonus stick to their partners. One recent case in FMCG identified the major cause of TT market disruption was at the in-house operated distribution centre, i.e. well off the radar of distributor bashing.

Without spending too much time digging, here are just a few of the errors found in the producer DC logistics operation:

  1. Orders adjusted to take into account stock available thereby inflating the Customer Service image internally but actually facilitating out of stocks in the trade.
  2. Orders adjusted to provide available stock to the “loudest” distributors thus directing stock away from where it was actually needed.
  3. Orders split to supply something rather than everything. Not bad in principle but an advance check with distributors would reveal if this would cause difficulty or even undermine planned promotional activity.
  4. Poor FEFO control which is only exacerbated as stock moves along the distribution chain.
  5. A culture of doing what is right for the Producer DC and not for the distributors nor the trade nor consumers.

This example is not in a country in which it is desperately difficult to operate so I can only guess what would happen if they had to deal with the African example in the earlier link!   

Image courtesy of Naypong at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, Traditional Trade, Logistics Management, Distribution

FMCG: Beer and Soft Drinks on shelf availability or not!

Posted by Dave Jordan on Thu, Jul 25, 2013

In my local supermarket over the weekend I noticed something I had not seen or perhaps not noticed before. On the shelf I was expecting to relieve of my weekend beer was a propped up sign saying “We are sorry your choice is not available. We are doing all we can to make this product available once again”. Oh, how very pleasant but I am still disappointed.

This well known brand of premium beer should be available 100% of the time, whatever the weather. As summer starts to build up towards a 40+ degrees peak in August more and more beer will be consumed on a daily basis so every empty shelf is a lost sale. You cannot imagine a thirsty consumer seeing an empty shelf and saying “never mind, I’ll drink double tomorrow to make up for not drinking today”. No, it is not going to happen so I like many others simply took a different brand of beer from another brewer.

At least the apologetic sign is in place to reassure you that next time there may be some stock available but this does not really help. Somewhere along the supply chain from brewery to 3PLP to distributor/retailer platform to retail back of store to shelf an error has been made.

Some may argue that the appearance of the world’s greatest drinks salesman was unexpected and demand exceeded supply but that is not good enough for premium brands. Producers put so much cash behind the development and promotion of brands that a lost sale should be considered a quasi-disciplinary offence. The error may also sit in the retailer system but you should be on top of that.

This brings me to the next frustration of the weekend. Not a face to face experience with a retailer but an interaction with a vending machine. These things used to be very simple but now some of them are around the size of small caravan and incorporate chillers, heaters and humidity control. In fact it is entirely possible that someone lives inside to restock the machine shelves on demand.

FMCG beer cans on shelf availability resized 600Choice is fairly limited to drinks, snacks, chocolates, biscuits and the odd sandwich but at least you can see what is available. (However, I was very impressed with the book vending machine on the underground in Bucharest recently.)  In a vending machine, if the lane is empty then you know that whatever was there is not available or the resident vending logistics man has just popped out for a smoke. The disappointment is the same but as you need something to keep the hunger/thirst pangs at bay you choose something else.

This is one of the most frustrating moments you can experience. Hot and sweaty and in need of a secret mix of water, sugar and caffeine I punch in the product code and then watch the spiral metal slowly propel my purchase – note, I have already paid, it is my property – to the dispensing edge. The can drops halfway and then gets stuck at an angle between another shelf and the glass screen front. Tactically I could invest in another can of fizz and potentially knock the other off but as my can, i.e. the one that I own, was the last one there is no chance of that.

When these machines were around the size of a large refrigerator they were easy to lift up and shake (eg, Lever Industrial Limited, Runcorn, 1984) until the jammed item and usually something else dropped into the drawer.  This was a sort of BOGOF opportunity and great fun at the same time.

Possibly worse than seeing a polite out of stock notice is seeing the stock, paying for it and then have it dangle tantalisingly in front of your eyes behind 6mm of glass or Perspex. Either way, the consumer is unhappy and that can never be right, can it?

Image courtesy of artzenter at freedigitalphotos.netfreedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, CEO, Supply Chain, Distribution, Inventory Management & Stock Control

Another telecoms customer service calamity results in lost customer

Posted by Dave Jordan on Tue, Jul 23, 2013

Another telecommunications related tale rounds off my current trilogy of customer service mishaps. I really do hope this is the last one I experience as I have been on a run of really bad luck lately. However, I suspect a long, hot and sunny UK summer without rain is more likely. Oh hold on a mnute, the UK summer has appeared!

Bucharest visitors will all have noted the ugly reels of communications cables hanging on every street light and telegraph pole. Romania is a very switched on and well connected country in terms of internet speed and availability but I live in the wireless internet enclave called Pipera. Specifically, at the end of the Aurel Vlaicu airport runway in an area ruled by the widely reported wild dogs and awash with implant recipients, i.e. Romania’s very own silicone valley.

Telecoms Customer ServiceFast broadband internet connection cables can be seen from my office but they are not coming any closer than 100m away very soon. This is why I rely on wireless broadband - if that is not a contradiction in terms as it is relatively slow. Returning from an S&OP project in Jeddah, KSA I found I could not access the net at any speed. Had I paid the last invoice? Yes, the direct debit had gone out on time as usual so that was not the cause.

Only one course of action left was to call company X customer service department. After getting through the robotic multiple choices with a string of punched-in binary code I finally reached someone who breathed and spoke excellent English. So far so good; this should be sorted out in no time at all.

CS Agent: “The service you had is no longer available

DJ: “ But my contract runs until October. Why is it no longer available?”

CS Agent: “The government withdrew the licence.”

DJ: “Ok, I guess there is nothing we can do about that but as I use the connection for my business it would have been good to know in advance so I could make alternative arrangements.”

CS Agent: “But we did tell you…..”

With walking into a room and not knowing why becoming more frequent in my life, I scanned my human memory for a letter, an email or even a phone call but no, I had no recollection of such notification.

CS Agent: “We sent you an SMS to the internet modem 10 days ago.”

DJ; “You mean you sent a message to the modem that I have not used for 2 weeks and now does not work?”

CS Agent: “Yes!”

There was no point in continuing the discussion. Why was there no effort to contact me to at least look at alternative possibilities? This company simply lost the government licence and that was that as far as they were concerned; customer service was not in the equation.

I decided to switch providers and did so rapidly and it delighted me in cancelling the contract for my second internet device from the same service-poor company.

SC Agent: “Oh no, you cannot do that as your contract is live until October and you have to honour this.”

DJ: “Do unto others as they do unto you.”

Image courtesy of Glberto107 at freedigitalphotos.net

Tags: Customer service, Dave Jordan, Telecoms, Supply Chain

Telecoms Customer Service reputation ruined in seconds

Posted by Dave Jordan on Wed, Jul 17, 2013

I recently wrote about how an airline dented its reputation with an overly fussy interpretation of on board baggage storage rules. In my poor customer service trilogy I now turn my attention to a well known global telecoms company. I will keep the name to myself on this occasion as the outcome is not yet finalised.

Telecoms companies change their deals so frequently it is difficult to keep track and really understand what each deal offers for you personally. So, when company X called me and suggested I pop into the shop to review my contract package I thought why not. With the heiress being in UK our telecoms costs had risen to a new level as we dealt with lost passports, lost keys and the heiress simply being lost.

Telecoms Customer Service failure resized 600On discussion with said shop it was very clear that our current contract was not ideal for our new long distance communication situation. I was offered a solution that would indeed save money but as my current contract was not adjustable for another 4 months I would have to take a new contract with a new number and lo and behold there was a special offer on just at that moment.

I accepted with the knowledge that I would return in 4 months and make a new lower cost deal for the number I had used for 10 years. What’s the problem with that then?

Exactly 1 month and 1 day after signing the new deal – yes, outside of the cooling off period – a cheery voice called and asked if I would like a new deal on my existing telephone number. Interesting, thought I so I listened to the pitch, i.e. “we have noticed you call UK a lot and we can give you a cheaper option”. Yes, you have guessed correctly, suddenly at their prerogative they offered me exactly the same deal I had taken one month previously on the new number.

Why didn’t the assistant at the shop tell me this? All my numbers are visible and call histories for at least the last 6 months are available so what stopped the assistant giving me a really good deal that would make me walk out with a spring in my step and a feel-good smile? Sales commission!

The deal offered in the shop brought the sales assistant some financial benefit through pushing the promotion. Yes, the solution offered did indeed save money but the desire to sell a new number overpowered his will to provide the best solution for the customer, i.e. the same new deal on the existing telephone number.

An example of a salesman doing what is right for him and not what is right for the customer or the company.  Unforgivable, in any sector at any time.

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: Customer service, Dave Jordan, Telecoms, Supply Chain, Sales

Airline Customer Service reputation ruined in seconds

Posted by Dave Jordan on Wed, Jul 10, 2013

This has not been a great week for customer service and from some very well known companies. People say things happen in threes and this week I have had 3 unexpectedly poor customer service experiences. Disappointment and irritation is always greater when you are treated badly by someone from whom you usually receive good service. Suddenly you start to wonder if all that brand trust and loyalty was all for nothing. In this blog I describe just one example of poor customer service.

I use KLM a lot as flying into Birmingham to see the heiress is far more convenient than battling through Heathrow and then the motorway traffic. In addition, Schipol is reasonably passenger friendly and has not lost a bag of mine, yet. The Amsterdam – Birmingham flight is  usually on a fairly small aeroplane and the journey is less than an hour so really not much time to experience any service, good or bad. Not this time!

KLM has decided to adopt some of the policies of low cost airlines and one example is charging for the extra leg room seats in the emergency rows. Fair enough, if you are jolly tall then why not fork out for a comfortable seat?

I did not know at the time but the baggage lockers above emergency row 11 on this particular plane are reserved for row 11 purchasers and this is denoted by a sticker on the door that you can see only when the locker is closed. With the plane being fairly full and all the lockers open I tried to put my modest bag in the row 11 locker. A very officious male attendant then said rather rudely “can’t you read?”

Poor Customer Service Airline resized 600Ever since I saw Lilly Savage use this put-down line I have been waiting to use it at the right moment and this was the time. With deep respect for the vast majority of hard-working airline staff that are pleasant, intelligent and look after us on flights, I replied “Yes, that’s why I’m not serving tea on a plane”.

Ok, maybe a little harsh but I was one of the last to board and all 6 seats in the row were empty. Mr. Jobsworth insisted myself and nearby passengers could not use the locker; wait for it, even after the plane was airborne! What did he expect? Were more passengers going to board the flight? With the exception of a really slight chance of 6 on-board births in 45 minutes there was no reason to keep paying customers cramped with bags at feet while space was available.

I hope KLM does not go too far down the low cost route or KLM will soon stand for “Kinda Like Michael” as in the infamous owner of Ryanair. You worked hard to attract your customers so it makes sense to keep them tighty held.

I am due to fly KLM again soon and will take some time to brush up on my reading skills.

Image couresy of phanlop88 at freedigitalphotos.netfreedigitalphotos.net

Tags: Customer service, Dave Jordan, Performance Improvement, Supply Chain

S&OP Word Power: Communicating FMCG Supply Chain Change 2

Posted by Dave Jordan on Thu, Jul 04, 2013

Recently I looked at how Enchange has been helping companies understand Supply Chain challenges through the use of music and verse. Our cultural theme continues here through the use of simple stories exposing some common problems encountered in FMCG and Pharmaceutical businesses. Drama in the Supply Chain is usually far from welcome but in this case it plays a role in making some of those daily challenges more easily understood.

Each of the stories below deals with Sales & Operational Planning (S&OP).  Enjoy!

  1. Jack Bauer and Chloe battle against time to save the monthly plan.
  2. Carson the Downton Abbey butler deals with an embarrassing out of stock incident.
  3. A well known UK special agent makes change happen in S&OP.

S&OP Blog Stories resized 600

Image courtesy of ddpavumba at freedigitalphotos.net

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

Communicating FMCG Supply Chain Change; Music to your SC ears?

Posted by Dave Jordan on Tue, Jul 02, 2013

From personal experience I know how difficult it can be to enable sustainable change in the extended Supply Chain.  Communicating change is hard enough but actually seeing it happen and being maintained is a tough task for most companies. Even though life and technology change almost daily there is still an in-built barrier in many people to doing something differently after doing a particular job another way for several years.

Endless slick presentations and training courses quickly numb people and they eventually pay lip service to the new way of working. So what can you do to get the doubters in line and engaged with you on your Supply Chain journey of change? Song and verse; no, honestly!

Musical blogs S&OP RTM SC IT resized 600Rather than persevering with the glossy PowerPoint slides why not present the need for and benefit of change in a way far removed from the normal training materials?  Take a look at some of these innovative ways of communicating change in extended Supply Chain operations.

Sales & Operational Planning (S&OP)

Shakespeare, yes the famous Bard helps us understand the pitfalls of not having a living S&OP process in place.

Village People tell us why S&OP is important, why it is not a Supply Chain problem and why sales forecasting is important.

Ultravox get all moody and show us how CEO’s feel when they fail to appreciate the value of S&OP.

SC IT

ABBA advises us on the benefits of using IT like APO to best advantage in business battles.

The Beatles quietly warn us on the continued use of spreadsheets instead of available ERPs.

Route To Market (RTM)

Madness help us understand the wisdom of working with distributors as true partners in Traditional Trade markets.

Mungo Jerry strums through the importance of drinks producers being ready for the arrival of the world’s greatest salesman.

The Beatles again, this time urging beer producers to be ready for the summer season.

Try a few of these out and see if they break the ice with people who find the boring cascaded presentations and briefings far too serious.

Find out more about how Enchange lives up to its name and ENables CHANGE by clicking here.

Image courtesy of Grant Cochrane at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, CEO, Traditional Trade, S&OP, RTM Assessment Tool