Supply Chain Blog

FMCG Route To Market (RTM) Distribution: Where did I put my keys?

Posted by Dave Jordan on Wed, Mar 26, 2014

If you are male and own a car then you will have spoken these words at least once! If you do not have a dedicated place to hang your keys then they will be surely be misplaced at some stage. You might miss an important event, football match or at the very least you will upset your spouse after complaining about how long she takes to get ready! Hold on a mnute, what has this got to do with supply chain, has Dave lost the plot?

Key to distributor management

How many sales have you lost business through Distributors not being able to find the right stock at the right time? You probably do not know the answer to that but I can bet it will be significant if the Distributor operates in a sub-standard warehousing operation. Sadly, this is still the norm in Romania, CEE and developing markets in general. Producers do not pay sufficient attention to how their valuable and carefully prepared stock is stored and handled by Distributors. Please do not misunderstand me. I am not proposing a cutting edge Warehouse Management System or narrow aisle reach trucks but a basic level of efficient operational warehousing is required to support professional producers.

Once the stock is inside the storage location you need to know where you put it - remember the keys? If racking is available then the destination location of each pallet must be recorded. No racking? Create a simple painted grid on the floor which allows you to allocate a particular space to a pallet or box or sack of product. (This also helps to maintain safety in the warehouse by isolating pedestrian and FLT routes.)

Above all else ensure there is a sensible level of security and no, I do not mean an internal team staffed with long term employees considered "part of the furniture". Distributors need to invest in a professional partner who has the training and authority to provide security for your stock. The key here is to continually rotate the security staff and prevent familiarity relationships developing. Like it or not but you need to have constant 24/7 checking of what is actually being loaded into trucks.

How many times have you faced large and unexpected stock losses at your Distributors whether through theft, damage or expiry? Even if they own the stock it is your lost sales! If you get the security aspect right then that might not be your biggest concern as Distributors are notoriously poor at applying stock rotation or FEFO/FIFO rules. You seldom get close to this end of the chain so you do not see it....until someone finds expired product on the shelf. At this stage it is your reputation at stake irrespective of any penalty clauses you can apply to the Distributor. Again, this does not have to be very sophisticated but there needs to be a basic routine to monitor stock age - pen and paper still works!

Finally, stock counting is a formal requirement in any business but this is seldom carried out properly, if at all. In any Distributor relationship you need to ensure cycle counting from day one in addition to the legally required annual counting. The rotational checking of a few sku's per week will reassure both parties that stock is under control and prevent an unexpected stock loss which has to be booked at the year end. Again, it is not just the financial consideration but if customers are ordering skus which are not in the warehouse then it is your lost sales once more..

Ensuring the Distributor applies some basic warehousing rules can contribute to a significant, positive difference to your stock outs on shelf.

(Me? My keys are magnetic and I stick them on the radiator as I enter the house! This alos make them nice and toasty in the winter.)

Success in distributor management

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

Supply and demand in Africa - it's a sport relief

Posted by Michael Thompson on Tue, Mar 25, 2014
If like me, you watched some of Sport Relief last Friday night, you may have been left with a number of emotions.

sport relief supply and demandFor those people outside of the UK not familiar with Sport Relief, it is a biannual event involving everyday folk, sports personalities and celebrities who take part in various events and challenges to raise money for charity. It culminates in an evening of television entertainment, the purpose of which is to raise as much money as possible for various causes in the UK and overseas including for needy children in Africa.

One of the more heroic contributors this year was Davina McCall. She swam, cycled and ran from Edinburgh to London in seven days - an ultra-triathlon. Her efforts alone have raised more than £2 million.

Iron Man finishing line Michael TompsonI can relate to Davina's adventure on a number of levels. Last year I completed the Ironman triathlon in France to raise money for the Tumshangilia School in Nairobi. My efforts pale in comparison of course.  However, I have some appreciation of the motivation, dedication, determination and ultimately immense satisfaction that she will have experienced.

So what has this got to do with supply and demand?  
Everything in a world of inequality, need and poverty, I would argue.  Here is just one example - children's education.

Hundreds of millions of children right now do not receive basic primary and secondary school education.  The demand is certainly there as anyone who has visited a school in Africa will no doubt testify. And in Africa, children love their schools.

However this demand far exceeds the supply of schools and teachers. The issue of course is money, or lack thereof.

The solution? It lies in the hands of a small number of some of the world’s powerful and influential people. Perhaps if they had some of the motivation, dedication and determination of say Davina McCall, this particular imbalance of supply and demand would be corrected. And what immense satisfaction that would bring to all concerned.

Sport Relief image courtesy of Twitter, Iron Man Finishing Line image courtesy of Michael Thompson.

Tags: Michael Thompson, Supply Chain, Forecasting & Demand Planning

FMCG/Pharmaceutical S&OP: Remove the fear from sales forecasting

Posted by Dave Jordan on Thu, Mar 20, 2014

I think by now I have been exposed to around 100 different Sales & Operational Planning processes (S&OP) in sectors from FMCG to Pharmaceuticals to Agrochemicals. These processes have been global, regional and very much local-for-local processes in largely developing markets on 3 continents. Within that matrix of variables there are frequently large differences in the ideal process, meeting schedule/sequence, quality and outcomes but there is one consistency.

I know this is a generalisation and you may believe I am biased but all of these companies would be enjoying much better success if the sales function really bought into S&OP. Attending all the meetings is not enough. Providing data at the correct time is not enough. Selling to the company target is not enough either when the quality of sales forecasting is consistently variable and/or low.

SSales individuals and teams need to fully commit to S&OP and be a helpful and proactive part of the process. Sitting outside the process and sniping at colleagues is counter-productive and only serves to ensure sales growth is a pipe dream. In many companies the sales bonus system is based upon value as a rolled-up whole and CEO’s do not help here by pushing sales to sell their grandmothers as long as the value number is achieved.

Sales forecast accuracy is not about being 100% accurate each and every period as a forecast will always suffer a degree of inaccuracy. When did the weather people get the forecast 100% correct? Did anyone expect Wigan to beat Manchester City in the FA Cup recently? No, of course not and nobody expects a sales forecast by sku to be perfect. This is simply not going to happen.

Forecasting towards an overall monthly target value will get you nowhere fast unless you have a handful of skus. Few companies are in that position so forecasting by sku is vital for S&OP and company success. If that sounds like a daunting task in your business then perhaps you have too many skus!

Let us look at a 5 point plan to remove the fear of sku forecasting and get sales people motivated by S&OP involvement and results.

1. Carry out a simple analysis of what each sku delivers to the business. This could be volume and margin or profit or whatever your key driver.

2. Categorise the skus A, B, C, D where A skus are vital to the business and must always be available. B skus may be high volume but low contributors while C skus may be low volume but high value. D skus should receive significantly less focus and be subject to delisting if they are destroying value – some certainly will. What would you rather have out of stock, A or D?

3. Through cross-functional focus within the S&OP framework, concentrate on A skus and towards achievement of a decent level of accuracy. If you are going to have debate then have debate on what makes a difference.

4. When the A skus are being forecasted and supplied at reasonable accuracy add the important others from the B and C lists – not all of them. With better accuracy maybe some B and C skus can push up to the A list - growth!

5. Refresh your understanding of sku profitability/margin on a quarterly basis to ensure you are still giving your best attention to the key skus in your business.

These 5 activities within a mutually supportive S&OP will lead to greater market understanding by all departments and leave you Mr. CEO, with an organisation that collectively wants to succeed rather than indulge in silo wars.

Image courtesy of Salvatore Vuono at freedigitalphotos.net

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

Supply Chain Interim Management & Consultancy – 7 Differences

Posted by Michael Thompson on Mon, Mar 17, 2014
At Enchange, we have provided a many interim managers for clients over the years.
I was discussing our supply chain interim management services with a client recently and she asked whether she should be hiring interim managers or consultants.
We had a long chat and it turned out that interim managers were the right solution for her project.  The main reason in this case was that she insisted in retaining total control of the project and the key need was for expert resource to deliver a number of work stream products.
So for anyone else facing a similar dilemma here are seven key differences between interim management and consultancy:
  1. Notice  Interim managers are often placed at short notice.  Consultancy contracts usually take several months to commence.
  2. Terms of reference  Interim management assignments nearly always commence with ‘implementation-driven’ terms of reference.  Consultancy contracts nearly always involve a process of analysis and usually include design work.  For an interim management contract, the analysis has usually been undertaken by the client.
  3. Project work  For project work, consultancy projects provide expertise not available in the company.  Interim management projects could normally be carried out by client personnel but resource is usually a constraint.
  4. Executive power  Interim managers are often called upon to demonstrate strong leadership from the outset of an assignment and can have a large degree of executive power.  Tough people decisions are sometimes made quickly.  It is unusual for a consultant to exercise executive authority.
  5. Client relationship  Typically interim managers become part of the client team quickly and identify totally with the needs of the client company.  Consultants, while always working closely with clients, often maintain an ‘arms-length’ relationship with client staff and identify totally with project deliverables.
  6. Contract duration  Interim management contracts are typically of longer duration than consultancy contracts.  However, the maximum duration for any assignment should not exceed 18-24 months.
  7. Fee rates are typically lower for interim management contracts.  At Enchange our rates for interim managers certainly are lower.

 users guide to interim management

I would be interested in other professionals views on the subject.

Tags: Interim Management, Performance Improvement, Michael Thompson, Supply Chain

Multi-Sector Integrated Business Planning/S&OP Summit: Going?

Posted by Dave Jordan on Thu, Mar 13, 2014

How many times do you find this happening? Someone asks you if you saw that blockbuster film last week or if you saw the new comedy series starring Rowan Atkinson or even if you saw the football match last night where Manchester United finally played like Champions and won a game?  You are right; the last one really is fiction in the context of 2013/14 and Mr. Moyes.

Enchange at IBP Summit 10-11 April 2014With the explosion in social media and internet accessibility you would think that everybody is always aware about what is happening in their locality, country or around the globe. If you think back before mobile phones and the internet it seems like there was less news, fewer disasters, fewer crises and human strife. My view is that there is little difference in global goings-on with the possible exception of financial crises due to some modern-day incompetence and greed.

In the context of business planning do you know about the Integrated Business Planning Summit coming up in London on 10, 11th April?  You do not want to find out about it post event as the next one will not be around for another 12 months or so. Whether you are interested in S&OP, IBP or even simple planning on a spreadsheet you should get yourself along so start planning now!

So who will be there? The speaker list is impressive and currently includes:

Tesco – a UK based retailer that has grown from Jack Cohen’s barrow in Hackney through “pile it high, sell it cheap” to be the second largest retailer in the world with over 3000 stores in the UK alone. Now it is only profit that is piled high.

Unilever – not many years have passed since Unilever did not have a Supply Chain presence on the main board.  In fact, not many years have passed since there were two main boards so how has planning excellence leveraged performance through S&OP and other initiatives?

Barclays – the bank that introduced the world’s first cash machine in Enfield, North London. What would we do without “hole in the wall” cash availability? We are banking on Barclays to deposit some interesting insights and notes on Supply Chain Finance related to planning.

Pizza Hut – the well known fast food outlet started by Dan & Frank Carney that has grown from having one store in Wichita, Kansas to being the world’s largest restaurant company. What slice of planning excellence will you choose to take away?

Lego – from "leg godt", which means "play well” in Danish. Go on, check! At the end of 2013 it was estimated that approximately 560 billion Lego parts have been produced and I am sure around 1 billion of those are in my attic. Hearing about how their planning building-blocks interlock in this business will undoubtedly be constructive.

Enchange Integrated Business PlanningThese are just five contributors from a lengthy list that includes others from Diageo to Osram to the Rainforest Alliance. The full list covers many different sectors with each bringing their own particular expertise and insights to the summit.

Oh, and Enchange will be there as well so that’s all the big names covered.

Check out the IBP Summit website and reserve your place. There is also a “convince your boss” button so go ahead and give it a try.

If I meet anyone there who has read this blog I may even buy them a drink.


2014 image courtesy of Stuart Miles at freedigitalphotos.netfreedigitalphotos.net

Telephone Box image courtesy of James Barker at freedigitalphotos.netfreedigitalphotos.net


Tags: FMCG, Dave Jordan, Pharma, Supply Chain, S&OP, Forecasting & Demand Planning

Supply Chain Recognition: Enchange blog gets an Oscar – sort of!

Posted by Dave Jordan on Tue, Mar 11, 2014

Recognition.  Everyone needs to feel a bit of warmth and appreciation at some stage at home and work or life can be a bit of a drudge. Recognition of an achievement or responsibility can take various forms. At school, recognition as the class Milk Monitor was keenly sought after. (UK readers born after 1971 are thinking if a Milk Monitor was a computer screen launched before Apple Inc got their act together with the Mac.)

What a responsibility and also a position of peer power? As Milk Monitor you were able to ensure you got a milk carton from the bottom of the stack that was still cold rather than a warm one from the top of the pile.  Similarly, you were able to decide who received the expired carton saved from last week and hidden behind a radiator. Would I do that?

While the UK’s honours system is raft with cronyism and political gifting there are always some names fully deserving of an award and the opportunity to meet a member of the British Royal Family at Buckingham Palace. This could be the “Lollipop Man” who has helped children cross a busy street for 25 years or one of the many selfless charity workers who are dedicated to causes that the government should pay for anyway.

A footballer who has scored a hat-trick of goals in a thumping win and is then substituted to loud and warm applause surely deserves that moment in the spotlight. However, this should not apply to Wayne Rooney. A reported GBP300,000 per week for a maximum of 2 matches is outrageous. If we assume a 40 hour week – which is not the case – Wazza is picking up GBP7500 per hour and what’s more, he gets paid whether he plays or not, how badly he performs and even if he is suspended. They way he plays sometimes, makes me think he should be suspended from something!

Enchange Blog voted in top 50 resized 600Anyway, I digress. The theme of this blog is all about recognition and thanks to you, our readers and subscribers; we have had a bit of recognition ourselves. The Enchange blog has been voted one of the top 5O Supply Chain blogs in the world by SupplychainOpz.com – click on this link to see the full list.

I really do not mind if the Enchange blog was rated number 1 or 50 but the simple fact it has been recognised as a source of good Supply Chain stuff is great news. So a big thank you to all our readers, subscribers and referrers and we look forward to keeping you trained and entertained on all things Supply Chain.

I think it is time for a celebratory glass of something. No, not milk.

Image courtesy of pixtawan at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Dave Jordan, Telecoms, Pharma, Supply Chain