Supply Chain Blog

FMCG Beer stock outs and the Otopeni airport baggage carousel

Posted by Dave Jordan on Wed, May 28, 2014

Quite a bit of travel recently with a trip in each of the last three weeks. Regular readers will be aware I do not particularly like flying these days, not out of fear but simply the hassle of getting onto a plane. I am now down to simple trainers, no belt, no watch yet I still beep occasionally at the metal check point before being introduced to the metal security sausage.

The most recent adventure involved a transfer in CDG Paris - who on earth thought out the people logistics on that one? If you have to transfer terminals at CDG then remember to take a packed lunch and make sure your passport has plenty of validity. Arriving back to base in Bucharest I waited to collect my bags at the carousel with all the other CDG’d passengers. The time was after midnight and inevitably passengers were tired but I noticed something weird. A fellow passenger whom I know was obviously looking for a red suitcase as he proceeded to check several against the luggage tag stuck on the back of his passport.

To be fair the bags were all varying shades of red and similar in size but he was obviously having great difficultly finding his own property. Aha, success! The tag numbers appeared to match and my fellow weary traveller pulled off a yellow case……Now, he is possibly colour blind, a thief – no he’s not by the way – or he simply selected the wrong case.  An honest mistake perhaps, but one that could see him at his business meeting the following morning in pink latex rather than a dull suit. (Yes, he has a beard so he could then be a contender for the Romanian entry at Eurovision 2015.)

beer stock out bar fmcg resized 600Fast forward to a well-known bar in Bucharest which shows all the major football games. Despite the place being packed out my domestic senior manager and I secured seats at the bar right in front of the beer pumps. This was one of those large gold coloured metal pumps which is raised off the bar and serves 5 different beers from a big name brewer. Straight a way we noticed a glass over one of the pumps indicating a stock out but no problem there were 4 more choices, but not for long. Next to go was the unfiltered or “cloudy” beer. No great loss there from our perspective but as half time approached the dark version of our preferred beer went dry.

Soon the flagship beer brand ran out in a mist of coughing and spluttering foam. This left just an expensive imported beer and like my friend at the airport it was time to take what was available even if it was not actually our usual beer. Get what you can before it all disappears!

How can the extended beer supply chain fail so dramatically at a city centre bar where Premier League games are shown every week to a packed crowd? I hope supply will be robust by the time the World Cup starts, at least for England’s three games!

Image courtesy of ahmet guler at freedigitalphotos.net

 

Tags: Brewing & Beverages, Dave Jordan, Humour, Supply Chain, Inventory Management & Stock Control

FMCG Producers: The important role of motorway network infrastructure

Posted by Dave Jordan on Wed, May 21, 2014

The human heart. Unless you are a little bit dead or a politician we all have one beating away inside. Thinking a little out of the box, what an excellent supply chain the heart is! Oxygenated blood is pumped through arteries around the body in just the right quantities at the right time. Depending on how you are exerting yourself more blood is pumped to specific areas to maintain strength, speed or whatever else you are up to…... De-oxygenated blood is then automatically sent back to the heart for a recharge before entering the blood supply chain once more. Perfect!

Which brings me to Tesco, that well known UK based but increasingly international retailer. In a presentation at the recent Integrated Business Planning event in London, Steve Strachota spoke about how the UK’s motorway network was vital in keeping stores well stocked from the distribution centres. With many stores opening 24/7 the need for reliable replenishment is critical to Tesco’s success. The days of a truck only delivering in the early morning before opening time are long gone.

The pressure on the supply chain is unrelenting and the M1 in particular was singled out as the main artery to keep shelves well stocked. Now, the UK motorway network is far from perfect and sometimes resembles a very large car park but it is well planned to keep all the major towns and cities linked. Barring hold-ups and sensible rest breaks you can drive the full length of the country in about 11 hours. That is about 600miles or just under1000km in new money.

Which brings me right across the continent to Romania. A while ago I helped drive a 7.5t truck from UK to Romania for a charity I support. Driving mostly on the wrong side of the road in the right side of the cabin was quite a challenge but by sharing the driving we managed to reach Oradea at the Romanian border in just over 2 days. Some 20 hours and 600km later we had reached Bucuresti. Of course, this would be faster in a car but we were driving a relatively small truck which many FMCG retailers and producers use to move goods.

fmcg motorway network Romania resized 600I am big fan of Romania and most Romanians but the road infrastructure still lets the country down. Several years on from entering the EU and petty politics, incompetence and corruption have made sure that not many km of motorways have been built. Yes, you can get closer to the Black Sea resorts now and there is a very slick motorway linking Bucuresti with Ploiesti but not much else. Romania has such a lot to offer and with low wage rates the country really should be host to much more manufacturing. In fact, some big name producers have already closed manufacturing facilities and taken their business elsewhere.

The Romanian road network needs urgent resuscitation before the low cost producer label is no more and producers move eastwards. FMCG Producers will not wait forever for the government to get its act together. Oh and before you ask, don't get me starte on the trains.   

Image courtesy of samarttiw at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Performance Improvement, Supply Chain, Logistics Management, Distribution

FMCG Meets Top Gear: IKA Store to Shelf Supply Chain: Last 50 Yards

Posted by Dave Jordan on Wed, May 14, 2014

FMCG and Brewing producers amongst many others, carefully pack their products to meet exacting requirements for International Key Account (IKA) and Local Key Account (LKA) customers. Increasingly this includes specially collated and shrink-wrapped pallets which are cross-docked to specific stores via a retailer platform. Powerful retailers force Producers to operate to strict standards of service whether this is case fill, OTIF, CCFOT, fill level or some other agreed measure designed to ensure products reach the shelf on time. Similarly, in quality terms any damages or close to expiry product is usually rejected even if it means empty shelf space.

If a platform is in use then this may be where the Producer liability ends but that is unlikely and in any case an empty shelf directly hurts the brand owner more than the retailer. So let us assume the carefully packed and stretched pallet of assorted goods arrives at the rear of the store on time, in full and in good condition. The next piece of the chain is called the “last 50 yards/metres”; that relatively short distance from back of store warehouse to the shelf.

If you have never seen a retailer back of store warehouse operation then you should, and soon. Some may indeed be slick, finely tuned operations continuously pumping product towards consumers. Take a look behind those dirty plastic flaps and see what is going on. Be careful when doing this as at any minute a fork lift truck with Retail Stig in the saddle will burst forth with plastic a-flapping and horn a-blazing. Without any apparent care for consumers or himself Retail Stig charges past the frozen food, takes a good line past the mop heads gondola before squealing the tyres around the bon-bons and across the line! You did it …..in……shouts a manic Clarksonesque store manager.

Store WarehouseAnyway, where was I? You will find that a majority of store warehouses will be badly organised and chaotic - perhaps chaos is inherent as you do need momentum and energy to keep the stocks moving. I believe the overriding problem is that while the rest of the chain is largely controlled by skilled supply chain professionals the back of store is not. To be fair some stores are staffed by skilled individuals but the organisation has a sales mentality rather than a supply chain focus. Just because the stock is now in a “shop” there is no logical reason why the required skills should be any different.

Many Producers have recognised this and have started coaching retailers in the “last 50 yards” to transfer basic supply chain skills and procedures. Some simple initiatives like pallet marking on floors, FIFO and easy access to fast movers will pay rapid dividends to both parties and stop some of the pointless conflict that seem to feature in Producer-Retailer relationships. This is not rocket science!

And on that bombshell……..

Image credit: Colliers International

Tags: Dave Jordan, Supply Chain, Logistics Management, Inventory Management & Stock Control

FMCG, Drinks, Pharmaceuticals: Mind the performance gap

Posted by Dave Jordan on Wed, May 07, 2014

I have recently returned from three days in London attending the Integrated Business Planning (IBP) Summit – more on that event in another blog. Now, I am not a frequent traveller in London or the UK in general for that matter so getting around is always a challenge and particularly when travel by the underground or tube is required. All those people! In the rush hours at each end of the day there must be more people underground in London than those with sky visible above their heads.

Huge columns of people continuously pour in and out of tube stations. Endless streams of unsmiling people striding along clutching the Evening Standard, bags in hand and Star Trek equipment in one ear. If there were any wildebeest visiting London they would look on in awe and take photographs on their telephones. (Aside – funny how these hands-free ear piece sets allow you to talk to yourself without being considered a loony now.)

As the crow flies my personal journey was the relatively short trip from Hammersmith to Shepherds Bush and being a temporary London commuter I assumed the tube was the way to go. I duly checked my newly installed tube app, tapped in my location/target and waited for my underground journey to be revealed. In a flash the travel information appeared on the screen.

  From Ravenscourt Park take the District Line
  Change at Gloucester Road to the Circle Line
  Change at Notting Hill Gate to Central Line
  Leave the train at Shepherds Bush

FMCG_Route_Planning_Sales Wow, that was more complex than I expected. Three trains on three different tube lines? I tried the reverse journey just to test the routing and sure enough the journey back to the hotel required the same sub soil complexity. What is more, the journey time was an astonishing 39 minutes each way.

I looked at the map app and realised the distance on foot was just over a mile and at a leisurely pace I could arrive in 24 minutes. With good weather forecast for the duration of the trip – yes, I was in UK – I untethered Shanks’s pony and enjoyed a walk to and from my destination in far less time than I would have spent on a tube train.

No wildebeest watching me as I ambled along on a very stress-free journey and one where I did not have to avoid eye contact on a packed metal sausage. No pushing and shoving. No being forced to listen to the hiss of what someone thinks passes for music from ill fitting ear phones. No “mind the gap”…………

“Mind the gap”. “Mind the gap”? That gap could well be your FMCG or Pharmaceuticals company failing to reach monthly targets, again! You may have all the glitzy technology in the world but if your logistics and/or you distributor route planning sounds like my London Underground experience then you will continue to struggle. Step back and sense check the developing reality rather than always relying on technology, apps and gadgets as they can lull you into a false sense of security that you are doing what is best for the business.

Tunnel vision gets you nowhere near your destination and that light at the end of the tunnel? Yes, it’s a train.

Image courtesy of adamr at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, Supply Chain, Traditional Trade