Supply Chain Blog

FMCG ERP Selection: Road to success or road to ruin?

Posted by Dave Jordan on Wed, Jul 30, 2014

I know this will not impress Jeremy Clarkson – and why would I want to? - but my first car was a Renault 5. I realise this is possibly only 2 steps up from a classic Citroen 2CV which Jasper Carrott likened to an upturned corrugated crab on wheels. My beauty was in a very shiny bronze colour or polished brown if you are being unkind. Inevitably it was my pride and joy even though it was not very high up on the list of “chick-magnet” vehicles.

FMCG ERP SAP CHOICE resized 600The top speed was just over three figures but that was probably downhill and without anyone else or anything in the car. After some time I realised I could actually move the car without using the engine as the floor had corroded so you could see the road. Only a minor glitch however, but it made tight parking easier.

Many years and many cars later I was presented with a choice of two vehicles; a nearly new Volvo XC 90 – yes, JC has one - or a ten year old Toyota Land Cruiser. The Volvo was very sleek and swish with all sorts of standard and added extras but to be honest I did not need many of them. The Toyota had seen over 200,000km and looked a little tired inside but the engine was one of the best they ever made.

For normal road driving the Volvo won hands-down due to the fresh, soft suspension and automatic 4WD which coped with what passes for roads in parts of Voluntari – take note Dl Primaria. However, when the snow appeared in the expected large quantities the Volvo could not make it up the road to the house. Irrelevant in the UK but here in Romania this is a significant factor for as sure as it will rain in UK in summer it will snow heavily in these parts come winter time.

So, inevitably the Toyota won the contest and is now 14 years old and approaching 300,000km. In any event I was always rather embarrassed when the fleet controller loudly asked me to release the Volvo for a service as he insisted on mispronouncing the car brand by swapping an “a” for the “o” at the end of the word.

All the technical specification data was pushing me towards the Volvo but when push came to shove I chose the car I knew could do the job and not the one everyone else thought could do a similar job. Similar jobs by definition are not the same.

This brings me to the sight of an FMCG CEO sitting with head in hands wishing she still had her old ERP instead of the new software which everyone said was wonderful and if everyone was buying,  then this must be true. The new ERP may have had electrically heated seats or internal climate control or even a voice activated sound system but it simply did not do the job that was required.

When making an expensive ERP decision be cautious and ask lots of questions and then ask them again. Is the ERP what you need or is it what the guy in front of you wants to sell? If you are not thorough in your evaluation you will end up with something that hinders not helps your business and this can take years from which to recover.

Image courtesy of mapichai at freedigitalphotos.netfreedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Performance Improvement, ERP/SAP, Supply Chain

FMCG Foods Turnaround: A highly successful S&OP Case Study

Posted by Dave Jordan on Wed, Jul 23, 2014

I know I am prone to rattle on about Sales & Operational Planning (S&OP) but seeing the benefits being delivered to previously struggling business is extremely motivating for a confirmed “techy” like myself. If only we could advertise such successes we would be able to find and help other business in need of an S&OP boot camp or some S&OP tender loving care. Here I attempt to highlight how one such business went from a boat up a creek without a paddle to a cruising, ocean going luxury liner.

The Challenge

Our regional FMCG client did not have any formal planning process and so started from a lowly position on the Enchange Assessment scale which allows benchmarking with the same and other sectors.

  • Demand and Supply Planning forums existed but they were not followed by a formal Finance Review nor any Pre-SOP and leadership S&OP meetings.
  • There was a weekly demand planning meeting that resembled an S&OP meeting.  However, this was a “fire-fighting” opportunity to adjust the current month forecast.
  • The forecast horizon was far too short particularly when considering significant peaks, e.g. Christmas and Easter.
  • Supply and demand were not optimised within the business and, for example, lost sales occurred while inventory was managed on a reactive basis resulting in over and under-stocking. As a result, the business had failed to reach budgeted sales targets for a number of months.

S&OP Case Study FMCG Foods resized 600

The Approach

Enchange designed a low cost 3 month project with largely full time support to implement S&OP in the business. As the project progressed the Enchange support gradually changed from “Enchange runs” through “Enchange facilitates” to “Enchange hands-off”. This enabled the client team to maintain process integrity and leadership at the closure of the project.

All processes and procedures were designed and documented together with new job descriptions. A company-wide set of “recovery KPIs” were created and published in a dashboard format with clearly allocated roles and responsibilities for each.

The Result

The business has been turned around as a result of this project. Budgeted monthly sales targets have been achieved for 6 consecutive months. Amongst many other enhancements the following KPIs have been implemented and are measured monthly:

KPI Measurement

Project Start

Project End

Business plan achievement

60%

129%

Growth over previous year

-15%

+20%

OTIF  

32%

95%

Stock outs finished goods

22%

8%

Stock outs raw/pack materials

>10%

2.6%

Forecast accuracy

27

75%

The Future

Clearly, this company is not yet the finished article but the improvements made in such a short time are staggering. KPIs will require adjustment as the company provides more and more fuel to the sales effort to ensure the performance bar continues to be raised and process complacency is avoided.

If you are reading this and this is not your company and you operate in an FMCG D&E market, one of your competitors just made a step change in market performance! Be afraid, be very afraid.

Image courtesy of renjith krishnan at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Performance Improvement, KPI, Supply Chain, S&OP, Integrated Business Planning

FMCG: Top ten tips for totally terrific S&OP – not a fishy tale!

Posted by Dave Jordan on Wed, Jul 16, 2014

I have travelled quite a lot over the years and tried to add one new country each year until I stumbled at 45. Many were holidays but a majority were on business with very few opportunities available to actually see the place. “Oh, you must be so lucky to travel” – not. During the hundreds of flights taken I have seen some very unusual things aboard aircraft.

S&OP_Top_10_Tips_MrCEOOn one flight in the Middle East the passenger in the business class seat next to me was a hooded falcon. Taking a flight out of Kuala Lumpur I soon realised I was the passenger list and that is a rather spooky situation when you are in a deserted Boeing 747 – service was ok, though. My most frightening experience was seeing man carry a blister pack of craft knives on board!

More recently, I scanned surrounding passengers in that dull period on a 3 hour flight after the inedible food had been consumed and before the hopeful sale of duty free items to see a young girl holding a small, clear plastic bag with a live goldfish inside. How does that happen in these security conscious days? I suppose if the amount of liquid was less than 100ml it could qualify as “safe” to carry on but what if the fish was not really a fish........? Would the fish need a pat-down search? What would be the scale of the risk .....groan.

When you are trying to secure the safety of hundreds of passengers on a plane and potentially on the ground you really do need a set of strict and consistent rules as if one airport drops its guard something significant could be missed.

Similarly, when you are running an FMCG or Pharmaceutical S&OP you need a set of consistent and widely understood rules and measures to get the best out of the process. Ok, so the implications of bending the rules are not usually life threatening in this context but getting this wrong can certainly bring your career to halt and make those nice bonus payments few and far between.

Top ten tips to a totally terrific S&OP:

  1. CEO and senior board buy-in. Without this don’t even bother to start S&OP.
  2. Appoint a process leader who knows S&OP inside out and has gravitas in the company.
  3. Create the role of Data Manager to turn data into information and a facilitate focused actions.
  4. Don’t promote or advertise S&OP as a Supply Chain process or one that it is designed to improve SC performance. Yes, it will but the ultimate priority is higher sales.
  5. Agree and display a set of KPIs that involve all disciplines to motivate co-operation and team working.
  6. Get the right people involved in the meetings – don’t allow people to delegate to junior colleagues.
  7. Get meeting dates in diaries for at least 12 months, rolling.
  8. Insist on personally seeing minutes and action lists; do not let meeting discipline fall away.
  9. Be hard on dissenters and laggards.
  10. Do not stop S&OP or you will end up with a business far worse than when you started.

If you stick to these rules you will be successful and I have now seen this achieved in many disparate environments leading to improved top and bottom lines. No, it is not rocket science but sticking to the rules can make your sales rocket.

Image courtesy of Dan at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Performance Improvement, Pharma, S&OP, Forecasting & Demand Planning, Sales, Integrated Business Planning

FMCG KPIs: Promoting improved performance or blame-storming?

Posted by Dave Jordan on Wed, Jul 09, 2014

Once upon a time I was working in a well-known detergent powder factory in the north of England. The factory manger at the time will remain nameless but he had a habit of dragging people from the production floor to show off the latest gadget or new techy thing in his office. Bearing in mind this was a long time ago this would include the unveiling of a push button telephone or a Dictaphone with a mini cassette tape or computer that would actually fit under the desk.

One day he surpassed himself by dragging me along to his office to see the new spy-hole that had been fitted to his door. In isolation this sounds a boring distraction but he already had a vertical rectangular window on one side of the door and the glass was clear, 2-way stuff!  You could imagine tapping on his door and waiting while he peered through the spy-hole and if he did not wish to see you at that time he would walk back to his desk in full view of the person knocking. Trigger from Only Fools & Horses comes to mind.

FMCG_KPIs_Performance_ImprovementWhile that really is just a little bit weird you could argue that it is actually fully transparent behaviour in that an audience was considered but rejected. There was no hiding behind a door without a window or behind a formidable secretary and this leads me on to the week’s topic in the wonderful world of Supply Chain and it concerns the choice and use of KPIs.

You need to measure performance and the KPIs should be selected to gauge reality and promote continuous improvement. As improvement materialises there is nothing wrong with changing KPIs to suit the new environment nor is it wrong to raise the bar. Conversely, if your business is struggling then a set of “intensive care “KPIs would be more appropriate.

What is certainly wrong is to measure negative KPIs where the only outcome is a blame-storming session. In many FMCG businesses there still exits a desire to allocate blame over KPI performance rather than collectively seek improvement and mutual success. This “proving people wrong” over “proving people right” is extremely damaging and reflects a very immature business and one far from success.

Certainly, you need to measure performance in areas of weakness, e.g. forecast accuracy, but how you deal with the information is what defines the board dynamics and ultimately company performance. If CEOs manage by fear and ridicule then you are likely to generate a rock solid silo-based bottom protection mentality which wastes time and effort looking backwards.

If you are continually looking forwards with or without a dodgy spy-hole then you are in with a chance of beating the competition rather than beating yourself.

Image courtesy of Adamr at freedigitalphtos.netfreedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Performance Improvement, KPI, Supply Chain

FMCG - Here comes summer, is your drinks RTM ready for the sun?

Posted by Dave Jordan on Wed, Jul 02, 2014

Improve Beverage DistributionSummer has finally reached Romania and this will be good news for all the beer, water and soft drinks producers. Nothing raises sales like a scorching yellow disc in a clear blue sky.

One of the classic summer tracks is Here Comes Summer by a variety of artists depending on your age. When you hear this song it is a sure sign summer is approaching and if you want to sell your drinks you had better be ready!

With reference to the original piece by Jerry Keller.

Here comes summer
The sun is out, oh happy days
Here comes summer
The peak for drinks is on the way
If we’re winning
Our sales will rise right away
Will the sun shine bright on our happy summer sales?

Here comes summer (here comes summer)
Almost June, the sun is bright
Here comes summer (here comes summer)
The drinks market will be tight
It's the toughest (here comes summer)
So little time to get it right
Will the sun shine bright on our happy summer sales?

Distribution’s not so bad but it could be better
They need close attention to make it to the top
Assess your route to market and do it soon
If we miss, our drinks sales will surely drop

Here comes summer (here comes summer)
Don’t let your competitor sales outshine
Here comes summer (here comes summer)
Whether it’s beer, soda or wine
Make it the greatest (here comes summer)
Drinks season of all time
Will the sun shine bright on our happy summer sales?

Image credit: raichinger

Tags: Brewing & Beverages, Route to Market, Dave Jordan, CEE, Traditional Trade, Sales, Distribution, RTM Assessment Tool