Supply Chain Blog

FMCG Route to Market Distribution: Free Distributor Assessment Tool

Posted by Dave Jordan on Wed, Jan 28, 2015

FMCG producers are often far too ready to blame their Distributors when sales do not go to plan and targets are not met. However, it is rarely all their fault particularly if producers are not clear on what is expected.

To help Producers understand the real state of their Distributors, Enchange has released a free - yes, free - tool to guide an assessment of Distribution networks. While focussed on FMCG the tool is applicable to all sectors using distributors.

Download the tool here.

The RTM Distributor Evaluation Tool has been designed to guide your evaluation of four key capability areas:

Partnership – is the relationship a one way street or do you actually talk to your distributors? Do you treat distributors as real partners aligned with your business objectives?

Planning & Logistics – how does the distributor Supply Chain stack up? Your Supply Chain maybe a Rolls Royce but what about theirs, can it do what you want it to do?

Sales Management – how does the distributor take orders and execute them? You would be surprised (and probably disappointed) at how some major producers are represented in front of customers.

Finance & Back-Office – how well is the distributor organised? How health are the finances? Does the distributor exploit IT or is it still a pen & paper based system?

The tool is not difficult or complicated and it will not take too long to run through the various questions and benchmarking statements. The important point is that the tool is completed as accurately and honestly as possible and certainly in collaboration with the distributors. I recommend you use someone unrelated to the distributor sales function or even a 3rd party to run the process to ensure you receive a reflection of reality.

Of course, the tool is not comprehensive but it can be used to provide a reasonable guide to how your current distributor network operates. Why not try it out; you may well be very surprised by the results!

Image courtesy of Enchange at Enchange.com

Tags: FMCG, Route to Market, Dave Jordan, Pharma, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG Retailers: IKAs need to get their own Supply Chain act together

Posted by Dave Jordan on Wed, Jan 21, 2015

A sweeping generalisation I know, but generally Supply Chain Directors who serve International Key Account (IKA) customers are small in stature. This is not by way of genetics or natural selection; it is just the simple physical result of being bashed on the head by IKA clients complaining about poor service. The repetitive bashing compresses the spine resulting in decreased height and consequently, wider feet.

Of course, IKA clients are important and in many locations they can generate the vast majority of your turnover but frequently they have their heads in the clouds over the reality of service expectations. Certainly, there should be a clear contract or Service Level Agreement (SLA) which defines what is expected by both parties and the KPIs required to monitor performance. If service falls below the required level then a sensible way forward is to jointly discuss the causes and apply a fix. If a promised SKU is out of stock due to a Producer error then fair enough, apply the penalties and get the Supply Chain Director rubber hammer out.

Unfortunately, IKAs tend to be a just a little bit selective when it comes to FMCG service! The producer truck arrives outside of the allocated time slot – apply penalties and reject the shipment. Producer trucks on time, IKA delays in unloading – tough, just wait. Internal IKA promotion exceeds expectation, producer cannot replenish unexpected demand then the IKA referee gets out the whistle and awards a penalty. Producer needs to push a new promotion to increase turnover – more listing fees please.

You may say that this desire to operate at optimum efficiency and with stock always available is creditable as it provides final consumers with what they want, when they want. However, recently I experienced a classic “pot-kettle-black” situation with a big name IKA.

FMCG IKA SUPPLY CHAIN SERVICE resized 600I recently used the online ordering service one of the large UK retailers who seem to have missed the competitive approach of Aldi and Lidl. The order was to provide for a Christmas dinner for 6 guests so the order was comprehensive and long. Virtually everything that was required to eat, drink, pull and clean up was carefully ordered online and a low cost delivery slot selected for the evening before the event. As requested I had also specified alternatives should some items be out of stock or out of date.

With matchsticks keeping my eyes open as the driver was late I greeted the jolly man and he started to unload the delivery boxes (every student has at least one; how many of these do IKAs lose?). You can possibly see where I am going with this but let us look at what did not arrive:

No turkey stuffing.

No milk.

No bread.

No sparkling wine

No Christmas crackers and more importantly, no silly hats to wear at dinner.

Oh, and the posh soft cheese had been squashed to a few mm thickness.

No substitutions, no apology and no way of applying a penalty even though I would have to drive out unexpectedly the following morning to secure the important omissions. Just not good enough.

IKAs have moved themselves out of the cosy world of in-store retailing where they sit back and let consumers graze the aisles to select what is on the shelves. Now they are trying their hand at providing Supply Chain services and they are clearly not very good at it, yet. Out of stocks, missed delivery slots and damage leading to disappointed customers with apparently no responsibility and no way of recourse.

Well, there is though and that is to spend more of your money in Aldi and Lidl! Online ordering and home delivery are here to stay but get the basics right quickly or it is another nail in the coffin of large retailers and another dip for the share prices.

Image courtesy of marin at freedigitalphotos.net

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

FMCG Opportunity: Time to Spring Clean your Supply Chain

Posted by Dave Jordan on Wed, Jan 14, 2015

Is the market getting any better, really? Many big name companies have announced indifferent Q4/Christmas results recently and all caution about the continuing "difficult market conditions”. Ok, so 2014 has been put to bed financially but many will be paying a heavy price for the mammoth last quarter efforts which must have made the advertising and promotional agencies extremely wealthy. I wonder what a snap-shot of bottom line profitability looked like over the final 3 months or month of the year?

If the economy is not much better than last year what exactly can you do differently to keep ahead of your competitors in 2015?  If you had all the time in the world you could apply all of the new FMCG Top 10 New Year Supply Chain Resolutions. You might not have the time, funds and resources to tackle all of them but there are a couple you can take advantage of now for some quick wins. Give your Supply Chain a much needed promo “twin pack” of a Spring Cleaning and see the difference this can make.

Most businesses will have carried out a stock count at year end. You do count your stock don’t you? If you don’t then I guarantee you will have less than you thought! You should now have a clear list of those SKUs which are clearly overstocked, close to expiry, old label, damaged etc. Every day you keep hold of this stock is wasted as the expense slowly but surely chips away at your bottom line making your life unnecessarily difficult and gradually unprofitable. Get rid of it now! Give it to charity and get a tax break on the donation. You could even sell it! If you clear out your stocks leaving what actually moves quickly you will naturally create a slightly more responsive and faster Supply Chain.

FMCG SPRING CLEAN SKUS resized 600Do you know how many “must have” core and promotional skus you added in 2014 in order to get as close to HQ top-down targets as possible? In difficult times it is easy for processes and procedures and even common financial sense to be overlooked in the search for more sales. Every SKU on the books costs you money even if it is difficult to quantify in the extended Supply Chain of your business. Do all of the SKUs actually contribute to profit? The answer is probably no! If you do not monitor profitability by SKU then a considerable proportion may exist, blocking up resources for no actual benefit. You need to be dispassionate about culling SKUs that are not performing and have no prospect of doing so. As far as possible you should keep Sales & Marketing out of that decision making process until your delisting business case proposal is water-tight.

Each of these initiatives is relatively straightforward and certainly not resource intensive. Carrying out this simple Spring Clean and getting your house in good order will help you focus your efforts on winning in the market place. Even in difficult times, someone always wins!

Image courtesy of Vectorolie at freedigitalphotos.net

Tags: SKU, FMCG, Dave Jordan, Performance Improvement, Supply Chain, Inventory Management & Stock Control

FMCG: New Top Ten Supply Chain Improvement Resolutions for 2015

Posted by Dave Jordan on Wed, Jan 07, 2015
Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein


How many of you will be reaching for an electric cigarette or giving up smoking altogether for the New Year?  How long will it be before visits to the gym trickle away? Will you get 5 portions of fruit and vegetables a day or will that take-away, drive-thru dinner prove irresistible? All over the world people will be making promises to themselves they would like to keep but few have the staying power to make a difference. Is this possible in your FMCG Supply Chain in 2014?

How about this revised Top 10 List of resolutions to help your businesses improve in 2015?

Supply Chain Improvement ListSupply Chain Awareness – As a start you might like to remind colleagues especially Sales & Marketing what Supply Chain is all about.

Sales &Operational Planning - If this is in place; improve! If there is no S&OP you should try it - it works! If you are agnostic about S&OP, take a look at how S&OP helped one FMCG company turn performance around.

SKU Complexity – Do you actually know how many SKUs you have and what is driving your sku complexity? Do you have amore now than when you started 2014 yet lower overall turnover? Check and take action on non-profitable SKUs and ensure resources are placed behind winners.

Route To Market – In developing markets Traditional Trade will still form a large chunk of your business. Give your RTM a thorough service and your Distributors will serve you better.

Sales & Marketing Buy-in – Wouldn’t it be powerful if everyone in your company was aligned to the same plan and 100% mutually supportive? Too much to hope for? If such a change happens you will rapidly feel the difference.

Proactive 3PLP’s – Are they meeting the agreed KPI’s? Do you have KPis as part of a Service Level Agreement (SLA)? If perfromance is not what you expect then perhaps you need to review them and revise upwards.

Reduced Stock/Inventory – The start of the year is a great time to remove that old stock. Why not give your sales a much needed post holiday sales boost with some unexpected and low cost support using stock that will be otherwise written off? Amd you know it will!

Improved Customer Service – Do you measure this and if you do is the measurement 100% honest and accurate? Companies that fool themselves on Customer Service may see short term benefits but do not succeed in the long run.

Use the ERP - Avoid spreadsheets like the plague as they undermine your business and waste time and effort. If you have invested in an ERP like SAP then ensure it is correctly implemented and apply relevant transactional discipline. Is you business running on raw data or actionable information? Think about that!

Continuously Improve – If you stand still as this awful recession slowly evaporraates it is highly likely you will be at the back of the pack. Keep innovating and improving your Supply Chain to maintain competiveness and freshness.

Naturally, you cannot do everything at the same time but if you choose to focus on a few of these areas you will discover you can significantly change your FMCG business success by getting improved and sustainable value from your Supply Chain.
Make a resolution and just do it! You don't need to be Einstein.........


Tags: Customer service, SKU, Route to Market, Dave Jordan, ERP/SAP, KPI, S&OP, Logistics Management, Distribution, Inventory Management & Stock Control