Supply Chain Blog

FMCG Shades of Greys: Parallel & Counterfeit Trade

Posted by Dave Jordan on Wed, Feb 25, 2015

Probably sitting at number two in the most popular excuses offered when FMCG sales did not happen as planned is parallel or grey trade. Without doubt greys, “passing off” and counterfeits can have an impact on FMCG sales but I was surprised how they only became significant when sales bonus targets were not achieved. Sales not going too well? Drum up a story about greys flooding the markets.

Counterfeits are simply illegal copies of quality brand names and increasingly they are more and more sophisticated and recognition is no longer a check of the bottle mould stamp or a sniff of the fragrance. Despite co-ordinated attention from multi-national companies, well equipped underground factories still exist to rip-off brand owners and consumers.

FMCG GREYS SALES RTM resized 600Passing-off an inferior product by making it appear to be a top brand is also potentially illegal but often takes time to prove a case. When a product is called Tipton Tea in a yellow box it is clearly an attempt to steal Lipton consumers who are not vigilant. However, if the tea was from Tipton how do you persuade a judge to rule in your favour if the artwork is not identical? As ever, such litigation takes time and money and even then, success is far from certain.

Back to greys or parallel trade. This is genuine product being sold in a territory for which it was not originally intended by the producer. The quality is fine, multi-lingual packs mean the instructions for use are available and in a duty free zone like the EU, stock can legally cross borders. Oh, and they are cheaper than what is normally available in any particular market. Grey sources can often be from a bona fide distributor in another country sending stock over the border with a bulk discount at month end – a sort of shifty shades of grey but not illegal!

The real problem arises when there is nothing shifty about the origin and there is no discounting or margin misbehaviour. Someone can get the same product into your market at lower cost than you can and consumers do not care whose bonus they are affecting. Instead of moaning and groaning about greys why not take advantage of this learning opportunity as someone can do it better than you can; deal with it!

Assuming the source cost ex factory and distributor margin are consistent then you should study your arrangements for transport, warehousing and specifically Route To Market distribution. Get your Supply Chain (not sales) people onto this and fix the cost to serve problem. If distributor margins are causing the greys then that is purely a sales issue, i.e. self inflicted sales pain. Get your whip and sort this out.

If you are the CEO do not be seduced or blind-folded by the sales message that their hands are tied and there is nothing you can do about greys. There is, and failure to do anything about them could cost you your job!

Image courtesy of praisaeng at FreeDigitalPhotos.net

Tags: FMCG, Dave Jordan, CEO, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG SKU Complexity E-book: Free Download

Posted by Dave Jordan on Wed, Feb 18, 2015
FMCG COMPLEXITY S&OP EBOOK FREE resized 600

The English dictionary lists the definition of complexity as “the state or quality of being intricate or complicated: an issue of great complexity”.

Wikipedia defines complexity in great detail and starts with “In general usage, complexity tends to be used to characterize something with many parts in intricate arrangement”.

Sales & Marketing people routinely define SKU complexity as ‘those items vitally important to the future of the company, the country, the global economy and possibly the planet."

Supply Chain people define SKU complexity as “what Sales and Marketing insist on to make our lives difficult.”

The reality is somewhere in the middle of all these views.

Based on our work with over 100 global, regional and local companies we have produced an E-book which may help you understand and manage SKU complexity in your FMCG or Pharmaceutical Supply Chains.

How much complexity is really necessary?

 

Image courtesy of antpkr at freedigital photos.net

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

Free FMCG Route to Market Improvement E-book

Posted by Dave Jordan on Wed, Feb 11, 2015

describe the imageDo you need to improve the availability of your products in the Traditional Trade?

Do you know the strengths and weaknesses of your distributor network?

Do you know what really happens after your products leave the warehouse?

Is your network managed as an extended supply chain or a sales irritation?

Practical, hands-on advice to FMCG producers on how to improve distribution operations including:

  • Choosing the right distributor.
  • Importance of communication.
  • Overstocking.
  • Unrealistic demand forecasting.
  • How your business can provide proactive support to RTM deployment.

Get our free e-book & put your FMCG distribution operations back on track now!

Buy local image courtesy of Stuart Miles at freedigitalphotos.net

Tags: FMCG, Route to Market, Dave Jordan, Supply Chain, Traditional Trade, Sales, RTM Assessment Tool

FMCG: Free Sales & Operational Planning (S&OP) e-Book

Posted by Dave Jordan on Wed, Feb 04, 2015

Whether your deployment of Sales & Operational Planning (S&OP) is as solid as fine old Cheddar or is more like Emmental after a rodent rampage, you will benefit from this free e-book. The Enchange S&OP e-book tells you what S&OP is, what S&OP does, how S&OP works, how S&OP can go wrong and how to evaluate the efficiency of your deployment. The book will also tell you what it feels like when you get it spot on!

As ever, there is always a little fun included so we expect you will be singing along to our very own S&OP song very soon.

You can download the FREE Enchange S&OP e-book HERE.

Visit our website for more FREE resources on everything Supply Chain.

Click to complete our contact form and send us a comment or a question.

Enchange – Improving Supply Chains every day, everywhere!

FMCG S&OP FREE E BOOK resized 600

Image courtesy of ddpavumba at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Humour, S&OP, Sales, Integrated Business Planning