Supply Chain Blog

FMCG IBP Team Behaviours: Wrecking Market Deployment

Posted by Dave Jordan on Wed, Oct 28, 2015
Over several years I have been involved in many Integrated Business Planning (IBP) meetings as a facilitator, observer or participant. Every IBP process is rightly different in every company and sector, e.g. FMCG, Pharma, Agri but the basics essentially remain the same.
  • IBP is a collaborative cross functional process that engages all functions to produce an integrated set of plans that all are committed to support.
  • The purpose is to balance demand & supply in the extended supply chain.
  • IBP is performed periodically – monthly or weekly cycles.
  • IBP aligns operational plans to high level business & strategic plans.
  • IBP can be implemented at a market, regional or global level.
  • At its core is a single set of numbers for the entire business.
  • IBP uses standardised processes, calendars of events & meetings, data and information requirements plus Key Performance Indicators.

Some meetings in the IBP cycle are deadly serious affairs with strong and controlling leadership while others are jollier with team members encouraged to throw in the odd guffaw in support of team bonding and morale. I personally prefer the latter as you tend to see far less use of damaging WMD – Wrecking Market Deployment – ordnance (yes, check the spelling if you must!).

What sort of morale, process and performance wrecking ordnance can be seen in the worst examples of an IBP process? Here is a selection:

Delayed Action Information Grenade – usually deployed after 20.00 on the evening before an important IBP meeting. Deliberately timed to provide no opportunity for debate or analysis before the information is revealed to the wider team. Usually aimed into a neighbouring silo and accompanied by the defensive “but I sent you an email” and much useless debate.

Blame Thrower – As the name suggests this weapon indiscriminately apportions blame to anybody but the person delivering the accusations. The usual outcome is that the deliverer is really the one to blame and this tactic is used to divert attention from their own failings.

Bouncing Bomb – This is deployed far in advance of the meeting with the full awareness that a problem is coming and the knowledge that this will explode much further down the process when it causes maximum disruption to the business.

Err to Err Missile – A lethal weapon which fails to correct known faults within the process and sees them repeated time after time. Eventually the error, whether data or behaviour, can become embedded thus consistently undermining performance.

UxB or Unexpended Budget - a passive weapon brought to the table by Sales and Marketing colleagues. Plans built on a certain level of market support have no chance of success when budgets are cut after business planning decisions have been made. Usually results in excess stock, lost sales and ultimately, write offs.

Unclear Bomb – Perhaps the most terrifying weapon of all and although deadly it is in frequent use in FMCG, Pharmaceutical and Agri IBP processes. This bomb is commonly deployed when participants have not adequately prepared for their part in an IBP meeting. A lack of clarity in data interpretation and the resulting information undermines the process and in-market performance.

There are many more weapons able to cause mayhem and disruption in IBP processes and they are used by all involved departments. Success comes only when the weapons are permanently decommissioned and people start to “prove people right” rather than work hard to prove them wrong.

Image courtesy of Ambro at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Pharma, S&OP, Agrochemicals, Integrated Business Planning

FMCG CEE Logistics; Transport, Trucks and Yorkie Bars

Posted by Dave Jordan on Wed, Oct 21, 2015

I like trucking, I like trucking, I like trucking and I like to truck.” Those of you who have not been on this planet very long and people who like hedgehogs will not be familiar with this Not The 9 O’clock News sketch from 1970’s UK TV. In short, the sketch showed macho truck drivers ploughing across the country flattening hedgehogs and munching on the obligatory large chocolate man-size Yorkie. (I was thinking how much smaller the Yorkie is now and when I checked it is indeed 15g and 2 chunks lighter than when I had my own teeth!)

Some of the trucks we see on the roads today are extremely high tech, modern and comfortable with hi-tech monitoring such as fuel consumption and tyre wear. They incorporate the latest motoring technology as well as a degree of driver cab luxury of which 1970’s Yorkie Man could only dream.

Tachographs have been around for ages but they are now largely superseded by satellite navigation that can track transport and shipments in real time ensuring drivers obey the rules of the road and avoid taking possibly amorous diversions they would rather keep quiet! (You should see the well-known names on trucks visiting a certain stretch of “comforting road” near Bucuresti!!!)

Load security and integrity can be monitored by a whole host of sensors keeping close watch on temperature, humidity, security seals and how often the doors have been opened and where and when. You also see some crazy looking trucks where the tops have been streamlined to cut down wind resistance and to contribute to a greener Supply Chain. Everything sounds hunky dory then as these modern juggernauts criss-cross the motorway network delivering chemicals, car spares or finished goods for FMCG and other sectors.

If you look towards the east of Europe you will find that Yorkie Man and his crumbling kit are alive and well. Yes, there are large fleets of top class modern equipment in CEE serving the internal country needs and of import and export to the EU. However, there remain a large number of smaller operators and owner-drivers who have not invested and upgraded to suit the needs of the modern transport trade. Again, there are some good examples but far too many are still using gas guzzling, fume spewing, unsafe vehicles that may be transporting your valuable goods. Remember, when a truck delivers your product they form part of your face to the customer.

Too many vehicles (well, one is too many isn’t it?) are operating on less than perfect road infrastructures with bald tyres, broken lights, poor load security and on borrowed time. Couple these failings with indifferent or a simple lack of driving skills and you have a recipe for a trucking disaster.

In particular, producer companies in those countries waiting to join the EU should take a look at how they move goods around now and start thinking about forcing an upgrade before the Yorkie gets even smaller.

Image courtesy of Decebal Popescu at Cartrans.ro

 

Tags: FMCG, Dave Jordan, CEE, Logistics Management, Transportation

FMCG: Will retailing the Amazon way see off the discounters?

Posted by Dave Jordan on Wed, Oct 14, 2015

Romania has not yet bought into online FMCG supermarket retailing in a big way. There have been some trials, tribulations and a few errors but online retailing here is this nothing like on the scale seen in UK, for example. As a tourist in Birmingham recently I awoke early due to the 2 hour time difference and decided on some breakfast retail therapy to pass the time.

Firstly, I had to negotiate the huge queue of students (going out or coming in?) and high-visibility vested workers waiting patiently for a very early dose of bakery products. Pizza slice, omelette in a bread bun and sausage rolls for breakfast? Aaaagggghhhh! There is even a Gregg’s loyalty rewards programme.

Anyway, avoiding the admittedly tempting smell of warm savoury dough I entered the large store of one of the UK’s dwindling retail giants. I say dwindling as Aldi and Lidl continue to erode their business base at a seemingly unstoppable pace. Being early in the day there were few shoppers around but the activity in the store was high due to the number of employees dashing about with trollies and scanners making up online orders.

Some moved frantically like Edward Scissorhands fulfilling orders at top speed while others dawdled along as if browsing in a shoe shop to avoid the rain. Do they assemble more than one order at a time or is it strictly a sort of online retail FIFO? What was clear was the appalling route planning.

Of all people, shop employees should now where all the products are displayed. Yes, the retailers do chop and change to try and trick us into spending longer instore and buying stuff we didn’t actually come in for but such changes are relatively infrequent. So why did these order pickers move around the store floor like balls in a faulty pinball machine?

Repeated returns were made to the same aisles to collect and scan further items for their orders. “Time is money“ and in this case time was what was being wasted. You may argue that the home deliveries all have time slots so rapid assembly is not vital but you could offer more slots to consumers or dare I say it, reduce the number of pickers employed.

As online shopping increases these huge outlets are potentially transforming into warehouses where the only activity is stock put-away and order picking. This may be on a smaller scale than by pallet load or case picking in a Distribution Centre but the exact same priority principles apply, i.e. ensure your know where the stock sits and that fast movers are readily available for rapid picking and order assembly. Maybe the retailers could learn a few things from logistics companies which will help to stem the discounter tide.

How far could we develop this approach? Are we likely to see any retailer go down the Amazon route where everything is online and consumers and retailers never the twain shall meet? Probably not but while in this flux between old fashioned aisle surfing by consumers and faceless fulfillment, the retailers may as well put a bit more thought into their order picking and assembly processes.

With that in mind I will just log onto GetGreggs.com (you saw it first here) and get a sausage & bean melt and a toffee finger doughnut delivered, now!

Image courtesy of jscreationzs at freedigitalphotos.net

Tags: Customer service, FMCG, Dave Jordan, Logistics Management, Inventory Management & Stock Control

FMCG Success Story: Focus on Customers - see the Benefits

Posted by Dave Jordan on Wed, Oct 07, 2015

 Once upon a time there was an FMCG company that I will refer to as “Foresight”. “Foresight” had spent many years and many Euros creating an acknowledged slick Supply Chain.

Top class regional and global buying
  • Flexible and cost effective factory network
  • State of the art ERP
  • Rigorous S&OP/IBP with top team buy-in.

With all those important boxes ticked they must be successful…..but they were not; not even close. In their peer group they were not number 1 and top & bottom line growth was getting harder and harder. Throw in an untimely and lengthy recession and the consumption of their product range plummeted – double digit style. A significant FMCG business and quite a few personal reputations were not looking pretty.

The problem was a surprising lack of focus on the customer end of the Supply Chain. Both International Key Accounts (IKA) and the Traditional Trade (TT) were being poorly serviced.

A lot of hard work upstream was being wasted through inefficiency and frankly, ignorance. The situation had existed for a number of years but as the same malaise was common in the industry nobody could see the benefit or indeed the need for “getting ones act together”. “Last amongst equals” was hardly a motivating and compelling business proposition for an international big name player.

Seeking external expert assistance “Foresight” started out on an adventure that would change the way they approached business at the customer end of the chain.

Customer Service.   This was something “Foresight” thought it was already good at providing but critical aspects were lacking:

  • Customer Service responsibilities were fragmented and lacked clear and unambiguous leadership.
  • Customer Service personnel had received no training in the subject - nobody really wanted to take responsibility.
  • Customer Service was actually limited to issuing and chasing invoices. Proactive interaction with customers and problem solution were not in the job descriptions.

This hardly projected an image of a caring “Foresight” and this was a huge risk considering the increasing power of the retailers…. 

Route To Market (RTM). “This is under control for TT and it seems to work”, however RTM was in the Sales black box and that box needed opening and shaking up and down vigorously!

  • The Distributor RTM network had been in place for several years and was decaying and the “Foresight” sales interaction with Distributors was far from a win-win relationship.
  • Several Distributors were simply incapable and/or ill equipped to represent such a major company. Some actually did not wish to be involved.
  • “Foresight” did not know who they could rely on in their network or how large and obvious opportunities could be targeted.
  • Bonus linked sell-in was the focus and the remaining steps to the consumer were ignored at “Foresight” level and left in the hands of some indifferent distributors.

The cures were not simple or quick but they were effective and the payback was fast and sustained. What happened?

The cures were not simple or quick but they were effective and the payback was fast and sustained. What happened?

“Foresight” now operates a centralised Customer Service department looking after customer needs in a standardised and caring manner. Phone calls are answered by someone who wants to help and the customer is not passed from pillar to post trying to find someone interested in their problem. Retailers now see CS staff face to face as they proactively take steps to understand the needs of both sides of the partnership. The Retailer office was once “sales only” and off bounds to other departments but not now and the benefit is clear and significant.

In RTM, “Foresight” carried out a comprehensive assessment of their distributor network making evaluations of all aspects of each distributor’s organisation. The strengths and weaknesses of each partner are now known and understood. “Foresight” now knows where there is receiver capacity to take more responsibility and a leading role in market deployment. Similarly, they also know to tread carefully with a number of distributors who are struggling financially or simply not equipped to meet expectations. “Foresight” efforts are now focused on those areas, providing maximum opportunity and reward. The “one size fits all” approach has gone and distributors are managed as individual and important partners.

In combination these changes have transformed the business and success has been quick to materialise.  “Foresight” enjoys a leading position in its sector while competitors scrap around trying to find growth that is there but they cannot reach.

For “Foresight” at least, they really are able to live happily ever after!

Image courtesy of David Castillo Dominici at freedigitalphotos.net

Tags: Customer service, FMCG, Dave Jordan, Sales, RTM Assessment Tool