Supply Chain Blog

FMCG Company disbands the Supply Chain function……..

Posted by Dave Jordan on Wed, Mar 23, 2016

I am back on line again after a few days’ holiday post completion of some challenging factory footprint project work. One of the first catch-up meetings I have had was with an FMCG CEO. No names of course, but this is a medium-large sized player knocking on the blue-chip door. The company has a broad European supply network and is present in most markets. I have disguised the identity to protect the innocent or not so innocent!

I recall how many companies plodded along blindly with what we now accept as supply chain functions dispersed around other departments, e.g. procurement/buying and logistics in finance, planning with sales – I, along with many, am so pleased that the latter is no longer the case!

Many years flew by before all the essential elements of supply chain were brought under one organisation. Looking backwards now, it hardly seemed like rocket science but it was a painful process as established empires were dismantled and begrudging recognition given to what is still an undervalued function in a large number of companies. How many actually have a Chief Supply Chain Officer even now?

Although many were dragged kicking and screaming into the newly created function, there is no doubt those companies operating an integrated supply chain have seen huge benefits over succeeding years. Nothing happened overnight of course, as slowly but surely companies made massive strides in understanding cost, efficiency, service and innovation. Is it naïve to believe that supply chain is now considered equally important as say finance or those darlings in sales? The jury is probably still out on that one.

FMCG_SUPPLY_CHAIN_CEO.jpgSo, you could imagine my jaw dropping onto the worn leather inlay of the table when I heard from Mr./Mrs. CEO that this company had taken the decision to dissolve their supply chain and relocate elements across the other departments. The Supply Chain Director role just vanished off the top table in one fell swoop. Without doubt, there must be a leading edge reason for this bold and brave (yes, insert “crazy” or “stupid” or “daft” as you wish) move and I waited for the disclosure of the divine inspiration and associated logic.

No, there was none on offer in my humble opinion. The insight behind the decision was that the company wanted more direct board control over various areas of business and believed that a dispersion of roles was required. The fact that segregation of roles is necessary for auditable control and accountability has been at best over-looked let alone the impact on business performance.

The only outcome is a lack of cross functional clarity on how the Supply Chain contributes to business performance excellence. A return to functional silos where people will not take responsibility or be accountable and resort to lobbing blame-grenades over the office walls.

Why would you make such a decision? What are they really hiding from? Answers on a post card please as this one beats me. I am not suggesting supply chain development has finished and we have the ultimate design (far from it) but reverting to a disjointed 1980’s model in an effort to improve control is a contradiction.

Image courtesy of Stuart Miles at freedigitalphotos.net

 

Tags: FMCG, CEO, Performance Improvement, Supply Chain

FMCG Supply Chain: KPI Scorecards - Don’t look back in anger

Posted by Dave Jordan on Wed, Mar 16, 2016

For a change, UK has been my base for a few weeks and even in that short time I have started to genuinely think I must now be a different nationality if not from a different planet. When my denim jeans rip at the knees it is time to throw them out.  I do not have a badly drawn and inappropriately placed tattoo. Nothing on me is pierced and decorated with metal, precious or otherwise.

I do not have a preference for Ant or Dec – the “best” UK double act in a sea of tepid TV reality dross? What is Keith Lemon all about? So many TV channels yet so little worth watching. I put litter in waste bins. I still know how to queue. I honestly don’t care about the new line up of Top Gear. Even my waistline is now considered trim. I own music recordings where the performers wrote the lyrics and play the instruments and don’t get me started on that Justan Ameoba fool.

Nevertheless, there is something consistent. Something that has not noticeably changed since I packed my company leaving gift suitcases in 1991 and departed for the desert. Traffic Wardens.

FMCG_KPI_SCORECARD_SUPPLY_CHAIN.jpgBeing a Traffic Warden is a universally hated career choice and possibly third on the detest list after Tax Inspectors and Bankers these days with Politicians closing in, of course. In the UK wardens patrol the streets looking for vehicles illegally parked even for a short time or even if the front bumper/fender overlaps the authoritative double yellow lines by a few millimeters.

Why do they exist; the role that is, not the people? What good are they doing for the general public and the fuel duty/road tax cash-cow motorist? Are they here to keep the Queen’s highways, byways and pavements clear of transportation obstacles to allow free flow of vehicles, people and prams? Are they here to generate as much revenue as possible for councils and police authorities?

Is their role to gently correct errors, show understanding and guide people on their future behaviour or are they here to discipline, penalise, visually allocate blame with a sticky yellow ticket and generally strike fear and hate in drivers? Should people hide and shy away from traffic wardens and treat them with mistrust or should they be seen as a welcome, integral part of day to day living.

Friend or foe? Beauty or beast? Pariah or paragon? Ant or Dec?

So what does your Supply Chain team think about your monthly KPI Scorecard discussions within your IBP/S&OP process? Is it a meeting all about blame and backwards looking fault finding and discipline? Or is it what it should be, an open discussion about what needs to be done better by everyone in the current and coming periods?

You certainly must learn the lessons of past shortcomings but applying the learnings to the future is a far more positive and healthy experience for everyone.

Applying a “…don’t look back in anger” approach will lead you and the business to a much more profitable oasis within the FMCG market place.

Image courtesy of iosphere at freedigitalphotos.net

 

Tags: FMCG, Performance Improvement, KPI, S&OP, IBP

Supply Chain: Communication teases out scorecard improvement

Posted by Dave Jordan on Thu, Mar 03, 2016

When I used to spend far too much of my life flying around the globe I did my best to avoid cabin chat with fellow passengers. That may sound a bit miserable but I just needed some sleep before arriving at the next FMCG supply chain challenge.

I still prefer to strap in with a hand wrapped around an old Cockburn’s port (in business class) or a plastic cup of wine from godknowswhere in cattle class and sleep until touchdown. My record sleep was non-stop from Kuala Lumpur to London when the air crew checked I was actually breathing every few hours.

Even then there were some travellers who obviously needed their chat fix to relax and they were persistent. This led me to design a range of responses to the inevitable “what do you do?” enquiry that would leave the chat ball squarely in their court and keep it there!  My top five “stop the chat” responses were:

  1. I have just been released from prison for a really bad thing but don’t worry, my drugs usually get me through the flight.
  2. I am an undertaker with excess capacity seeking new business.
  3. I am an erotic dancer and stripper (no, not of the paint kind).
  4. I collect nail clippings; from hamsters.

If they persisted I would look them deeply in the eyes and say:

  1. I’ll do whatever you’d like me to do………

FMCG_SUPPLY_CHAIN_COMMUNICATION_SCORECARD.jpgThe temptation to do this in business must be avoided as discussion and debate are of course vital for success.  Nevertheless, the wrong question at the wrong time in the wrong tone can hide issues and keep them hidden until lasting damage is done. When questioning is consistently about what went badly you seldom hear what really did go wrong only what the “accused” is willing to reveal without exposing themselves or colleagues. 

To stem the tide of accusative questioning in an IBP/S&OP meeting try a different approach and see how colleagues react. Throw in a few of these questions/requests to get the chat ball freely bouncing back and forth and avoid the what went wrong/who did wrong interrogation.

Performance Scorecard

Measurement

Achievement

Board feedback

Forecast Accuracy

85%

Getting better. Please share some of the successes from the month to see if can share the learnings across all categories.

Overall Equipment Efficiency

75%

How can we maintain this momentum so we can continue to postpone new capex?

Picking Accuracy

99.95%

Nearly perfect; can we do any more or is it a case of diminishing returns?

Customer Service Level

98.75%

We are delighting 98.5% of our customers but some still need a bit more from us, or do they? Why don’t we check what the other 1.5% really need from our extended supply chain?

Inventory Level

15 days

Such a difference to 12 months ago after our SC Analytics investment. Could we shave off another day?

When you see scores very close to the objective or what is actually possible given the constraints of your supply chain then change the approach. Tease out a little more performance rather than stopping the chat ball dead in its tracks.

Image courtesy of stockimages at freedigitalphotos.net

Tags: FMCG, Performance Improvement, KPI, Communication