Supply Chain Blog

Supply Chain Analytics: Sprouts, Imodium & Harry Potter

Posted by Dave Jordan on Wed, Jan 18, 2017

Christmas and new year holidays seem a long way behind. The decorations have been squeezed back into their boxes for another year and Slade, Cliff, Bing, Bowie and others are safely back in their CD cases. Turkeys around the world are rejoicing as much as the children who do not have to tackle Brussels Spouts for another 12 months.

 

As ever, platform 9 at London’s Kings Cross station is a lonely place jam-packed full of people. Fellow commuters all with the same futile hope of securing a double seat with a table and a charging point nearby. A seat of any kind would be a bonus on your daily commute out of London to Cambridge on the 07.44 but at least this train will run and is on time. This must be the only form of transport globally where you can pay a premium seat price to stand next to a blocked toilet. Enjoy!

 

Blue Monday, even the odorous toilet spot has been taken so you are further relegated to the unheated bicycle area which must have been designed for Eskimos with unicycles. Settled as well as it is going to get, your thoughts turn to the new year ahead and the depressing expectation of the same old operational problems and challenges popping up. The slow chug-chug of the train brings the first lines of Bohemian Rhapsody to mind as an apt description of how you feel:

 

Is this the real life?SUPPLY_CHAIN_ANALYTICS_IT_FMCG.jpg
Is this just fantasy?
Caught in a landslide,
No escape from reality.

 

This sneaks into your head repeatedly even as the chugging slows and Cambridge eases into view. Time to snap out of it and get the business hat firmly on. At least the new ERP is in place and after a 3-month error-ridden ramp-up it should be ready to support the business a little better than the in-house, low cost, back of a fag packet version that lasted more than 10 years. There is a lot riding on this expensive ERP; this ERP will finally tell us what is really happening in our supply chain.

 

Well no, it will not.

 

Don’t worry, you have not invested heavily in the wrong software. The ERP will do exactly what is says on the tin which is probably in the German language.

 

Thinking back to that train toilet, consider for a moment that your ERP is Imodium – a fantastic product which does exactly what it claims on the pack. You can trust Imodium to get you from A to B where B is not necessarily where you want to be but it is a place of distinct safety and comfort. Imodium does not tell you what went wrong inside nor does it tell you what to do differently to avoid the same effect at a later date. In short, Imodium slows down your business but doesn’t tell you what is wrong.

 

What you need is some form of Supply Chain Analytics to sit on top of your ERP/Imodium – not a substitute. Your new ERP will have automated your usual ways of working but this seldom leads to huge improvement and often, performance visibly worsens with the increased noise and operator nervousness in the planning processes. Inevitably, the forecast takes the blame. The issues lie within the supply chain processes, the set-up of the IT systems and how add-on tools are being used. To protect themselves, your supply chain managers are buffering supply chains with unnecessary inventory and backside-protecting lead-times.

 

Analytics uses your data to analyse and diagnose what is happening in your supply chain by providing a suite of tools and dashboards to model the implications of your decision making. Achieving extra visibility across the supply chain inevitably delivers better service, lower costs, happier people and a supply chain that is easier to manage.

Analytics is transforming the way organisations improve performance and gain competitive advantage, every day. Even on those cold, wet Mondays when you are at the station contemplating another standing commute. Take a look at Supply Chain Analytics and you will find yourself with exclusive access to Kings Cross Platform 9¾ and we all know what magic is possible there!

Image courtesy of Poulsen Photo at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Humour, Supply Chain, Supply Chain Analytics, IT

FMCG Planning: If you like chocolate, now is the time!

Posted by Dave Jordan on Wed, Jan 11, 2017

Overeaten chocolate during the holidays but still want some more? Get yourself and a large blue IKEA bag down to your local supermarket as chocolate is heavily discounted. Easter is not far away this year so why not save a little cash and stock up now - use by dates permitting, of course!

Post Christmas I have been taking a look at International Key Account retailers and seeing how they are coping in the continuing economic squeeze. One question came to mind after seeing well over 20 outlets of various retailers. What do they all do with all that chocolate and other Christmasy confectionery?

Planning Chocolate Sale The same scenario is also present after Easter. Shelf after shelf and gondola after gondola of seasonal chocolate in all sorts of formats, shapes and sizes. Not simple packaging either and it must cost a fortune to pack a 15cm tall chocolate Santa or rabbit into a multi-coloured coffret. To be fair it is not just one manufacturer who has suffered a forecasting blip, every major name chocolate producer appears unable to get it right. For all of them Christmas must be a peak period and one that can make or break the year-end results and with no time left to remedy any sales deficit. Similarly, the timing can also place an un-provisioned hole in Q1 numbers even before you have taken down the decorations.

Of course, nobody wants to disappoint consumers and run out of stock at those peak periods but how can they afford the apparent over-stocking? If the goods are on consignment or “sale or return" then I can perhaps understand why retailers let displays hang around for several weeks. Even then I doubt the retailers would relish wasting valuable sales space on Easter themed chocolate into June and beyond.

Considering the power retailers have over producers I do not understand why stock is allowed to gather dust on shelves. Certainly, for many foodstuffs the listing contracts will contain clauses to withdraw stocks but usually only when the sell-by date approaches or off-take is ridiculously low.

What is the destiny of chocolate Santas and bunny rabbits after the sell-by date arrives? You cannot do much with it, can you? You cannot send it to a sink market in another country and with the vast majority of edibles you cannot recycle the stuff into fresh production as you could with washing powder, for example. If you have to write-off stock you have to pay to have it destroyed professionally and you frequently have to pay VAT on the stock value as if it was a sale.

Whatever the destiny of all that yummy chocolatey goodness, it is indicative of a lack of rigour in forecasting and/or sales expectations. Diverting some investment from stock that does not sell into taking a long, hard look at your Sales & Operational Planning (S&OP) process could offer a very rapid pay-back for those companies willing to break the chocolate losses mould.

As a step further, Supply Chain Analytics can help you to fully understand what is really happening in your peak periods and why you continue to miss your sales targets. Presently, there is a free of charge offer to analyse some of your data and expose the reality of your decision making.

Image courtesy of Nora Ashbee at Enchange.com 

 

 

Tags: FMCG, Christmas, Dave Jordan, Supply Chain, S&OP, Forecasting & Demand Planning, Supply Chain Analytics