Supply Chain Blog

FMCG/Pharma: Why S&OP is vital for your business health

Posted by Dave Jordan on Wed, Nov 27, 2013

I had a terrible row last weekend. Everything seemed to be going well; no stress, nothing to worry about just getting along nicely then boom! There was screaming, pain and I have to admit I was close to shedding tears as the incident unfolded. Within seconds I had gone from warm contentment to hurt and concern.

I had clearly overstretched myself on the rowing machine and my right hip had taken a beating. I was not sure if it was a muscle problem or a jolted joint or possibly both but I was very sure it hurt. Limping immediately and obviously like a poor amateur dramatics actor doing Long John Silver, I turned off the DVD of Botham’s Ashes and hobbled away.

FMCG S&OP business instability resized 600Walking around was difficult as the discomfort was constant and punctuated by unpredictable sharp daggers of excruciating pain for no obvious reason. A good overnight rest should do the trick, or so I thought. The next morning I carefully maneuvered my feet onto the floor and stood only to experience a searing pain in my left foot. Where did that come from? Was I finally falling apart? Has the time come to sell the gym equipment?

I was now walking extremely strangely trying to optimise/minimise the right hip and left foot pain. Expecting some sort of improvement 2 days later, my right knee joined in on the act and started to ache too. An unholy trinity of pain now had me barely walking. My wife reckoned I looked like one of those Olympic walkers but in very, very, very slow motion – so kind!

What was strange was that I could run up the stairs without any twinge of discomfort. How crazy is that? I could run out of the house in an emergency but I could not walk out.

Not surprisingly, my right hip problem had forced me to modify the way my left foot moved me along and in turn, a combination of right hip-left foot adjustment put extra strain on my right knee.

Does my aching torso sound a little bit like your FMCG or Pharmaceutical business? For example, think about what happens when a tactical key account promotion is proposed which was not in any forward looking activity plan. The Supply Chain has to bend over backwards to make stock available for multinational retailers which consequently starves the traditional trade of stock.

Seeing a rise in demand the planners raise orders for replenishment stocks but by the time these arrive the sales team has decided the tactical promotion was not quite right and another sku is required for the promotion. Of course, you are now overstocked in one key sku and out of stock in another and have unhappy clients in both channels.

The supplying factory also detects a rise in demand so activates RM/PM orders in anticipation of execution of the forecasted sales which do not materialise.

If you operate your company outside of a rigorous S&OP process you will cause the business to lurch from one problem to another as different departments work in isolation and try and adjust and compensate for unexpected, unplanned challenges. A real S&OP process – not just on paper to satisfy the auditors – allows all the different departments to take decisions and similarly take risks, with total clarity and consensus on the potential outcomes.

I am fully recovered now but your business may need a little more time to get back into decent shape and S&OP could well be the medication you need.

Image courtesy of cooldesign at freedigitalphotos.netfreedigitalphotos.net

Tagss: FMCG, Dave Jordan, CEO, Performance Improvement, Pharma, Supply Chain, S&OP