Supply Chain Blog

FMCG Boardroom Blame Tennis: What really causes lost/missed sales?

Posted by Dave Jordan on Tue, Apr 29, 2014
I witnessed an intense match of blame tennis recently in the board room of a popular FMCG multinational. The intensity and aggression on display presented a mental image of a tennis match with John McEnroe, Ilie Nastase, Goran Ivanisevic and Marat Safin all on court at the same time with each competing against three opponents in multiple, parallel games. Can you imagine the debris from all those broken racquets and chairs? There would certainly be a multi-lingual blueness in abundance along with some badly damaged balls.

FMCG_Sales_BoardThe CEO blamed the Sales Director for not meeting the targets so the sales guy sent a blame diverting back-hand into the ribs of the Supply Chain Director who then immediately returned with a solid smash only for the sales guy to produce an unexpected lack of credit drop shot that completely caught out the Finance Director. What a waste of senior level time and energy and frankly, shame on the CEO for starting the interchange as he/she should have been better informed. What is more, the S&OP process is obviously not very healthy.

As ever, the reasons for not meeting sales targets are numerous and seldom are such failures attributable to one individual department or team. Through the S&OP process people need to be brave and very open about why errors occur and they will certainly occur as nobody and certainly no S&OP process is perfect.

Work together to identify the real causes of lost, missed or reversed sales. Do not rely on hearsay or history as you cannot cure what you cannot clearly see. Agree a policy that identifies the exact source for all lost sales or returns from clients and then you can drill down and apply 100 year fixes. Note that the aim is not to be able to allocate blame!

Sales generated lost sales/returns/reversals

  • Expired in Key Accounts
  • Expired in Traditional Trade
  • Valid order rejected on receipt at client
  • Damaged at client
  • Overstock at client – stock pushed at month end and not actually required
  • Stock returned by client prior to a relaunch or promotion, i.e. prefers the new packaging
  • Post relaunch returns
  • Failed promotion returns
  • Slow moving stock returned by client, i.e. sales not going as well as expected

SC generated lost sales/returns/reversals

  • Wrong shipments, e.g. client or store
  • Shipment rejected due to missed delivery time slot
  • Damaged on receipt
  • Picking errors, missing goods
  • Picking errors, expired/close to expire goods
  • Documentation errors
  • Old product supplied after relaunch

Shared lost sales/returns/reversals

Duplicate orders received and/or recorded in the ERP.

These are the items that should be under your own control and if you can control them you should be able to engineer improvements. You cannot do much about lost sales due to unexpected but compelling competitor activity, a sudden economy bubble-burst or a natural disaster so focus on what you can influence.

Get John, Ilie, Goran and Marat off each other’s back and get them to direct their shots at the opposition for a change.

Image courtesy of imagerymajestic at freedigitalphotos.net

 

 

Tagss: FMCG, Dave Jordan, CEO, Supply Chain, S&OP, Sales