Supply Chain Blog

FMCG S&OP implementation & compliance: MNC's & regional players

Posted by Dave Jordan on Tue, May 14, 2013

Increasingly, most multinational FMCG/Brewing/Pharmaceutical companies have implemented some form of Sales & Operational Planning (S&OP) or further integrated planning. They will have gone through the undoubted pain of getting people together to communicate for the good of the company and not just individual departments. Asking people to change the way they have been working, i.e. in silos, for years and having meaning and collaborative discussions is a very difficult task.

Other smaller and possibly regional players are yet to take the plunge despite the obvious benefits that continue to be generated in the larger operations. As mentioned above, the adoption of a robust S&OP does indeed take some effort particularly if the Sales and Marketing departments are lacking in structure and rigour which sadly, is usually the case. However, the longer there is a lack of planning rigour related to sales and marketing activities affecting product supply, undoubtedly the harder it is to make the S&OP mentality change.

S&OP Maturity Supply Chain Getting the meeting structure in place is hard enough as contributors have to have fixed dates in their diaries for months ahead. The sequence of inter-related meetings cannot stop or be significantly adjusted as the whole S&OP process is then out of kilter. Such discipline does not come easy but you have a chance if the top team and particularly the CEO/MD understands what S&OP is and is seen to be a very visible leader of the process. After all, the success of S&OP and ultimately the sales generated impacts heavily on her/his career prospects.

So, in such cases with smaller companies the equation is:

S&OP Education + CEO/MD understanding and buy-in = Success

Going back to the multinational situation, once S&OP is established is that the end of the matter? A resounding “no” is the answer in increasing numbers of companies. The pain of implementation has eased and the consultants or in-house project managers have cleared their desks. Project ROI has been calculated and the pay-back has been very swift indeed. Market performance is growing and the team seems a lot happier with their lot. What can go wrong?

Firstly, competition will always increase and improve so the efficiency and maturity of your S&OP must be constantly challenged or your once-formula 1 process could actually be well back on the grand prix starting grid. In order to avoid salami-like slippage the buzz word for the larger companies is compliance. Employees can get bored with the necessarily endless and repeated meetings and slackness and short cuts can creep in. If you have an ERP even the dreaded Excel spreadsheet may have made a comeback!

Assessing your S&OP performance and compliance internally is difficult and seldom provides you with a crystal clear picture. Get this done by an external company with deep knowledge of S&OP and more importantly, awareness of how other companies are succeeding with new and improved S&OP tools and techniques.

Image courtesy of Stuart Miles at Freedigitalphotos.net

Tags: Dave Jordan, CEO, Performance Improvement, S&OP, Forecasting & Demand Planning, Compliance

S&OP Compliance – 3 Steps to Success

Posted by Michael Thompson on Mon, Jun 13, 2011

I have had several further discussions with our Supply Chain Executive from a recent blog on the subject of supply chain and S&OP compliance and its relationship to supply chain assessment.

Let me reiterate the key issue. 

Many organisations undertake a periodic supply chain assessment or review.  Generally this is a ‘deep dive’ assessment of the supply chain – a health check or audit, so to speak.

S&OP ComplianceS&OP compliance is different.  This is a regular (usually monthly) compliance check. It is a simple and quick method of assessing the extent to which there is compliance against, for example, a set of supply chain process standards that have been developed and deployed.

So to address the question posed in the last blog:  Can our Senior Supply Chain Executive translate his supply chain assessment into a simple monthly compliance checklist?

The answer was – sort of. So we had a further series of discussions to help guide the process.

In summary, a strategic view needs to be taken with regard to the current status of the supply chain (Where are we now?), future supply chain strategic intent and goals (Where do we want to get to?) and the steps and measure to achieve our supply chain goals (How do we get there?).

So to put our discussion of supply chain assessment and compliance into this ‘strategic context’, I offer the following 3 steps to success:

 1. Current Supply Chain Status – measure

  • Measure current status of the ‘internal’ supply chain & ideally external relationships with supply chain partners (e.g. suppliers & distributors).
  • The current status can be expressed as Supply Chain Maturity.

2. Strategic Intent, Goals & Plans – decide what you are trying to achieve.

  • Decide overall strategic intent (e.g. improve service levels to >98%; reduce inventory to upper quartile of industry best practice, achieve overall supply chain maturity of >3.0; etc). Remember cost / benefit of high levels of supply chain maturity.
  • Establish internal supply chain goals & external goals with supply chain partners.
  • Develop Road Map & Plan to realise above.

3. Compliance – develop & deploy a model

  • Translate strategic intent and goals into monthly (or weekly) activities on a process basis. The activities will be closely aligned to the assessment criteria used in determining supply chain status in 1) above.
  • Establish compliance methodology and tools to support the required activities.
  • The Enchange toolset measures compliance to predefined standards. As a simple monthly self-assessment check, it also quickly identifies specific & targeted areas for performance improvement

Having had this discussion, we attempted to put the theory into practice. 

More in the next blog on S&OP and supply chain compliance.

Comments always welcomed please.

S&OP Compliance

 

Read other posts regarding Compliance HERE.

 


Tags: FMCG, Michael Thompson, S&OP, Forecasting & Demand Planning, Compliance

Supply Chain and S&OP Compliance & Assessment

Posted by Michael Thompson on Wed, May 18, 2011

My earlier blogs about supply chain and S&OP compliance have prompted a number of further discussions.

I love being compliant resized 600One particular issue that has emerged is an area of potential confusion. It came to light during a recent discussion with a Supply Chain Executive of an FMCG multinational. 

SCE (Supply Chain Executive) - You have mentioned the need to produce a checklist based upon an operating model. Indeed this was noted as “Step 2” in one of your blogs.  We tried this and it looked very similar to the list that we previously used to assess our supply chain.

Mike  Good. It is supposed to. However, there is a significant difference between a ‘deep dive’ assessment of the supply chain and a regular operational compliance check.

SCE  Please explain.

Mike  A supply chain assessment is a periodic event that assesses the status of the supply chain and can, for example, measure supply chain maturity.  It is akin to an audit and typically takes between one and three weeks for a operating company, depending on the level of detail. 

A monthly compliance check is a simple and quick method of assessing the extent to which there is compliance against, for example, a set of supply chain process standards that have been developed and deployed.

SCE  I can understand that.  But you said that the two are similar. 

Mike  Yes. The two are similar in so much that they should be closely aligned. Ideally the compliance checklist should be fully supportive of the supply chain assessment originally used, assuming that you wish to measure compliance based upon the original assessment (audit).  The difference is that the compliance check is a simplified and more ‘user friendly’ version.

SCE  So at one level they could be almost identical?

Mike  Yes. For example, you may wish to use the same key activities (e.g. demand planning) and the same checklist criteria within each key activity but please remember that the compliance checklist must be simple.

SCE  How can I make the monthly checklist simple if the original assessment was far more complicated?

Mike Try this test.  For each item on the checklist, make sure that it can be answered with a “yes” or “no” response.

SCE  Sounds straight forward.  Let me try.

Mike  It is not too difficult but does need to be carefully thought through.

SCE  Leave it with me ....

S&OP Compliance

 

Read other posts regarding Complience HERE.

 

Image credit: zazzle.co.uk

Tags: FMCG, Michael Thompson, S&OP, Forecasting & Demand Planning, Compliance

Supply chain and S&OP Compliance – 5 Steps to Making it Happen

Posted by Michael Thompson on Tue, May 03, 2011

I have had several discussions in response to my last blog on the subject of supply chain and S&OP compliance.

A common theme was the practicalities of measuring compliance.  So here are 5 steps to make it happen.

  1. Supply Chain & S&OP Operating Model. Start with the blueprint or template of how the supply chain should operate.  This is often a process map at several levels of detail, sometimes to procedural level.
  2. Checklist.  Use the operating model to define a checklist of activities that should be undertaken on a regular basis; monthly is usually sufficient.  Subdivide the list into key activities – e.g. Demand Review, Supply Review, Financial Evaluation, Consensus, Demand Execution, Supply Execution.  Clearly define for each activity what constitutes compliance. 
  3. Process Owners.  Assign a process owner to each key activity.  These people nearly always pick themselves as depicted by their operational roles.  Their roles should now include formal responsibility for reporting compliance each month. 
  4. Measuring Compliance.  A reporting mechanism is now needed.  We have found that some type of tool is the best way of capturing compliance data and information.  The tool should be accessible by process owners of course and be visible to the operational management team and team of senior executives.  Tools can be spreadsheet based (this is often a good place to start), web based or utilise social networking tools.  The key issue is to make the tool easy to use and accessible.  We would also advise that the tools focus not only on compliance as such but also on improvement.  As such it is a good idea to include a section in the tool related to a short narrative on status and future improvement actions.  Brief and train users in the use of the tool and, critically, on why it is being deployed.  If possible aim for a ‘sell approach’ but a ‘hard sell’ – this is a critical part of company operations.
  5. Keep it Simple.  People do not like what they perceive as extra work.  People also do not like filling out forms, even if they are within well designed tools.  Whatever type of tool or reporting mechanism you choose, test it and time how long it takes to complete.  If it is longer than 10 minutes (maximum 15 minutes), it is too complicated.

Supply chain and S&OP Compliance

You are now ready to go.

Our experience is that if you stick to these 5 steps, you will have a practical approach to ensuring the extent to which your supply chain and S&OP operating model has been successfully deployed.

If you would like more help with checking supply chain and S&OP compliance, please do contact us – we have done this successfully many, many times before.

S&OP Compliance

 

Read other posts regarding Compliance HERE.

 


Tags: FMCG, Michael Thompson, S&OP, Forecasting & Demand Planning, Compliance

Supply Chain and S&OP Convergence – Checking Compliance

Posted by Michael Thompson on Thu, Apr 07, 2011

Why don’t people just do what they say they will do?

This, in a nutshell, was the substance of a discussion I had last week with a senior supply chain executive of a Fortune 500 FMCG multinational. 

It is also similar to many conversations I have had down the years with executives disappointed with the extent to which change has occurred as a result of multi-million dollar change programmes.

I will describe this particular case by paraphrasing our discussion:

Supply Chain Executive (SCE): “We have just completed a global convergence project. It has cost several millions of dollars. In addition to an SAP upgrade, it also aligned our global and regional S&OP processes.

I have just completed a tour of my region (Africa Middle East).  I am very disappointed about the lack of progress with the S&OP project.  In summary, people, including senior management, are just not doing what they are supposed to be doing.  They all signed up to the programme but are not complying with the new global standards that have been agreed.

Why is this & what can I do about it?”

Michael Sympathetic Ear (MSE): “What is happening?  And what is not happening?”

SCE: “It’s a mixed bag.  In some Operating Companies (OpCos), the process is in place but at a very superficial level.  For example, key meetings seem to be happening but I know that key operational decisions are being taken ‘behind the scenes’.  In some OpCos, key parts of the process are not working well or are totally absent.  In other OpCos meetings are not taking place at all.”

There followed a discussion of how the programme had been conceived and rolled out.  It is true to say that some of the key levers of change management had been overlooked, notably in the failure of true engagement with senior management prior to and during the programme, and in the absence of proper involvement of operational management in deployment.

However, the question is - what should this senior executive do to address the current situation given the current situation?

I return to our discussion:

Mike Sympathetic Ear (MSE): “What processes have you put in place to ensure monthly compliance?”

SCE: “The main reason for my tour was to check implementation progress.”

MSE: “Yes but what about an operational process undertaken at local level to check compliance?”

SCE:  “Nothing operational as such.”

MSE: “Well there is something you can address straight away. You need to understand what is actually happening (or not happening) on a routine monthly basis.  A tour by senior management will only give a ‘snapshot’ at best.

SCE:  “Ok.  How do we do that?”

S&OP Process Compliance

MSE: “Use your Supply Chain Operating Model (we had established that one existed & that it was sound and documented) to create a checklist of monthly activity. Subdivide the list by key activity (e.g. Demand Review, Supply Review, Financial Evaluation, etc). Define for each activity what constitutes compliance.  Assign a local process owner to each key activity (this had in the most part already happened) and make them responsible for formally reporting compliance each month.  Include a short narrative on status and future improvement. Keep it simple – i.e. it should take no more than 10-15 minutes each month for a process owner to complete.”

SCE: “That could get resistance.  Management are very busy.  They may think it’s a bit ‘Big Brother’ with Head Office checking up on them.”

MSE: “If they complain about either, something else is probably wrong.  In that event, you need to understand what the ‘something else’ is.  Let me be blunt.  You spend millions on a new convergence project, a key component of which is clearly not working.  Surely the very least you should be doing is checking that people are doing what they signed up to do.”

SCE: “Fair enough. Sounds like it’s worth a try”.

Compliance checking is a key part of project monitoring and evaluation. And it is not difficult to do. 

Enchange has developed compliance tools that can greatly help the process.  If you would like more information, please do contact us.

 

  S&OP Compliance

Read other posts regarding Compliance HERE.

 


Tags: FMCG, Michael Thompson, S&OP, Forecasting & Demand Planning, Compliance