Supply Chain Blog

Supply Chains – A second look: What do all those initials really mean?

Posted by Dave Jordan on Wed, Feb 08, 2017

In common with many business functions Supply Chains adopt multiple initials and/or acronyms to describe various tasks and processes they manage on a daily basis. Those not familiar with SC-speak will often sit bemused as various initials are quoted and debated and then usually blamed for some tenuous lost sales claimed by Sales and Marketing.

Here I take a fresh look at just a small selection of those Supply Chain initials and acronyms.

SC – Super Colleagues. Well, I may be biased but that is what you usually find. Supply Chain people must react to wildly varying demands and impossible timings but more often than not they succeed to get stock to the right place at the right time.

SOP - Supports Outstanding Performance. If you do not follow an S&OP process and your business is doing well and is robust then a pat on the back is deserved. However, if your business is struggling then you might consider the benefits of S&OP which can make all the difference.

IBP – Irritating But Productive. Often considered to be a more mature version of S&OP, Integrated Business Planning can be similarly difficult to get started but when everything clicks, business benefits.

Supply_Chain_FMCG_Initials.jpgSAP - Spreadsheets Are Preferred. The use of spreadsheets is prevalent in many businesses and equally common is the number of CEO’s who believe spreadsheets are NOT being used in their workplace! They almost certainly are but what can you do about this?

IKA- Irritating, Keep Away. In mature Western European markets, big name International Key Accounts are firmly established but in many other parts of the world the reality is quite the reverse. Traditional Trade is a very important part of many developing businesses yet most fail to pay sufficient attention to the continued growth potential of the TT channel.

SKU - Sales Keep “Upping”. Introducing new SKUs really should be a cross business decision taken within the context of S&OP and with sound financial analysis. Sadly, this does not happen very often as businesses rack up lengthy SKU lists where the tail items do not even pay for themselves in turnover, margin or profit.

KPI - Keeping People Interested. The adage of “if you don’t measure then you cannot improve” is certainly true here. Take care to manage your KPI’s closely and frequently but make sure you have a set which ensures everyone knows how they impact collective team performance and results. Visibly reward against the relevant KPIs and your staff will keenly follow them.

ERP – Everyone Requires Products. The whole purpose of your Enterprise Resource Planning is to get your products to the right place at the right time and at optimum cost. Occasionally, priorities must be made between demanding customers and a good ERP will guide your decisions.

PLP -  People Loading Products. Think long and had before outsourcing your outbound logistics operations to a 3rd party as they may not be ready to take on your business, seamlessly.  Prepare thoroughly and ensure you know exactly what you want from them and the relationship. A big step that is difficult to reverse without pain so be careful!

WMS - Where’s My Stock? Your 3PLP partner should be left to run their own business as that is why you pay them. However, you need to be involved in the stock counting process or you will lose sales and experience costly year-end write offs.

4PLP - 4 People Loading Products. If you have successfully used 3PLPs for some time you might wish to take a look at what a 4PLP can offer to the business. This is certainly not for everyone but can be very cost effective.

RTM - Retail Takes Money. Whether your focus is on IKA or TT how you manage your distribution network will be a key driver of your success in the market place. It is a fact that companies spending time and effort getting their developing market TT distributor networks in good order are more successful.

FIFO – Find It, Fuss Over. When you (or your 3PLP) operate a tight warehousing operation you will know where your stock sits, how old it is and what needs to move out to avoid write off costs and the inevitable poor customer service.

OTIF - Often The Invoice Fails. If you fail to deliver orders on time and in full you invite the customer to challenge the invoice and delay payment until you have made financial adjustments.

There are many, many more examples of SC-speak but this set will do for a KO so TTFN!

Image courtesy of boulemonademoon at freedigitalphotos.net

 

Tags: SKU, FMCG, Route to Market, Dave Jordan, KPI, Traditional Trade, S&OP, Logistics Management, Distribution, Inventory Management & Stock Control

An FMCG Distributor Is For Life: Not Just For Christmas

Posted by Dave Jordan on Wed, Dec 21, 2016

Ok, so you are unlikley to see this on a car bumper sticker but FMCG Distributors will have a significant impact on your sales performance, probably your variable pay bonus and therefore your CEO aspirations! How have you treated your Distributors this year? Were they the usual pain in the proverbial - failing to achieve targets, not paying on time, always moaning about trading terms? Of course, some Distributors do fit this stereotype but others are keenly trying to be treated as and to be, equal partners in your business success. But do you see this?

How are things going in Q4? Have you fallen into the trap of the “sales bonus push”? Year end stock clearance FMCG Breaking all the supply and sales phasing rules you have been trying to drum into Distributors? Did you strictly maintain discipline on Sales & Operational Planning or did the last quarter deteriorate into a “sell whatever we've got in the warehouse” scenario?

Companies that spend time and effort in proactively guiding their Distributors, providing relevant training and support inevitably succeed in the market place. Yes, at the end of the day Distributors have to stand on their own two feet but so many FMCG companies assume an organisation calling itself an “FMCG Distributor” inherently knows how to properly support any specific business.

If you do not pay attention to the Traditional Trade (TT) distribution side of your business then you are asking for trouble and that trouble usually ends in divorce along with all the discontinuity baggage separation brings. You need to avoid your choice of Distributors becoming like the English Premier League where managers get about 5 minutes to make an impact before being shown the door. (Strange though, that all these football managerial failures usually find another highly paid role.)

So, as we approach a special time of the year why not think about your Distributors and ask yourself if you have given them a fair crack of the whip?  If not, then you might consider a New Year resolution to develop a strategy for mutual success. This is far better than continually highlighting deficiencies and using backward looking, discipline focussed KPIs to bash them on the head.

Sit down with your RTM Distributors regularly, evaluate their strengths and weaknesses and agree to do something about the latter. Simply running through a Route To Market evaluation together can work wonders in establishing trust and cooperation. Do yourself a favour and do this now before Q1 next year also becomes history.

Click on the RTM link below and go!

CTA RTM Free Download resized 600

Image courtesy of stock.xchnge at freeimages.com

Tags: FMCG, Route to Market, Dave Jordan, CEO, Performance Improvement, Supply Chain, S&OP, Distribution

Olympic level FMCG performance or simply distributor over-stocking?

Posted by Dave Jordan on Tue, Aug 16, 2016

Wow, four years have flashed past since the London Olympic bunting was packed away and the metal polish put back under the sink. The 2016 Rio games are well and truly underway and the cauldron flame is alight for the duration.

Over 11,000 competitors from nearly 200 countries and even a refugee team have been getting up ridiculously early to sweat and train at whatever sport they excel. That is a huge number of really fit people who are focused on being in peak condition for a once in a lifetime event that might last less than 10 seconds or several hours.

Taking the 100m sprint as an example; the top sprinters will have 4 opportunities to perform. A combined window of 40 seconds to reflect all that money, time and effort that has been expended to qualify and perform to the best of their ability. What if they stumble or don’t hear the starting gun, drop the baton or worse still, get disqualified?

FMCG_INVENTORY_DISTRIBUTORS_CEO.jpgAll that planning and careful preparation to get to the final of the competition only to be disqualified for being a little twitchy waiting for the starting pistol to crack out loud. Or, sticking your foot just a millimeter into the triple jump plasticine. Hey, don’t worry, there will be another chance for you in Tokyo………

You are not in the final to perform in front of millions of people watching around the world. Nobody will see you perform and instead of your stock rising and attracting more lucrative advertising deals you will be remembered as that poor guy with the twitch or that girl with the too-big training shoes.

Cue segue. The global economy seems permanently stuck in “weak and unpredictable” performance mode with no obvious way out even for the dis-United Kingdom of Brexit. Imagine you are a yellow CEO Pac-Man (do they have female Pacs?) nibbling away at the dots and then getting stuck in a dead-end. What next, nowhere to go, panic, panic! Despite this, many CEOs will be under extreme pressure to “make the numbers”. How exactly? While all this Olympic activity is taking place is your physical FMCG stock rising as we move through the second half of the year?

Despite what sales and finance colleagues will spout, there is a limit to how much stock can you push into your trading channels and this includes International Key Accounts. Coercing (or more likely forcing) a distributor to take more and more stock may appear an easy option but it is an unsustainable action that damages your business in the long run.

At some stage a brave CEO has to say enough is enough and start a period of controlled destocking despite the effect this will have on top and bottom lines. Loading the trade does not happen by accident; you know you are doing it so stop deluding yourself and HQ and do something! Put a stake in the ground that sets the tone for the future.

You may believe that excess inventory means you will never be out of stock or off the shelves but this is not the case. The available stock will inevitably be unbalanced and just when you expect your long planned relaunch to fly out of the blocks and hit the shelf you also twitch and realise you have 9 months’ stock of the old product sitting in distributors warehouses.

What a disappointment. A waste of money, time and effort, i.e. an Olympic gold medal-sized goof and HQ is unlikely to give you another chance in a lot less than 4 years’ time.

Image courtesy of stockimages at freedigitalphotos.net

 

Tags: FMCG, CEO, Distribution, RTM Assessment Tool, Inventory Management & Stock Control

7 Deadly FMCG Sins: Overstocked Traditional Trade Distributors

Posted by Dave Jordan on Wed, May 06, 2015

044951C8572581EB3FB7ABA741B0A21E066A3CEE461F88BE9Apimgpsh_fullsize_distrSorry to be a little direct right at the start but make no mistake Mr/Mrs. FMCG Producer, YOU put the stock there, oh yes you did! Distributors don't buy stock for a laugh and a giggle as they like full shelves. Excess stock blocks up their shelves and warehouses and, most critically locks up their cash. Yes, the cash you are desperately trying to collect and book in the accounts to meet your month-end commitments.

 Let us take a look at the 7 deadly sins of excess stock:

  1. Month, quarter and year-end push. "Targets have to be met so push as much stock as possible into the Distributors. Even if they have no chance or intention to sell it."
  2. Failed launches. Unrealistic Producer sales objectives leading to slow moving and eventually expiring goods. Slow movers and expired all form part of Producer stock value and Distributor sunk cash until you do something!
  3. Old label/pre-relaunch stock. Perfectly good stock but the pack with the new artwork is being sold already and nobody wants this variant. Some careful planning in advance could see older stock liquidated in a sink market or moved out through discounting.
  4. Old and expired promotions. Funding support has ended and the guys with the best cars have moved onto the next “big thing” so what do we do with all these left over promotional packs? Disassemble, discount or destroy but don’t keep lying around!
  5. Returns from customers. Still arguing about who is to pay for these returns? Was a return policy agreed in the first place?.
  6. Producer forecasting errors. Nobody wants to lose face at Producer HQ so the excess stock sits and gathers dust until the annual stock count and later expiry.
  7. Damaged and expired. Is it clear who pays for any damages and expired goods? Make a decision and either re-sell or get this stuff off the books. Inevitably, damages will happen but get them written off quickly AND destroyed and get over it. You can avoid expired goods – see all of the above!

You might think your Distributors have a healthy 21 days of cover but in reality they are operating with a much lower level of saleable stock. The rest sits in their books and in your stock cover numbers but it contributes nothing, zero to sales. In fact, it negatively affects sales as stock that is in demand and selling out is available at too low levels to meet customer requirements.

"They have so much stock but my Customer Service level is rubbish". THIS IS NOT A SUPPLY CHAIN PROBLEM ALONE!

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEE, Distribution, Inventory Management & Stock Control

FMCG Distribution: Route Planning & IKEA Shopping Chaos

Posted by Dave Jordan on Wed, Apr 29, 2015

Ok, I know I should not have gone there. It was Sunday and well before the live Premier League football on the TV. The weather was cold, the air was full of drizzle and as I turned off the overgrown roundabout the scale of my folly dawned; the IKEA car park was bursting at the seams. Every available legal and illegal space was taken.

There were families pouring out of cars and into the store and equal numbers trying to squash brown flat-packs of “destroy it yourself” furniture and fittings called Grunt, Splat and Twong into impossibly small cars. What do these people do about their Sunday outing passengers after they have loaded up? Do they give Granny and Granddad a few coins to take the bus home? There is no way you can fit all the passengers and the flat-pack must-haves back into some of these cars.  Maybe that is why they provide rope at the IKEA loading bay; it is actually to tie Granny and Granddad onto the roof of the car.

Oh well, I am committed so might as well join the hoards of people unable to control shopping trolleys, with absolutely no sense of direction and with varying levels of short-term memory loss. I hooked a yellow bag over my shoulder and I too became an IKEA shopper!

I know there is a science in store layout design whether it is a supermarket, a DIY store or an M&S type outlet. The store wants everyone to see everything they have available and they want it to be just at the right time when for example, the shopper has been subliminally convinced that the bright pink Plobo stool would look really nice in their kitchen.

FMCG RTM ROUTE PLANNING resized 600Oh, but the chaos this causes in an IKEA store. Being a Supply Chain chap I would make the whole store strictly one-way with nobody allowed to double back to soft furnishings or for a forgotten low energy light bulb. In fact, if I had my way I would make the floors with a defined downhill gradient and ensure trolley wheels were oiled hourly to help people on their way, through the broken furniture bargain section, past the cheap but strangely filling fast food and out into the car park. What about a small battery pack on each trolley which delivered a persuasive tingle of current if you tried to push the trolley against the traffic? Too extreme, possibly!

Think of all the wasted hours and wasted effort of moving all the way through the store then insisting on reversing the route and getting in the way of everybody else. Then it struck me. I realised where I had seen this before and why I perversely enjoyed dodging the trolleys in the IKEA shopping maze. This is what many FMCG companies suffer in their distribution route planning in Romania every single day. Wasted miles, wasted fuel, wasted time and in all that time there are customers not being served.

If your FMCG sales are struggling along and the stream of excuses for monthly gaps appears endless you might take a close look at how much time your sales people spend selling to and guiding distributors in the Traditional Trade If they have adopted the IKEA system then you may just have spotted a huge opportunity to improve your Route To Market performance.

Go and have a closer look. Get some IKEA rope, tie yourself to the roof a salesman’s car and see what some simple thought and routing logic can add to your bottom line.

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: FMCG, Route to Market, Supply Chain, Sales, Distribution, RTM Assessment Tool

FMCG Traditional Trade Distribution: A letter to the Drinks Agony Aunt

Posted by Dave Jordan on Wed, Apr 15, 2015

Dear Drinks Agony Aunt,

I have reached the end of my patience. I’m drinking too much coffee, too much beer, I smoke like a chimney, I’m not eating properly and I just cannot sleep. I have not managed to watch or play any of my favourite sports and now even my kids call me Uncle Dad as I spend hour after hour at work. At times, a short step off a tall bridge without a bungee cord does not seem such a bad idea. These drinks Distributors are killing me. Literally!

FMCG Drinks Distribution Agony resized 600The world’s greatest drinks salesman is glowing bright yellow in the sky. Consumers are literally gasping for drinks yet we cannot get our products onto shelves and into coolers. We have given the Distributors some very focused incentives and we are spending thousands on quirky TV adverts with that irritating guy with the funny hair. There is no doubt our brand awareness is right up at the top level yet we just don’t sell as much as we could and should!

When the weather is this hot, consumers want a drink when they are thirsty and not when Joe Egg the Distributor can be bothered to turn up in his smoke belching van to replenish stocks. If our product is not sitting invitingly in a cooler the thirsty masses simply take an alternative product. Consumption is immediate, I have lost a sale and this drives me madder than Brian Mad of Madcastle.

Please, please help me. Tell me what I should do before I lose even more of my hair.

Yours,

Frustrated of FMCG Drinks

......and the answer.  

Dear Frustrated of FMCG Drinks,

Thank you for your letter, which was a delight to read. Believe me; you are not alone in having such feelings and concerns. There is nothing worse than seeing the world’s greatest drinks salesman shining down and not being able to meet the demand of the thirsty masses. This frustration plus the lack of return on valuable investment can leave even the calmest of souls agitated and depressed. However, do not despair. As I said you are not alone and this is not the first time I have seen this problem. You need professional help to receive the Route To Market/Distribution therapy you need.

Firstly, you must overcome 2 important barriers. The first is that you cannot assume your existing Distribution network is entirely suitable for the job in hand. Secondly, you must look at yourself in the mirror and realise that you are not perfect either. If you can do these 2 things then help is at hand.

Using this simple checklist and guiding definitions you can take a critical look at how you manage your Distributors and how they manage your business on your behalf. Some of the questions are searching and may cause you some discomfort but this is necessary in order to accurately evaluate what is going well and what can be improved.

Do not keep this to yourself. The effective management and exploitation of a robust and proactive Distributor network is a team effort requiring buy-in from all Board colleagues and peers. Keeping this problem to yourself will only increase the caffeine/beer intake and accelerate the hair loss!

I will always be pleased to help you and look forward to your feedback on a very positive experience with the checklist. Cure the problem, do not treat the symptoms!

Yours in a soothing, calming tone,

The FMCG Drinks Agony Aunt

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, Traditional Trade, Distribution, RTM Assessment Tool

FMCG Shades of Greys: Parallel & Counterfeit Trade

Posted by Dave Jordan on Wed, Feb 25, 2015

Probably sitting at number two in the most popular excuses offered when FMCG sales did not happen as planned is parallel or grey trade. Without doubt greys, “passing off” and counterfeits can have an impact on FMCG sales but I was surprised how they only became significant when sales bonus targets were not achieved. Sales not going too well? Drum up a story about greys flooding the markets.

Counterfeits are simply illegal copies of quality brand names and increasingly they are more and more sophisticated and recognition is no longer a check of the bottle mould stamp or a sniff of the fragrance. Despite co-ordinated attention from multi-national companies, well equipped underground factories still exist to rip-off brand owners and consumers.

FMCG GREYS SALES RTM resized 600Passing-off an inferior product by making it appear to be a top brand is also potentially illegal but often takes time to prove a case. When a product is called Tipton Tea in a yellow box it is clearly an attempt to steal Lipton consumers who are not vigilant. However, if the tea was from Tipton how do you persuade a judge to rule in your favour if the artwork is not identical? As ever, such litigation takes time and money and even then, success is far from certain.

Back to greys or parallel trade. This is genuine product being sold in a territory for which it was not originally intended by the producer. The quality is fine, multi-lingual packs mean the instructions for use are available and in a duty free zone like the EU, stock can legally cross borders. Oh, and they are cheaper than what is normally available in any particular market. Grey sources can often be from a bona fide distributor in another country sending stock over the border with a bulk discount at month end – a sort of shifty shades of grey but not illegal!

The real problem arises when there is nothing shifty about the origin and there is no discounting or margin misbehaviour. Someone can get the same product into your market at lower cost than you can and consumers do not care whose bonus they are affecting. Instead of moaning and groaning about greys why not take advantage of this learning opportunity as someone can do it better than you can; deal with it!

Assuming the source cost ex factory and distributor margin are consistent then you should study your arrangements for transport, warehousing and specifically Route To Market distribution. Get your Supply Chain (not sales) people onto this and fix the cost to serve problem. If distributor margins are causing the greys then that is purely a sales issue, i.e. self inflicted sales pain. Get your whip and sort this out.

If you are the CEO do not be seduced or blind-folded by the sales message that their hands are tied and there is nothing you can do about greys. There is, and failure to do anything about them could cost you your job!

Image courtesy of praisaeng at FreeDigitalPhotos.net

Tags: FMCG, Dave Jordan, CEO, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG Route to Market Distribution: Free Distributor Assessment Tool

Posted by Dave Jordan on Wed, Jan 28, 2015

FMCG producers are often far too ready to blame their Distributors when sales do not go to plan and targets are not met. However, it is rarely all their fault particularly if producers are not clear on what is expected.

To help Producers understand the real state of their Distributors, Enchange has released a free - yes, free - tool to guide an assessment of Distribution networks. While focussed on FMCG the tool is applicable to all sectors using distributors.

Download the tool here.

The RTM Distributor Evaluation Tool has been designed to guide your evaluation of four key capability areas:

Partnership – is the relationship a one way street or do you actually talk to your distributors? Do you treat distributors as real partners aligned with your business objectives?

Planning & Logistics – how does the distributor Supply Chain stack up? Your Supply Chain maybe a Rolls Royce but what about theirs, can it do what you want it to do?

Sales Management – how does the distributor take orders and execute them? You would be surprised (and probably disappointed) at how some major producers are represented in front of customers.

Finance & Back-Office – how well is the distributor organised? How health are the finances? Does the distributor exploit IT or is it still a pen & paper based system?

The tool is not difficult or complicated and it will not take too long to run through the various questions and benchmarking statements. The important point is that the tool is completed as accurately and honestly as possible and certainly in collaboration with the distributors. I recommend you use someone unrelated to the distributor sales function or even a 3rd party to run the process to ensure you receive a reflection of reality.

Of course, the tool is not comprehensive but it can be used to provide a reasonable guide to how your current distributor network operates. Why not try it out; you may well be very surprised by the results!

Image courtesy of Enchange at Enchange.com

Tags: FMCG, Route to Market, Dave Jordan, Pharma, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG: New Top Ten Supply Chain Improvement Resolutions for 2015

Posted by Dave Jordan on Wed, Jan 07, 2015
Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein


How many of you will be reaching for an electric cigarette or giving up smoking altogether for the New Year?  How long will it be before visits to the gym trickle away? Will you get 5 portions of fruit and vegetables a day or will that take-away, drive-thru dinner prove irresistible? All over the world people will be making promises to themselves they would like to keep but few have the staying power to make a difference. Is this possible in your FMCG Supply Chain in 2014?

How about this revised Top 10 List of resolutions to help your businesses improve in 2015?

Supply Chain Improvement ListSupply Chain Awareness – As a start you might like to remind colleagues especially Sales & Marketing what Supply Chain is all about.

Sales &Operational Planning - If this is in place; improve! If there is no S&OP you should try it - it works! If you are agnostic about S&OP, take a look at how S&OP helped one FMCG company turn performance around.

SKU Complexity – Do you actually know how many SKUs you have and what is driving your sku complexity? Do you have amore now than when you started 2014 yet lower overall turnover? Check and take action on non-profitable SKUs and ensure resources are placed behind winners.

Route To Market – In developing markets Traditional Trade will still form a large chunk of your business. Give your RTM a thorough service and your Distributors will serve you better.

Sales & Marketing Buy-in – Wouldn’t it be powerful if everyone in your company was aligned to the same plan and 100% mutually supportive? Too much to hope for? If such a change happens you will rapidly feel the difference.

Proactive 3PLP’s – Are they meeting the agreed KPI’s? Do you have KPis as part of a Service Level Agreement (SLA)? If perfromance is not what you expect then perhaps you need to review them and revise upwards.

Reduced Stock/Inventory – The start of the year is a great time to remove that old stock. Why not give your sales a much needed post holiday sales boost with some unexpected and low cost support using stock that will be otherwise written off? Amd you know it will!

Improved Customer Service – Do you measure this and if you do is the measurement 100% honest and accurate? Companies that fool themselves on Customer Service may see short term benefits but do not succeed in the long run.

Use the ERP - Avoid spreadsheets like the plague as they undermine your business and waste time and effort. If you have invested in an ERP like SAP then ensure it is correctly implemented and apply relevant transactional discipline. Is you business running on raw data or actionable information? Think about that!

Continuously Improve – If you stand still as this awful recession slowly evaporraates it is highly likely you will be at the back of the pack. Keep innovating and improving your Supply Chain to maintain competiveness and freshness.

Naturally, you cannot do everything at the same time but if you choose to focus on a few of these areas you will discover you can significantly change your FMCG business success by getting improved and sustainable value from your Supply Chain.
Make a resolution and just do it! You don't need to be Einstein.........


Tags: Customer service, SKU, Route to Market, Dave Jordan, ERP/SAP, KPI, S&OP, Logistics Management, Distribution, Inventory Management & Stock Control

FMCG Route To Market: Traditional Trade Distributor Signals

Posted by Dave Jordan on Tue, Dec 16, 2014

We have invested in a new waste bin for the kitchen. Even with our strict regime of recycling as much waste as possible that small flip-up bin inside a cupboard just was not big enough. Yes, the lid dutifully popped up when the cupboard door was opened but usually this simply confirmed there was no more room in the bin.

Our new bin is a highly polished stainless steel tube of almost 1 metre in height and can get us through a few days before capacity is reached and a trip to the wheelie bin in the garden is necessary. It is up market too with a system that automatically opens the top of the bin whenever you approach with kitchen rubbish; that’s a bin with a proactive customer service ethic.

In other news. Senior Management and I prefer a pitch black bedroom. This is all well and good until I have to get up early and stumble across the floor and fumble for the bedroom door handle. If this is after a few pints of the foaming ale then I often switch the dog off and let the intruder alarm outside into the garden. On reaching the kitchen I switch on the lights....and the posh new bin 3 metres away as the crow flies and around a corner opens its gaping mouth waiting for rubbish.

FMCG_TT_DISTRIBUTOR_SIGNALSWhy does it do that? This is not meant to happen. The lights are standard bulbs so there is not even an invisible spike from a fluorescent tube starter motor floating around the room. Why is our posh new state of the art waste bin getting a signal to open up and prepare to swallow our daily trash? Even in my slowly improving fuzzy headed state I have no rubbish I need to deposit in the shining tube. The bin is reacting to a signal of some sort but it is producing an action that is not helpful or appropriate.

Where have I seen that before so many times? Let me think about that for about half a millisecond, yes your FMCG Traditional Trade (TT) Route To Market (RTM). You the producer and your exclusive TT distributor partners are trying to achieve the same objective of selling more of your brands. The relationship should not be competitive or one largely based on negative, backward looking penalisation which will do anything but raise your sales.

Let us briefly look at five signals that TT distributors send out and how they are (mis)understood within FMCG producers.

Information Signal

 

Typical Response

A Better Response

Sales running rate unlikely to meet monthly target.

Draft the penalty debit note.

What is the problem, what else can we do together?

Key SKUs are approaching out of stock.

Tell the distributor to improve forecast accuracy.

Oh, an opportunity. Can we get more stock to the distributor?

The promotion is not going as well as expected.

What are they doing wrong?

What are we doing wrong?

There is a new competitor product launch.

Oh, really? Too late to do anything about that now.

Let’s activate a very rapid spoiler promotion.

I have some ideas how we can grow the business.

Yeah, right!

You are closer to the market so let’s hear those ideas.

There are many, many more examples where producers either misunderstand or misinterpret the data and information emanating from TT distributor networks.

A little more care in this area will help to ensure your sales are not a complete load of rubbish.

Image courtesy of Franky242 at freedigitalphotos.net

 

Tags: FMCG, Route to Market, Dave Jordan, CEO, Supply Chain, Traditional Trade, Distribution