Supply Chain Blog

Supply Chain Performance: Budget Airlines and KPIs……

Posted by Dave Jordan on Wed, Jun 14, 2017

I have never been a fan of budget airlines and certainly not since one left me sleeping overnight in the back of beyond that is Luton Airport. That may be an exciting addition to a student’s back-pack holiday itinerary but when you have a glass back it is not so appealing.

Nevertheless, they do fly to or near to where I need to be and the prices are much cheaper if you book well in advance, don’t pay with a credit card, don’t carry any luggage, don’t eat or drink, wish to sit next to your wife or use the toilet (thank you Fascinating Aida).

So, once again I found myself on the busy Birmingham – Bucharest route after visiting the heiress and some things are inevitable on a no-frills airline. I know the dimensions of my carry-on bag but so many others either forget to check or think they will get away with a dayglo sausage the size of Sicily without paying the penalty fare. That’s how they make their money; last minute, extortion, take it or leave it.

My second frequent observation is that there is usually someone sitting in my seat when I board. Yes, they move when challenged but only to another seat which is not theirs either. I know some airlines do or did provide a free seating/chaos policy but when you have a seat allocated on the boarding pass, sit in it!

Finally, we are off the ground and ascending before soon the engines throttle back and this is when I want to shout out some helpful advice to the captain, “change gear now”. I know how planes work but that bit off take off always makes me uncomfortable. The beep of the seat belt sign going off leads to an immediate dash for the toilets (I hope they pre-paid) and a long line of shuffling bodies.

The line of casually shuffling bodies soon turns into a twitching queue of concern as the red toilet sign above the cabin remains illuminated. Phones are consulted to pass the time and refocus the mind; people even read the safety information booklet and the duty-free magazine which is anything but duty free, of course.

Finally, a Flight Attendant needs to transport a metal trolley on inedible stuff to the other end of the plane and realises she cannot possibly conquer the lavatory line and politely knocks on the toilet door. No answer. Another tap-tap-tap plus an enquiry if everything is OK also fails to change the indicator from no-go red to free flowing green. The red light seems to glow brighter as if to irritate those with crossed legs.

This is now serious as the inedible stuff is getting cold and more people are standing in the aisle than sitting in seats. The pilot is probably having to battle with the controls to keep the plane centrally balanced. Something must give and judging by the faces of the queuers, this will be very soon. The red light glows.

Then action; the queue is guided away from the toilet door and back behind the curtain. Male and female crew members are poised to open the door using the emergency switch and they don’t know what or whom they will find. The door is cracked open as male and female eyes strain to see which crew member will take the lead and help the possibly stricken passenger. The red light vanishes and the green for go appears above the curtain. Relief is at hand.

There’s nobody in the toilet. The grateful mass of people takes one step forwards as the end is finally near.

FMCG_SUPPLY_CHAIN_HUMOUR_KPI_ANALYTICS.jpgSo, what went wrong? Will the cleaning service at the destination find something a very unexpected item in the garbage area? Is someone hiding in the skin of the aeroplane plotting something nasty?

There was never anyone in the toilet in the first place and staff had forgotten to flick the switch to make it open for business. The red light stayed illuminated but it was not telling you what the real situation was with toilet occupancy and the impasse was allowed to go on for quite some time. The KPI (kay pee aye) was showing red but it was not telling you the reality and certainly not everything.

Don’t always believe your KPIs are telling you the whole story; challenge them routinely. They are frequently an indication of performance at a certain moment in time and a longer-term view is necessary as the business evolves. If your business is in trouble you may need a set of Recovery KPIs whereas a booming business on a roll may need a set which is far more forward thinking and aggressive. Supply Chain Analytics help you take the longer term view.

Blindly believing long term over or under performance can see your company quickly performance go down the pan.

Image courtesy of phasinphoto at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Humour, Performance Improvement, Pharma, KPI, Supply Chain, Supply Chain Analytics

Global FMCG Supply Chain Transformed by Analytics

Posted by Dave Jordan on Wed, Apr 05, 2017

The Challenge

A leading global FMCG company undertook an aggressive supply chain improvement programme across 150 markets. The objective was 100% alignment of worldwide operational activities with company strategy and objectives. Not an insignificant task! 

The Problem

The organisation routinely calculated and published multiple KPIs and targets, but a lack of data integrity, accessibility and insightful reporting limited supply chain progress. Data was ‘scattered’ across multiple sources including enterprise ERP, market ERP, multiple factory systems and MI systems. No shortage of data but a severe dearth of insight and information.

In several markets, the organisation was suffering from volatile and highly variable short-term supply chain plans and an excess of finished goods inventory, despite a stable and predictable consumption. The ways of working within the supply chain and the interactions externally were traditional, with operating practices and decision making analysis unchanged for far too many years.

The Solution

Engagement with key stakeholders across the business established the corporate need and critical success factors for the analysis. A Toolset & suite of SKU-level Dashboards was developed, focussing on demand, planning, materials, production & execution. Company data was extracted into the toolset to provide information leading to appropriate actions. New monthly reporting and analysis revealed significant inventory reduction opportunities and importantly, operational management had the confidence to drive the required changes with a far greater understanding of potential outcomes.

sc_transformation_supplyvue_updated.pngThe Winning Tool

SupplyVue is a revolutionary supply chain analytics solution.

  • SupplyVue uses existing data to analyse and diagnose problems and successes in the supply chain.
  • SupplyVue provides a suite of tools and dashboards to model different inventory, financial and service level scenarios.
  • SupplyVue provides the visibility, data, information and business case to drive changes in the supply chain while fully understanding potential trade-offs.
  • SupplyVue enables provides visibility across the end-to-end supply chain to deliver better service to internal and external stakeholders.

The Result

Hard work, patience and trust in the analytics tool provided:

  • Improved forecasting accuracy.
  • Senior management tools to set informed policy.
  • For the first time, planners had powerful and relevant tools to perform root cause analysis of supply chain issues.

The big one? The company achieved an inventory reduction of 40% (yes, forty) in 12 markets amounting to US$ 200 million. Not too shabby eh?

Plus, something that is difficult to measure. SupplyVue raised the morale of supply chain staff who were now able to offer intelligent and assured solutions rather than shoulder shrugs and excuses.

The Future

Would you like to read more about analytics?

Supply Chain Analytics

SupplyVue

The Pathway

How to transform your supply chain?

The Next Important Step

Enchange can help you transform your supply chain, the overall business and personal ambitions!

To find out how we can help you and to enquire about our wide range of supply chain and related services please click here and contact us.

Image courtesy of Enchange.com

Tags: Customer service, FMCG, KPI, Supply Chain, Inventory Management & Stock Control, Supply Chain Analytics

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

FMCG Supply Chain: KPI Scorecards - Don’t look back in anger

Posted by Dave Jordan on Wed, Mar 16, 2016

For a change, UK has been my base for a few weeks and even in that short time I have started to genuinely think I must now be a different nationality if not from a different planet. When my denim jeans rip at the knees it is time to throw them out.  I do not have a badly drawn and inappropriately placed tattoo. Nothing on me is pierced and decorated with metal, precious or otherwise.

I do not have a preference for Ant or Dec – the “best” UK double act in a sea of tepid TV reality dross? What is Keith Lemon all about? So many TV channels yet so little worth watching. I put litter in waste bins. I still know how to queue. I honestly don’t care about the new line up of Top Gear. Even my waistline is now considered trim. I own music recordings where the performers wrote the lyrics and play the instruments and don’t get me started on that Justan Ameoba fool.

Nevertheless, there is something consistent. Something that has not noticeably changed since I packed my company leaving gift suitcases in 1991 and departed for the desert. Traffic Wardens.

FMCG_KPI_SCORECARD_SUPPLY_CHAIN.jpgBeing a Traffic Warden is a universally hated career choice and possibly third on the detest list after Tax Inspectors and Bankers these days with Politicians closing in, of course. In the UK wardens patrol the streets looking for vehicles illegally parked even for a short time or even if the front bumper/fender overlaps the authoritative double yellow lines by a few millimeters.

Why do they exist; the role that is, not the people? What good are they doing for the general public and the fuel duty/road tax cash-cow motorist? Are they here to keep the Queen’s highways, byways and pavements clear of transportation obstacles to allow free flow of vehicles, people and prams? Are they here to generate as much revenue as possible for councils and police authorities?

Is their role to gently correct errors, show understanding and guide people on their future behaviour or are they here to discipline, penalise, visually allocate blame with a sticky yellow ticket and generally strike fear and hate in drivers? Should people hide and shy away from traffic wardens and treat them with mistrust or should they be seen as a welcome, integral part of day to day living.

Friend or foe? Beauty or beast? Pariah or paragon? Ant or Dec?

So what does your Supply Chain team think about your monthly KPI Scorecard discussions within your IBP/S&OP process? Is it a meeting all about blame and backwards looking fault finding and discipline? Or is it what it should be, an open discussion about what needs to be done better by everyone in the current and coming periods?

You certainly must learn the lessons of past shortcomings but applying the learnings to the future is a far more positive and healthy experience for everyone.

Applying a “…don’t look back in anger” approach will lead you and the business to a much more profitable oasis within the FMCG market place.

Image courtesy of iosphere at freedigitalphotos.net

 

Tags: FMCG, Performance Improvement, KPI, S&OP, IBP

Supply Chain: Communication teases out scorecard improvement

Posted by Dave Jordan on Thu, Mar 03, 2016

When I used to spend far too much of my life flying around the globe I did my best to avoid cabin chat with fellow passengers. That may sound a bit miserable but I just needed some sleep before arriving at the next FMCG supply chain challenge.

I still prefer to strap in with a hand wrapped around an old Cockburn’s port (in business class) or a plastic cup of wine from godknowswhere in cattle class and sleep until touchdown. My record sleep was non-stop from Kuala Lumpur to London when the air crew checked I was actually breathing every few hours.

Even then there were some travellers who obviously needed their chat fix to relax and they were persistent. This led me to design a range of responses to the inevitable “what do you do?” enquiry that would leave the chat ball squarely in their court and keep it there!  My top five “stop the chat” responses were:

  1. I have just been released from prison for a really bad thing but don’t worry, my drugs usually get me through the flight.
  2. I am an undertaker with excess capacity seeking new business.
  3. I am an erotic dancer and stripper (no, not of the paint kind).
  4. I collect nail clippings; from hamsters.

If they persisted I would look them deeply in the eyes and say:

  1. I’ll do whatever you’d like me to do………

FMCG_SUPPLY_CHAIN_COMMUNICATION_SCORECARD.jpgThe temptation to do this in business must be avoided as discussion and debate are of course vital for success.  Nevertheless, the wrong question at the wrong time in the wrong tone can hide issues and keep them hidden until lasting damage is done. When questioning is consistently about what went badly you seldom hear what really did go wrong only what the “accused” is willing to reveal without exposing themselves or colleagues. 

To stem the tide of accusative questioning in an IBP/S&OP meeting try a different approach and see how colleagues react. Throw in a few of these questions/requests to get the chat ball freely bouncing back and forth and avoid the what went wrong/who did wrong interrogation.

Performance Scorecard

Measurement

Achievement

Board feedback

Forecast Accuracy

85%

Getting better. Please share some of the successes from the month to see if can share the learnings across all categories.

Overall Equipment Efficiency

75%

How can we maintain this momentum so we can continue to postpone new capex?

Picking Accuracy

99.95%

Nearly perfect; can we do any more or is it a case of diminishing returns?

Customer Service Level

98.75%

We are delighting 98.5% of our customers but some still need a bit more from us, or do they? Why don’t we check what the other 1.5% really need from our extended supply chain?

Inventory Level

15 days

Such a difference to 12 months ago after our SC Analytics investment. Could we shave off another day?

When you see scores very close to the objective or what is actually possible given the constraints of your supply chain then change the approach. Tease out a little more performance rather than stopping the chat ball dead in its tracks.

Image courtesy of stockimages at freedigitalphotos.net

Tags: FMCG, Performance Improvement, KPI, Communication

FMCG Performance Scorecard: Not seeing the wood for the trees!

Posted by Dave Jordan on Wed, Aug 12, 2015

When travelling, my personal preference is to take only one plane to my final destination. I know this is more expensive than journeys with connections but I find it a much better overall experience. Of course, sometimes I do have to transit and I must have done this on a few hundred occasions but it is nearly always a nightmare especially in places like CDG and currently in Rome. Whoever designed the temporary airside operations during the terminal extension needs their gene pool membership urgently reviewed.

Anyway, during a fairly tight transit you seek out the flight display boards and rapidly scan to see from which gate your next flight leaves and if there are any delays. Just as you have found the right flight and glance towards the gate number column the display refreshes and you have to start again. Then the code share flights start to show so the flight numbers change unexpectedly.

With few minutes to spare I am not interested in Ryanair being delayed as the captain is carrying out a whip-round to pay for the fuel. Or that the Wizzair flight has been cancelled at the last minute, again! (If you are going to name the company after something that sounds exciting, fast, direct and reliable then try and operate in that way.)

There is so much information on one of these huge airport screens that it takes some time to actually see whether you need to run or take your time to negotiate a loan to in order to buy an airport meal. When you cannot see important information quickly there is the every chance of missing the flight.

This week I have been helping a regional FMCG company define a corporate KPI Performance Scorecard. Like many companies they had plenty of data, KPIs etc and as usual more than one format for period end performance reporting. In all cases the previous brief must have been to limit the report to single A4 pages but cram in as much data/information as possible via minute fonts and creative use of text in all sorts of direction.

FMCG_SCORECARD_PERFORMANCE_TRAFFIC_LIGHTSUseful visual colour coded traffic lights were present but there was so much “stuff” on show I did not know where to start let alone focus on what was important and needed the senior team attention. Perhaps this is an unachievable utopia but just one set of traffic lights on a page would provide far greater clarity than a jumble of usually backward looking, defensive statements and assessments.

How would this work?

Green – no need for the senior team to waste their time discussing what is going right. (Certainly valid learning in a different business planning forum.)

Amber/Green – improvement is visible and resources should be applied to keep the indicator moving toward a green light.

Amber/Red – something is slipping here. Why? How? What needs to be done to address the slide?

Red – this is what needs the collective brains of the top team. Spend time on these red items as they will be permanently draining resources without defined leadership and coaching.

Presentations where requests for assistance are obscured by formatting and animation are far less effective than clear, in your face messages.

Must dash, flight to catch and it’s not Wizzair.

Image courtesy of stockimages at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Performance Improvement, KPI, Supply Chain

FMCG Supply Chain Scorecard Performance Measurement: Del-Boy Style....

Posted by Dave Jordan on Wed, Aug 05, 2015

In a related post I took a look at the use of Balanced Scorecards in FMCG, Brewing and Pharmaceutical businesses but in fact they are entirely appropriate for any business. Whatever your business size or offering you will benefit from knowing exactly what is going on and where you need to improve.

For once I can name a specific company in this blog. Trotters Independent Traders (TIT) is a well known UK operation involved in general trading and “knocking stuff out”. This very flexible company is run by two entrepreneurial brothers with occasional “help” from a family elder statesman and with even less help from their acquaintances. They operate from an exclusive high-rise, corporate accommodation suite and while they are not yet super rich, “this time next year we’ll be millionaires“is their mantra. This is how the Trotters Independent Traders KPI Balanced Scorecard might look.

fmcg_balanced_scorecard

With a quick glance you can see who is being a dip-stick and who is playing a blinder in this company.

Should you also follow a Balanced Scorecard approach to business? Cushty, you know it makes sense. Le monde est votre homard !

Image courtesy of Enchange.com

Tags: FMCG, Dave Jordan, Humour, Performance Improvement, KPI, Supply Chain

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 Humour: Supply Chain Communication Clarity

Posted by Dave Jordan on Wed, Sep 17, 2014

The United States of America, the US of A, Uncle Sam and the land of the three. No, not a typo but three visits to USA by yours truly, that is.  Two for business and one for pleasure but you cannot visit there without having fun even if it is after a bit of a boring day discussing the details of how to make better soap.

While I have many great memories from the trips there is something humorous that always stands out from each visit. During the first visit to San Francisco for an externally run training course I was told that my English was quite good. The second visit was to Chicago and here after a food fight in a restaurant I was brought a plate of frogs’ legs to make me feel at home.......

humpur_FMCG_SUPPLY_CHAIN_LANGUAGEThe most recent expedition was to West Point near New York City. Not even Jack Bauer could get me to reveal the reason why I was there. Strictly classified. Anyway, in every restaurant or bar bathroom was a sign stating boldly “Staff must was hands”. Well, I waited and waited but nobody came so eventually I washed them myself.

I recently blogged about the lack of clarity in general business language and here I take another look at how a few extended supply chain phrases and terms might have alternative meanings.

Sales are buoyant

The entire sales team is on a team building exercise on a boat

Volumes have softened

The freezer control on the ice cream warehouse has broken down

Service improvement

There is a new speaker system in the church

Operational efficiency

Hospital surgeons are working very well

Forecast accuracy

The weather guy got it right for once

Month-end peaking

Ordering a Chinese roast crispy duck soon after collecting salary

Stock control

A cheap remote for the TV

Capital investments

Buying a house in London or Paris or Rome

Quality control

Expensive remote for the TV

Sales remain buoyant

They are still messing around on that boat

Stock availability

Lots of gravy left over after the roast beef

Bill of materials

A guy called William from the RM/PM warehouse

Lost sales

Inevitable; we have called out the coast guard

Promotional planning

A rarely used HR tool

Transport provider

A taxi

Balanced scorecard

Golf - 74 shots on the front nine & eactly the same on the back nine

Factory gate prices rise

Now it costs more to put a barrier at the front of the factory

Pallet configuration

How an artist arranges paint

Shrink-wrap

A psychiatrist singing an Eminem song

Stock take

Your FMCG warehouse has just been robbed

Pallet utilisation

How much of the pallet is covered with paint

Cross-docking

How the boat captain feels as he finally brings the sales team back

While these are English, English-centric I am sure many exist in other languages. Why not share your alternative supply chain meanings below?

Click here for more supply chain lexicographic guffawing.

Image courtesy of Stuart Miles freedigitalphotos.net

Tags: FMCG, Dave Jordan, Humour, KPI, Supply Chain, Sales, Inventory Management & Stock Control

FMCG Foods Turnaround: A highly successful S&OP Case Study

Posted by Dave Jordan on Wed, Jul 23, 2014

I know I am prone to rattle on about Sales & Operational Planning (S&OP) but seeing the benefits being delivered to previously struggling business is extremely motivating for a confirmed “techy” like myself. If only we could advertise such successes we would be able to find and help other business in need of an S&OP boot camp or some S&OP tender loving care. Here I attempt to highlight how one such business went from a boat up a creek without a paddle to a cruising, ocean going luxury liner.

The Challenge

Our regional FMCG client did not have any formal planning process and so started from a lowly position on the Enchange Assessment scale which allows benchmarking with the same and other sectors.

  • Demand and Supply Planning forums existed but they were not followed by a formal Finance Review nor any Pre-SOP and leadership S&OP meetings.
  • There was a weekly demand planning meeting that resembled an S&OP meeting.  However, this was a “fire-fighting” opportunity to adjust the current month forecast.
  • The forecast horizon was far too short particularly when considering significant peaks, e.g. Christmas and Easter.
  • Supply and demand were not optimised within the business and, for example, lost sales occurred while inventory was managed on a reactive basis resulting in over and under-stocking. As a result, the business had failed to reach budgeted sales targets for a number of months.

S&OP Case Study FMCG Foods resized 600

The Approach

Enchange designed a low cost 3 month project with largely full time support to implement S&OP in the business. As the project progressed the Enchange support gradually changed from “Enchange runs” through “Enchange facilitates” to “Enchange hands-off”. This enabled the client team to maintain process integrity and leadership at the closure of the project.

All processes and procedures were designed and documented together with new job descriptions. A company-wide set of “recovery KPIs” were created and published in a dashboard format with clearly allocated roles and responsibilities for each.

The Result

The business has been turned around as a result of this project. Budgeted monthly sales targets have been achieved for 6 consecutive months. Amongst many other enhancements the following KPIs have been implemented and are measured monthly:

KPI Measurement

Project Start

Project End

Business plan achievement

60%

129%

Growth over previous year

-15%

+20%

OTIF  

32%

95%

Stock outs finished goods

22%

8%

Stock outs raw/pack materials

>10%

2.6%

Forecast accuracy

27

75%

The Future

Clearly, this company is not yet the finished article but the improvements made in such a short time are staggering. KPIs will require adjustment as the company provides more and more fuel to the sales effort to ensure the performance bar continues to be raised and process complacency is avoided.

If you are reading this and this is not your company and you operate in an FMCG D&E market, one of your competitors just made a step change in market performance! Be afraid, be very afraid.

Image courtesy of renjith krishnan at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Performance Improvement, KPI, Supply Chain, S&OP, Integrated Business Planning