Supply Chain Blog

Supply Chains – Managing internal & external 3/4PLP expectations

Posted by Dave Jordan on Wed, Feb 22, 2017

American sit-coms. With very few exceptions I personally do not find them at all funny. At times the funniest part is hearing the hilarious canned laughter when nothing in the least bit humorous occurs. MASH, Taxi and Cheers are the only sit-coms out of hundreds that managed to connect with my sense of humour. This is a personal thing of course but I do not like Raymond and I never got into Friends or what I consider its males deceased sequel, The Golden Girls.

Maintaining the comedic theme, not everyone likes Donald Trump either. The recently installed POTUS has certainly ruffled some feathers and while I am not going to dwell on the content of what he has done or said, the fact is that he is essentially doing what he said he was going to do. The Donald was voted in on certain promises and he appears to be trying to deliver. That ends my toe dipping into American comedy and politics (is there a difference anyway?) and now to Supply Chain stuff!

SUPPLY_CHAIN_3PLP_4PLP.jpgSo how is the above relevant to Supply Chains across the globe? In preparation to outsource or renew transport and/or warehousing contracts to 3PLPs or 4PLPs, an important part of the process is gathering the views and expectation of the key stakeholders. This will ensure the tender process and tender documentation are designed specifically for the company in question and also in good time.

Even within a small FMCG company board team the motivation for outsourcing will vary widely.This table shows where priority interests may lie across the management team and with customers. There is no guarantee any outsourcing arrangement will achieve one or more of these benefits but each is possible.

 4pl-3pl-expectations-supply-chain.jpg

As you can see, individual functions may have very different expectations from outsourcing the corporate logistics operations. Of course, everyone in the team should be working for the best all round company performance but these are the benefits at the core of their functional expertise and requirements. For example, lower working capital will excite the Finance Director but will be met with a blank stare from S&M colleagues.

A key step at the start of an outsourcing process is to find out what the internal and external stakeholders expect and equally importantly, tell them what they can expect in reality. Managing the various and often competing expectations will be an important task for the outsourcing team to avoid wasteful post project debate and mudslinging. Care though, benefits will not be delivered from day 1 so ensure the current and following annual plans reflect a sensible phasing.

If the project delivers broadly what was agreed after the stakeholder interviews there will be no place for any board room dramas or even alternative facts!

Image courtesy of vectorolie at freedigitalphotos.net

Tags: FMCG, Logistics Service Provider, Dave Jordan, Humour, 3PLP, 4PL

FMCG CEO 2016 Letter to Santa Claus (aka Father Christmas)

Posted by Dave Jordan on Tue, Dec 20, 2016

FMCG/Brewing/Pharma CEO Letter to Santa ClausDear Santa,

I have been a very good FMCG CEO this year, I promise. If you want, you can check with my shareholders. They know how good I have been this year. Apart from the out of stocks of course, oh and the little mistake when we had to write stock off and waste lots of our money. But that is not so bad is it? Other CEOs were naughty last year and they still got what they wanted from you.

I had better be honest because you will know if I am not telling the truth. We also had a problem starting S&OP and so our planning, forecast accuracy and sales were not very good. They were not really big problems so I hope you can forget about them this time, please. Next year I promise to do better, I do, honest.

I forgot about the Route To Market (RTM) mess we had in the peak sales months but that really was not my fault. I also promise to do something about RTM next year and make sure it works properly so people who buy our products are not disappointed again. I know it is bad when people come to buy our products and then spend their money on something else. I will talk to our distributors and Enchange and find out what we need to do.

I know, I know, when the new ERP computer system was switched on we were not really ready for the change but we did make it better as fast as possible. I did not think we needed any outside help for the new IT but I admit I was wrong. Next time I will get it right, hopefully without having any lost sales.

The factory thing was not my fault, I think. The factory man promised me lots of product but his machines kept breaking down at the wrong times and we had to wait for the fixing men to arrive. They took ages to get the machines working again and then they broke down again and again. No, it is not a very reliable factory, yet.

Does the warehouse problem count against me as well? We could not find our products when we wanted them and then when we did find them they were old and out of date and of no use. This was very sad but it will not happen again next year, I hope.

I have just read my message again to make sure I did not spell any words wrong and I see I was not as good as I thought. Actually, after reading this I am going to the chimney to take my stocking down and put it away in the Christmas storage box. I will try again next year, Santa.

Bye bye and Happy Christmas.

CEO FMCG

Image credit: HikingArtist.com

Tags: Route to Market, Christmas, Logistics Service Provider, Dave Jordan, CEO, Humour, Performance Improvement, Traditional Trade, S&OP, Sales, Inventory Management & Stock Control

Logistics Outsource Tendering in CEE - Top 7 Hazards

Posted by Dave Jordan on Wed, Nov 16, 2016

This process can be straight forward but a little extra care and knowledge will ensure you achieve the best warehousing and/or transport solution for your business.

Just a quick reality check, do you need to outsource? Before embarking on a complicated and potentially disruptive tender are you convinced your current in-house operation is unsuitable? Think long and hard about outsourcing or you could be trapped in a long-term relationship with someone who may not care about your business as much as you.

Assuming you have taken the correct decision let us look at 7 things that can go wrong.

1. Process Leadership If possible, appoint a leader from outside of the Supply Chain team, e.g. Finance. This will promote impartiality and in any case, many of the key debates will be in the Finance area. For complete impartiality, you might consider hiring an experienced Interim Manager or Consultant who has no long term interest. All contenders will be trying to pick up snippets of advantageous information and you must not compromise the tender process in any way.

2. Qualification. Get an idea for which companies are likely to be interested in and capable of being your 3PL partner. Do not be surprised if your list is relatively small but you should aim for 8-10 contenders in this first sweep. Contact these companies with a questionnaire asking them to outline their capabilities, pedigree and reputation in your geography and follow this up with a face to face meeting where you can get a better feel for competence and commitment.

3. Cost Comparison. Outsourcing is not always about cost reduction but the costs of the 3PL contenders will be a major element in the decision. Ensure you know your accurate current costs for the entire service you are expecting the 3PL to provide. You need transparency on your own cost structure to make a valid and meaningful comparison.

4. Time Expectations. Don't rush the process despite the pressure from above (or below) to make a change. You will be reliant on your 3PL to support your business so make sure a timetable is agreed with all stakeholders, including your own Supply Chain people. The tender process will not be a secret however hard you try and your people will be nervous. The changeover should fall in a slack period so avoid your seasonal peaks and major promotional periods.

5. People. If you are outsourcing your existing in-house Logistics function, then you are either going to make several staff redundant or you will be looking for the new 3PL to take those staff on board. Either way you must treat people in the best way possible or your service levels will suffer as you make this difficult change.

supply_chain_3pl_logistics_transport.jpgIf you are making staff redundant you must keep them fully informed at each critical step. Why not consider an escalating loyalty bonus linked to performance? If existing staff members are being offered the opportunity to join the new 3PL then it is your responsibility to ensure terms and conditions are fair. From experience in CEE it is wise to build a "parachute" agreement into the new contract ensuring existing terms and conditions are maintained for a period of say, 12-18 months.

 

6. Beware of well- meaning Distributor partners trying to step up to the mark as a 3PL and be similarly aware of any of the big names who are not present locally but "expect to be". This means they are unlikely to enter your market unless they get your business and you will not appreciate being their new guinea-pig!

7. Start-up Phase. Ensure your tendering process includes a clear understanding of what will happen as the business is transferred. How soon will KPI's be at the required level? Does the 3PL have the necessary staff with relevant skills, e.g. narrow aisle FLT drivers. Do they have extra FLT batteries than can be swapped to maintain the operation? Has the WMS been robustly tested? Do they have sufficient trucks and drivers?.........Even some of the big name 3PLs make mistakes at this crucial time.

Taking care of these 7 elements will help you move through the all-important implementation phase to a steady business state without surprises.

Some 3PLs tend to be very slick at securing new business but some of them are not very good at keeping it!

Want to know more about logistics in the CEE region?  Check out these posts too!

Logistics: Working With 3rd Party Logistics Providers in CEE 

Working With 3PLP's in CEE - When did you last see your stock count?

Top tips to improve your cycle counting & avoid suffering stock shock 

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: Customer service, Logistics Service Provider, Supply Chain, Cost Reduction, Transportation, 3PL

FMCG:Top 10 Smash Hits of Warehousing & Logistics

Posted by Dave Jordan on Wed, May 20, 2015

Hello pop pickers, here is this weeks’ top 10 smash hits in this important but often forgotten part of the FMCG Supply Chain.

FMCG_top_ten_warehousing_and_logisict_hitsAt number 10 is All Systems Go by Donna Summer – Do not cut costs on your Warehouse Management System (WMS) and avoid any untried local “specials”. Make sure all stakeholders are involved in the design specification at an early stage to avoid costly and “least worst” bolt-ons later.

Staying at number 9 is Prodigy with Out Of Space - Ensure your chosen Third Party Logistics Provider (3PLP) has sufficient space or can expand to meet your growth expectation. If your 3PLP offers you a site which is boxed in and cannot expand then walk away!

Old favourites Smokie with For A Few Dollars More lie 8th – avoid the temptation to accept the lowest 3PLP quote, however tempting. Cost is not everything and if you bite on the low quote you will probably pay for it in the long run. Evaluate 3PLP offers thoroughly including which staff they intend to deploy on your business. Also, is it really cheaper and more efficient to outsource your logistics capability?

Up And Away from the Banned of St Trinians pops up at number 7 this week – your fast moving, profit generating brands should be on the floor or lower racks to facilitate picking. Those slow moving or seasonal items (in that case why do you have ANY stock?) should be on the top row and up and out of the way.

Alliyah bringing us Age Ain’t Nothing But A Number stays at number 6 – your WMS must be capable of carrying out stock ageing analysis to prevent losses from expired products. If age analysis is not carried out you will lose sales when you realise your “stock” is not actually suitable for legal sale.

Holding steady at number 5 is Counting Every Minute from Sonia – if you want to avoid a severe financial shock at the end of the year then you must take responsibility for ensuring stock is accurately counted. In addition to statutory fiscal counting you should activate routine cycle counting to ensure your data retains accuracy. Secondly, if you see a stock mismatch early enough you may be able to rectify this before memories fade and time moves on.

Keep On Truckin’ by Eddie Kendricks sits at 4 this week – whether you chose electric powered narrow aisle or standard FLT’s do a simple check and ensure battery type are interchangeable across the fleet AND sufficient extra batteries are available to ensure 24/7 coverage. Surprisingly, idle FLT’s are a common sight when battery budgets have been cut. (They only seem to run out of power when it is busy. Right?)

Sittin’ On The Dock Of The Bay by Otis Redding begins the top 3 countdown – how many loading bays does your 3PLP have or propose for a new build? You have to get stock in at the same time as you move stock out. The almost inevitable month end bonus push from Sales will expose a simple lack of doors and bays.

Living In A Box by the delightfully titled Living in a Box is at number 2 – forgive my indulgence. I think this is a great Supply Chain themed song so it gets in!

It Takes Two Baby by ageing rockers Rod Stewart and Tina Turner leads the warehousing chart this week – do not assume your 3PLP knows enough about your business to leave him alone on a day to day basis. You need daily discussions to resolve operational issues plus monthly performance reviews at an appropriate senior level. Get yourself an office in the 3PLP premises and work hard at the relationship on a daily basis.

Enchange_improve_lsp

 

Images courtesy of Stuart Miles at FreeDigitalPhotos.net and Enchange Ltd.

 

Tags: FMCG, Logistics Service Provider, Dave Jordan, WMS, Cost Reduction, Logistics Management

FMCG's Working With 3PLP’s - Shrinking the "shrinkage" problem.

Posted by Dave Jordan on Wed, Apr 22, 2015

People over a certain age talk about times when they could leave their front doors open or when you found money on the pavement and took it to a police station. Long-gone days, sadly. Nowadays, if you leave your front door open all you belongings will be stolen plus your dog and the actual door itself. Once that loss has taken place it is nigh near impossible to recover the same.

Similarly, stock loss will be happening in your FMCG warehouse. Repeat; stock loses will be happening in your warehouse.......unless you are being proactively vigilant.

You are never going to stop packets of instant soup walking out of the gate in trouser pockets or drinks in lunchboxes or even the legendary string of frozen sausages hidden under a dapper French beret. Yes, 3PLP's need to be vigilant and carry out random checks on personnel (and their vehicles) as the bottom line is this is theft and it is costing you money and customers. However, your biggest losses may be leaving your 3PLP by the pallet not the pocket load.

The troika of Dispatcher, Truck Driver and Security Guard can cost your company huge sums of money.

Ok, so the loading document states 20 FMCG pallets, the driver signed for 20 pallets and the security man "counted" and signed the paper work for 22 pallets so what's the problem? The problem is the warehouse employee loaded 26 pallets, the driver rubs his hands and the security man looks forward to a brown envelope of notes at a later date.

Ensure your 3PLP hires a seasoned and professional security company to look after what could be several million Euros of stock. In-house security operations do not work as this makes the troika formation even easier. Even then the security personnel must be randomly rotated to avoid development of cosy cliques and familiarity. Be suspicious of security people who MUST work the night shift!

You would be amazed at how many major companies still allow high value stock to be shipped around without a robust truck seal protocol. Without a seal the truck becomes an immediate mobile supermarket for the driver.  Sometimes this will be opportunistic but on a majority of occasions theft is made to order and prearranged meetings take place for removal of your stock. If you do not believe me and you have stock losses then follow a few trucks and see where they go!

The 3PLP must apply a numbered seal to each and every truck and this must be done by a suitably senior and trusted security employee. If that seal is intact when the truck arrives at the destination then there is a fair chance the goods are there. However, beware of the delicately cut and carefully reconnected seal that is whipped off in a second at the delivery point.

FMCG Shrinkage 3PLP IKA Stock resized 600If you can persuade your customers to witness the seal breakage then you might stop endless the arguments about refunds and credit notes with your Key Accounts. Now, wouldn't that be nice I hear FMCG producers say!

You should not think the risk is all over when the goods are on the customer unloading dock. I have witnessed an instance when a full pallet of FMCG was relocated to an electrical room while the driver waited out of the way for paperwork processing.

Avoid the shock of huge claims for shortage, inevitable write off and tetchy IKA negotiations by treating your stock like cash because that is exactly what it is!

 

Image courtesy of jesadaphorn at freedigitalphotos.netfreedigitalphotos.net

Tags: FMCG, Logistics Service Provider, Dave Jordan, Supply Chain, Inventory Management & Stock Control

FMCG CEO 2014 Letter to Santa Claus (aka Father Christmas)

Posted by Dave Jordan on Thu, Dec 11, 2014

FMCG/Brewing/Pharma CEO Letter to Santa ClausDear Santa,

I have been a very good FMCG CEO this year, I promise. If you want, you can check with my shareholders. They know how good I have been this year. Apart from the out of stocks of course, oh and the little mistake where we had to write stock off and waste lots of our money. But that is not so bad is it? Other CEOs were naughty last year and they still got what they wanted from you.

I had better be honest because you will know if I am not telling the truth. We also had a problem starting S&OP and so our planning, forecast accuracy and sales were not very good. They were not really big problems so I hope you can forget about them this time, please. Next year I promise to be better, I do, honest.

I forgot about the Route To Market (RTM) mess we had in the peak sales months but that really was not my fault. I promise to do something about RTM next year and make sure it works properly so people who buy our products are not disappointed again. I know it is bad when people come to buy our products and then spend their money on something else. I will talk to our distributors and Enchange and find out what we need to do.

I know, I know, when the new ERP computer system was switched on we were not really ready for the change but we did make it better as fast as possible. I did not think we needed any outside help for the new IT but I admit I was wrong. Next time I will get it right, hopefully without having any lost sales.

The factory thing was not my fault, I think. The factory man promised me lots of product but his machines kept breaking down at the wrong times and we had to wait for the fixing men to arrive. They took ages to get the machines working again and they broke down again and again. No, it is not a very reliable factory.

Does the warehouse problem count as well? We could not find our products when we wanted them and then when we did find them they were old and out of date and of no use to us. This was very sad but it will not happen again next year, I hope.

I have just read my message again to make sure I did not spell any words wrong and I see I was not as good as I thought. Actually, after reading this I am going to the chimney to take my stocking down and put it away in the Christmas storage box. I will try again next year, Santa.

Bye bye and Happy Christmas.

CEO

Image credit: HikingArtist.com

Tags: Route to Market, Christmas, Logistics Service Provider, Dave Jordan, CEO, Humour, Performance Improvement, Traditional Trade, S&OP, Sales, Inventory Management & Stock Control

FMCG 3PLP Outsource Tendering in CEE - Top 7 Hazards

Posted by Dave Jordan on Wed, Nov 26, 2014

This process can be straight forward but a little extra care and knowledge will ensure you achieve the best solution for your business.

FMCG 3PLP HAZARDS OUTSOURCE resized 600Just a quick reality check, do you really need to outsource? Before embarking on a complicated tender are you really convinced your current in-house operation is unsuitable? Think long and hard about outsourcing or you could be trapped in a long term relationship with someone who may not care about your business as much as you do. Assuming you have taken the correct decision let us take a look at 7 things that can go wrong.

Qualification. Get an idea for which companies are likely to be interested in and capable of being your 3PLP. Do not be surprised if your list is relatively small but you should aim for 8-10 contenders in this first sweep. Contact these companies with a questionnaire asking them to outline their capabilities, pedigree and reputation and follow this up with a face to face meeting where you can get a better feel for competence and commitment.

Cost Comparison. Outsourcing is not always about cost reduction but the costs of the 3PLP contenders will be a major element in the decision. Ensure you know your current costs for the entire service you are expecting the 3PLP to provide. You need transparency on your own cost structure in order to make a valid and meaningful comparison.

Process Leadership If possible, appoint a leader from outside of the Supply Chain team, e.g. Finance. This will promote impartiality and in any case many of the key debates will be in the Finance area. For complete impartiality you might consider hiring an Interim Manager or Consultant who is rewarded on the tender process efficiency and has no longer term interest. All contenders will be trying to pick up snippets of advantageous information and you must not compromise the tender process in any way.

Time Expectations. Don't rush the process despite the pressure from above (or below) to make a change. You will be reliant on your 3PLP to support your business so make sure a timetable is agreed with all stakeholders, including your own Supply Chain people. The tender process will not be a secret however hard you try and your people will be nervous. Any changeover time should fall in a slack period so avoid your seasonal peaks and major promotional periods.

People. If you are outsourcing your existing in-house Logistics function then you are either going to make a number of staff redundant or you will be looking for the new 3PLP to take those staff on board. Either way you must treat people in the best way possible or your service levels will suffer as you make this difficult change.

If you are making existing staff redundant you must keep them fully informed at each critical step. Why not consider an escalating loyalty bonus linked to performance? If existing staff members are being offered the opportunity to join the new 3PLP then it is your responsibility to ensure terms and conditions are fair. From experience in CEE it is wise to build a "parachute" agreement into the new contract ensuring existing terms and conditions are maintained for a period of say, 12-18 months.

Beware of Distributor partners trying to step up to the mark as a 3PLP and be similarly aware of any of the big names who are not present locally but "expect to be". This means they are unlikely to enter your market unless they get your business and you might not appreciate being their new guinea-pig!

Start-up Phase. Ensure your tendering process includes a clear understanding of what will happen as the business is transferred. How soon will KPI's be at the required level? Does the 3PLP have the necessary staff with relevant skills, eg narrow aisle FLT drivers. Has the WMS been robustly tested.........Even some of the big name 3PLPs make mistakes at this crucial time.

FMCG 3PLP OUTSOURCIING HAZARDS resized 600Taking care of these 7 elements will help you move through the all-important implementation phase to a relatively steady business state without surprises.

3PLPs tend to be very slick at securing new business but some of them are not very good at keeping it!

Want to know more about logistics in the CEE region?  Check out these posts as well!

 

 

Logistics: Working With 3rd Party Logistics Providers in CEE 

Working With 3PLP's in CEE - When did you last see your stock count?

Top tips to improve your cycle counting & avoid suffering stock shock 

Image 1 courtesy of photostock at freedigitalphotos.net

Image 2 courtesy of Ambro at free digitalphotos.net


Tags: FMCG, Logistics Service Provider, Logistica Management, Dave Jordan, Supply Chain, CEE, Logistics Management, Outsourcing

Opening a new FMCG/Pharma warehouse? Top Ten Tips to success

Posted by Dave Jordan on Wed, Nov 05, 2014

I suppose it’s inevitable with age. Everything starts to fall apart eventually and it is amazing how it creeps up on you. You remember giggling silently when someone of a certain age walked in to a room and could not remember why or what they are supposed to be doing. I do this and like millions of others I have to return from whence I came to try and remember why I purposely strode into another room.

Packing for business travel used to be automatic and everything that was required was found and packed without resorting to lists. Recently I have found myself in Africa without toothbrush and paste but that was soon remedied via a hotel vending machine. I was not so lucky on arriving in Cyprus to find I did not have any undies. You try finding them in a budget hotel vending machine!

Now let us look at warehousing. A project to design, build and open a new warehouse is usually large and complicated but at least it is an indication something is going well in the business. Assuming the facility is built on time and to specification and all legal matters are in hand, here are some important aspects you need to remember in order to bring the warehouse on stream smoothly.

Project Network

A suitably qualified and experienced person should be leading the project and one of the key tasks is to maintain a very detailed network.  The network should be widely available and routinely updated to ensure potential issues are flagged up in real time. You do not need expensive software to do this but you do need rigorous project management discipline.

Job Descriptions

Every role should have a job description including the oft forgotten pallet repairer. Unless you are about to run an innovative warehouse you will have no trouble finding good job description templates on the internet. Once adjusted to suit your particular circumstance you need to ensure suitable role segregation has been defined.

Recruitment

Do not wait until the last minute to recruit staff. Get them in as early as you can so you are able to see how they operate against job descriptions and them working in teams. Companies frequently leave this too late thus placing training and commissioning in jeopardy. If you are transferring staff from an existing warehouse to a new facility you must ensure a controlled transition. An army of people turning up for work on a Monday morning in a new warehouse will not work.

FMCG_New_Warehouse_top_tipsTraining

Untrained people are dangerous and particularly in a warehouse situation if you are using narrow aisle high reach FLT’s. All employees require formal and documented training in their particular area before they are set loose in the warehouse. Do not skimp on training for specialist roles, e.g. for high reach truck training you need certified training by the supplier directly.

 

Dry Commissioning

Before you open for business you need to systematically test all your equipment to verify that it operates to desired specifications. You do not need a warehouse full of goods to do this and you should use this exercise to iron out any glitches.

Wet Commissioning

Now you do the same but under realistic conditions moving finished goods. Generate some test inbound receipts and customer orders. Go through the motions of the actual operation without running the risk of disappointing customers or injuring employees. Attempt to operate at high capacity so your process is well tested.

Ramp-Up Planning

However well you have prepared it is highly unlikely you will be at 100% logistical efficiency immediately. Set targets which see acceptable efficiency achieved within a reasonable time frame and display the plan widely so everyone is singing from the same hymn sheet.

IT & Comms

Do the telephones work? Is the IT network in place and accessible? Do the hand-held scanners communicate correctly and from all areas of the warehouse? Has the ERP been tested and tested and tested again?

Stock Count

A key part of the preparation phase is the receipt of stocks as if these are not counted and booked accurately you will soon be in trouble. Mass stock movements present opportunities for “shrinkage” and make no mistake somewhere along the line someone will be looking to exploit this discontinuity.

Communicate

Suppliers and customers need to know what you are doing and not least as the start up may pose them problems. With the ramp-up plan in mind you should make sure your suppliers and customers know what to expect and when you are capable of meeting their usual demands. They may not have much sympathy for you but being forewarned often helps to ease relationships into the new ways of working.

You will not get everything right and something always crops up to derail even the most well prepared, planned and activated project.

What will you forget? When I look at all the warehouse start-ups I have seen there is one item which is frequently missed. Remember to buy sufficient batteries to keep your FLT’s operating 24/7!

Image courtesy of lamnee at freedigitalphotos.net

 

Tags: FMCG, Logistics Service Provider, Logistica Management, Dave Jordan, Pharma, Supply Chain, Inventory Management & Stock Control

FMCG Logistics: Are you optimising trucking weight & volume capacity?

Posted by Dave Jordan on Wed, Aug 21, 2013

I crossed a border in Eastern Europe recently and although the private and car traffic sailed through without delay there were a surprising number of trucks parked in a snake on the approach roads. Both countries are in the EU so I guess someone was carrying out a bit of thorough drugs or human trafficking checking or looking for some other equally vile trade.

I know this is not an unusual sight but something struck me as very unusual for transportation logistics in 2013. A majority of the waiting trucks had their curtains and/or doors opened probably awaiting the sniff test of a slobbering customs hound. What jumped out and hit me in the face making my jaw drop was that most of these 40 foot beasts were empty. Well, at least empty of any palletised or loose stowed goods depending on what the dog found under the boards!

I thought we had all been through the pain of back-hauling and similar opportunities to save money on fuel, assets and operational costs. Whether it was brewers bringing back empty bottles or FMCG producers shipping finished goods on trucks that had arrived with raw materials aboard or simply pallet poolers recovering their wooden stock, I thought the days of wasted trucking miles/kilometers were behind us. (I know this activity can never be a perfect fit as 100% back-hauling is just not going to happen due to the timing and geography of supply and demand fluctuations.)

transport pallets space utilisation resized 600To be fair, some of the trucks in the crossing queue were very well packed, e.g. bottles of fizzy drinks on the bottom with pallets of high volume/low weight snacks on top to maximise the available volume/weight capacity. Another was loaded with FMCG on the bottom and paper tissues above. Simple solutions to maximise available resources and certainly not rocket science. The last example was actually for goods from different producers so there is probably a proactive 4PLP involved who is financially motivated to squeeze every last penny of value out of any logistics expense.

You cannot mix just anything in loads of course. Tea is not going to taste very good after a few hours rocking about above perfume-rich detergent powder and you don’t want liquids above anything electrical but I think we could do a lot more to maximise transport resources. Some companies adopt a “not on your life” attitude at suggested capacity sharing but I think that shows a lack of innovation capability and desire.

On the subject of logistics optimisation and flexibility I stumbled across this excellent use of space and transport expenses. Click on this link and take a look at how soft drinks producers can help to distribute medicines in D&E regions. A simple solution to the distribution of medicines in very difficult environments where cost pressure usually means the people who need don’t get.

Image courtesy of renjith krishnan at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Logistics Service Provider, Logistica Management, Dave Jordan, Cost Reduction, Logistics Management

FMCG 3PLP partnerships: A happy marriage? Avoid divorce.

Posted by Dave Jordan on Thu, Nov 01, 2012

Marriage is quite a project, isn’t it? You take a look at what is on the market and get to know a few possibilities. You may search for a long time to find the right partner who will sweep you off your feet and eventually carry you over the threshold of your first house. That could be a long way into the future as there are the inevitable set-backs and mismatches, e.g. she likes One Direction and you like Motorhead.

As relationships develop there are investments in drinks, dinner, after-pub snacks, cinema tickets and possibly “test” holidays. This is when you see the inevitable reality of the toilet seat being continually left up or the New York skyline of cosmetics blocking out the light from the bathroom window. Get through that and the family interrogation and you might actually make a choice of partner, get engaged and plan to marry.

Here is where the money starts to flow. Payment s for the church, flowers, cars, the wedding breakfast, the evening disco plus the cost of cleaning your car after your “mates” treated it to a shaving foam respray. You are making a huge personal and financial commitment on this project so let’s hope the partnership lasts as divorce is equally expensive and causes untold disruption.

Finding a logistics 3PLP is quite a project isn’t it? You see what is in the market and how well they are doing; who has capacity, capability in your sector, eg FMCG and the best credentials. When you have a short list you operate a tender process so all candidates have an equal and fair chance to become your preferred partner.

You make a selection and celebrate with drinks and dinner with the parents; sorry I mean senior 3PLP partners and then jointly plan the transfer of responsibilities to the new 3PLP provider. The new relationship gets off to a flying start but in many cases sooner or later the “toilet seat” effect arises. The 3PLP is not performing as well as you expected and your business is suffering.

Do you

  A) Immediately stop the contract and find someone else?
  B) Find a way forward to jointly improve performance?
  C) Do it yourself?

C is certainly a possibility to consider but after you have sent so much time and effort finding the partner and then getting to know each other you really should avoid the discontinuity a 3PLP change brings.

  1. Talk to each other at the right operational and senior levels.
  2. If you do not have a Service Level Agreement (SLA) within the contract, construct one.
  3. If you have an SLA are the correct KPI parameters being measured? Are expectations clear?
  4. Agree very clear improvement targets and timelines and monitor progress frequently.

The key requirement here is to have an SLA agreed before you start collaboration. Without this vital pre-nup you may end up flushing away a huge amount of time and money.

Getting to Grips with 3PLPs in CEE

Tags: Route to Market, Logistics Service Provider, Dave Jordan, Performance Improvement, Supply Chain, CEE, Logistics Management, RTM Assessment Tool, Outsourcing