Supply Chain Blog

Relieve your FMCG pain - secure Interim Supply Chain Support

Posted by Dave Jordan on Wed, May 10, 2017

I know you are busy. Not enough hours in the day. Deadlines rapidly approaching. Your children call you Uncle Dad or Auntie Mum. Before the stress takes its inevitable toll think about relieving the pressure without adding to head count.

Interim Manager SoftedgeWhy s Interim Management an opportunity at present? Mainly as a result of the continuing economic conditions numerous companies have folded this year and a similar number have been taken over or merged with others. Obviously companies that fold are too late to be helped although I am not sure too many actually sought the right professional help and guidance in good time.

Those companies and Private Equity players merging or buying in this period need to have their new businesses in good shape to ensure the ROI in the contract deal has even a chance of coming to fruition. When the green shoots of recovery actually start looking like shrubs, shareholders and PE owners will rightly expect their pound of flesh.

One route to accelerating and establishing integration and realignment is to use the services of an Interim Manager. Hear are 7 reasons why hiring an Interim Manager (IM) can be of benefit.

  1. Return On Investment. No, it is not more expensive than hiring full time (FTE) or temporary employees. Take all recruitment and employment costs into account and you will appreciate the efficiency of IM. You may pay your employees for turning up for work whereas IM can be remunerated against set objectives and delivery. (Consider the cost if you make the wrong choice of FTE and have to go through a lengthy, disruptive and expensive exit process!)
  2. Speed. Senior Interim Managers are readily available for Supply Chain tasks. You do not have to waste time going through a lengthy search and selection process with a fee-taking headhunter.
  3. Expertise. Interim Managers are usually seasoned professionals with deep operational experience. A vast majority will have successfully held senior roles in blue-chip organisations for long periods.  No training is required; you get a “vertical start-up”.
  4. Objectivity. Interim Managers are able to look at a given situation with a fresh set of eyes and will not be afraid of “treading on toes” or telling the boss there is a better way!
  5. Accountability. Interim Managers are not there to advise. They are in place to handle a specific project or a department in transition. Unlike full time employees they are very comfortable at being rewarded (or not) based on black and white objective achievement.
  6. Effectiveness. Possibly the most obvious contribution of IM. Once the Board has given a mandate to carry out a task, the IM will get on and do it without struggling through a bout of inertia. “Just Do It” sums this up nicely. 
  7. Commitment. Interim Managers remuneration means they have a direct financial stake in the assignment. They are not there to make friends or pave the way for recruitment. They wish to do the job well, get paid and move onto the next challenge.

If you have a difficult job to be done within a defined timetable and you do not currently have the resources in-house you should consider the value an Interim Manager can bring both to yourself and your organisation. Gaze into the future and see what tough jobs need to be done well now to ensure you are ahead of the game.

Interim Management User's Guide

 

Image credit : CELALTEBER

Tags: Interim Management, Mergers & Acquisitions, Dave Jordan, Supply Chain, CEE, Logistics Management

FMCG Mergers & Acquisitions (M&A):Why acquired brands fail to deliver

Posted by Dave Jordan on Wed, Aug 14, 2013

Let me get straight to the point on this one. Why do so many FMCG mergers or acquisitions frequently result in the apparent death-knell of once proud and promising brands? I am not going to name any names but if you think about it there have been some real clangers dropped by some of the blue-chip FMCG giants.

Purchased companies or individual brands are usually reasonably successful in order to attract new owners. Yes, sometimes companies will divest weaker brands or brands no longer core to their portfolios but you will struggle to sell a clearly decaying brand name. A real hospital pass if ever there was a branded one.

I am studying such a case in Europe at the moment where the FMCG brand acquisition is about 12 months old so plenty of time for smooth integration or so you would think. Marketing activity has not changed and I am also assured above and below the line advertising spend has been maintained at pre-acquisition levels. That in itself is unusual as sellers usually spend big to make a brand more attractive at sale time.

So why does an apparently attractive acquisition fail so quickly? Nothing at all to do with marketing or finance but everything to do with the extended Supply Chain. Just to be clear here I do not consider the Supply Chain to end at the distributor’s warehouse in Traditional Trade markets you commonly find in CEE, Africa and the Middle East. You need Supply Chain skills to get products on to shop shelves and then keep them replenished. With due respect to salesman and women, they are trained to sell.

Supply chain rtm m&a resized 600The newly acquired brand that was purchased with buoyant sales and a high profile has been dragged down to the level of the existing brands by inadequate Supply Chain and Route To Market (RTM) operations. Frankly, it did not stand a chance and it is no wonder the company wanted to buy a top selling brand when their own were performing so badly. However, the reasons for failure were all in-house as the once top selling brand plunged to the depths.

There was no formal Supply Chain department with planning, logistics and customer service roles scattered around in Finance and Sales departments. There was no focus and no single person to co-ordinate and run a functioning Supply Chain. Forecasting accuracy; what’s that? Stock cover; no idea. S&OP; forget it Customer service; no!

Couple that level of disorganisation with a bonus-centric, forecast averse sales force trying to run the distribution chain through to the TT shop shelf and it is no wonder all the presentation arrows were red and pointing south.

When considering an acquisition to bolster sales and profit make sure your existing skus are not already blighted by lack of care an attention to your Supply Chain and RTM.

Image courtesy of renjith krishnan at freedigitalphotos.net

Tags: FMCG, Route to Market, Mergers & Acquisitions, Dave Jordan, CEO, Traditional Trade, Forecasting & Demand Planning, Distribution

7 Top Tips to Successful Mergers & Acquisitions (M&A) Integration

Posted by Dave Jordan on Tue, Apr 10, 2012

The ink is dry on the deal, the celebratory corks have been popped and the lawyers have gone off to bank a small fortune. The projected negotiations to thrash out a deal to buy or merge with another FMCG or other sector company are finally over. Relief all around, smiley faces, back slapping; done and dusted! Although through-the-night negotiations on a diet of coffee and cigarettes are not easy, integrating the two or more entities will be substantially harder and a minefield.

M&AsConsiderable time, effort and cash are expended in calculating the business case of M&A activity before completion of the deal. Elaborately crafted press releases then tell the world about all the benefits the new relationship will deliver. However, very few people involved up to this stage in the process will actually be accountable for success or failure.

Whether your M&A is a local, regional, national or global event here are 7 top tips to getting as close to the glossy press release promises as possible.

  1. Team. Appoint a team to lead the change and ensure there is a Change Manager in the team with deep and recent experience in the field. The overall project must be led by someone of suitable seniority in order to make an easily accessible two-way bridge between junior and senior groups. Don’t select the team members from one entity only!
  2. Objectives. Make intentions clear and get buy-in from all parties and particularly the acquired team. If you genuinely make everyone feel part of the process you will have greater success in implementing difficult decisions later on and these will come!
  3. Assets. If offices and factories are involved and your intention is to centralise/harmonise you need to approach this delicately. The “bought company” will always assume their workplace is most at risk so all evaluations have to be transparent and honest and impartial 3rd party expert help is advised.
  4. Culture.  There will inevitably be differences in company culture but if both sides can accommodate modification towards a halfway-house then that can be a win-win. If one or other culture is forced on one group or another then you are likely to fail.
  5. Rumour Control. Have you ever heard a good news rumour about someone? Most rumours are negative or critical or someone or something and they will plague M&A integrations. If you get your communication policy in order and people feel free to raise concerns then damaging coffee machine gossip can be nipped in the bud.        
  6. Communicate, communicate, communicate, oh and communicate. M&A integration worries people and worried people are not as efficient and diligent as they should. Invest in a website and/or newsletter that very clearly keeps people informed on progress and next steps. Keep them fully involved with Q&A sessions and proactively sought feedback.
  7. Keep the business going! Sounds obvious but getting distracted by integration ups and downs can severely damage your business. You must keep close control on maintaining good business practice in all integrating businesses.

When you consider the amount of time and money that went into securing the M&A deal a generous budget for integration will payback extremely quickly. A degree of early planning and preparation on the actual integration will see you reach the press release objectives – if anyone ever checks!

Tags: Mergers & Acquisitions, Dave Jordan, CEE, Cost Reduction

It’s Deja Vue all over again for FMCG Supply Chains

Posted by Dave Jordan on Tue, Aug 09, 2011

Do you remember the rash of take-overs, buy-outs and mergers just before last two rounds of EU accession? Locally owned CEE Companies that could not or would not meet the various requirement of EU accession were sold off to competitors and private equity that were more willing and able to invest in the future.

FMCG Mergers and AcquisitionsAs this current recession drags on and governments adopt more desperate and savage methods of balancing the national books many companies are once again feeling the strain. The market is once again ripe for some potentially lucrative low cost FMCG purchases.

Of course, when someone invests in a business there is usually a cost saving element broadcast due to synergies of those businesses.  How often do those synergistic costs saving numbers come to fruition? I am sure we would hear loudly about such successes if they were common. The problem is that they are not. Businesses are left in limbo by management failure to drive home re-engineering plans to completion. Yes, it is painful and it requires resources to be taken out of the day to day business but such re-engineering is vital to a sustainable future.

The company logos have been harmonised, the factory uniforms are all the same, the remuneration policies are in line and perhaps inevitably, the executive level company car policy has been harmonised upwards! When synergy programmes fail (or don’t even commence!) this leads to a succession of Supply Chains and specifically Route to Market Distribution networks that urgently require attention.  

There is an argument to put Logistic synergies last on the list of jobs to be done. This is fair enough as the last thing you want to disrupt after a merger is the customer/consumer interface. However, sooner or later you will have to tackle this side of the business or you will be left with inefficient and potentially competing Supply Chains. Examples exist in the market today where big name companies have failed to definitively harmonise their Route To Market networks and are floundering in a recessionary economy where every last sale counts.

In addition to such selling opportunity inefficiencies don’t forget the merger headline claims on cost savings. To achieve these in full you need to step back and evaluate the Supply Chains with prudent priority or else back-office savings will be used to prop up your creaking business. And when the next recession comes…….the hunter becomes the hunted!

***

Enchange RTM services

Tags: FMCG, Route to Market, Mergers & Acquisitions, Dave Jordan, CEE, Distribution

7 Reasons for Securing an Interim Supply Chain Manager in CEE

Posted by Dave Jordan on Tue, Dec 14, 2010

 

The recession rumbles on and on and on. Greece, then Ireland; who is next in line for a heavy duty IMF/EU bale out? Should Spain become the next country to hit the financial wall that would send a few shock waves around Europe.

Interim Manager SoftedgeSo why is Interim Management an opportunity particularly in CEE at present? Mainly as a result of the economic conditions numerous companies have folded this year and a similar number have been taken over or merged with others. There is more of each to come, I fear. Obviously companies that go bust are too late to be helped although I am not sure too many actually sought professional help and guidance.

Those companies and Private Equity players merging or buying in this period need to have their new businesses in good shape to ensure the ROI in the contract deal has a chance of coming to fruition. When the green shoots of recovery actually start looking like shrubs shareholders and PE owners will expect their pound of flesh.

One route to accelerating and establishing integration and realignment is to use the services of an Interim Manager. Below are 7 reasons why hiring an Interim Manager (IM) can be of benefit to companies in CEE:

  1. Return On Investment. No, it is not more expensive than hiring full time (FTE) or temporary employees. Take all recruitment and employment costs into account and you will appreciate how efficient IM costs can be. You pay your employees for turning up for work whereas IM are paid against set objectives and delivery. (Consider the cost if you make the wrong choice of FTE and have to go through a lengthy, disruptive and expensive exit process.)
  2. Speed. Senior Interim Managers are readily available and located in CEE. You do not have to waste time going through a lengthy search and selection process with a fee-taking headhunter.
  3. Expertise. Interim Managers are often seasoned professionals with deep operational experience. A vast majority will have successfully held senior roles in blue-chip organisations for long periods.  No training is required; you get a “vertical start-up”.
  4. Objectivity. Interim Managers are able to look at a given situation with a fresh set of eyes and will not be afraid of “treading on toes” or telling the boss there is a better way!
  5. Accountability. Interim Managers are not there to advise. They are in place to handle a specific project or a department in transition. Unlike full time employees they are very comfortable at being rewarded (or not) based on black and white objective achievement.
  6. Effectiveness. Possibly the most obvious contribution of IM. Once the Board has given a mandate to carry out a task they will get on and do it without struggling through a bout of inertia. “Just Do It” sums this up nicely. 
  7. Commitment. Interim Managers remuneration means they have a direct financial stake in the assignment. They are not there to make friends or pave the way for recruitment. They wish to do the job well, get paid and move onto the next challenge.

If you have a difficult job to be done within a defined timetable and you do not have the resources in-house you should consider the value an Interim Manager can bring both to yourself and your organisation. Gaze into the post-recession future and see what tough jobs need to be done now to ensure you are ahead of the game.

Interim Management User's Guide

 

Image credit : CELALTEBER

Tags: Interim Management, Mergers & Acquisitions, Dave Jordan, CEE, Logistics Management

FMCG/Pharma Mergers & Acquisitions and Supply Chains

Posted by Dave Jordan on Tue, Oct 19, 2010
As we slowly (but surely?) emerge out of recession you can expect the number of M&A deals to rise. Many companies have tightened their belts and tried to ride out the economic storm but many have already gone to the wall and even more will follow. The recession is hitting local companies particularly badly in Romania where several big local players have declared insolvency.

If the Private equity people have their wallets open then they may benefit from some rich pickings.

While some M&A deals seem like they are made in heaven others are a disaster waiting to happen and often it is because the people signing the deal have not paid sufficient attention to the integration of potentially very different supply chains. Post merger supply chain integrationFailure to do this can turn successful companies into a chaos from which it is difficult to self-extricate. You cannot operate 2 discrete Supply Chains for long after a merger; you should plan Supply Chain integration even before the ink dries.

Unless you are overflowing with surplus resources do yourself a favour and get somebody else to plan and execute the integration. Your existing people will still be doing their day jobs (and worrying about job security!) and will not have time to step back, look at the big picture and move the right levers at the right time.

A few key focus areas:

IT - is each entity running SAP or another common system? Evaluate both, chose the optimum system and migrate to it. You can spend hours arguing about which system to migrate to so providing they are top class IT solutions simply evaluate both, choose one quickly and move on.

S&OP - In some cases it can be advantageous for neither of the merger parties to operate a robust S&OP. Implementing such a process jointly can provide a huge step forward in the integration process and staff camaraderie. If S&OP is already active there is no harm in taking the best elements from both and moulding a freshly agreed process with widespread buy-in.

Warehousing & Logistics - Do not try and integrate these ahead of the IT and S&OP changes. There is no harm in allowing warehouses to operate in parallel for some time. Once you have your business processes stabilised you can move ahead to integration, simplification and cost saving here.

Distribution/RTM - many different Route To Market models exist and careful planning is needed when changing any aspect of customer/consumer interaction. Do you service Key Accounts direct? Do you need all those Distributors? A merger is an ideal opportunity to thoroughly evaluate the newly combined Distributor cadre. Some will obviously be better than others but you need a scientific and unemotional tool to assess this critical function.

Learning to live with a new partner is never going to be easy but you can minimise the stress by taking steps to integrate Supply Chains in a timely fashion.

 Post-merger Supply Chain  Integration


Tags: FMCG, Route to Market, Mergers & Acquisitions, Dave Jordan, Pharma, Private Equity, ERP/SAP, S&OP, Logistics Management, Distribution