Supply Chain Blog

FMCG SKU Proliferation: You DON'T need lost sales in Q4

Posted by Dave Jordan on Mon, Nov 13, 2017
Extra SKUs sneak onto price lists when nobody is looking. Sales & Marketing colleagues prefer new launches with lengthy SKU lists different flavours, different sizes, different colours, new packaging etc. How many shelf facings do they want? How do these decisions get through S&OP meetings? (You do run an S&OP process, don't you?)

Do you know this SKU proliferation is likely to affect your customer service? Rather than delighting more and more customers you maybe disappointing them and wasting countless Euros at the same time. Introducing an SKU is a cross business decision, or should be! When considering new SKU introduction at your next Board or S&OP meeting then the supply chain people should ask some testing questions.

Cost per SKU. Have you ever sat down with your Management Accountant and calculated how much it costs to have an SKU on your price list? Sales staff will bemoan the rising listing fees but in reality the cost of an SKU is much, much more. Including, e.g.

  • An employee must spend time buying the different label, dyestuff, cap, box, etc.
  • The new raw material/packaging must be stored in a warehouse.
  • Someone must call it off at the factory.
  • The factory must schedule and make the SKU.
  • The finished product is stored in a warehouse.
  • Someone at the operating company must plan the SKU.
  • Transport into and ex-factory.
  • Transport to Distributor or Retailer etc, etc

All of these activities and many, many more ensure that the cost of having an SKU on the books is significant. In a very rough rule of thumb the cost of having any 1 SKU on the books of a medium-sized company is typically 30,000 Euros per annum.

Factory complexity. Time is money in factories as they try and make their assets sweat and get as much out of the gate as fast and cheaply as possible. Each colour or perfume change or label or pack size adjustment stops the production line and steals valuable time which you cannot recover.

Logistics. Each individual SKU requires a dedicated pallet or rack or bin location. The more SKUs you have the more money you are paying for space. When you have 16 variants of the same shampoo pack size you can understand why picking errors occur, lowering your customer service and causing lost sales.

Interim_Management_FMCG_Dave_Jordan_SKU_Complexity.jpgPlanning. At year-end low value SKUs really drag your business down as resources are applied to plan and deliver SKUs to market which may increase your volume number but not your profit line. Your scarce resource should be focussed on delivering those SKUs that make a real difference to profit rather than spending time on low value/slow moving SKUs which may actually have to be written off in the long term.

SKU rationalisation. Ok, so despite the above you are drowning under SKU complexity. Far too many organisations launch a new SKU and then fail to revisit the data assumptions on which it was first introduced. Firstly, if a new SKU is not even expected to deliver at least 30,000 Euros (or whatever your in-house figure may be) profit then DON'T LAUNCH IT! For all SKUs on your price list you should carry out an SKU Rationalisation exercise preferably quarterly but at least annually. SKUs that do not meet profit/margin/volume/GP criteria should be placed on watch. If they remain below your cut off points then it is time to propose a delisting.

The ideal time to carry out that rationalisation exercise is before you submit Annual Plan 2018 and certainly before the end of 2017. Your staff will be concentrating on the day to day operation so recruitment of an external resource to carry out the segmentation is advisable. The temporary recruit will be dispassionate and unbiased and will deliver a proposal which is right for the business and not just right for some. 

Of course, there will always be special cases like SKUs that constitute a range or a niche local jewel but as long as these are the exceptions then you have a chance of a fast flowing, efficient and reliable supply chain ready for 2018. 

Need more expert advise from readily available talent to address SKU Complexity? Please click here. 

Image courtesy of Supertrooper freedigitalphotos.net

Tags: Customer service, SKU, FMCG, Interim Management, Dave Jordan, S&OP, Sales

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

UK NHS Supply Chain: bed-busting benefits of patient SKUs

Posted by Dave Jordan on Wed, Jun 29, 2016

Some time ago I looked at the often dreadful customer service offered by FMCG and Telecoms companies in CEE. Of course, this avoidable malaise is not restricted to that part of the world. After being in UK for a few weeks I have experienced really poor service from organisations you would think had top notch, high performing supply chains.

The Royal Mail and all those “black and white cat” types will be the subject of a later blog but first in line for critique is the National Health Service.

The NHS in the UK is a precious gem and really is the envy of most other countries where credit cards have to be produced before you hear the Marigold’s snap on. The NHS is supported by a seriously complex, unpredictable and volatile supply chain. On this occasion supply chain certainly includes the provision of medical supplies, equipment, foods to multiple locations around a hospital site. (I am tempted to bang on about the quality food or to be more exact, the amount of wasted food as most of what I see is not going to win any awards.)

My bone of contention with NHS service is about beds, the availability of which is a constant battle which is seemingly never won. Operations are regularly postponed when there are no beds available for post-op recuperation. Yes, some beds are certainly blocked by long term patient residents but my observations suggest there are actually many beds woefully under utilised. To alleviate the problem, I am certainly not suggesting bed sharing which does occur elsewhere. (I have personally seen a single bed with 4 occupants at the same time in a certain country.)

While it is important patients are treated with the utmost dignity and with the best care in the world I think NHS bed availability would be improved if patients were considered as SKU’s on a supermarket shelf. Just take the emotion away for a moment and consider how this might work.

Each bed is shelf in a shop and the optimum situation is to see all these shelf locations full and more importantly, replenished as soon as stock (patients) moves off the shelves (beds). As with transferring stock from the Lidl back of store to gondola ends, this should not be rocket science. And quite right too as long as decisions are made in the optimum sequence and information is in full flow.

Admittedly based on my massive sample of 1 hospital, I see the following sequence of activities:

  1. NHS_SUPPLY_CHAIN_BED_PLANNING.jpg1. Patient gets ready to leave and sits in a chair waiting for discharge.
  2. 2. Nothing happens at the bed.
  3. 3. A patient leaves the bed and is discharged.
  4. 4. Nothing happens at the bed.
  5. 5. The bed is stripped and all cups, jugs etc. are removed.
  6. 6. Nothing happens at the bed.
  7. 7. Bed and surrounding area are cleaned and the bed re-made.
  8. 8. Nothing happens at the bed.
  9. 9. Eventually, a new patient arrives to fill the bed but this can be several hours and often overnight, after the vacancy was first identified.

Just a little bit of basic demand and supply forecasting plus timely information transfer would see a far higher utilisation of available bed space and over the period of a year, noticeably shorter waiting times.

Ok, so I know little about the intricacies of the NHS and maybe other hospitals are slicker in their bed allocation but I feel it is a huge opportunity. A change in mindset and a willingness to learn from other supply chains could prove invaluable. I did offer my services to look at this acute bed shortage problem and was welcomed as long as I had previous experience of working within the NHS…….

Isn’t that the problem? If you are not open to new ideas and innovative solutions, you will get nowhere while the NHS wastes money on incestuous internal studies and reviews. Remember Einstein, who probably did have good knowledge of rocket science; “Insanity: doing the same thing over and over again and expecting different results.”

Image courtesy of Suriya Kankliang at freedigitalphotos.net

 

Tags: SKU, FMCG, Dave Jordan, Forecasting & Demand Planning, IT, Information

Why S&OP and IBP are invaluable all year round but especially at Christmas

Posted by Dave Jordan on Wed, Dec 09, 2015

All rather too quickly Noddy Holder is already gargling on the festive gravel. Roy Wood and Wizard are wishing we could grossly over eat and drink on 365 or 366 days of the year and although they never met, Bowie and Bing are dueting about peace on earth – a likely story in today’s world.

Together with the usual sincere festive releases from talentless “celebrities” from reality TV we also hear some old favourites.

“Dashing through the snow
In a one horse open sleigh…"

How many of you actually started to sing then? Yes, the festive period is fast approaching and the biggest and best Supply Chain in the world is almost ready to activate. There is no way Santa Claus could achieve his annual success without sticking rigidly to an S&OP or IBP process, i.e. Santa & Opening Presents or Incoming Boxes of Presents.

The process starts every year on the 26th December just when all the children start to play with the empty Christmas wrapping and packaging instead of their much sought after gifts. Their engorged parents lounge sleepily in front of the television watching The Great Escape or Jason and the Argonauts – again! The loyal Elves are given their end of season bonus – taxed of course - and packed off back to Eleveden Forest in Suffolk. Didn’t you know that is where they live for most of the year?

Before too long, those lovely people who design toys and games quickly introduce new and more exiting models which will become must-haves for countless girls and boys across the globe. Toy shops are visited and catalogues scanned as millions of children quietly note those presents they would like Santa to bring them the following Christmas. Demand slowly builds until it is time to bring the Elves back from Suffolk, UK on the eleventh day of the eleventh month – no surprise there! The first job for the Elves is to get the global and regional toy factories ready to run once again.

SOP_Planning_Cycle.jpg

 

In parallel, millions of children around the world unzip their pencil cases with a purpose. Using their best handwriting they tell Santa they have all been well behaved this year and then they list all the presents they would like to receive. This accumulated demand allows the Elf factories to start making production plans to meet a deadline that is set in stone and stuffing and snow.

Money does not grow on trees so “Santa” has to quickly check what can be afforded from the budget. Remember, wish lists are always too long and you do not want 100% Customer Service  – keep ‘em hungry I say – or too much inventory. The Pre-S&OP takes place with all stake holders involved to ensure everything is ready to go. You want to avoid stock-outs just as much as you need to avoid expensive write-offs.

After necessary adjustments are made to the planned volumes by SKU, the final S&OP meeting takes place. Santa is fully dressed in his best red uniform and takes his seat at the head of the table. If Pre-S&OP actions have not been carried out then there is unlikely to be much “yo ho ho-ing”. Fortunately, everyone has completed their tasks and there is agreement before the final set of receiving child and gift numbers is rubber-stamped. Everyone involved in the Christmas S&OP/IBP must operate on the same set of numbers or somebody will be bitterly disappointed.

The big day comes and Rudolph leads the reindeers in pulling the sleigh across the world. Santa makes sure all the presents are delivered on time before little heads lift from pillows to wake parents at 4am! (Well, I woke mine at that time.)

And before you know it there we are again on 26th December and the same robust and reliable S&OP/IBP cycle starts all over again amongst the discarded wrapping. See you next year Santa.

“Dashing through the snow
In a one horse open sleigh
O'er the fields we go
Laughing all the way
Bells on bob tails ring
Making spirits bright
What fun it is to laugh and sing
A sleighing song tonight” 

 

Tags: SKU, FMCG, Dave Jordan, Supply Chain, S&OP

FMCG SKU Proliferation: How this affects your Customer Service

Posted by Dave Jordan on Wed, May 13, 2015

Complex_SKUFMCG SKUs sneak onto price lists when nobody is looking! Sales & Marketing colleagues prefer new launches to have lengthy lists of SKUs; different flavours, different sizes, different colours, different shapes. How many shelf facings do they want and how many do they really need? How do these decisions get through S&OP meetings? (Assuming you do actually run a Sales & Operational Planning process......)

Do you know how this proliferation is likely to be affecting your customer service? One thing for sure is that it is affecting the same and always negatively. Rather than delighting more and more consumers you are likely to be disappointing them and wasting countless Euros/Pounds/Dollars at the same time.

Factory complexity. Time is money in factories as they try and make their assets sweat and get as much out of the gate as fast as possible and as cheaply as possible. Each colour or perfume change or label or pack size adjustment stops the production line and steals valuable time and money.

Each individual SKU requires a dedicated pallet or rack location. The more SKUs you have the more money you are paying for space. When you have 16+ variants of the same shampoo pack size you can understand why picking errors occur, stocks become inaccurate leading to lower customer service levels.

Cost per SKU. Have you ever sat down and calculated how much it costs to have an SKU on your price list? Sales staff will bemoan the rising listing fees but in reality the cost of an SKU is much, much more. Including, for example

  • Someone has to develop the product/pack/bottle case.
  • A colleague has to find suitable suppliers.
  • An employee has to buy the different label, dyestuff, cap, box etc.
  • The new raw material/packaging has to be stored in a warehouse.
  • Someone has to call it off at the factory.
  • The factory has to make the SKU.
  • The finished product is stored in a warehouse.
  • Someone at the operating company has to supply plan the SKU.
  • Transport ex factory.
  • Storage at operating company warehouse.
  • Transport to Distributor or Retailer.

All of these activities and more ensure that the cost of having an SKU on the books is significant. In a very rough calculation the cost of having 1 SKU on your books is typically 30,000 Euros in a medium sized business.

SKU rationalisation. Ok, so you are in FMCG and drowning under SKU complexity. Far too many organisations launch a new SKU and then fail to revisit the data assumptions on which it was launched. Firstly, if a new SKU is not even planned to deliver at least 30,000 Euros profit (or whatever your in-house rule of thumb figure may be) then DON'T LAUNCH IT! For all SKUs on your price list you must carry out an SKU rationalization exercise at least annually and preferably quarterly. SKUs that do not meet profit/volume/margin criteria should be placed on watch. If they remain below your cut off points then it is time to propose a delisting.

Of course, there will always be special cases like SKUs that constitute a range or a niche regional product. As long as these are the exceptions then you have a chance of a fast flowing, efficient supply chain.

Introducing an SKU is a cross business decision, or should be! When considering new SKU introduction at your next Board or S&OP meeting then the supply chain people should be asking some very testing questions.

Need more expert advice on SKU complexity and how to define necessary complexity? Contact Dave!

Image courtesy of Gualberto107 at FreeDigitalPhotos.net

Tags: SKU, FMCG, Dave Jordan, S&OP, Inventory Management & Stock Control

FMCG SKU Complexity E-book: Free Download

Posted by Dave Jordan on Wed, Feb 18, 2015
FMCG COMPLEXITY S&OP EBOOK FREE resized 600

The English dictionary lists the definition of complexity as “the state or quality of being intricate or complicated: an issue of great complexity”.

Wikipedia defines complexity in great detail and starts with “In general usage, complexity tends to be used to characterize something with many parts in intricate arrangement”.

Sales & Marketing people routinely define SKU complexity as ‘those items vitally important to the future of the company, the country, the global economy and possibly the planet."

Supply Chain people define SKU complexity as “what Sales and Marketing insist on to make our lives difficult.”

The reality is somewhere in the middle of all these views.

Based on our work with over 100 global, regional and local companies we have produced an E-book which may help you understand and manage SKU complexity in your FMCG or Pharmaceutical Supply Chains.

How much complexity is really necessary?

 

Image courtesy of antpkr at freedigital photos.net

Tags: Customer service, SKU, FMCG, Dave Jordan, Humour, Supply Chain, Sales

FMCG Opportunity: Time to Spring Clean your Supply Chain

Posted by Dave Jordan on Wed, Jan 14, 2015

Is the market getting any better, really? Many big name companies have announced indifferent Q4/Christmas results recently and all caution about the continuing "difficult market conditions”. Ok, so 2014 has been put to bed financially but many will be paying a heavy price for the mammoth last quarter efforts which must have made the advertising and promotional agencies extremely wealthy. I wonder what a snap-shot of bottom line profitability looked like over the final 3 months or month of the year?

If the economy is not much better than last year what exactly can you do differently to keep ahead of your competitors in 2015?  If you had all the time in the world you could apply all of the new FMCG Top 10 New Year Supply Chain Resolutions. You might not have the time, funds and resources to tackle all of them but there are a couple you can take advantage of now for some quick wins. Give your Supply Chain a much needed promo “twin pack” of a Spring Cleaning and see the difference this can make.

Most businesses will have carried out a stock count at year end. You do count your stock don’t you? If you don’t then I guarantee you will have less than you thought! You should now have a clear list of those SKUs which are clearly overstocked, close to expiry, old label, damaged etc. Every day you keep hold of this stock is wasted as the expense slowly but surely chips away at your bottom line making your life unnecessarily difficult and gradually unprofitable. Get rid of it now! Give it to charity and get a tax break on the donation. You could even sell it! If you clear out your stocks leaving what actually moves quickly you will naturally create a slightly more responsive and faster Supply Chain.

FMCG SPRING CLEAN SKUS resized 600Do you know how many “must have” core and promotional skus you added in 2014 in order to get as close to HQ top-down targets as possible? In difficult times it is easy for processes and procedures and even common financial sense to be overlooked in the search for more sales. Every SKU on the books costs you money even if it is difficult to quantify in the extended Supply Chain of your business. Do all of the SKUs actually contribute to profit? The answer is probably no! If you do not monitor profitability by SKU then a considerable proportion may exist, blocking up resources for no actual benefit. You need to be dispassionate about culling SKUs that are not performing and have no prospect of doing so. As far as possible you should keep Sales & Marketing out of that decision making process until your delisting business case proposal is water-tight.

Each of these initiatives is relatively straightforward and certainly not resource intensive. Carrying out this simple Spring Clean and getting your house in good order will help you focus your efforts on winning in the market place. Even in difficult times, someone always wins!

Image courtesy of Vectorolie at freedigitalphotos.net

Tags: SKU, FMCG, Dave Jordan, Performance Improvement, Supply Chain, Inventory Management & Stock Control

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 Drinks and disastrous extended Supply Chain overstocking

Posted by Dave Jordan on Wed, Jan 29, 2014

I don’t know why I looked this up now but I did. Do you remember the Icelandic volcano that erupted in 2010 and caused so much havoc to supply chains in and around Europe? Most people do as they were affected in some way either in professional or personal life. Outside of Iceland, I expect few people had heard of the location and even fewer could pronounce it – Eyjafjallajökull – well worth 406 points in Scrabble.

Do you know how much ash and other debris was propelled skywards from the Eyjafjallajökull volcano in the first 3 days?  The best estimate indicates a mammoth 140 million cubic metres (180,000,000 cu yards) which erupted at a rate of 75 tonnes per second – thanks Wiki. Think about it for a second or two. That is enormous. Try and picture about 100 pallets of Persil washing powder being propelled into the air every single second for some considerable time and staying airborne!

If matter cannot be created or destroyed, what replaced this? Is Iceland actually sitting on a structure that looks like a giant Malteser chocolate which may give way at any time? I think we should be told. Mastermind’s Magnus Magnusson would have told us wout a hint of a "pass".

And now to my supply chain related volcano comparison. On a much less destructive level the month, quarter, year-end sales push in FMCG, Pharma and Brewing places unwanted stock in the market which disrupts supply chains and can severely destabilise companies. Don't say it doe snot happen; you know it does. When so much unwanted stock explodes into the market place – usually the last few days of the month - this causes a number of related problems and not least, forecast accuracy collapse:

  1. The Producer may believe the demand signal is healthy and gears up for replenishment stock which locks up resources, cash and physical space.
  2. Distributor/Key Accounts cash flow and warehouses are blocked as nobody actually wants the product that is available.
  3. Supply of product consumers actually want is delayed as Producers make the wrong stuff or run out of storage space.
  4. Stock will expire and you will suffer write off.
  5. Yet, sales people get their bonuses despite causing internal chaos……..

Like my Icelandic Malteser proposition, at the period end you have thrown so much unwanted stuff into the market that nobody needs or wants and it hangs around for ages. What is left behind is uncertainty and certainly not very pleasant.

You can only get away with a “head in sand/ash”  push strategy for so long until your business is paralysed and badly damaged and this can take years from which to recover. Next time you are asked to approve a last minute loading don’t say “pass” say “no”.

 

 

SKU Complexity Ebook


Tags: Customer service, SKU, Brewing & Beverages, FMCG, Dave Jordan, Pharma, Distribution, Inventory Management & Stock Control

Fergie Out: Moyes In – FMCG SKU Complexity......

Posted by Dave Jordan on Mon, May 13, 2013

This latest blog is unashamedly about football or soccer depending on where you live, but with a Supply Chain related theme. If football -the correct term, actually – is not your cup of steaming Lipton then thanks for clicking and see you next time.

A week is a long time in football but one thing David Moyes will not be doing when he strides into Old Trafford on 1 July will be enabling much change.  Apart from his lack of silverware lifting success the similarities with the outgoing Sir Alex are obvious in style, focus, steely-eyed sternness and not least, nationality. The heritage in place at Manchester United will not allow Moyes to make any significant adjustments to the way the club works and why should he? Multiple trophies over 26 years suggest that something good must be going on at the Theatre of Dreams.

However, Man United may well be Premier League Champions once more but a little tinkering with their skus, sorry I mean players may be prudent. Even the most successful product ranges need refreshment from time to time as some skus perform better than others.

Take Rooney W, for example. For over 8 years he has been the dynamic, goal getting centre forward and probably name number 1 on the team sheet. However, a new sku in Robin van Persie was launched for the 2012-13 season and he has arguably performed to a far higher quality than expected for his first year on the product range. RvP has quickly established himself at the top of the Pareto pile and is firmly in the upper quartile of high performing skus. Wazza (aka Rooney) is certainly not in the upper quartile any longer.

Two new skus on the Man U range could result from M&A activity by Moyes at his former club Everton. The Everton midfielder Felliani is bound to be a target for a switch and as he has actually areadly moved house to Manchester means this might happen sooner rather than later. Felliani is the man who appears about 3m tall due to the size of his afro.  Felliani could certainly strengthen the Man U midfield with some hair-raising performances and what a shame the famous Fergie Hair Dryer will not be available any longer.

FMCG SKU AssessmentThen there is Mr. Baines who is also follically-challenged but in a very 1960’s early Beatles mop-head fashion. Without doubt Baines is the best left back sku in the Premier League and certainly amongst the English contingent which is actually in a minority now. The addition of Baines who is already in the upper performance quartile would surely soon have the Old Trafford crowd singing “I love you yeah, yeah, yeah”.

Every team needs to continually refresh - even Man U - and progress to be successful and this is the same for your FMCG sku range. If you have not looked at it for some time you can bet your life you will find it is a little hairy.

Image courtesy of artu84 at freedigitalphotos.com

Tags: SKU, Dave Jordan, Performance Improvement, Supply Chain