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 Chain Analytics: Sprouts, Imodium & Harry Potter

Posted by Dave Jordan on Wed, Jan 18, 2017

Christmas and new year holidays seem a long way behind. The decorations have been squeezed back into their boxes for another year and Slade, Cliff, Bing, Bowie and others are safely back in their CD cases. Turkeys around the world are rejoicing as much as the children who do not have to tackle Brussels Spouts for another 12 months.

 

As ever, platform 9 at London’s Kings Cross station is a lonely place jam-packed full of people. Fellow commuters all with the same futile hope of securing a double seat with a table and a charging point nearby. A seat of any kind would be a bonus on your daily commute out of London to Cambridge on the 07.44 but at least this train will run and is on time. This must be the only form of transport globally where you can pay a premium seat price to stand next to a blocked toilet. Enjoy!

 

Blue Monday, even the odorous toilet spot has been taken so you are further relegated to the unheated bicycle area which must have been designed for Eskimos with unicycles. Settled as well as it is going to get, your thoughts turn to the new year ahead and the depressing expectation of the same old operational problems and challenges popping up. The slow chug-chug of the train brings the first lines of Bohemian Rhapsody to mind as an apt description of how you feel:

 

Is this the real life?SUPPLY_CHAIN_ANALYTICS_IT_FMCG.jpg
Is this just fantasy?
Caught in a landslide,
No escape from reality.

 

This sneaks into your head repeatedly even as the chugging slows and Cambridge eases into view. Time to snap out of it and get the business hat firmly on. At least the new ERP is in place and after a 3-month error-ridden ramp-up it should be ready to support the business a little better than the in-house, low cost, back of a fag packet version that lasted more than 10 years. There is a lot riding on this expensive ERP; this ERP will finally tell us what is really happening in our supply chain.

 

Well no, it will not.

 

Don’t worry, you have not invested heavily in the wrong software. The ERP will do exactly what is says on the tin which is probably in the German language.

 

Thinking back to that train toilet, consider for a moment that your ERP is Imodium – a fantastic product which does exactly what it claims on the pack. You can trust Imodium to get you from A to B where B is not necessarily where you want to be but it is a place of distinct safety and comfort. Imodium does not tell you what went wrong inside nor does it tell you what to do differently to avoid the same effect at a later date. In short, Imodium slows down your business but doesn’t tell you what is wrong.

 

What you need is some form of Supply Chain Analytics to sit on top of your ERP/Imodium – not a substitute. Your new ERP will have automated your usual ways of working but this seldom leads to huge improvement and often, performance visibly worsens with the increased noise and operator nervousness in the planning processes. Inevitably, the forecast takes the blame. The issues lie within the supply chain processes, the set-up of the IT systems and how add-on tools are being used. To protect themselves, your supply chain managers are buffering supply chains with unnecessary inventory and backside-protecting lead-times.

 

Analytics uses your data to analyse and diagnose what is happening in your supply chain by providing a suite of tools and dashboards to model the implications of your decision making. Achieving extra visibility across the supply chain inevitably delivers better service, lower costs, happier people and a supply chain that is easier to manage.

Analytics is transforming the way organisations improve performance and gain competitive advantage, every day. Even on those cold, wet Mondays when you are at the station contemplating another standing commute. Take a look at Supply Chain Analytics and you will find yourself with exclusive access to Kings Cross Platform 9¾ and we all know what magic is possible there!

Image courtesy of Poulsen Photo at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Humour, Supply Chain, Supply Chain Analytics, IT

FMCG Planning: If you like chocolate, now is the time!

Posted by Dave Jordan on Wed, Jan 11, 2017

Overeaten chocolate during the holidays but still want some more? Get yourself and a large blue IKEA bag down to your local supermarket as chocolate is heavily discounted. Easter is not far away this year so why not save a little cash and stock up now - use by dates permitting, of course!

Post Christmas I have been taking a look at International Key Account retailers and seeing how they are coping in the continuing economic squeeze. One question came to mind after seeing well over 20 outlets of various retailers. What do they all do with all that chocolate and other Christmasy confectionery?

Planning Chocolate Sale The same scenario is also present after Easter. Shelf after shelf and gondola after gondola of seasonal chocolate in all sorts of formats, shapes and sizes. Not simple packaging either and it must cost a fortune to pack a 15cm tall chocolate Santa or rabbit into a multi-coloured coffret. To be fair it is not just one manufacturer who has suffered a forecasting blip, every major name chocolate producer appears unable to get it right. For all of them Christmas must be a peak period and one that can make or break the year-end results and with no time left to remedy any sales deficit. Similarly, the timing can also place an un-provisioned hole in Q1 numbers even before you have taken down the decorations.

Of course, nobody wants to disappoint consumers and run out of stock at those peak periods but how can they afford the apparent over-stocking? If the goods are on consignment or “sale or return" then I can perhaps understand why retailers let displays hang around for several weeks. Even then I doubt the retailers would relish wasting valuable sales space on Easter themed chocolate into June and beyond.

Considering the power retailers have over producers I do not understand why stock is allowed to gather dust on shelves. Certainly, for many foodstuffs the listing contracts will contain clauses to withdraw stocks but usually only when the sell-by date approaches or off-take is ridiculously low.

What is the destiny of chocolate Santas and bunny rabbits after the sell-by date arrives? You cannot do much with it, can you? You cannot send it to a sink market in another country and with the vast majority of edibles you cannot recycle the stuff into fresh production as you could with washing powder, for example. If you have to write-off stock you have to pay to have it destroyed professionally and you frequently have to pay VAT on the stock value as if it was a sale.

Whatever the destiny of all that yummy chocolatey goodness, it is indicative of a lack of rigour in forecasting and/or sales expectations. Diverting some investment from stock that does not sell into taking a long, hard look at your Sales & Operational Planning (S&OP) process could offer a very rapid pay-back for those companies willing to break the chocolate losses mould.

As a step further, Supply Chain Analytics can help you to fully understand what is really happening in your peak periods and why you continue to miss your sales targets. Presently, there is a free of charge offer to analyse some of your data and expose the reality of your decision making.

Image courtesy of Nora Ashbee at Enchange.com 

 

 

Tags: FMCG, Christmas, Dave Jordan, Supply Chain, S&OP, Forecasting & Demand Planning, Supply Chain Analytics

Supply Chain Analytics: Is your data providing information & actions?

Posted by Dave Jordan on Wed, Nov 09, 2016

Who coined the term “Big Data”? How did we get there without tiny data, ordinary data, slightly larger data, chubby data and bordering on big data? People working in or associated with Supply Chains seem obsessed by data yet data itself tells you absolutely nothing. Really, not a lot apart from the fact that something is being measured or calculated.

Firstly, a couple of information irritations. If you need to renew your UK passport (must be similar for other countries too) you need to have your identity confirmed by someone in a certain profession, e.g. doctor, teacher and be a person of “good standing in their community”. The allowed list of professions includes Bankers which baffles me these days. Anyway, the signatory must provide information confirming your identification and you get the passport. Information and not data gets the job done.

 

My bank writes to me – note, sends me a physical letter – asking me to confirm my address! “If you know where I live why do I have to call you to confirm what you already know?” TINA as Maggie Thatcher would say, there is no alternative so you must bite your tongue and provide the information.

In Supply Chains the data obsession is growing. “Show me the data. How does the latest data look? Will the data protect my backside?” Data is only valuable if you know what it is measuring, what it means and what you need to do to change or influence an aspect of future business performance. For data to be useful it must be converted into useful information and then into appropriate actions.

Someone is shouting “data is information isn’t it”? Well, no it is not and as Michael Caine insists he never said, “not a lot of people know that”. Consider this example.

Due to some poor forward planning by the travel department you find yourself airborne for the duration of a vital end of season relegation encounter. On leaving the plane you ask an airport worker about the big football game. All he/she can tell you is that 4 goals were scored. Is that helpful?

CANALYTICS_SUPPLY_CHAIN_DATA_INFORMATION.jpgertainly, the match sounds like it was entertaining but your overpaid wimpy football idols needed a win. The data you have been given is 100% accurate but it does not actually tell you anything about the outcome. Was it 2-2, 3-1, 1-3 or even a diabolical 4-0/0-4?

When you understand the final score was 3-1 in favour of your football wimps you are elated and think about kissing the moustachioed guy at security but back down just in time – that metal detector sausage could cause some damage. Instead of being as sick as a parrot you are over the moon, y’know what I mean?

You have converted that raw goals scored data into information and then into celebratory actions. In terms of actions this means you have wisely decided against kissing the Village People lookalike security guard to head off to quaff several pints of the foaming ale. When you only had the 4-goal data you had no idea of the outcome.

Increasingly you need to turn to analytics to understand what is actually happening in your Supply Chain why it is happening and most importantly, what needs to change for future business success.

Image courtesy of ddpavumba at freedigitalphotos.net

Tags: Supply Chain, Inventory Management & Stock Control, Supply Chain Analytics, IT

Supply Chain Analytics: The birth of a new Dawn, or Daniel

Posted by Dave Jordan on Wed, Nov 02, 2016

Anyone expecting their first child has probably been told by a gloating-doting grandparent-to be that their lives are about to change dramatically. This is of course untrue as in reality dramatically is too simple a word and in any event, that “change” is far, far different than granny suggests. Your pre-natal life as you know it will become obsolete at the snip of a chord.

Sleep, sanity, social life and other activities beginning with “s” will soon become history as you become slaves to the mini-me you have created who appears to have over active exhaust systems at both ends. Night and day whizz past in a blur of endless demands for food and cleaning and screaming and that is just the husband.

Did you know what sex the little darling was before the big day or did you wait and see what would be delivered? Did you and the family try to predict boy or girl based on family history? You know, things like the first born is always a boy if the birth takes place in summer. Or, it must be a girl based on the size of the baby bump etc., etc.

Supply_Chain_Analytics_CEO_Planning.jpgDespite all the indicators and family history and old wives’ tales you got the sex of the baby wrong? Dear me, there are only 2 options after all! If you can get that 50/50 prediction wrong how on earth do people cope in the supply chain business when the number and type of variables is enormous? (You knew the segue was coming and there it is!)

What is going to happen in the future is always difficult to predict even remotely accurately.

Hold on a minute but what about all that Supply Chain data? Your Management Information System is running red hot; the KPI Dashboard has digital steam coming out of its ears and you can see numbers bursting out of the air vents on the top of the Data Warehouse. You have more data available than you can shake a USB Data Stick at!

The problem is that all those numbers and colour coded percentages help to tell you everything that has already happened in your Supply Chain. Good to know of course but isn’t it better to know why certain events happened and how they can be avoided in the future?

I can imagine your last S&OP meeting involved making considered changes to plans and activities to correct certain deficiencies or to take advantage of opportunities. All well and good but the internal operational deficiency you have is that you must wait weeks or months or longer to find out if your strategy was successful.

What you need is an analytical tool to take advantage of all that data and convert it into actionable information. A tool which allows you to diagnose the precise causes of past events and which allows you to model the probable results of your decisions into the future. These tools exist as cost effective cloud based solutions but most companies stubbornly remain convinced that their expensively installed MIS/ERP should be sufficient. Put simply, alone, they are not.

When you were thinking about starting a family if you knew which “tadpole” was most likely to win the race you would not be on a ladder hurriedly repainting the nursery blue!

Image courtesy of dream designs at freedigitalphotos.net

Tags: CEO, Forecasting & Demand Planning, Supply Chain Analytics, IT

Fashion Retailers: Is inventory eating into your profits? (It is…)

Posted by Dave Jordan on Wed, Aug 31, 2016

I touched on the problem of expanding UK waistlines a few blogs ago and the topic popped up again recently when I was out and about shopping for clothes – no, not me. This is not as regular an event as it may be for senior management but due to the imminent arrival of a few dry and summery days, I was in need of new shorts and T-shirts.

Nothing special or posy, just bog-standard items that do not have some sort of advertising logo blazoned across for which I receive no payment.  Similarly, I was keen to avoid those that look like someone has been assaulted by an ultimate, all-topping, deep-pan, soft-cheese pizza. Oh, and no fashionable rips and tears, either. Plain and simple and in one “quiet” colour; that’s me.

Fashion_retail_inventory_supply_chain_analytics.jpgIf I look at the internet – it’s all true there isn’t it? – then I am about the top end of average as long as it is not Christmas, Easter or holiday time. As everyone knows, bathroom scales do not work accurately during those periods and clothes shopping then is silly anyway. There started my rare shop for T-shirts and shorts in the medium/large size range. Should be relatively simple I thought as I started to dodge the bodies of the newly pedestrianised high street throng.

Alas, no BHS, no Austin Reed and now not even an Old Guys Rule to replenish my summer wardrobe but plenty of retail options remained. With a spring in my step I activated the soft hiss of the sliding doors and there I was in one of the largest clothes retailers in the game. No names mentioned in case it jinxes the chain and we lose another big name!

The choice in style and colour was good and the racks were very well stocked with lines and lines of T-shirts and shorts. Then the problem hit me. Although I was looking for M or L sizes the only items available were extra small, small, extra-large, XXL and even XXXL! (Don’t get me started on why extra small and XXXL must be the same price.) This was not an isolated case and after checking I realised this was true for the gaudy coloured stuff and the “stylish” pre-damaged items. What is going on?

This may only be a sample of 1 but this major UK chain with several international franchise locations is probably operating with several hundred thousands of Euros hanging on racks with only a small chance of being sold anytime soon. Sizes which fit a large proportion of the population are out of stock (OOS) presenting a huge lost sales problem. And it is not just T-shirts and shorts; have a look at hugely expensive suits, coats and shoes. The same may also be true of the ladies’ fashions but I decided against browsing those racks.

In FMCG, if your Heinz beans are OOS then you pick up HP or an own label offering in the same outlet and it does not really impact on the retailer or the consumer. Not so in clothing retail where alternative options are dotted around the adjacent shopping centres. Seeing multiple Mr. Averages walk out of your store due to OOS while a host of other sizes hang around is just plain daft.

How long does that working capital flap about in the stores eating into your profits? Inevitably, the seasons change and with that the styles adjust. New designs and new ranges are introduced but where do you put them? Eventually, to create space you have to withdraw the S/XXXL stock and either marginally discount it internally or more heavily with a third party.

The problem is not only about having too few top sellers but also about how you plan for the success of the entire size range and avoid over-stocking profit guzzlers. Nobody has a functioning crystal ball but you can apply some clever supply chain analytics to ensure your store inventory is designed for success and not for failure.

Image courtesy of mapichai at freedigitalphotos.net

Tags: CEO, Inventory Management & Stock Control, Supply Chain Analytics, Integrated Business Planning, retail

FMCG – Hunkering down for Supply Chain Analytics

Posted by Dave Jordan on Wed, Aug 24, 2016

Have you ever “hunkered down”? I remember being asked to hunker down during a supply chain training course many years ago and I had no idea what I was supposed to do. Eventually I had to ask as failing to follow the hunker downwards request appeared to be causing a bit of a problem for the presenter.

This hunkering failure occurred during one of the many versions of the Beer Game in which I have taken part or run over the years. Anyone who has been involved with supply chain activities will probably have taken part in the Beer Game, or the Moussy Game as it is sometimes known in dry countries of the Middle East.

What does the beer game do? The rules are relatively simple and in summary the overall objective is to meet consumer demand for cases of beer in a complex, extended supply chain while controlling unplanned expense on back orders and inventory. The game involves four overlapping and inter-dependent supply chains, i.e. manufacturing, distribution, procurement and a retail outlet. There is a cost penalty for holding excess stock and any backlog unfulfilled orders.

Players rely on colleagues in the other departments to do the right things for the business but frustration soon surfaces. Usually, things do not go well and players feel frustrated because they are not getting the results they expect. Assumptions are made about consumer demand and erratic patterns emerge as backlogs mount and/or massive unnecessary stocks accumulate. It was at this stage in the game I was told to “hunker down……….”.

Does that sound like your own supply chain – not the hunkering bit? Frustration is common between departments who all aim to do the right thing but only have the necessary data and information to do the right thing for their specific area of responsibility at that specific time. Even after careful consideration and informed debate, the real effect of an adjustment can only be seen in the future.

supply_chain_analytics_fmcg_inventory_performance.jpgIF - a big if -  nothing else changes and all assumptions are correct and accurate then there is a chance the desired effect will develop. However, life is not like that and certainly not supply chain life. What can happen?

New launches kick-in and are successful, or not.

Competition by definition is designed to disrupt your plans.

The weather turns out rather different to the forecast.

The economy takes a turn up or down.

Factories, 3PLPs and distributors all suffer performance variability.

Customers and consumers change their needs and habits.

Etc., etc., etc., this list really is endless. Absolutely anything can happen to turn apparently sensible decisions into foolish, forecast failure.

Hey, what about all that IT we have? Doesn’t that help us understand what is going on? This should tell us what is really going to happen in supply chains? No, not necessarily. Common supply chain IT tells us what has happened, what is happening, where and when but not precisely why an event happened or what will happen.

Subtle differences perhaps but to up your game you need to hunker down with Supply Chain Analytics to gain a full unexpurgated understanding of how changes you make today will impact the future and more importantly, how you can change that future.

Yes, you can.

Image courtesy of Enchange at Enchange.com

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

Supply Chain – regular IT to Supply Chain Analytics

Posted by Dave Jordan on Thu, Aug 11, 2016

I am an App-free zone. I have to admit I am not a big App fan but at least I now know what an App is after a lengthy period of ignorant denial. Originally used only by cutting edge, bearded techies (sorry Steve), Apps have become a major part of routine as life seems to revolve around getting more out of mobile phones.

Some of these telephones are more powerful than desktop PC’s and the cameras are certainly as good as mid-range stand-alone versions. In fact, why is a mobile phone called a telephone anymore? The functionality is such a long way from the house brick sized “hand” sets you see on old shows like The Sweeney that another moniker seems appropriate.

Supply_Chain_Analytics_FMCG_PLANNING_PHARMA_IT.jpgWe do not call a modern car a wheel simply because that’s what started things rolling in that technology, do we? Nor do we call our curved, slimline HDTVs cathode ray tubes. Find a new name people!

Apps in industry and supply chain in particular tend to be rather larger in size and far more expensive but do they all do what it says on the tin? Largely, yes.

  • ERPs do bring a high degree of rigour, data collation and transactional integrity to complicated manufacturing and distributive supply chains.
  • WMS systems do provide you with inventory control, performance measurement and stock surety as a basis for excellent customer service.
  • DRP helps you plan the efficient distribution of your finished product.
  • TRP works to ensure your stock is on the move to clients in good time and with efficient fuel and time consumption.
  • APO can certainly help a company improve planning across the extended supply chain.

These and more apps or IT packages are certainly good news for people running complicated regional or global supply chains. While they all have a value and a role to play there is something they do not provide. 

Despite spending millions of Euros in sophisticated and not so sophisticated systems, are there any significant new opportunities to improve supply chain performance? Yes, and here is why:

  • All those increasingly complex IT-led projects have automated ways of working whether they are optimum or not. Generally, this provides incremental improvement at best and with significantly increased variability and caution in the planning processes.
  • The sales forecast is often blamed as the cause of whatever problem is current. In reality the issue lies within the supply chain processes, the set-up of the IT and/or how the various tools are being used in parallel and in tandem.
  • Managing this never ending supply chain complexity becomes the real challenge. Faced with this complexity and increasing uncertainty, planners buffer their supply chains with inventory and lead-times. Inventory becomes that large eared elephant in the room. Everyone knows it reduces free cash and adds unnecessary cost but nobody knows exactly what to do about it and even fewer are brave enough to propose anything.

There really is nothing positive about unnecessary inventory in the supply chain.

The answer? What is needed is better and more accessible data analysis to drive decision making across the supply chain and not in one stand-alone sub function. Decisions need to be taken based on facts and without the emotion or gut feel that is often the default motivation for immediate action.  This is where the App and half that is Supply Chain Analytics can contribute to your business success.

SC Analytics Apps or IT can sit above your existing transactional IT to overcome these challenges and help you ensure all the individual sub-functions are working seamlessly and synergistically. You do not write off your existing systems or put them in a box on a shelf; they all have a major part to play but they would benefit from supply chain analytics help.

Thinking about it, the term “supply chain” actually does reflect the reality for companies yet to operate with some sort of Supply Chain Analytics. Think of a heavy stainless steel chain draped across the desk. Yes, all the functions are indeed joined together but some links are not fully aligned, some lie at odd angles and overlap with others while others are stretched out and only just connect at the extremes. Doesn’t that sound like something that can be further improved?

Maybe the supply chain should actually be the “supply artery” without all the spatial confusion of a chain. The artery would continually supply the precise amount of product required at any time to any location as demand dictates and taking all environmental factors into account. Now, that is an App I would buy!

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: Performance Improvement, ERP/SAP, Forecasting & Demand Planning, Supply Chain Analytics

Frock Stocks & FMCG Supply Chain Inventory Decisions

Posted by Dave Jordan on Thu, Aug 04, 2016

Senior Management has been on quite a shopping spree over the last few months taking advantage of various big name high street stores that have lost their lustre and even their premises in some cases. The demise of these familiar UK brands has nothing to do with Brexit and the variable value of Sterling but in one case a run on the Green pound has been responsible…..

Of course this has had several knock-on effects and not least the amount of money “invested” in clothes and shoes is now significant and that money is largely sunk - the market for unwanted or out of style apparel being extremely limited. I hate to think how much money is hanging in the wardrobe but that raises a second issue.

The trusty old Grink pine wardrobe from IKEA has reached capacity. As a result, the small Allen Keys have been out causing blistered fingers in order to erect another Grink plus a wall mounted Plop shoe tidy. Another investment to store items that are not in regular use. In fact, if you consider that the vast majority of clothes and shoes are seasonal, at any one time most of the space is taken with things you would not dream of wearing. Fake leather Boots in August? A floral summer dress in December? (NB Northern hemisphere before someone comments!) A Superwoman onesie at any time!

FMCG_INVENTORY_STOCK_SERVICE_CONTROL.jpgWith so many clothes squeezed into the now two Grinks they are so full that finding anything in a reasonable time is difficult. Senior Management might well be correct that there is a perfect dress in there for a particular special event but can you find it? Sooner or later all recollection of what is in the wardrobes has been lost as the memory grey matter section diminishes.

Worse still, fashion trends do not stand still so what was a “must have” last year may be considered an insult to the designer where they to be worn the following season, luvvie!  

So, what have we got and what have many, many FMCG and pharmaceutical companies?

High working capital – all that money tied up on stock that may not be useful.

High storage costs –  you will be paying too much for storage whether you manage logistics internally or outsource to a 3/4PLP. (Don’t expect them to reveal that you are storing too much!)

FIFO - stock age is not monitored and write offs persist. Old stock is not liquidated before expensively assembled relaunches hit the shelves. You do not actually know what is there contributing to ongoing working capital.

High stock shrinkage – loss and damage have a higher incidence when stock is not correctly monitored and inventory levels are kept high – harder to miss.

Stock accuracy - cycle and annual stock counts are difficult to execute and usually provide unwanted shocks at reporting period ends.

Efficiency -  when warehouse capacity utilisation above 80%, operational efficiency stalls and soon plummets. Picking becomes a hazard and the warehouse simply does not have sufficient doors to move goods in and out.

When supply chain processes are inefficient and specifically inventory build decisions are not fully assessed and evaluated, you inevitably overstock as planners do not know what else they should do to protect sales and customer service. Conversely, when this happens you actually lose sales and offer poor customer service.

Does this provide the basis for a profitably growing business? Of course not but so many companies remain oblivious to the processes applied and decisions that are taken that bulk-out the supply chain.

Image courtesy of photostock at freedigitalphotos.net

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