Supply Chain Blog

FMCG Route To Market: Traditional Trade Distributor Signals

Posted by Dave Jordan on Tue, Dec 16, 2014

We have invested in a new waste bin for the kitchen. Even with our strict regime of recycling as much waste as possible that small flip-up bin inside a cupboard just was not big enough. Yes, the lid dutifully popped up when the cupboard door was opened but usually this simply confirmed there was no more room in the bin.

Our new bin is a highly polished stainless steel tube of almost 1 metre in height and can get us through a few days before capacity is reached and a trip to the wheelie bin in the garden is necessary. It is up market too with a system that automatically opens the top of the bin whenever you approach with kitchen rubbish; that’s a bin with a proactive customer service ethic.

In other news. Senior Management and I prefer a pitch black bedroom. This is all well and good until I have to get up early and stumble across the floor and fumble for the bedroom door handle. If this is after a few pints of the foaming ale then I often switch the dog off and let the intruder alarm outside into the garden. On reaching the kitchen I switch on the lights....and the posh new bin 3 metres away as the crow flies and around a corner opens its gaping mouth waiting for rubbish.

FMCG_TT_DISTRIBUTOR_SIGNALSWhy does it do that? This is not meant to happen. The lights are standard bulbs so there is not even an invisible spike from a fluorescent tube starter motor floating around the room. Why is our posh new state of the art waste bin getting a signal to open up and prepare to swallow our daily trash? Even in my slowly improving fuzzy headed state I have no rubbish I need to deposit in the shining tube. The bin is reacting to a signal of some sort but it is producing an action that is not helpful or appropriate.

Where have I seen that before so many times? Let me think about that for about half a millisecond, yes your FMCG Traditional Trade (TT) Route To Market (RTM). You the producer and your exclusive TT distributor partners are trying to achieve the same objective of selling more of your brands. The relationship should not be competitive or one largely based on negative, backward looking penalisation which will do anything but raise your sales.

Let us briefly look at five signals that TT distributors send out and how they are (mis)understood within FMCG producers.

Information Signal

 

Typical Response

A Better Response

Sales running rate unlikely to meet monthly target.

Draft the penalty debit note.

What is the problem, what else can we do together?

Key SKUs are approaching out of stock.

Tell the distributor to improve forecast accuracy.

Oh, an opportunity. Can we get more stock to the distributor?

The promotion is not going as well as expected.

What are they doing wrong?

What are we doing wrong?

There is a new competitor product launch.

Oh, really? Too late to do anything about that now.

Let’s activate a very rapid spoiler promotion.

I have some ideas how we can grow the business.

Yeah, right!

You are closer to the market so let’s hear those ideas.

There are many, many more examples where producers either misunderstand or misinterpret the data and information emanating from TT distributor networks.

A little more care in this area will help to ensure your sales are not a complete load of rubbish.

Image courtesy of Franky242 at freedigitalphotos.net

 

Tags: FMCG, Route to Market, Dave Jordan, CEO, Supply Chain, Traditional Trade, Distribution

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

Posted by Dave Jordan on Thu, Dec 11, 2014

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

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

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

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

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

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

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

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

Bye bye and Happy Christmas.

CEO

Image credit: HikingArtist.com

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

(FMCG) Friendly Man Carrying Gifts & (RTM) Reindeer To Market

Posted by Dave Jordan on Tue, Dec 02, 2014
Client:   
Santa Claus aka Father Christmas, Kris Kringle, St Nick
Market: Most of the World
Scope:
Reindeer To Market (RTM) Distribution
Deliverable: Evaluation of RTM against sector benchmarks

Summary of Evaluation

Click here to enlargeMagnifying Glass

 RTM reindeer to market

The project delivered:

  • A detailed evaluation of the Christmas RTM deployment highlighting strengths and weaknesses.
  • A grading of each core element in terms of capability to deliver the presents in compariosn to benchmarks.
  • A framework development plan for parents and Santa Claus.
  • A clear business case for the continuation of Christmas.

Santa FMCG Christmas resized 600We would like to thank Mr. Claus for allowing us the opportunity to evaluate this important Reindeer To Market network. The network is in very good condition and we wish him every success on the 25th December.

Need help with your RTM deployment? Click here and we will give you a call.

Santa image courtesy of stock images at freedigitalphotos.net

The full assessment tool includes 10 individual elements and this can be found HERE.

Other seasonal yo ho ho posts:


Tags: FMCG, Route to Market, Christmas, Dave Jordan, Pharma, Traditional Trade, Distribution, RTM Assessment Tool

FMCG RTM Distribution : How Traditional Trade interaction could work

Posted by Dave Jordan on Wed, Aug 20, 2014

I previously blogged about the reality of FMCG Traditional Trade (TT) Route To Market (RTM) distribution and described the drivers and behaviours in each party as the monthly plans inevitably imploded.  Let us now get out the crystal ball and stare into the mystic orb and dream how life could be if both producers and distributors really got their acts together.

FMCG Blog 200814 resized 600 

describe the imageI believe this is achievable but all parties have to work together closely, openly and with trust to make it happen. This will not happen overnight but a mutual programme of improvement with frequent training and coaching by subject matter experts will pay dividends.

At the end of the day both producers and distributors are trying to make a profit so why should getting your RTM to work efficiently be such a hurdle? If you will not accept your RTM network requires careful yet skilled management then your chances of success are like a man with no hands clutching at straws.

Image courtesy of Nutdanai Apikhomboonwaroot at freedigitalphotos.net

Tags: FMCG, Route to Market, Performance Improvement, Supply Chain, Traditional Trade, Sales, Distribution, RTM Assessment Tool

Supply Chain Insight: FMCG Drinks Stock Shrinkage

Posted by Stefan Cucu on Wed, Aug 06, 2014

Today we see a lot of writing about Supply Chain. Technology is advancing rapidly and we are seeing changes almost on a daily basis; progress is simply enormous. However, some things never change and this is what I discuss here – things that never change.

I am not going to tell you about anything difficult. What I mentioned above is as old as humanity but all too often forgotten. True, such things are not usually directly addressed by our business as they relate to common sense only but as we know, common sense is not that common! Of course, I can only approach this from a personal perspective as everyone is entitled to their own opinion.

Today's Topic: "Yeah man, we steal here!"

This is without any doubt one of the most powerful insights that I have been offered in my Supply Chain consultant career. Once upon a time, when I accompanied a sales rep on his route in a Route-to-Market (RTM) project, I visited a certain street in the southern Romania district of Giurgiu. The day was beautiful, the sun was shining and spring had finally arrived. I do not remember how many stores we had already visited, it was a typically busy day in multi-distributor RTM project. Despite the technology progression I mentioned earlier we had printed forms to complete as PC Tablets were still too expensive. I felt that, apart from the spring-like weather, the day would turn outquite boring.

The sales agent was visibly annoyed by me, as I marked several x’s and far fewer stars on my printed forms. He was wondering, what on earth do keep scribbling there? Well, I said, I have to write down whether I find any products in the refrigerator that are from the competition or even a different sector. “Aha, let me take you somewhere that you will remember for your whole life”, he said. And he was correct, I still remember to this day.

FMCG STOCK SHRINKAGE THEFT resized 600We went to one of the HORECA outlets, essentially a pub which was very crowded and full of people, noise and smoke. The pub also had a cooler provided by the sales agents company. Do believe me, that refrigerator was the most beautiful thing I had seen throughout the project. It was flawless, arranged exactly as it needed to be, with the premium and expensive products nicely placed on the top shelf at eye level, the products which his company tried so hard to sell and promote. In the cooler there was no trace of competition; excellent, this was simply divine. I would have gladly taken a “selfie” with the cooler and post it on Facebook but I figured out a tiny problem - a huge padlock.

Nobody could use the cooler. Was it just for decoration? The agile waitress was very busy, serving the customers by bringing them their selected beverages from the back room. At first, she did not understand what the long-face guy wanted from her (it was I, obviously baffled), but then exclaimed, “Well, I tell you, I can’t even leave the cooler open for ten seconds, the customers will steal everything”. Right, so it is, confirmed the agent, these guys steal everything!

Then something incredible happened: the buzz in the room stopped, like in old films the piano stopped playing and everyone was looking at me. A customer from a neighbouring table wearing a nice sailor T-shirt, showed me his broken and blackened teeth in a large, no, huge smile and exclaimed “Yeah man, we steal here!” Then obviously, everyone started laughing. And they laughed…

Half joking? Half serious? This is a warning to those who operate in traditional trade HORECA outlets – your products are being stolen or at least permanently borrowed!

While these drinkers were every honest about their dishonesty it is likely this is happening along the Supply Chain. A Supply Chain Manager surely needs to know the technical stuff but they also have to have a nose to sniff out where shrinkage is occurring.

Whether you signed a contract that can bring you personal benefits, no matter how large these benefits are, whether you favour suppliers or clients for reasons known by you only, or whether the stocks simply disappear from the company's warehouse - this is still called theft and eventually someone has to pay for it. Moreover, as a Supply Chain Manager you should be the first to know that something is going wrong and certainly before the Controlling or Audit department and certainly before any external legal involvement.

ERP, WMS, TPS, or BI, APO, MRP and the rest are excellent systems and procedures but they all fail if the phrase applies which my good old sailor friend from Giurgiu enunciated so well: we steal here!

Sometimes it’s that simple why you are losing stock and suffering expensive stock counts!

Image courtesy of chanpipat at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Stefan Cucu, Traditional Trade, RTM Assessment Tool, Inventory Management & Stock Control

FMCG - Here comes summer, is your drinks RTM ready for the sun?

Posted by Dave Jordan on Wed, Jul 02, 2014

Improve Beverage DistributionSummer has finally reached Romania and this will be good news for all the beer, water and soft drinks producers. Nothing raises sales like a scorching yellow disc in a clear blue sky.

One of the classic summer tracks is Here Comes Summer by a variety of artists depending on your age. When you hear this song it is a sure sign summer is approaching and if you want to sell your drinks you had better be ready!

With reference to the original piece by Jerry Keller.

Here comes summer
The sun is out, oh happy days
Here comes summer
The peak for drinks is on the way
If we’re winning
Our sales will rise right away
Will the sun shine bright on our happy summer sales?

Here comes summer (here comes summer)
Almost June, the sun is bright
Here comes summer (here comes summer)
The drinks market will be tight
It's the toughest (here comes summer)
So little time to get it right
Will the sun shine bright on our happy summer sales?

Distribution’s not so bad but it could be better
They need close attention to make it to the top
Assess your route to market and do it soon
If we miss, our drinks sales will surely drop

Here comes summer (here comes summer)
Don’t let your competitor sales outshine
Here comes summer (here comes summer)
Whether it’s beer, soda or wine
Make it the greatest (here comes summer)
Drinks season of all time
Will the sun shine bright on our happy summer sales?

Image credit: raichinger

Tags: Brewing & Beverages, Route to Market, Dave Jordan, CEE, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG, Drinks, Pharmaceuticals: Mind the performance gap

Posted by Dave Jordan on Wed, May 07, 2014

I have recently returned from three days in London attending the Integrated Business Planning (IBP) Summit – more on that event in another blog. Now, I am not a frequent traveller in London or the UK in general for that matter so getting around is always a challenge and particularly when travel by the underground or tube is required. All those people! In the rush hours at each end of the day there must be more people underground in London than those with sky visible above their heads.

Huge columns of people continuously pour in and out of tube stations. Endless streams of unsmiling people striding along clutching the Evening Standard, bags in hand and Star Trek equipment in one ear. If there were any wildebeest visiting London they would look on in awe and take photographs on their telephones. (Aside – funny how these hands-free ear piece sets allow you to talk to yourself without being considered a loony now.)

As the crow flies my personal journey was the relatively short trip from Hammersmith to Shepherds Bush and being a temporary London commuter I assumed the tube was the way to go. I duly checked my newly installed tube app, tapped in my location/target and waited for my underground journey to be revealed. In a flash the travel information appeared on the screen.

  From Ravenscourt Park take the District Line
  Change at Gloucester Road to the Circle Line
  Change at Notting Hill Gate to Central Line
  Leave the train at Shepherds Bush

FMCG_Route_Planning_Sales Wow, that was more complex than I expected. Three trains on three different tube lines? I tried the reverse journey just to test the routing and sure enough the journey back to the hotel required the same sub soil complexity. What is more, the journey time was an astonishing 39 minutes each way.

I looked at the map app and realised the distance on foot was just over a mile and at a leisurely pace I could arrive in 24 minutes. With good weather forecast for the duration of the trip – yes, I was in UK – I untethered Shanks’s pony and enjoyed a walk to and from my destination in far less time than I would have spent on a tube train.

No wildebeest watching me as I ambled along on a very stress-free journey and one where I did not have to avoid eye contact on a packed metal sausage. No pushing and shoving. No being forced to listen to the hiss of what someone thinks passes for music from ill fitting ear phones. No “mind the gap”…………

“Mind the gap”. “Mind the gap”? That gap could well be your FMCG or Pharmaceuticals company failing to reach monthly targets, again! You may have all the glitzy technology in the world but if your logistics and/or you distributor route planning sounds like my London Underground experience then you will continue to struggle. Step back and sense check the developing reality rather than always relying on technology, apps and gadgets as they can lull you into a false sense of security that you are doing what is best for the business.

Tunnel vision gets you nowhere near your destination and that light at the end of the tunnel? Yes, it’s a train.

Image courtesy of adamr at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Dave Jordan, Supply Chain, Traditional Trade

FMCG Route To Market (RTM) Distribution: Where did I put my keys?

Posted by Dave Jordan on Wed, Mar 26, 2014

If you are male and own a car then you will have spoken these words at least once! If you do not have a dedicated place to hang your keys then they will be surely be misplaced at some stage. You might miss an important event, football match or at the very least you will upset your spouse after complaining about how long she takes to get ready! Hold on a mnute, what has this got to do with supply chain, has Dave lost the plot?

Key to distributor management

How many sales have you lost business through Distributors not being able to find the right stock at the right time? You probably do not know the answer to that but I can bet it will be significant if the Distributor operates in a sub-standard warehousing operation. Sadly, this is still the norm in Romania, CEE and developing markets in general. Producers do not pay sufficient attention to how their valuable and carefully prepared stock is stored and handled by Distributors. Please do not misunderstand me. I am not proposing a cutting edge Warehouse Management System or narrow aisle reach trucks but a basic level of efficient operational warehousing is required to support professional producers.

Once the stock is inside the storage location you need to know where you put it - remember the keys? If racking is available then the destination location of each pallet must be recorded. No racking? Create a simple painted grid on the floor which allows you to allocate a particular space to a pallet or box or sack of product. (This also helps to maintain safety in the warehouse by isolating pedestrian and FLT routes.)

Above all else ensure there is a sensible level of security and no, I do not mean an internal team staffed with long term employees considered "part of the furniture". Distributors need to invest in a professional partner who has the training and authority to provide security for your stock. The key here is to continually rotate the security staff and prevent familiarity relationships developing. Like it or not but you need to have constant 24/7 checking of what is actually being loaded into trucks.

How many times have you faced large and unexpected stock losses at your Distributors whether through theft, damage or expiry? Even if they own the stock it is your lost sales! If you get the security aspect right then that might not be your biggest concern as Distributors are notoriously poor at applying stock rotation or FEFO/FIFO rules. You seldom get close to this end of the chain so you do not see it....until someone finds expired product on the shelf. At this stage it is your reputation at stake irrespective of any penalty clauses you can apply to the Distributor. Again, this does not have to be very sophisticated but there needs to be a basic routine to monitor stock age - pen and paper still works!

Finally, stock counting is a formal requirement in any business but this is seldom carried out properly, if at all. In any Distributor relationship you need to ensure cycle counting from day one in addition to the legally required annual counting. The rotational checking of a few sku's per week will reassure both parties that stock is under control and prevent an unexpected stock loss which has to be booked at the year end. Again, it is not just the financial consideration but if customers are ordering skus which are not in the warehouse then it is your lost sales once more..

Ensuring the Distributor applies some basic warehousing rules can contribute to a significant, positive difference to your stock outs on shelf.

(Me? My keys are magnetic and I stick them on the radiator as I enter the house! This alos make them nice and toasty in the winter.)

Success in distributor management

Tags: Route to Market, Dave Jordan, CEO, Supply Chain, CEE, Traditional Trade, Distribution, Inventory Management & Stock Control

FMCG/Pharma cost savings versus sales & marketing budgets!

Posted by Dave Jordan on Wed, Nov 20, 2013

There is your dilemna. You need to save cash towards an expensive year-end holiday but you really do not know the best place from where to take the money. Do you take it from your day to day current account which is already set up to pay the routine monthly bills and invoices? Or, do you take funds out of an investment account that has not yet actually matured?

In effect, the money in the current account is already committed and the expected appreciation in the investment account is still to be delivered which puts me on my soap box and to today’s topic.

When times are tough in FMCG and Pharmaceutical companies and cost savings are required why do the senior bodies always look to Supply Chain in the first instance? Unlike those colleagues with a fondness for agency lunches there is very little discretionary spend to be found in the vast majority of Supply Chain operations. Ok, there may be some team building budget, business travel and a small entertainment allowance but where else can you save money?

There is not a lot you can do to have an impact in the short term. What could you do?

Negotiate better RM/PM prices? Yes, but this will not filter through very quickly.

Increase efficcncy in your factories? Yes, but again not likely to hit the balance sheet any time soon.

Reduce head count along the Supply Chain? Certainly effective but think about notice periods and compensation obligations and not least the effect on efficiency and reliability.

FMCG Pharma cost savings supply chain resized 600You will have contracts in place for most services with 3 or 4PLPs for warehousing but as long as pallet space utlisation, storage efficiency and shrinkage etc is under control there really are few opportunities and certainly no “low hanging fruit”.

People often rant on about how sales and marketing people are the real stars of any FMCG or Pharma show and without them nothing happens. Think about it, if you do not have any product available to sell it does not matter if you have the best sales pitch or the most memorable TV advert, does it? In simple terms the SC gets the stuff there and S&M might, repeat might sell it!

Supply Chain people and processes get the product into Traditional Trade and Key Account outlets and how they do it is relatively inflexible in terms of discretionary spend along the way. So when you are looking for savings why do you assume they must come from Supply Chain and not from the huge sales and marketing budgets? The promised client discounts have not yet delivered and the proposed new TV advertisement is a long way from having an in-market impact.

Certainly, you have to keep control of costs and a rolling annual target is a sensible plan for any business but 2-3% Supply Chain reduction every year is commonly small beer compared with multi-million S&M expenses. Diverting your valuable Supply Chain resources to scrimp and save these small percentages simply takes people off the day to day priority of getting your stock onto shelves.

Those Supply Chain “savings” may not actually be money in the bank.

Image courtesy of cooldesign at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Pharma, Supply Chain, Traditional Trade

FMCG Retailing/Supply Chains: corner shops to out of town superstores

Posted by Dave Jordan on Wed, Sep 25, 2013

A couple of weeks ago senior management and I had to stay up late to collect the heiress and a very brave boyfriend from the airport around midnight. Unfortunately the low cost airline they were using did not live up to its speedy name and the flight was delayed by 2.5 hours. We were committed at that stage so no point in sleeping, what should we do?  We went shopping of course!

Now, 24/7 shopping is not new but it was not so long ago that the FMCG outlet network operated in a very different way, in the UK at least. Before the boom in out of town shopping centres the vast majority of FMCG products were sold in the local high street and mostly by independent traders. I can only recall Tesco, the Co-Op and perhaps Spar as having anything like a national network. Yes, I realiSe I am showing my age here.

These shops had rigorously defined opening hours which were usually 09.00 until 12.30 when they would close for lunch and then re-open at 14.00 until the shutters were back on again at 17.00. Where I lived in a quaint village called Birkenhead they did not open at all on Wednesday afternoons and many did not open on Sunday either.

Some archaic laws did not help as you had the crazy situation where you could buy a girly magazine on a Sunday but not a Bible! (Coincidentally, when In Vienna 2 years ago I found out it was illegal to sell paper products there on Sunday.) If you needed something and the shops were shut then you really had no option but to wait until they re-opened the following day as long as it wasn’t a Sunday!

FMCG Retailers Supply Chains resized 600Supply chains or what passed for supply chains at that time were relatively simple with shopkeepers usually restocking from a cash & carry like Makro/Metro.

Spring forward a generation and you can just about buy anything you like at any time of the day and on any day of the week. I am not sure how many people do shop at 3am but it must be profitable as so many FMCG retailers keep their doors open permanently. With shelf off-take spread over 24 hours in any one day retailers need to have slick chains in place to move goods from their central warehouses right up to the shelf. FMCG Producers who deliver direct to stores or to retailer platforms need to be time flexible to meet the variable consumer demand.

Shops are open constantly and demand is usually greater at weekends so why do so many supply chains close down at 5pm on a Thursday or Friday, depending on where you live? While everyone needs a break isn’t there a competitive edge to be had from offering supply chain support at least every day of the week if not 24 hours a day?

Image courtesy of digitalart at freedigitalphotos.net


Tags: FMCG, Route to Market, Dave Jordan, Traditional Trade, Sales