Supply Chain Blog

3 Steps to Address Q4 FMCG, Drinks Supply Chain Challenges

Posted by Dave Jordan on Mon, Sep 26, 2011

How on earth did it get around to the end of September so quickly? One minute I was sniffling at our daughter’s school leaving speech and the next I see Christmas goods in shops. Who is in the mood to buy Christmas goods in September? Who plans for Christmas sales in September – that’s another S&OP story!

The global economy remains poorly. We are seeing successive green shoots of recovery trampled back down by repeated bad news from countries and companies. The feared double-dip recession is back in the headlines and no, a double-dip recession is nothing to do with a shortage of taramasalata and tzatziki in Greece. With countries failing it is no surprise FMCG companies are feeling the pinch particularly when they operate in the area of discretionary purchases. I am aware of local operating companies that have lost significant turnover over the last couple of years and by significant I mean 20-30%. When viewed within the agglomerated global numbers such failings are often hidden but they are there and could be depressingly negative for some time.

What next? Well, I would bet most global HQ are pushing their local operating companies to “make the numbers” while offering little direct assistance. This happened in 2009 and again in 2010 and no doubt the same call to action will be made in various board rooms around this time of year. This is folly! When consumer discretionary spend is restricted you cannot hope to keep filling up their baskets and pantries with stocks of discounted goods. Eventually your turnover will collapse and how you react will dictate how long it remains in the doldrums.

Those same suits from HQ will hold you responsible for touring the business around despite the same suits issuing orders to do something illogical to “make the numbers”.

A few initiatives which will help you get under control and prepared for future challenges:Supply Chain Review

  1. Maintain rigour on S&OP. Stock pushing “orders from above” are inevitably going to change the way you plan deployment of resources. This will be disruptive but if S&OP is functioning well you can mitigate the discontinuity and at least record the newly made assumptions and make senior management aware of the implications.
  2. Clean out your stocks. You will have tired all sorts of activities and promotions to make a sale. Some will work while some will not. There may be a once off hit on profit but you can pump up your top line by pushing out this stock through discounting while also reducing the associated logistics costs for holding the same.
  3. Realign your horizon and structure. Fire fighting and number chasing forces entire organisations into ridiculously short term horizon management. Using S&OP as the “glue” that holds everything together you can once again look to the business medium term and make tough decisions based on realistic if albeit unimpressive, forecast data. If you are constantly worrying about tomorrow then 6 months hence will be a disaster.

If you have the time for a port and cigar moment you might reflect on what might have been when your business set out on 2011.


RTM Improvement

Tags: FMCG, Dave Jordan, S&OP, Forecasting & Demand Planning, Inventory Management & Stock Control

FMCG Cost Optimisation: Cause or Effect of Supply Chain Excellence?

Posted by Dave Jordan on Tue, Sep 20, 2011

I recently had a lengthy discussion with someone from the Armed Forces who was preparing to lead his men into a currently dangerous part of the world. I enquired about the logistics of delivering people, arms and machines to the right place at the right time. Running out of anti-dandruff shampoo may prompt you to select a light coloured shirt in the morning but running out of bullets when under fire provides a different challenge.

Taking bullets as the focus. Getting bullets to the front line and keeping up the supply lines must be an incredible logistical task which cannot fail. Just imagine, no weekends or bank holidays to allow the supply chain to catch up or regroup. All FMCG supply chain people will have all had the dubious privilege to call Metro or Asda or the like to say “sorry, we are out of stock on Bloggo but it will be with you on Tuesday”. The supply chain in an active military deployment must be a super-slick Rolls-Royce of an organisation……..not!

Well, actually my friend rated the quality of supply chain in the military as ………. Yes, you can probably guess the short but not so sweet military technical term used. Quite simply, the military supply chain does not have to make money or deliver savings nor is it measured against customer service at the dusty location of a fire-fight. They are tasked to get stuff from A to B and get it there they must or the consequences are potentially lethal. Consequently the military spends far more than is necessary in civilian life to achieve similar objectives.

Cost Saving in FMCG, Pharma & BrewingFMCG, Brewing and Pharma companies find it hard enough to forecast what domestic consumers will eat, drink and slap on their skin on a daily basis. Compare that to how many bullets are needed or what volume of diesel is needed or how many tank tracks are going to be ripped off. If military forecast accuracy and stock levels were the subject of KPI’s then the turnover of supply chain people would be very high. So, cost in a military environment may not receive close scrutiny but in FMCG, Brewing and Pharma it certainly does.

This leads me to the core of this blog and lines up a later one. In the relatively mundane field of soaps and shampoos, beer and Bollinger, tablets and tonics does cost excellence deliver performance excellence or is it the other way around……..?

Tags: Customer service, FMCG, Dave Jordan, Performance Improvement, Cost Reduction, Logistics Management

Sales & Operational Planning (S&OP) Village People Style

Posted by Dave Jordan on Tue, Sep 13, 2011

You can, there's no need to feel down
I said you can, pick your sales off the ground
I said you can, stop running around
There's no time to be unhappy

You can, there's a process you know
I said you can, when your sales don’t grow
You know, you are lagging behind
Get back to the good times

It's good to run an S&OP
It's good to run an S&OP
You have everything for your team to deploy
Share success you can all enjoy

It's good to run an S&OP
It's good to run an S&OP
Increase your sales a great deal
You can see what you can achieve

Salesman, are you listening to me
I said salesman, what forecast you see?
I said salesman, sell as much as you dream
But you've got to know this one thing

Don’t try to do it all by yourself
I said salesman, to get your stuff on the shelf
You should buy-in to S&OP
I know this will set you on the way

It's good to run an S&OP
It's good to run an S&OP
You have everything for your team to deploy
Share success you can all enjoy

It's good to run an S&OP
It's good to run an S&OP
You can raise your sales a great deal
You can do whatever you need

Supply chain, I was once in your socks
I said I was, fed up with out of stocks
Salesmen, unhappy whatever I tried
I felt so bad I could have cried

That's when Enchange came to see me
And said supply chain look how good it can be
There's a process out there called S&OP
That you can start running today

You can, there's no need to feel down
I said you can, pick your sales off the ground
I said you can, stop running around
There's no time to be unhappy

S&OP; just go for S&OP………...


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Tags: Dave Jordan, Humour, S&OP, Forecasting & Demand Planning, Sales