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Route to Market & Supply Chain Blog

A solid internal S&OP process and still we failed to deliver!

Posted by Christian Cusworth on Tue, May 04, 2010
We often hear FMCG businesses complain about being let down by their Logistics providers. "They couldn't deliver "Not enough space in the warehouse" "Trucks in the wrong location", "Resource constraints" etc.

The standard response is to despatch the Supply Chain Director with a set of KPIs, service level agreements and a cricket bat (typically the bigger the manufacturer the bigger the bat), to "remind" the Logistics provider of his "commitments".

Logistics providerApologies accepted and penalties charged, "How can we make this work" bellows the manufacturer "Well there is one thing" the supplier responds timidly. "Information", "just a little information". The response that the Logistics provider would like to give may be similar to this: You change the sales plan daily and we only find out when orders are receipted, promotional quantities and skus change by the hour, 20% of orders are for delisted skus, new products arrive at the warehouse and we don't know what they are, order volumes change during picking, and by the way we have an aisle full of obsolete stock awaiting a "decision" from you for over 6 months.

After further thought and valuing his contract with the manufacturer, our Logistics manager restrains himself and offers the following: I understand that you review the Sales Plans & Marketing activity in your S&OP process.  If we where to be involved in this process I could better plan my resources and activities to deliver what you need. I could attend part of the S&OP meeting, understand the plan and advise of any constraints. We could look at mid/longer term plans, thus giving us the time to develop further capacity, increase headcount or trim back, whatever is required. In addition you may share promotional strategy, NPI information and price change data for example.

Logistics providers are not deliberately rubbish. They may not be house trained but must be integrated at a basic level within the S&OP process.

FMCG manufacturers depend on Logistics providers to serve customers, without them they fail. Sharing information with them is as important as communicating internally. The forum for this communication is S&OP.


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Tags: FMCG, Logistics Service Provider, S&OP, Logistics Management

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