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Route to Market & Supply Chain Blog

Extended Supply Chain - What do all those initials really mean?

Posted by Dave Jordan on Thu, Feb 25, 2021

Is it just me or does FMCG life seems to be increasingly full of initials? New examples seem to pop up on a weekly basis with COVID-19 being top of mind currently. In line with many business functions Supply Chain and other functions use multiple initials and/or acronyms to describe the various tasks they manage on a daily basis. This can appear to be a foreign language and in many respects, it is.

extended-sc-in-postThose not familiar with the language of Supply Chain will often sit in meetings bemused as various KPI initials are quoted, debated and then usually blamed for a tenuous lost sale claimed by Sales and Marketing. Here, we take a fresh tongue-in-cheek look at just a small selection of those initials.

1. SCSuper Colleagues. I may be biased (of course I am) but this is usually the case. Supply Chain people have to react to sometimes wildly varying demands plus impossible timings but more often than not they succeed to get stock to the right place at the right time.

2. SOP - Secures Outstanding Performance. If you follow a Sales & Operational Planning (S&OP) process, it is robust and your business is doing well then you deserve a pat on the back. If your business is struggling and particularly during this pandemic, then you should consider the benefits of S&OP which can make all the difference in times of business stress.

3. SAP - Spreadsheets Are Problematic. Still a common issue in many businesses. Also common is the number of CEOs who still believe spreadsheets are NOT being used in their workplace! They almost certainly are in use under the radar with all of their inherent flaws, inconsistency and inaccuracy.

4. IKA - Irritating, Keep Away. In developed markets the big name Key Account retailers  may well be the dominant future of retailing in the FMCG sector but in many other parts of the world the reality is quite the reverse. Traditional Trade (TT) is a very important part of many businesses yet most fail to pay sufficient attention to the continued development and growth of the TT channel.

5. SKU - Sales Keep Upping. Introducing new SKUs really should be a cross-functional 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 SKU lists where the lengthy, tail items do not even pay for themselves in turnover/profit.

6. KPI - Keep People Interested. The old adage of “if you don’t measure then you cannot improve” is certainly true here. Be careful not to have too many KPIs but make sure you have a set which ensures everyone knows how they impact the wider team performance and results. Reward against the relevant KPIs and your staff (not just Sales) will follow them keenly.

7. 3PLP - 3 People Loading Products. Think long and hard before outsourcing your logistics operations to a 3rd party. They may not be ready to seamlessly take on your business and their internal preparation must be a key part of your project network. Prepare thoroughly and ensure you know exactly what you want from them and the relationship. A big step that is difficult to reverse so be very careful!

8. WMS - Where’s My Stock? Your 3PLP partner should be largely left alone to run their own business as that is why you pay them. However, you should have cycle counting and leadership of the annual stock counting process or you will lose real sales and experience costly year-end write off surprises.

9. 4PLP - 4 People Loading Products ………..but perhaps slightly faster and with less reliance on Producers? If you have successfully used 3PLPs for some time you might wish to take a look at what a 4PLP can offer your business. This is not for everyone but can be very effective allowing you to concentrate your efforts on growing your core business. 

10. RTM - Retail Takes Money. Whether your focus is on IKA or TT, direct or indirect, how you manage your distribution network will be a key driver of your success in the market place. There is no doubt that companies spending time and effort reviewing and getting their TT distributor networks in good order will be better prepared to survive this COVID-19 crisis.

As you well know, there are many, many more initials used in the extended Supply Chain but this set of 10 will do for a kick off.


Tags: SKU, FMCG, Route to Market, Dave Jordan, KPI, Traditional Trade, S&OP, Logistics Management, Distribution

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