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Route to Market & Supply Chain Blog

FMCG Opportunity: Time to Spring Clean your Supply Chain

Posted by Dave Jordan on Wed, Jan 14, 2015

Is the market getting any better, really? Many big name companies have announced indifferent Q4/Christmas results recently and all caution about the continuing "difficult market conditions”. Ok, so 2014 has been put to bed financially but many will be paying a heavy price for the mammoth last quarter efforts which must have made the advertising and promotional agencies extremely wealthy. I wonder what a snap-shot of bottom line profitability looked like over the final 3 months or month of the year?

If the economy is not much better than last year what exactly can you do differently to keep ahead of your competitors in 2015?  If you had all the time in the world you could apply all of the new FMCG Top 10 New Year Supply Chain Resolutions. You might not have the time, funds and resources to tackle all of them but there are a couple you can take advantage of now for some quick wins. Give your Supply Chain a much needed promo “twin pack” of a Spring Cleaning and see the difference this can make.

Most businesses will have carried out a stock count at year end. You do count your stock don’t you? If you don’t then I guarantee you will have less than you thought! You should now have a clear list of those SKUs which are clearly overstocked, close to expiry, old label, damaged etc. Every day you keep hold of this stock is wasted as the expense slowly but surely chips away at your bottom line making your life unnecessarily difficult and gradually unprofitable. Get rid of it now! Give it to charity and get a tax break on the donation. You could even sell it! If you clear out your stocks leaving what actually moves quickly you will naturally create a slightly more responsive and faster Supply Chain.

Do you know how many “must have” core and promotional skus you added in 2014 in order to get as close to HQ top-down targets as possible? In difficult times it is easy for processes and procedures and even common financial sense to be overlooked in the search for more sales. Every SKU on the books costs you money even if it is difficult to quantify in the extended Supply Chain of your business. Do all of the SKUs actually contribute to profit? The answer is probably no! If you do not monitor profitability by SKU then a considerable proportion may exist, blocking up resources for no actual benefit. You need to be dispassionate about culling SKUs that are not performing and have no prospect of doing so. As far as possible you should keep Sales & Marketing out of that decision making process until your delisting business case proposal is water-tight.

Each of these initiatives is relatively straightforward and certainly not resource intensive. Carrying out this simple Spring Clean and getting your house in good order will help you focus your efforts on winning in the market place. Even in difficult times, someone always wins!

Tags: SKU, FMCG, Dave Jordan, Performance Improvement, Supply Chain, Inventory Management & Stock Control

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