Networking
I recently met the CEO of an FMCG beverages company at a charity fund raising evening and both being fans of the foaming ale, we settled on a canape-fuelled discussion on all things beer. At this event I was not wearing my Supply Chain consultant hat so the conversation was very open and informative in a way that formal, office-based meetings seldom allow.
We talked about readiness for the upcoming annual appearance of the World’s Greatest Drinks Salesman and how Sales & Operational Planning (S&OP) would support their efforts. Apparently, all was in order as they were anticipating a good season supported by some exiting relaunches and an aggressive, well funded marketing campaign. What could possibly go wrong?
Expect the unexpected?
In fact, said the CEO, slowly topping up on his own product, “if we can get beyond 80% Customer Service Level we could be in for a great year”. The piano background music stopped suddenly. Drinks were suspended in long streams from the necks of bottles above thirsty glasses. People around the room were in a state of frozen animation with faces fixed in laugher and limbs in mid stride or dance. A silence enveloped the room and even the clock stopped ticking.
After a few seconds of this suspended animation, everything in the room immediately returned to normal. Drinks flowed again and splashed into glasses, laughing continued and the dancing-dads resumed their jerky exhibitionism. What on earth had I just heard? I repeated the CEO's statement in case it was the beer talking/listening but no, their Customer Service Level target across the hot seasonal peak was 80%. What is more, I knew that this CSL was significantly behind competitors in the same markets.
Probe, probe, probe!
I was now entering full consultant mode and I started to throw in a few searching questions that would tease out the operational reality in this business:
1. Is forecast accuracy measured? By SKU? Is the KPI measurement 'honest' and it allows you to monitor improvement?
2. Does your Supply Review use a clearly agreed plan of anticipated sales across the appropriate horizon?
3. Is there a single set of financial numbers used by all functions at all times? No under the table, error-ridden Excel sheets?
4. Do you (the CEO) lead an S&OP meeting each month which covers an adequate planning horizon? Is Sales & Operational Execution (S&OE) also managed as a discrete discipline?
5. Are all sales orders given a clear promise date at order capture and Customer Service Levels given the highest priority, focus and attention?
6. Is there a process to provide visibility for key RP/PM items covering an adequate planning horizon while maintaining materials at an optimum level?
7. Is there a series of formal meetings in place to support S&OP on a rolling, 12 month basis? Are these meetings well attended, minuted and actions agreed and circulated?
8. Are you (the CEO) seen to be actively and continually leading S&OP across the business?
9. Do you have suitable IT tools, systems and KPI performance measures in place to support S&OP?
10. Do you believe S&OP works for you?
Unfortunately, the CEO offered mostly negative answers accompanied by copious head shaking.
A percentages game.
As the coffee and cigars arrived, I decided to literally bite the biscuit and advise that IMHO the company was running an immature S&OP rather than a having a fluid process that should be guiding the business. Do nothing and your Customer Service Level will be all you deserve and can expect. No cigar moment for this CEO, yet……..
Help! I need somebody!
If you have any Customer Service, Supply Chain or Route to Market problems (or opportunities) you would like to discuss, then please reach out to Enchange.com via telephone, email or live chat.
