Feeling good?
On a daily basis the amount of care we give to the human body is remarkably little. When you are feeling good the best the body can hope for is a shower, a brush of the teeth and a slap of moisturiser. What else? Haircut and manicure perhaps oh, and possibly a check on your weight on the scale that must be faulty.
Considering the complexity of the human body we do not spend too much time analysing how it is performing. We probably pay more attention to our cars or IT gadgets. Why is my PC running so slow? My phone keeps freezing. The car is overheating. Such symptoms are immediately of prime importance and top of mind or we simply cannot function in this modern world.This all changes when we are under the weather or unwell. Suddenly we are taking our temperature, blood pressure and pulse rate. Blood tests may be needed. You could be wired up to monitor to see how the heart or brain is functioning. Now the body is getting the intensive care it needs before it is too late. Recording and interpreting the raft of bodily data is the route to a full and speedy recovery.
Health Check
If your FMCG business is operating well and there is even some growth then the usual 'heart monitoring' Balanced Scorecard KPIs can be reported weekly or monthly. The focus is usually on getting your product onto the shelf at the right time, in the correct quantity at the lowest cost. Along with other company measures the scorecard should show the health of the business.
When all is not going smoothly however, the Balanced Scorecard may need supplementing with other measures. In companies where sales are below expectations and cash flow has dried up you need intensive care focus in that area. This does not mean you stop generating the Balanced Scorecard as this will contain the important financial and non-financial measures.
Medicine?
For businesses struggling with operations, sales and cash flow, here are some focus areas to which you might pay more attention to aid your recovery
| FOCUS | ACTION |
|
Sales & Operations Planning |
Is the process running well, are the meetings happening and are there quality debates? Ensure your process has not become a box ticking exercise. How you perform in S&OP will have a direct impact on market success, or otherwise. |
| Sales & Operations Execution |
Yes, different from S&OP but equally critical. S&OE is the short-term, proactive planning process that focuses on actually getting your products to where there is current demand. Do you take your eye off the ball |
| Forecast Accuracy | You should be looking at this by SKU and not at a brand or range level as this hides deficiencies. Do not look at every single SKU. Determine which SKUs are actually important and make a healthy profit and focus on those critical A and B SKUs. |
| Factory Planning | Ensure your factories are very closely aligned with the focus on the A, B SKUs. They should be as part of a fully functioning S&OP process but sometimes factory managers make the best decisions for the factories rather than the wider company objectives. |
| Lost Sales | Firstly, check if they really are lost sales and not delayed or caused by over promising. Investigate every significant lost A&B SKU sale and try and apply a ‘100-year fix’ so mistakes do not recur or are at least reduced. |
| SLOBS | Monitor stock age rigorously in-house and at distributors and take promotional sales action to reduce storage costs while collecting cash. You must minimise this criminal and often unexpected cash drain. |
| Returns & Damages | If times are tough for you they may well be tough for distributors and customers. Ensure you have crystal clear contracts on the subject of returns/damages or you will find your warehouses will become dumping grounds. |
| RM/PM Stock | If you are overstocked you should not re-order and you might consider selling some RM/PM items which are grossly over foreseeable requirements. Your stocks should be aligned with those important A,B SKUs identified above. |
| Finished Goods Stock | Again, ensure your key SKUs are always available in the required quantities and at the appropriate locations. Promote any excess FG stock to generate turnover and minimise potential write off. |
| Creditor Days | You owe this money but if you upset suppliers they are likely to stop supplying! Renegotiate where possible and do your best to pay on time and maintain relationships. You never know when the boot might be on the other foot. |
In addition to the sensible tight control of discretionary spend in all departments, these actions can stabilise your vital signs and guide your business back to health.
Help, I need somebody!
If you have any Supply Chain or Route to Market performance problems (or opportunities) you would like to discuss, then please reach out to Enchange.com via telephone, email or live chat.
