Holiday hangover?

Ok, so 2024 has been put to bed financially but many will be paying a heavy price for the mammoth last quarter efforts which must have made logistics companies and advertising and promotional agencies extremely wealthy. I wonder what a snap-shot of bottom line profitability looked like over the final few weeks of the year.........

Is the FMCG market getting any better, really? Many big-name companies are predicting indifferent Q4/Christmas results and all continue to caution about the prevailing  'difficult market conditions'. Certainly, the various conflicts in progress, resulting lack of confidence and the resurgence of The Donald suggests that 2025 will not be an easy ride, either. The weather is also adding to the uncertainty as severe storms appear to be the norm and natural disasters ever more frequent. Good luck with your ice cream predicative models in 2025!

Can you thrive in 2025?

If the economy is to remain as difficult as in 2024 then what exactly can you do differently to keep ahead of your competitors in 2025?  If you had all the time and money in the world you could apply all of the FMCG Top 10 New Year Supply Chain Resolutions. In reality, you will not have the time, funds and human  resources to tackle all but there are a couple you can take advantage of now for some quick wins. Give your Supply Chain a much needed, promotional boost of a Spring Clean and see the difference this can make.

Shock the stock

Most businesses will have carried out a mandatory stock count at year end. If you didn't then then I guarantee you will have less or more than you thought and this could be significant. 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 waste 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 or you could even sell it in a restricted sink market or a reputable residuals disposal company where 'greys' can be avoided. If you refresh your stocks this will leave you with those SKUs that actually move quickly (and hopefully profitably) and you will naturally promote a slightly more responsive Supply Chain heading in the right direction.

Do your KPIs reach for the skies?

Please, please do not tell me you have simply cut and pasted the KPI suite and targets from 2024. Performance measurement should never stay the same and if you are looking to continuously improve, you must keep the pressure on. In fact, you really should have reviewed and and agreed your PI and KPIs alongside the annual plan development in early Q4. Sales and cost aspirations can only materialise if the KPI selection and metrics are very closely aligned.

The company may aspire to have A SKUs always available for key accounts. Fair enough, but the business has to understand the effect this will have on working capital, storage costs and on those SKUs not fortunate to be classed as being A. If something is not important or does not impact results significantly then do not waste time and effort measuring the same.

There is no reason why you have to end the year with the same suite of KPIs and targets as you start with in Q1. The market will change, competition will do their utmost to knock you off balance and probably your own priorities will adjust as the year progresses.  I would not change KPIs on a monthly basis as that is disruptive but carrying out a review every quarter end will ensure you are still measuring the right stuff and aiming at appropriate targets.

All change. Mind the gaps

Do you know how many must-have core and promotional SKUs you added in 2024 in a desperate attempt to 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 and more sales. Every SKU on the books costs you money even if it is difficult to quantify in the complicated and extended Supply Chains of modern business. Do all of the SKUs actually contribute positively to profit? The answer is probably no! If you do not monitor profitability by SKU then a considerable proportion of dead wood may exist, blocking up resources for no real benefit.

You need to be dispassionate about culling SKUs that are not performing and have no prospect of doing so in the short/medium term. Unless your slow-burn growth SKUs can end up as a Pepsi or  Coca Cola, put them on the back-burner. As far as possible you should keep other functions out of that review process until your delisting business case proposal is water-tight. You may not win all of the battles but at least the senior team knows what unhealthy, growth eroding SKUs are doing to the results.

Ubi fides ibi lux et robur

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!

Help! I need somebody.

If you have any 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.