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Route to Market & Supply Chain Blog

FMCG Sourcing: 4 Frequent Flaws to Avoid

Posted by Dave Jordan on Fri, Feb 11, 2022

The Enchange Supply Chain House is available for those wishing to embark on a structured, medium-term journey towards Supply Chain excellence. What about those companies who need change now with no time to waste? What can they do to effect meaningful change sooner rather than later?

The Enchange 6-Part Model

In a simplified view of supply chain, the priority of FMCG players work to get their stuff in front of consumers but with so many hurdles, this is not necessarily easy. The 6 simple steps:

Step 1: Sourcing

Step 2: Planning

Step 3: Manufacturing

Step 4: Warehousing

Step 5: Transport

Step 6: The all-important Consumer Shelf

Previously, we asked if you understood the day to day operational difficulties and challenges experienced by your staff along these 6 steps.

  • What happens at the important handovers/pinch points?
  • What can go wrong at these interfaces?
  • How do you identify and solve problems?
  • How can you improve the data and information hand-shakes?

Four Frequent Flaws - Sourcing

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  1. Service Level Agreements. People will always make mistakes but when errors are caused by external forces, it is doubly irritating. Every time you buy something from a shop or online, you enter into a contract with the seller about price, delivery and terms. Whatever the size of your business, you need an SLA with suppliers. No, this will not stop errors occurring but it will show the supplier you are taking the partnership seriously and expect standards to be met. With the SLA in place you will force an improvement in service and stop wasting time deciding who is to blame for exceptions.

  2. Forecast Visibility. It should not be a secret kept from suppliers! The more forward looking information you can share with your supplier partners, the better. The timely availability of raw and pack materials relies on the quality of your forecast so share it. Suppliers have their own supply chains to manage and this should be dovetailed with your own.

  3. Listen To Pareto. Not all SKUs are created equal! Your business will probably rely on a relatively small number of SKUs (the 80/20 rule) so at time of stress stop worrying about an SKU that provides little benefit. Decide on your critical SKUs and then derive your equally critical RM/PM and deploy your available resources on ensuring the timely arrival of those materials. 

  4. Avoid Single Suppliers. Relying on a sole supplier for a material can increase the risk of failure to supply, price increases or even force majeure. Two suppliers for the same RM/PM will provide some reassurance in times of uncertainty, e.g. while defragging the supply chain. Yes, having multiple sources will provide extra complexity and cost but supplier flexibility is what you need at this time.

What next?

In subsequent articles we will look at the manufacturing handshake in the chain and consider what can be done, quickly.

If you need to make supply chain change in the next 2/3 months, we are just a call away.  

Feel free to use any of our contact routes including Live Chat, if you have any questions about how the Enchange Supply Chain House can assist your journey to supply chain excellence. 

Read more articles on Supply Chain Excellence and Route to Market on our website where you can also subscribe to our frequent updates.  

 

Tags: FMCG, Dave Jordan, Sourcing, supply chain excellence

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