Supply Chain Blog

FMCG Food Waste: Supply chain speed and agility v inventory.

Posted by Dave Jordan on Mon, Dec 11, 2017

Hooray! Many supermarket chains now sell imperfect or misshapen fruit and vegetables at a discount. As you may know I am a big fan of buying this type of food as taste has nothing to do with shape based on my massive culinary knowledge. Whether my potatoes are knobbly, or my parsnips look like Donald Trump, I simply don’t care.

My other food gripe has always been about “best before” and “sell by” plus the simply ridiculous, “display until”. Food producers and legislators don’t make it easy for consumers, do they? Surely there can be 1 definitive statement for a food safe shelf life measure, for example “do not consume after….”. Slowly but surely progress is indeed being made to remove this confusion for consumers and waste for everyone in the supply chain including you.

This charity in Denmark collects close to expiry, expired and slightly defective product from producers and supermarkets and sells to the public with at least a 50% discount. This has helped to reduce unacceptable food waste in difficult economic times. Unfortunately, this charity has been so successful it has started the process of turning their operation into a branded supermarket and will have 3 shops open in 2018.

FMCG_FOOD_WASTE_PLANNING_FORECASTING.jpgAll good stuff then as long as the waste mountain is reduced. Well no, not at all. Why are some big name FMCG companies producing so much food stock that is either destroyed or as in Denmark, redirected to a charity. If you look at the video in the earlier link you will see some well-known names who will publicly claim to enjoy supply chain excellence. Getting their products to the consumers on time in full and at lowest cost is all very well but if the stock ends up as not required, it is surely a hollow boast?

I agree there will always be some inaccuracy in forecasting – there must be – but the volumes involved are not 1 or 2 cases, it is pallet loads. These companies will all be using various clever IT tools to forecast and supply the market demand but are they guilty of pushing too much into the retail end of the supply chain? Competition dictates that your products must always be available, and the consumer decides on the spot if she/he buys Coke or Pepsi.

I am still not convinced sales colleagues get forecasting in the way supply chain people must. The forecast must be based on what is being pulled along by consumers rather than what is pushed in to reach a monthly top line number. If sales forces in a number of foods companies do this then inevitably there will be waste at the far end of the extended supply chain.

Someone will get their forecast horribly wrong and when thinking about huge brands even a small inaccuracy can mean a hefty contribution to the waste mountain of food and expense.

You cannot ask your competitors what their volume plans are for the month to make sure there is no over-supply, but you can bring more agility to your supply chain. Demand fluctuates across the month irrespective of those companies still “enjoying” unrealistic month-end pushes. You might look at how much safety stock you have built into the plan and along the chain, reduce that cost and invest it in speed and flexibility instead.

Lose some fat from your inventory waist and you will be able to move much faster when the market or a competitive move demands.

Image courtesy of Stuart Miles at 

Tags: FMCG, Forecasting & Demand Planning, Inventory Management & Stock Control, WASTE, Food

FMCG: I’m a Supply Chain expert…Get me out of here!

Posted by Dave Jordan on Sun, Dec 03, 2017

The definition of celebrity is a famous person, VIP, very important person, personality, name, big name, famous name, household name, star, superstar, celebutante, leading light, giant, great, master, guru. In that case why do I only know 3 people from the 2017 series? One boxer, a footballer with an ironic surname and Boris Johnson’s father. I don’t know Mr Johnson either, but he helped produce Boris the buffoon so probably deserves to endure a degree of hardship.

I guess I have lived outside the Brexit zone too long and simply do not appreciate the celebrity importance of this collection of egos but some of these people are obscure. If they are stars or household names, then surely everyone will get a go at being handsomely paid to eat crocodile tongues on holiday down-under. My turn must come!

What’s more the show is being presented by the best UK double act since Morecambe and Wise……UK TV is becoming a veritable talent vacuum.


Dare I say it, but a similar dynamic is emerging in the world of supply chain consulting. With business media site like LinkedIn being unregulated you can add whatever you wish to your profile and work history. Unless someone notices a blatant fabrication and takes the time to suggest a text correction, this becomes the accepted reality where the term “expert” is overused. I even recall one LinkedIn member set his status as “Current Company: Unilever – Position: Owner”!

Another definition for you; expert - having or involving a great deal of knowledge or skill in a particular area. That level is not achieved easily or in a few years and being employed for many years in supply chain does not mean you can simply switch to become a credible consultant. From personal experience making that change after almost a lifetime in an FMCG multinational (no, I wasn’t the owner either) is not easy.

There are 2 important elements to being a successful consultant after working on the other side of the fence. Real and deep expert knowledge is a given but the task of imparting that to often cautious or even suspicious clients is the difficult part of the job. When you work in industry you have the authority of your work level or job title which make things happen. When consulting you have diddly-squat authority and making things happen and stay happened is a tough new skill to learn.

When you are in the market for consultancy expertise you must carry out some degree of due diligence. Check out and corroborate the claims of past success with particular focus on how expertise was deployed in the receiving organisations.

Don’t be taken in by the “expert” moniker and use something like the Talent Hub to find out who is availableand what they have actually achieved in the wonderful world of consulting.

It's a jungle out there!

Image courtesy of Stuart Miles at  


Tags: FMCG, Interim Management, Supply Chain, CONSULTING

FMCG Year-end 2017: Distributors overstocked?

Posted by Dave Jordan on Thu, Nov 30, 2017
How is 2017 going so far? Are you in cruise control or is your business chaos central? Be honest now! The last quarter of the year is always difficult to manage in order to achieve 2017 results without negatively impacting 2018.
Interim_Management_FMCG_Dave_Jordan_SKU_Distributor_Inventory.jpgWhen your business still relies on a healthy traditional trade serviced by distributors the balance of sales in versus sales out is always a challenge. Any major discrepancy will alert the auditors and in particular you do not want be accused of loading the trade to meet the planned numbers. 
If you have let your distributor stocks get out of control this can be remedied through discipline and rigour plus top-down leadership ideally through a dynamic S&OP process.
  1. Month, quarter and year-end push - Run your business on one set of numbers agreed at Board level and ensure NOBODY operates an alternative private agenda. If you follow a decent S&OP process such last minute, period-end pushes can be avoided. Let's face it; period-end sales pushes place huge strain on everybody in the organisation yet only the sales people receive a bonus for these efforts!

  2. Failed launches - Be realistic with new product launch volume projections. Brand Managers will always, repeat always overstate how successful their new SKU is going to be. They do not want to appear unambitious and nor do they want to run out of stock. This is what happens when self-interest decisions are taken outside of a healthy S&OP process.

  3. Old label stock - New launches are not a surprise and with half-decent planning you can avoid seeing old label inventory ageing in the distributor warehouse. As soon as you start pumping in a new label SKU the distributor will stop selling the old one. "Well that's his problem" - no it isn't! It blocks his warehouse, his cash and your customer service. If you plan your launch volume ramp-up well you can avoid this. Consider running a sink-market region where all stocks of the old label SKU are sold out, possibly with a discount.

  4. Old and expired promotions - If promotions have failed and do not move then bite the bullet and take rapid and direct action. Dismantle co-packs and put the valuable and original SKUs back into stock and/or re-label special offer packs.

  5. Customer returns - Producer sales forces struggle with this and particularly when it concerns International Key Accounts. You need a cast iron agreement on responsibility AND authority for customer returns. If this is contractually agreed then fine, take the stock back and recycle within your system. If there is no definite agreement then you leave the door open to individual sales people taking unilateral decisions to accept returns to get clients off their backs. Unexpected and unmanaged returns cause havoc in logistics, warehousing and in ERP's.

  6. Producer forecasting errors - No forecast is ever 100% perfect and nor should it be, by definition. However, if you measure your forecast accuracy by SKU and take actions to improve accuracy then this source of overstock can be significantly reduced. Ignore calls to measure accuracy by brand or by category as the data is useless to the people supplying the products.

  7. Damaged and expired. This is really an accumulation of all the items above. Damaged and expired products will be present in any business. To ensure they do not appear in the ERP as good stock it is important to write off and dispose of them as soon as possible.

If you need to destock your distributors before the auditors come sniffing then you should get on with this quickly. No resources available? Look at who is available to help you get these tasks completed. Crush the internal resistance and get the job done now!

Image courtesy of nonicknamephoto at


Tags: Dave Jordan, CEE, Traditional Trade, S&OP, Forecasting & Demand Planning, Distribution, Inventory Management & Stock Control

FMCG Trade Loading & 4th Quarter Challenges - deja vue all over again!

Posted by Dave Jordan on Mon, Nov 27, 2017

Some things never change and FMCG 4th Quarter challenges certainly do not. The same challenges are clearly present and what is astonishing is that some companies are still making short term, expensive efforts to “make the sales numbers”. I don't think that is very clever; instead of pouring cash into a black hole without guaranteed return why not divert resources to sort out the underlying problems? They will not go away on their own!

There is a little bit of growth in the market but those green shoots are still relatively puny. Assuming growth is to return, those companies that had the vision to be critical of how they do business in difficult times will be the winners. All the others will be achieving the numbers by loading the trade….again and again.

You should have a good feeling for how things have gone in Q3 and what is still needed in Q4 to reach the numbers you committed to over 12 months ago. "Committed" may well be the wrong word as you were probably forced/cajoled/persuaded to accept figures you knew would be difficult if not nigh impossible to achieve. However, for the greater corporate good you took it on the chin and said “yes, we will do it” (no idea how but cést la vie).

Exactly how are you going to achieve those seemingly distant numbers? The corporate world remains in trouble but so are consumers. The two groups are not disconnected; consumers are having a very tough time considering the increasingly clueless government austerity measures that continue to drip out around the globe. Consumers simply do not have the money to prop up your annual plan and what money they do have is likely to be rationed to be sure of a reasonably happy Christmas. Remember, consumers owe you nothing, not a penny!

One thing you may consider if sales are not going well is to fall into the trap of month-end loading. Let us consider this scenario which is far from uncommon even in “blue-chip” companies. Let us assume October sales are poor in the first 2 weeks and then the word is given to “push” stocks into the trade. Discounts are given, favours called in and hey presto, the required target number is achieved and you and your bosses think you are back on tSupply_chain_sales_planning_results.jpgrack.

You have pushed so much stock into the trade that distributors are short of cash and International Key Accounts platforms are overstocked. Consumers do not drink more beer or wash their hair more often or eat extra snacks because you sold at a discount. They have taken advantage of your offers and have filled their own domestic warehouses ready for Christmas and possibly beyond.

Then we get to November. This time sales are poor into the third week and the rallying call of the stock push does not seem to be working. Support  and discretionary spend budgets are raided again and yet more stock is forced into places where it has no demand. Despite this, the motivation of achieving targets and securing a bonus ensure that the right number is flashed to HQ at the end of the month.

Now just December to get through……even if it is really only a 16/17 day month for selling. You are so close that a few more discounts and the promotion of high value SKUs means you close the year on target. It’s that champagne moment, get the fat cigars out!!!!

Sit down and think about what you have just done for the sake of a slap on the back and a bonus. You have turned the operation of the company upside down, contravened numerous policies, abused S&OP (if you use it) and unfairly stretched your staff in all departments. 

If you are brutally honest you will know you have sold January’s demand over the last quarter the year. You will not get away with that for long as it will come back to bite you eventually!

With stretched resources it is difficult for companies to see what is really happening across all departments and how decisions in one area cause a detrimental effect in another. If you insist on chasing the full year numbers/bonus then you might at least take on some professional support and understand the damage you are causing to yourself.

Image courtesy of Stuart Miles at


Tags: FMCG, Dave Jordan, CEO, Performance Improvement, S&OP, Forecasting & Demand Planning, Sales, Distribution, Integrated Business Planning

FMCG Route To Market Challenges; Learn from IKEA

Posted by Dave Jordan on Sun, Nov 19, 2017

There is no excuse in visiting IKEA on a Sunday before watching 22 millionaires with daft hair styles kick a football around on live telly. The weather was cold and the air was full of autumn drizzle and as I turned into the car park the scale of the folly dawned on me; the IKEA car park was bursting at the seams. Cars were on pavements, on grass verges and on the approach road; grim.

There were entire extended families pouring out of cars and into the store. In parallel,   equal numbers were exiting before trying to squash brown flat-packs of “destroy it yourself” furniture and fittings called Grult, Splad and Twong into and onto impossibly small cars.

What do these people do when they have removed all the air from their cars? Do they give granny and granddad a few coins to take the bus home? There is no way you can fit all the people and the flat-pack must-haves into some of these cars.  Maybe that is why IKEA provides free rope on the loading bay; it is to strap the unfortunate grandparents onto the roof of the car.

Oh well, here now so might as well join the hoards of people unable to control a shopping trolley; absolutely no sense of direction and with variable but low levels of short-term memory. I hooked a yellow bag over my shoulder, picked up a pencil and I too became a zombified IKEA shopper!

I know there is a science to store layout design whether it is a Tesco supermarket, a Hornbach DIY store or an M&S type outlet. The store owner wants everyone to see everything at least once and they want exposure to be just at the right time when for example, the shopper has been subliminally convinced that the bright pink Plobo stool would look really nice in their kitchen (believe me it won't).

Ikea Shop Floor FlowOh, but the chaos this causes in an IKEA store! Being a supply chain type I would make the whole store strictly one-way with shoppers not permitted to double-back to soft furnishings or for a forgotten low energy light bulb. In fact, if I had my way I would make the floors with a defined downhill gradient and ensure trolley wheels were oiled hourly to help people on their way, through the broken furniture bargain section, past the cheap fast food and out into the car park. What about a small battery pack on each trolley which delivered a persuasive electric tingle if you tried to push the trolley against the traffic? Too extreme, possibly?

Think of all the wasted hours and effort of moving all the way through the store then insisting on reversing the entire route and getting in the way of everybody else. Then came my eureka moment. I realised where I had seen this behaviours before and why I perversely enjoyed dodging the trolleys in the IKEA maze.

This is precisely what many FMCG, Brewing and Pharmaceutical companies suffer in their Route to Market distribution planning every single day. Wasted miles, wasted fuel, wasted hours and in all that time there are customers not being serviced.

RTM Assessment toolIf your sales are struggling along towards the end of the year and the stream of excuses for gaps appears endless, you might take a close look at how much time your sales people spend travelling to, selling to and guiding distributors. If your sales team has adopted the IKEA system logic then you have just spotted a huge opportunity to improve your Route to Market (RTM)performance.

Get out from behind the desk and have a closer look. Get some IKEA rope, tie yourself to the roof a salesman's car and see where some simple experience, thought and logic can significantly add to your bottom line. 

Too busy to ease yourself out of that IKEA chair? Then seek out some professional resource to take a cold hard look at how you operate RtM in the traditional trade.

IKEA image courtesy of A littleSprite 

Tags: Route to Market, Interim Management, Dave Jordan, Supply Chain, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG SKU Proliferation: You DON'T need lost sales in Q4

Posted by Dave Jordan on Mon, Nov 13, 2017
Extra SKUs sneak onto price lists when nobody is looking. Sales & Marketing colleagues prefer new launches with lengthy SKU lists different flavours, different sizes, different colours, new packaging etc. How many shelf facings do they want? How do these decisions get through S&OP meetings? (You do run an S&OP process, don't you?)

Do you know this SKU proliferation is likely to affect your customer service? Rather than delighting more and more customers you maybe disappointing them and wasting countless Euros at the same time. Introducing an SKU is a cross business decision, or should be! When considering new SKU introduction at your next Board or S&OP meeting then the supply chain people should ask some testing questions.

Cost per SKU. Have you ever sat down with your Management Accountant and calculated how much it costs to have an SKU on your price list? Sales staff will bemoan the rising listing fees but in reality the cost of an SKU is much, much more. Including, e.g.

  • An employee must spend time buying the different label, dyestuff, cap, box, etc.
  • The new raw material/packaging must be stored in a warehouse.
  • Someone must call it off at the factory.
  • The factory must schedule and make the SKU.
  • The finished product is stored in a warehouse.
  • Someone at the operating company must plan the SKU.
  • Transport into and ex-factory.
  • Transport to Distributor or Retailer etc, etc

All of these activities and many, many more ensure that the cost of having an SKU on the books is significant. In a very rough rule of thumb the cost of having any 1 SKU on the books of a medium-sized company is typically 30,000 Euros per annum.

Factory complexity. Time is money in factories as they try and make their assets sweat and get as much out of the gate as fast and cheaply as possible. Each colour or perfume change or label or pack size adjustment stops the production line and steals valuable time which you cannot recover.

Logistics. Each individual SKU requires a dedicated pallet or rack or bin location. The more SKUs you have the more money you are paying for space. When you have 16 variants of the same shampoo pack size you can understand why picking errors occur, lowering your customer service and causing lost sales.

Interim_Management_FMCG_Dave_Jordan_SKU_Complexity.jpgPlanning. At year-end low value SKUs really drag your business down as resources are applied to plan and deliver SKUs to market which may increase your volume number but not your profit line. Your scarce resource should be focussed on delivering those SKUs that make a real difference to profit rather than spending time on low value/slow moving SKUs which may actually have to be written off in the long term.

SKU rationalisation. Ok, so despite the above you are drowning under SKU complexity. Far too many organisations launch a new SKU and then fail to revisit the data assumptions on which it was first introduced. Firstly, if a new SKU is not even expected to deliver at least 30,000 Euros (or whatever your in-house figure may be) profit then DON'T LAUNCH IT! For all SKUs on your price list you should carry out an SKU Rationalisation exercise preferably quarterly but at least annually. SKUs that do not meet profit/margin/volume/GP criteria should be placed on watch. If they remain below your cut off points then it is time to propose a delisting.

The ideal time to carry out that rationalisation exercise is before you submit Annual Plan 2018 and certainly before the end of 2017. Your staff will be concentrating on the day to day operation so recruitment of an external resource to carry out the segmentation is advisable. The temporary recruit will be dispassionate and unbiased and will deliver a proposal which is right for the business and not just right for some. 

Of course, there will always be special cases like SKUs that constitute a range or a niche local jewel but as long as these are the exceptions then you have a chance of a fast flowing, efficient and reliable supply chain ready for 2018. 

Need more expert advise from readily available talent to address SKU Complexity? Please click here. 

Image courtesy of Supertrooper

Tags: Customer service, SKU, FMCG, Interim Management, Dave Jordan, S&OP, Sales

NHS UK Supply Chain Waste: Planning Patience

Posted by Dave Jordan on Thu, Sep 28, 2017

I have spent some considerable time visiting medical facilities both at home and in UK and in the latter case I was not impressed. The National Health Service is still the envy of the rest of the world and rightly so. When you consider the policies and procedures in other countries the people who benefit from the NHS really should not complain about a 4 hour wait as you will be seen and you will not be asked if your bank card is contactless before you get to see a medical professional.

The NHS is struggling but I think that is partly due to people using the A&E facilities for an ingrowing toe nail or a stomach upset after a magmaloo curry (search that and Jasper Carrott) the night before. The strain on the service would be a lot less if treatment really was restricted to people who have bits hanging off and when life is under threat.

There is another area where the NHS struggles and that is on their supply chain. Yes, it is of course complicated; it is hard to demand forecast what accidents and illnesses will be wheeled through the doors and it is a supply chain that must deliver. Essentially everything should be available, everywhere at all times of the day in a non-stop operation. You cannot be out of stock on surgical sutures and make do with a bit of masking tape or ask the patient to "press firmly here" until replenishment arrives.

As a result, I saw horrendous waste on an hourly basis. Medicines, bandages, food (yes, I know it's not too clever anyway), utilities and perhaps most importantly, staff time and beds. At a time when the NHS is thought to be lacking beds I thought this was perhaps the most serious fault as waiting time for beds is high. Indeed, many non-urgent operations are cancelled as beds are apparently not available. Yet, beds were vacant and beds were still occupied by cured and dressed patients waiting for transport home.

SUPPLY_CHAIN_PLANNING_FORECASTING_costDrugs were delivered for people who had been discharged or even sadly died. Not one bit of this was deliberate but there appeared to be a frailty of planning. I am certainly not suggesting the operation of a 24/7 nationwide NHS is an easy operation to run but I do feel some of the waste listed earlier can be avoided but not by rigidly sticking to current practises and procedures. That clever bloke Einstein defined doing the same thing over and over again and expecting different results, as insanity.

I would be similarly insane to say all the problems can be solved easily but when I met with the equivalent of the Ops Director at one major hospital in an English city currently without any Premier League teams, I was rather shocked. There was tacit agreement that numerous problems existed and there was an understanding of the improvement suggestions I made but then she bluntly played the Einstein card. You can only advise the NHS IF you have previously advised the NHS. What? Surely that is a recipe for a rapidly downwards spiral of inefficiency leading to collapse. Think out of the box!

I believe the NHS could learn from industry and even correction of a few basic errors mostly linked to simple data and information flow could deliver substantial sums. In 2015/16 the NHS budget was £116 billion, yes 116 billion of our weakening pounds. That is a serious amount of money that is not being well spent in some areas, in my humble opinion.

I asked the Ops Director what her biggest challenge was and I expected the answer to be a secure electricity supply or clean water or drugs availability etc, but was just a little surprised to hear she gets the greatest grief from bosses when...... the entry barrier does not work on the visitor car park.

Image courtesy of Stuart Miles at


Tags: Dave Jordan, Performance Improvement, Supply Chain, Forecasting & Demand Planning

FMCG CEE Route To Market: Importance of relationships

Posted by Dave Jordan on Tue, Sep 26, 2017

You have great brands and brand awareness, a fantastic internal supply chain, tight financial control, top class HR, a top-notch sales force, innovative marketing - surely a recipe for success in CEE? Surely this must be the case? Sadly, not always and some big-name companies frequently get this important relationship badly wrong.

Blue chip companies with internal operational excellence continue to flounder when serving the Traditional Trade in CEE. Admittedly, this trade channel has reduced in importance over the past years but it still accounts for a sizable portion of markets which will return to good growth sooner or later. International Key Accounts and Local Key Accounts will continue to take share in urban areas but in a country as vast as Romania, for example they will not conquer the rural market in the medium term.

Producers need knowledgeable and reliable Route To Market partners to reach the smaller corner shop outlets. There is no shortage of operators willing to be distributors for big name clients but how many of them are really equipped and ready to do the job properly? Producers are often guilty of placing their reputations and ultimately profits, in the hands of enthusiastic amateurs. In the sporting definition, true amateurs do not get paid for their work and distributors do not get paid by producers when they fail to meet targets.

Unfortunately, instead of doing something about the short-comings of distributors, producers proudly celebrate securing penalties or better terms through negotiating against poor performance. What is the point of doing that? Instead of carping on about how poor these "partners" are why not get out there and help them?

You cannot build houses on sand yet producers expect distributors to swiftly dove-tail into their in-house processes, IT, style, ethics, reporting schedule etc. Yes, they probably exaggerated their capabilities and readiness during the pitch but you should be able to see through that or at least be ready to quickly assess capability.

Is it any wonder why so many distributors go under when they are not considered partners and in some cases, are believed to be a hindrance? Distributors do not deliberately make mistakes that lead to their own reduced income. They too are in business to make a few Euros to take home at the end of the month.FMCG_RTM_DISTRIBUTORS_PARTNERSHIPS.jpgProducers need to look closely at the capability matrix offered by their distributors (or more importantly, potential distributors) and in most cases, this will not match up to requirements. Do something about this; build capability where it lacks and you will reap the benefits in having proactive partners going that extra kilometre to make a sale for you.

Those FMCG producers who are in tune with distributors strengths and weaknesses AND do something about the latter will be in pole position with a Ferrari while less wise competitors are at the back of the grid with a horse and cart. The route to your end market can be a lot easier than you fear.

Image courtesy of Stuart Miles at



FMCG Cost Control: Boosting Brewing Bottom Lines

Posted by Dave Jordan on Tue, Sep 19, 2017

Picture the scene in many a brewing boardroom; a terse note has arrived from the suits at HQ telling the boss to urgently reduce costs as the year-end result is not going to look pretty. Why do all the board directors then look silently at their supply chain colleague? Of course, there are significant costs associated with a modern supply chain but you cannot make significant savings from that infrastructure overnight.  Supply chain budgets very rarely contain significant discretionary spend unlike the bank busting sums in the pockets of sales and marketing!

BREWING_COST_SAVINGS_BOTTOM_LINE_FMCG.jpgAs is usually the case, let us assume the SC team is constantly looking at ways to reduce cost in factories, logistics networks, 3PLPs, planning etc. What other costs could be challenged without causing discontinuity and unnecessary stress in the company?  The SC usually leads any cost efficiency projects which I think is fair enough as the discipline is most familiar with cost control and challenge.

Here are 5 areas I feel are always worthy of visiting when looking for "low-hanging fruit" bottom line benefits.   

  1. Old promotions, soon to expire stock, old artwork/label stock, slow movers. All companies (particularly FMCG) will have some or all of this and for various reasons - some good, some not so good. If you do not routinely address this you will be hit with an unexpected loss at year end or at the next stock count. Bring the list to the board meeting and hold accountable the actual people responsible for creating the stock in the first place. Sell it out and stop paying for storage too!
  2. Promotional activity. Is it all really necessary and does it actually pay back? Do you know how much of that original pristine packaging assembled in the factory is destroyed in the name of the latest promotional whim? Plastic film, outer cases and trays litter the floors of repacking operations everywhere. You have paid for that original packaging and now you are paying someone to destroy that and replace it with fresh material. Just think of all those Dollars/Euros that could be spent in a much more customer focussed way or simply saved? When you consider all the extra labour, logistics and packaging material just how much value is really generated for your business?

  3. How many SKUs do you need? Do you know how many your business has when you include all the promos and specials? Every single SKU costs money to source, transport, plan, store and deliver. Plus, the more you have the more likely you will generate the problem discussed in point 1 above. Analyse your current portfolio and see what is really driving value in your company. Conversely, see what is sucking value out of the business at the other end of the scale. Every extra low value SKU clogs up the wheels of your Sales & Operational Planning (S&OP) process.

  4. Telephones and internet. Always a difficult area as it can be perceived to be petty but it is usually an uncontrolled drain on cash. If you have provided staff with internet access on laptops or tablets or telephones you can be sure you are funding personal surfing time. Unless free telephone calls are part of the remuneration package why should the employee not pay for them? In my experience, significant cash can be saved through just a little prudence in this area. Do you leave your telephone network open at night with unlimited international dialling access? Also, the next time you see 2 people in the same office talking to each other on company mobile phones.......

  5. Discretionary spend. Don't make it discretionary! If budgets exist for team building and entertainment you can bet your life those funds will be used. Do you really need to "team build" every year? These occasions tend to be considered as a perk of the job and I am not convinced of their value when they happen so often. If team building sessions are to go then you should ensure this applies to all departments. Letting the marketing team building slip through will simply demotivate the rest of the company.

Achieving visible buy-in at the top table which is cascaded to teams will generate the best initiatives and ensure alignment. Paying consistent attention to these and other cost areas might save you from the ultimate saving of issuing redundancy notices including possibly, your own!

Image courtesy of Pixomar at

Tags: Brewing & Beverages, FMCG, Dave Jordan, Forecasting & Demand Planning, Cost Reduction

FMCG Turn-around Intensive Care Recovery KPIs

Posted by Dave Jordan on Wed, Sep 06, 2017

On a daily basis the amount of care we give to the human body is remarkably little. When you are feeling in good shape the best the body can hope for is a good wash, a brush of the teeth and a slap of moisturiser if you are a bit of a girly. What else? Haircut and manicure perhaps oh, and possibly a check that your weight has not dropped that desired 10% overnight.

Considering the complexity of the human body and how we cannot live without it we do not spend too much time analysing how it is performing. We probably spend more attention on our cars and IT gadgets. Why is my PC running so slow? The car is overheating, I must check this now. Such symptoms are immediately of prime importance and top of mind and must be addressed now!

This all changes when we are feeling unwell. Suddenly we are taking our temperature, blood pressure and pulse rate. Blood tests may be needed. You may be wired up to monitor to see how the heart or brain is functioning. The body is now getting the intensive care it needs in hospital. Recording and monitoring this raft of data is the route to a hopefully full and speedy recovery.

FMCG_RECOVERY_SUPPLY_CHAIN_KPIS.jpgIf your business is operating well and there is even some growth in these testing times then the usual keep fit-heart monitoring Balanced Scorecard KPIs are reported weekly or monthly. The focus is usually on getting your stuff to customers and onto shelves at the right time, in the correct quantity and at the lowest cost. Along with other company measures, e.g. finance, HR, SHEQA, the scorecard shows 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 important financial and non-financial measures. Instead, you need to place the sensors in the critical locations.

What about when things are not going well? Measuring the usual set of KPIs is all very well but when you are in a mess you need some intensive care. For businesses struggling with tight cash flow here are top ten tips for some relatively simple Recovery KPIs:

  1. Sales-out Sales-in do not guarantee you a final cash sale to a consumer so focus on the final sales transaction.
  2. Discounts Control how much discounting is taking place by those generous sales people. Is it authorised in advance and at the correct level?
  3. Debtor Days This is money owed to you so negotiate favourable terms and constantly review. If 60 days has been in place for years then it is about time this was challenged so apply some pressure.
  4. Creditor Days You owe this money but if you upset suppliers they will stop supplying! Renegotiate where possible and do your best to pay on time as you never know when you really need a favour.
  5. Overdues Where money is due to you and has exceeded the agreed terms you need a persuader to get on top of late payers.
  6. Forecast Accuracy Do not look at every single SKU; apply segmentation principles. Determine which SKUs are important and make a healthy profit, focus here.
  7. Lost Sales Investigate every significant lost sale and systematically apply a 100-year fix so mistakes do not recur.
  8. Potential write off Monitor stock age internally and at distributors and avoid this criminal cash waste.
  9. RM/PM stock If you are overstocked you should not re-order and you might consider selling some items. Your stocks should be aligned with those important SKUs identified above.
  10. Finished Goods stock Again, ensure your key SKUs are always available in the required quantities. Promote any excess or slow-moving stocks to generate income and minimise potential write off.

In addition to the sensible tight control of discretionary spend this approach can stabilise your vital signs and guide you back to a healthy glow without the intensive glare of the suits from HQ.

Imag courtesy of moggara12 at 


Tags: FMCG, KPI, Supply Chain, Cost Reduction, Inventory Management & Stock Control, balanced scorecard, Recovery