Supply Chain Blog

Essential Competitor Analysis Tips to Improve Route to Market Strategy and Execution in FMCG

Posted by Ross Marie on Thu, Oct 18, 2018

Over the last number of weeks, I have been writing a blog series on my 20 Steps to Route to Market Excellence model. You can read more about the the steps I have already discussed here. My goal is to provoke business leaders in the Fast Moving Consumer Goods (FMCG) community to really think about every element of their RtM, and to question and analyse the decisions they will make (building) or have already made (reviewing). Is my RtM Strategy and Execution as good as it could be?

The 20 Steps are split into 4 phases, Assessment, Strategy, Design and Implementation. This blog focuses on Step 4, ‘Competitor Analysis’, which is the last step in the Assessment Phase, and is the last step to take before consideration of your approach to RtM strategy.

competitor_analysis_enchangeBusiness leaders today fully understand the need for competitor analysis. It is a cornerstone of any business strategy, but as with all elements of RtM strategy, it is all about the detail. Understanding what your competitors are doing, why they are doing it, how they are doing it, what their results are, and why you are different, is key to any effective sales and distribution or RtM strategy.

Below are some of the questions you should ask under Step 4 – Competitor Analysis. An important consideration is the availability of open source, legally available and reliable data and information – e.g. internal company data, field force knowledge, trade publications, industry reports, trade visits, etc.:

  1. How are our direct competitors executing their RtM Strategy? What is their DIME approach to distribution (Direct, Indirect, Mix & Everything in between)?
  2. What are the differences between their RtM and ours?
  3. What are the differences in their performance and ours? What is their brand distribution, volume & share vs ours?
  4. What are the factors that we believe are behind that?
  5. How are other non-competing organisations, still in our sector, executing their RtM strategy?
  6. How is that different to mine and why?
  7. Are there elements from competitors’ operations that we should look to evaluate, either positive or negative?
  8. Are there lessons to be learnt or mistakes to be avoided?
  9. Looking across the 20 Steps, ask yourself, what is their approach to the 4D’s (Distribution, Display, Dialogue, Digital)
  10. How does the competition classify their outlets, or their channels? Do they use the traditional norms, or do they target specific avenues?
  11. How do they set up their territories and what is their trade structure and FTE’s?
  12. Do they get sales data from the trade and what metrics do they measure? Do we know how they target their field force?
  13. Do they have specific planograms and trade promotions? Are they active in POS placement?
  14. Do they have a trade incentive and /or engagement programme?
  15. What is their order capture method? How are they using technology in the field?
  16. How are they leveraging Digital (with regards to sales channels, order capture, engagement, promotions, trade incentives, trade marketing, etc.)?
  17. What do we know about competitor distributor activities? Who are they partnering with? Has this changed in the last 5 years? What is their distribution effectiveness?
  18. Do we see evidence of their successful initiatives in one area being rolled out to other territories?
  19. How do they manage key accounts? What is their overall relationship with the trade?

There are many questions you could ask here, and I would encourage you to think about which are the most relevant for your markets and industries. Give Competitor Analysis the importance it deserves to gain a well-rounded, in-depth knowledge of your competition and feed this into your RtM strategy.

I hope you find this helpful, and I appreciate your views and comments below. I will pick this up again next week, with Step 5 RtM Strategy & the 4D Approach. Please subscribe to the blog, you can do so on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, promotions, RTM, retail, RTM Assessment Tool, Distribution, Sales, Route to Market, FMCG

Distributor Assessment Essentials to Deliver Sales Growth and Improve RtM Strategy

Posted by Ross Marie on Fri, Oct 12, 2018

Welcome to Step 3 of the 20 Steps to Route to Market Excellence. You can read more about the overall model and the steps I have already discussed here.

fmcg-distributotor-assessmentThe third step is ‘Distributor Assessment’. Whether you are looking to build a RtM strategy from scratch or review your existing sales and trade marketing execution, assessing the current and/or available methods of distribution is crucial. Distribution in FMCG is typically complex, with many layers, levels and combinations. There may also be local geographic nuances, and/or historical challenges to deal with. You may own and control every element of the distribution network, known as Direct Distribution. You might contract out the distribution to 3rd parties who then distribute on your behalf, also falling into the Direct Distribution category. You may sell to distributors who then distribute on to retailers themselves (or via other intermediary wholesalers or cash & carry’s), known as Indirect Distribution. You may have a mix of any of these methods which effects both the level of control, and the complexity involved.

No matter what is in place now, you must evaluate every step in the current method of distribution, from an independent point of view, and consider the possible alternative methods for getting your products to retail.

Here are just some examples of questions you can ask under Step 3 – Distributor Assessment:

  1. What is my current method of distribution?
  2. Is my distribution all ‘direct’ to my customers via my own owned or contracted distribution network?
  3. Is my distribution all ‘indirect’ to my customers through distributors that work either exclusively or non-exclusively for me? What are the layers of distributors, sub-distributors, wholesalers, cash & carry's, etc.?
  4. Is my distribution a mix of the above?
  5. Is this the way it has always been for us or did we change and if so why?
  6. Is my current point of sale coverage a function of my distribution model, or of my route to market strategy?
  7. What are the total number of distributors in my market?
  8. What is their coverage map? How many, if any, am I using? Why is this?
  9. How are my direct and indirect competitors servicing the marketplace? What is their distribution model? How do we feel is it performing for them? Is there anything we can learn from them?
  10. How regularly am I assessing the distribution network or the distributors?
  11. Do I have a distributor assessment tool to conduct the assessment? Feel free to gain inspiration from our Distributor Assessment Guide and Distributor Assessment Tool available for download.
  12. After conducting visits, and using my distributor assessment tool, what is the current performance of my distribution network and /or each one of my distributors?
  13. Where are the gaps in performance vs my ideal distribution network?
  14. What are the current levels of brand and SKU availability at the distributors retail level? What are the levels of out of stock?
  15. Is POS material available and visible at retail level? Are planograms being adhered to? What are the overall levels of display in retail?
  16. Is there an awareness of my brands at a retail level? Are trade engagement programs being run at retail level?
  17. What are the current service levels of my distributors? How does this compare to our contract and our KPIs?

Regardless of which method we choose to assess our distributors by, one fact will not change. We must get out into the field, see the distributor and retail environments first hand, and assess effectiveness of what is really happening, not what we believe is happening. Information, reports, and monitoring tools are essential in RtM execution, but nothing replaces actual field work.

I hope you find this helpful, and I appreciate your views and comments below. I will be continuing my series on the 20 Steps to Route to Market Excellence, with Step 4 Competitor Analysis in my next post.

Please subscribe to the blog, on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, retail, Logistics Service Provider, RTM Assessment Tool, Distribution, Performance Improvement, Traditional Trade, Route to Market, FMCG, SKU

Your Guide to Consumer & Market Mapping to Improve RtM Strategy for Sales Growth

Posted by Ross Marie on Thu, Oct 04, 2018

Welcome to Step 2 of the 20 Steps to Route to Market Excellence. You can read more about the overall model and the steps I have already discussed here:.

The second step is ‘Consumer & Market Mapping’.  This is where you will review how you are currently reaching all the potential places from which your consumers are buying, to maximise sales growth.

consumer-market-mapping-rtmIn the consumer goods business, buying trends, brand distribution, product availability for consumers, and reach, are things managers live and die by. The measurement of these are also critical as they can be a key factor in understanding poor performance or in delivering success. For example, you may have a first-class Route to Market model for retail right across your market, but what if your consumers are moving to digital channels? Or your internal availability/brand distribution measure may show 95%+ on your system, but what if your RtM doesn’t cover all available points of sale?

This is where Step 2 of the 20 Steps model comes in. Here are some examples of questions you can ask under Step 2 – Consumer & Market Mapping:

  1. What are the current buying trends of my consumers?
  2. How have these trends shifted in recent years and do we expect them to change soon?
  3. What are the market specific geographic challenges and realities that we need to be aware of?
  4. What are the current number of available points of sale in my market?
  5. Do we have this data available? If so, at what level of detail and how is it maintained?
  6. Do we need to conduct an ‘Every Dealer Survey’ to map all the points of sale? What are the constraints involved? Could we do this internally or do we need to look externally?
  7. What is the split between direct vs indirect points of sale?
  8. How many points of sale are we reaching?
  9. What are the gaps and why has this happened? Was this a strategic decision or natural development?
  10. To what extent are there any specific ‘cost to serve’ issues?
  11. To what extent is the picture similar for our direct competitors and can we learn from them?
  12. What about the picture for other companies who do not compete with us in our sector?
  13. What is the population spread of consumers in relation to our coverage of points of sale?
  14. What percentage (best estimate) of the target consumers are we reaching?
  15. What are the key battlegrounds and must win areas for the market?
  16. Where are our gaps in relation to this and how are we going to bridge them?
As with each of the 20 Steps, the key is getting into the detail, getting behind the data and understanding the actual reality of your company’s marketplace and not just your own historical view of it.

Getting these foundation steps right in the Assessment phase of the 20 Steps to RtM Excellence can be the difference between beating or missing those sales targets.

I hope you find this helpful, and I appreciate your views and comments below. I will be continuing my series on the 20 Steps to Route to Market Excellence, with Step 3 Distributor Assessment in my next post.

Please subscribe to the blog, you can do so on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, RTM, retail, RTM Assessment Tool, Traditional Trade, Route to Market, FMCG

The FMCG Leaders Guide to Route to Market Strategy & Execution in 20 Steps

Posted by Ross Marie on Wed, Sep 19, 2018

Wouldn’t it be great if someone developed and shared a step by step model detailing how to build and improve route to market execution, sales execution and trade marketing strategic and operational plans? After 20 years in RtM and after working with Enchange and some of the biggest multinationals around the world, I have now developed just such a model.

First things first, where did it all start?

In the summer of 1998, I had just finished my Degree and Masters. Tom Hanks was searching for Private Ryan and I had yet to get my first mobile phone. The dot com bubble had yet to inflate and I was desperate to get my first ‘sales’ job with a company car. I really wanted to start my career, I wanted to begin my climb up the sale ladder, I wanted to follow in my father and brothers’ footsteps, but more than anything, I really wanted the independence of my own transport. It’s amazing how you view the world at 21!

As it turns out, I did start my sales career that summer. I joined an agency in Dublin, doing sales promotion and merchandising with Showerings (Allied Domecq) and Grants of Ireland. My focus was the spirits division in the grocery sector. I also finally got that company car (sort of). My red 1998 Diesel Ford Courier Van, it may not have been the sales man’s dream Beemer or Alfa, but I loved that little van. Most importantly, my career had started, and I was on my way.

Moving on into Diageo later that year and then entering the tobacco industry for 15 years, mainly British American Tobacco, allowed me to experience in detail the breath of roles across the sales, route to market and trade marketing and distribution functions. When you work in the tobacco industry, and you can’t communicate with consumers on billboards, or TV, or almost anywhere, you live and die by route to market (RtM) execution. I loved that challenge.

Following a successful and enjoyable career working for multinationals, I joined a specialist supply chain and RtM consultancy company, Enchange. Enchange shared my passion for RtM execution and has been delivering RtM improvement programs with amazing results for some of the world’s leading companies for the last 25 years.

Together, we have spent the last number of years refining our approach and building a model for RtM execution. I would now like to introduce you to the ’20 Steps to RtM Excellence’.

20 Steps to Route to Market Excellence

 

This methodology not only combines decades of RtM experience, it brings a strategic approach to delivering excellence in RtM execution. It gives you a systematic step by step approach to driving sales and share growth while meeting consumer’s needs.

The 20 Steps are split across four phases of Assessment, Strategy, Design and Implementation. Over the next weeks and months, I will be sharing more and more information on each of the 20 steps, how they work, how they build on each other and how they can transform an organisation to deliver sales growth.

I hope you will find this helpful and I would really appreciate your views and comments below. Please also sign up to our blog, you can do so on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: RTM, RtM Strategy, RTM Assessment Tool, Distribution, Ross Marie, FMCG, Route to Market, Traditional Trade, 20 Steps to RtM Excellence

Improve Manufacturing Performance with Total Productive Maintenance

Posted by Dave Jordan on Thu, Aug 23, 2018

When I first came across Total Productive Maintenance (TPM) I was sceptical of yet another ”blue sky” approach to pursuing manufacturing excellence. Surely, this would soon be replaced by the next set of buzz-word initials dreamed up by sharp-suited consultants. But no; I saw the light and now I’m a firm believer in this technique that originated in Japan.

If you have a factory that is running below par in terms of efficiency, output, reliability or cost etc, then TPM could be the ideal tool to achieve a sustainable turnaround. Companies do not like under-performing factories and there is usually somewhere else they could make their products better, faster or cheaper. So, if your factory is under threat of closure you might consider following the TPM principles.

TPM is not rocket science but it requires just as much senior management buy-in and patience as an S&OP process demands. There are multiples levels of TPM success but even the basics will require a significant and sustainable change in behaviour. Kick off with the Kaizen 5S approach which is remarkably simple stuff.

Total Productive MaintenanceKaizen 5S is based on the translation of 5 Japanese words relating to systematic improvement and maintenance of a clean, efficient, well organised operation.

  1. Sort – Sort out what you really need – I mean really need! Throw out anything that has been hanging around for a few years “just in case”. Check out your spare parts store and see what items are held for equipment you no longer own!
  2. Straighten – Have you ever mislaid your car keys? This system creates a dedicated space for every tool or spare part located near to where it is needed and you can clearly see when it is missing!
  3. Scrub – Clean the machines and the production area thoroughly. Dust can affect quality, spills can be hazardous and well maintained equipment lasts longer.
  4. Standardise - If you use identical working practices for maintenance and cleaning your employees will become highly proficient. Standardisation provides you with a flexible workforce that can be deployed where needed and without a training period.
  5. Sustain – From the factory manager to the tea boy you must keep the faith and sustain every initiative. This is very difficult at first but you have to grit your teeth and keep going.

Of course, this is merely a snap-shot of what TPM entails but it shows you the basic elements you need to start the journey. As mentioned, the first tentative steps can be painful but if you stay the course the benefits are immense in efficiency and employee satisfaction. The principles apply equally to logistic centres, offices; essentially everywhere people work.

Oh, but don’t try this at home or a divorce is highly probable, believe me!

Image credit: corbindavenport.blogspot.co.uk

Tags: FMCG, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain, S&OP, Cost Reduction

Supply Chain, Supply Chain: What’s That All About?

Posted by Dave Jordan on Wed, Aug 22, 2018

I started my career as an R&D type who helped bring new FMCG products to the market. Nobody really knew how a product made the transition from bench top and pilot plant testing to the supermarket shelves. Somebody must have been involved somewhere but this was hardly a cohesive team with job descriptions let alone aligned roles and responsibilities. Even then “somebody” was not part of the project team so with hindsight it was inevitable delays and mistakes would occur. “Somebody” was to blame every time!

Supply Chain Small resized 600Supply Chain departments started to spring up in FMCG and Pharma companies as formal organisations around ERP deployment. Recruits were taken from other departments; commercial, manufacturing, sales and even R&D! Very few had any real understanding of Supply Chain requirements and they certainly did not have any formal qualifications or training. Qualifications and training are now widely available through many organisations such as CIPM and the Supply Chain Council.

I am not sure who coined the term Supply Chain though, do you know? I have taken a few Supply Chain definitions from the internet and started with the individual word basics from an Oxford English Dictionary:

Supply noun

1. An amount of something that is available for use when needed.

2. the action of supplying something.

Chain noun

1. A row of metal rings fastened together.

2. a connected series of things e.g. a chain of events.

Seems reasonable but what about a more technical definition taken from the Council of Supply Chain Management Professionals (CSCMP)?

 “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

Wikipedia chips in with “A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.

Who can resist asking the people at the aptly named Supplychaindefinitions.com?

“… the movement of materials as they flow from their source to the end customer. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service, demand planning, supply planning and Supply Chain management.  It is made up of the people, activities, information and resources involved in moving a product from its supplier to customer.

Although this Supply Chain definition sounds very simple, effective management of a Supply Chain can be a real challenge.”

Investopedia.com offers up this definition which I particularly like as it highlights Supply Chain as a “crucial process”.

“The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, the supply chain encompasses the steps it takes to get a good or service from the supplier to the customer. Supply chain management is a crucial process for many companies, and many companies strive to have the most optimized supply chain because it usually translates to lower costs for the company. Quite often, many people confuse the term logistics with supply chain. In general, logistics refers to the distribution process within the company whereas the supply chain includes multiple companies such as suppliers, manufacturers, and the retailers.”

Rightly, Supply Chain is now part of every serious company aiming to put a product in front of consumers whether this is FMCG, Pharma, Telecoms etc. However, is it seen as “crucial”? Even today I feel some companies still underestimate the value a “storming” Supply Chain team brings. In some companies Supply Chain does not have a discrete representative at the “top table” and if you delegate Supply Chain management to your Sales Director then you should reconsider that decision and/or pray. One way of ensuring sustainable sales uplift is NOT to report the Supply Chain community into another non-specific, non-skilled company director.
 

Tags: FMCG, Dave Jordan, Pharma, Supply Chain, Forecasting & Demand Planning

10 Top Tips to Successful Mergers & Acquisitions (M&A) Integration

Posted by Dave Jordan on Wed, Aug 15, 2018

The ink is dry on the deal, the celebratory corks have been popped and the sharp-suited lawyers have gone off to bank a small fortune. The projected negotiations to thrash out a deal to buy or merge with another company are finally over. Relief all around, smiley faces, back slapping; cigars; done and dusted! Although through-the-night negotiations on a diet of poor coffee and poorer cigarettes are not easy, integrating the two or more entities will be substantially harder and a potential minefield.

M&AsConsiderable time, effort and cash are expended in calculating the business case of M&A activity before completion of a deal. Elaborately crafted press releases tell the world about the benefits the new relationship will deliver. However, very few people involved up to this stage in the process will actually be accountable for future success or more likely, failure.

Whether your M&A is a local, regional, national or global event here are 10 top tips to getting as close to the glossy press release promises as possible.

  1. Team. Appoint a team to lead the change and ensure there is a Change Manager in the team with deep and recent experience in the field. The overall project must be led by someone of suitable seniority in order to make an easily accessible two-way bridge between junior and senior groups. Don’t select the team members from one entity only!
  2. Objectives. Make your intentions and targets clear and get buy-in from all parties and particularly the acquired team. If you genuinely make everyone feel part of the process you will have greater success in implementing difficult decisions later on and for sure these will come!
  3. Assets. If offices and factories are involved and your intention is to centralise/ harmonise you need to approach this delicately. The “bought company” will always assume their workplace is most at risk so all evaluations have to be transparent and honest and impartial 3rd party expert help is advised.
  4. Culture.  There will inevitably be differences in company culture but if both sides can accommodate modification towards a new halfway-house then that can be a win-win but it is extremely difficult to achieve. If culture is forced on one group or another then you are likely to fail.
  5. Rumour Control. Have you ever heard a good news rumour about someone? Most rumours are negative or critical or someone or something and they will plague M&A integrations. If you get your communication policy in order and people feel free to raise concerns then damaging coffee machine whispering can be nipped in the bud.        
  6. Communicate, communicate, oh and communicate. M&A integration worries people and worried people are not as efficient and diligent as they should. Invest in a website and/or newsletter that very clearly keeps people informed on progress and next steps. Keep them fully involved with Q&A sessions and proactively sought feedback.
  7. Keep the business going! Sounds obvious but getting distracted by integration ups and downs can severely damage your business. You must keep close control on maintaining good practice in all integrating businesses.
  8. Complexity Reduction. If the businesses have similar SKU ranges then take the opportunity to understand where there are clear overlaps and where an SKU cull can free up human and cash resources.
  9. Constantly review. Integration is a real moving feast! Assumptions will change and plans may have to be modified and these should be embraced rather than receive critical attention. Do not be afraid to revisit the objectives and plans frequently and modify as prudent.
  10. Celebrate. When significant milestones are achieved be sure to get the cakes and champers out. Reassure people that the journey is progressing well and particularity those not directly involved in the process as they will feel the most pressure on job security.

When you consider the amount of time and money that went into securing the M&A deal a generous budget for integration will pay back extremely quickly. A degree of early planning and preparation on the actual integration will see you reach the press release objectives – if anyone ever checks!

 

Tags: Mergers & Acquisitions, Dave Jordan, CEE, Cost Reduction, CEO, FMCG

FMCG cost savings versus sales & marketing budgets!

Posted by Dave Jordan on Mon, Aug 13, 2018

There is your dilemma. You need to save cash towards an expensive year-end holiday but you really do not know the best place from where to take the money. Do you take it from your day to day current account which is already set up to pay the routine monthly bills and invoices? Do you take funds out of an investment account that has not yet actually matured?

In effect, the money in the current account is already committed and the expected appreciation in the investment account is still to be delivered which puts me on my soap box for today’s topic.

When times are tough and cost savings are required why do the senior bods always look to Supply Chain in the first instance? Unlike those colleagues with a fondness for endless agency lunches there is very little discretionary spend to be found in the vast majority of Supply Chain operations. OK, there may be some team building budget, business travel and a small entertainment allowance but where else can you save money?

There is not a lot you can do to have an impact in the short term. What could you do?

1. Negotiate better RM/PM prices? Yes, but this will not filter through to the bottom line very quickly.

2. Increase efficiency in your factories? Yes, but again not likely to hit the balance sheet any time soon.

3. Reduce head count along the Supply Chain? Certainly effective but think about notice periods and compensation obligations and not least the effect on efficiency and reliability.

FMCG Pharma cost savings supply chain resized 600You will have contracts in place for most services with 3 or 4PLPs for warehousing but as long as pallet space utlisation, storage efficiency and shrinkage etc is under control there really are few opportunities and certainly no “low hanging fruit”.

People often rant on about how sales and marketing people are the real stars of any FMCG or Pharma show and without them nothing happens. Think about it, if you do not have any product available to sell it does not matter if you have the best sales pitch or the most memorable TV advert, does it? In simple terms the SC gets the stuff there and S&M might, repeat might, sell it!

Supply Chain people and processes get the product into Traditional Trade and Key Account outlets and how they do it is relatively inflexible in terms of discretionary spend along the way. So when you are looking for savings why do you assume they must come from Supply Chain and not from the huge sales and marketing budgets? The promised client discounts have not yet delivered and the proposed new TV advert is a long way from having an in-market impact.

Certainly, you have to keep control of costs and a rolling annual target is a sensible plan for any business but 2-3% Supply Chain reduction every year is commonly small beer compared with multi-million S&M expenses. Diverting your valuable Supply Chain resources to scrimp and save these small percentages simply takes people off the day to day priority of getting your SKUs onto shelves.

Those Supply Chain “savings” may not actually be money in the bank.

Image courtesy of cooldesign at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Pharma, Supply Chain, Traditional Trade, Cost Reduction

FMCG Supply Chains – The most important roles?

Posted by Dave Jordan on Thu, Aug 09, 2018

I am often asked which job in the extended Supply Chain is the most important. For FMCG producers this may be the demand planner while for retail partners the key role could be innovation planning. I do have a view on this so park the question for now and read on.

I was in Tunis recently in the final few days before the eid holidays celebrations commenced. At just about every traffic junction farmers were selling sheep and goats for the upcoming big family feast that is a very important part of the local culture. Possibly incongruous when surrounded by so much soon to be red meat, I was eating a delightful fish lunch when I studied a temporary pen containing about 100 sheep and goats.

I noted how straw and other feed was being offered to each of the animals almost on a personal basis. Normally, farmers would drop a bale of straw or hay and leave the flock to fight it out on who gets the largest share and who goes hungry. Not here; each animal was encouraged to eat, eat and eat again. Why would they be so generous?

Of course, with the sheep sold by weight it was a cheap way to increase income. A kilogram of hay and feed costs a lot less than a kg of lamb!

I didn’t think I had seen this trick before then I remembered I had and it was much closer to home. If you are ever lucky enough to visit the Danube Delta in Romania then on the road back towards Bucharest you will see men and women standing at the side of the road with outstretched arms. This is not a weird salute to the Village People but it seeks to tell you they have very large fish available for sale.

You have floated on the Danube and probably seen many fish so why not buy some fresh local samples to cook at home in Bucharest or wherever your destination may be? Good prices too but more often than not you will find your fish has been stuffed full with stones. When you buy thee fish by weight you are paying for stones at the price of quality fish.

Ok, so if you don’t live in Romania or visit countries celebrating eid you may not have seen this cunning slight. Hold on! Yes, you have. This same is happening in virtually every country and I guarantee you have been on the receiving end.

When I was younger I remember my mother buying fruit and vegetables from a little green van driven by a fellow Tranmere Rovers fan, Mr Talbot. Mr Talbot would weigh the requested fruit and veg in an old fashioned scale that had a detachable bowl. The contents of the bowl would then be poured into whatever bag was available. You wanted a kilo (well, 2.2 pounds at the time) of potatoes and that is exactly what you received in return for your hard earned cash.

FMCG RETAIL SUPPLY CHAIN IMPORTANCE resized 600Today of course, supermarkets provide rolls and rolls of bags for you in which to collect your fruit and vegetables and then weigh the contents............ and the bag. I know, it is a small bag but you are paying for the bag at the price of the items you have purchased.

I used my local medium sized supermarket for a one off survey. Their bags weigh a surprising 1.5g but even so if you are buying potatoes at 0.15 Euro cents a kilo you are not losing much to plastic. However, if your tastes include lemon grass at 15 Euros a kilo then it starts to get significant.

My local shop tells me they use 1400 bags on a typical day so if there is a run on expensive stuff like lemon grass – I know, highly unlikely – then they are selling 2.1kg of bags at a price of 15 Euros per kg. A quick search of the internet shows that the most expensive purchase would be something called hop shoots which retail at a staggering 1000 Euro per kilo. Now that would be on expensive poly bag! I wonder how many bags are "sold" across the globe each day? When possible you should weigh your larger purchases and THEN put them in the bag if you can.

So at least one part of the original question now has an answer. The most important role in a retail supermarket Supply Chain is the person who makes sure those hard to open bags are always available. Having no bags makes it difficult to buy any loose fruit and vegetables while having bags is a real money spinner!

Image courtesy of stockimages at freedigitalphotos.netfreedigitalphotos.net

Tags: FMCG, Dave Jordan, Supply Chain

10 Top Tips To Tip-Top Customer Service in FMCG, Drinks & Pharma

Posted by Dave Jordan on Mon, Aug 06, 2018

Do FMCG, Drinks & Pharma Companies delude themselves on Customer Service? I think some may well be doing this and may or may not know it! Whatever service related KPI you measure, the KPI is designed to asses how you are performing both internally and at a retailer or outlet level, against peers.

Customer service improvementThere are many ways of measuring the performance including OTIF, CSLM, CCF and CCFOT amongst many others. Essentially you are measuring how much of the right stuff you delivered to the right place at the right time. Importantly, it is not value based – you might measure that internally for monthly progress monitoring and sales bonuses but it is irrelevant for service measures.

Common errors in Customer Service measurement and management:

1. Service should be measured per SKU thus avoiding the possibility of hiding poor performance in one area with exceptional performance in another. Measuring by SKU allows you to hold the right people accountable and ensure resources are appropriately applied.

2. Are you measuring against what the customer ordered or what your team said he could order? This is a common error particularly when order capture is in the hands of staff rewarded via value based sales incentives - “We don’t have that but you can have some extra of this”. You need to see the raw, unconstrained demand from your customers to really understand what they asked for and what they actually received. There is no problem with substituting products with customer agreement as this maintains the relationship and should result in sales but this must be a visible process.

3. Yes, of course the customer may ask for unreasonable amounts of a certain standard SKU or promotion pack but hiding the “data blip” is not the answer. Addressing the issue with some collaborative planning would help both parties. For some reason they asked for a huge shipment; find out why and be more ably prepared to service the demand next time.

4. Use an ERP that automatically allows you to allocate reason codes for service failures and get them investigated promptly. Focus on the big wins using the 80/20 principle; don’t spend too much time finding out why you did not deliver 5 boxes of washing powder and do spend time on the failure to deliver large volumes of high value beauty products.

5. Get your service level on the agenda of the top table in the company. Your service level is a function of every single person in the company and is a reflection of how well you are performing in the market. This means the Marketing guy and the HR guy and others must be involved. Celebrate successes widely and noisily.

6. Do you have a Customer Service department led by a talented individual who is graded as highly as peers within the company? CS is a very important function and it should enjoy equality of importance within the business. Also, CS is not just about taking orders and printing invoices as customers deserve the opportunity to talk to a real human being (avoid answer phones!) about their problems and concerns. Small issues in invoice accuracy which can delay payments of thousands of Euros can be sorted out by knowledgeable and concerned staff motivated to help.

7. Make the CS measure highly visible around the company – everyone should be aware of the overall CS their company is offering to customers. Don’t fall into the trap of accepting low or “sand-bagged” targets – you are likely to achieve them and that gets you precisely nowhere. If you deliver to Retailer platforms you might wish to check where your measure is recorded.

8. Make cross functional visits to customers - they need to see people other than sales reps. Not every day, of course but an annual review with all interested parties present can smooth relationships and assist in times of difficulty.

9. Agree Service Level Agreements to ensure both parties know exactly what is expected as providers or receivers of service. The SLA should contain a few KPIs which allow you to understand the current state and drivers of CS.

10. Celebrate successes both internally and when appropriate, with customers. You need to maintain a rigorous approach to business principles but an above the board dinner does no harm.

Customer Service = Satisfied Customers = Sales = Pay/Bonus = Growth = Satisfied & Retained Staff

 

Tags: Customer service, FMCG, Logistics Service Provider, Dave Jordan, Pharma, KPI, Logistics Management, Brewing & Beverages