Supply Chain Blog

7 Top Tips for Spare Parts Management in Factories

Posted by Dave Jordan on Mon, Jun 04, 2018

Well, I find it strange anyway. Some very large companies spend countless hours and cash in finding and securing a third party logistic provider (3PLP) to take great care of their finished goods assets. The performance of the chosen 3PLP is then measured and monitored very closely using a suite of KPIs, e.g. damages and losses are recorded and usually debited to the 3PLP under the contract terms. A 3PLP is charged with “storing your stuff” as safely and cost effectively as possible and providing easy picking for dispatch.

I often wonder why some blue chip companies fail to adopt similar warehousing and logistics principles in the operation of in-house engineering stores. Depending on the industry, the value of the components can be several millions of Euros. If you do not pay attention to this area then the same things happen as they do with finished goods warehouses, including:

1. Shrinkage or more accurately, theft! Your spare parts stores will be helping to repair private cars, replenish home tool-boxes and raise personal funds through the sale of stolen goods. This might seem harsh but I have seen it first-hand and continue to in large organisations.

Bottling line resized 6002. Important parts are not in the right place. If you do not have clearly labelled storage bins you can stop production lines very quickly losing valuable operating time. At the end of the day an idle line can probably lead to more lost sales than a badly picked finished goods pallet.

3. Spare parts not replenished. If stock control is not rigorous then you will go out of stock on important items just when you need them. Sod’s Law dictates that they will also be the parts with lengthy lead times.

A few simple principles loaned from big scale warehousing will help:

  1. Operate some sort of stock management system. This can be done on Excel with some discipline but specifically designed software packages are available. You need to know where each spare part is located just like in a finished goods warehouse.
  2. Carry out cycle and annual stock counting. Keep a close eye on your high value and production-critical items by counting them on a rotating basis. Do not wait for a year-end count to reveal a gaping hole in your stock value.
  3. Carry out an ageing analysis. Many large stores are full of spares for machines that were last running when “Shep was a pup”. They are of no use to you yet they sit on a shelf and on your books as working capital. Any materials with specific shelf lives also need regular checking to ensure you are not holding something which is at best useless or at worst dangerous!
  4. Secondary store for critical items. Items of high value or those which will stop production can be held in a “store within a store”, e.g. a wire cage with 2 locks. Access to these items requires a more senior employee to be present at issuance, e.g. maintenance manager.
  5. Operate some relevant KPIs. These do not have to be wide ranging or difficult to calculate, e.g. ageing, stock rotation, shrinkage etc. An important KPI can be the value of your spares as a % of the operation asset value. Do you know yours?
  6. Order and stock only what you need. Avoid the temptation to buy in bulk as the price is keener. If you are able to calculate a forecast plus some safety stock then you can minimise your inventory and your working capital. Also, ensure that spares purchasing and receipt are spilt responsibilities or you may find you are buying items you do not actually use in the factory..………
  7. Restrict access to the spare parts stores. If you allow anyone to wander in and remove items then your stock control will be out of control, no doubt. If you require access to spares on a 24 hour basis then ensure the facility is staffed appropriately at all times. Leaving the stores unmanned and the door open should be a disciplinary offence.

When looking at factory operating efficiency people will often focus only on the production line and RM/PM supply. Take a look at how you manage spare parts and you may be able to influence your level of efficiency from an unexpected source close to home.

Image credit: Hi.WTC

Tags: Logistics Service Provider, Dave Jordan, Manufacturing Footprint, KPI, Logistics Management, Inventory Management & Stock Control, Spare Parts

Santa & Opening Presents - Christmas S&OP For Parents

Posted by Dave Jordan on Fri, Dec 15, 2017

“Dashing through the snow
In a one horse open sleigh…”

How many of you started to sing then? Yes, the festive period is fast approaching and the biggest and best supply chain in the world is almost ready to activate. This is always the most efficient supply hain whatever those nice chaps at Gartner may say.

There is no way Santa Claus could achieve his annual success without sticking rigidly to an S&OP process, i.e. Santa & Opening Presents.

The process starts every year on the 26th December just as children start to play with the empty packaging instead of their much sought after gifts. Their engorged parents lounge sleepily in front of the television watching The Great Escape or Jason & the Argonauts – again! The loyal Elves are given their end of season bonus and packed off back to Eleveden Forest in Suffolk. Didn’t you know that is where they live for most of the year?

Before January is over those lovely people who design toys and games quickly introduce new and more exiting models which will become must-haves for countless girls and boys. Toy shops are visited and millions of children quietly note those presents they would like Santa to bring them the following. The demand slowly builds until it is time to bring the Elves back from Suffolk on the eleventh day of the eleventh month – no coincidence there! The first job for the Elves is to get the huge Christmas factory ready to run once again.

santas_sop_planning_cycle_small.jpg

In parallel with this, millions of children around the world unzip their pencil cases with a purpose. Using their best handwriting they tell Santa they have all been well behaved this year and then  list all the presents they would like to receive. This accumulated unconstrained demand allows the Elf factory to start fixing production plans to meet a deadline that is set in stone. Is there a more peakier peak period?

Money does not grow on trees so “Santa” must quickly check what can be afforded from the budget. Remember, the wish lists are always too long and you do not want 100% Customer Service  – keep “em hungry”, I say. The Pre-S&OP takes place with all stakeholders involved to ensure everything is ready to go. You want to avoid stock-outs just as much as you need to avoid expensive write-offs.

After necessary adjustments are made to the planned volumes by SKU, the final S&OP takes place. Bearded Santa is fully dressed in his best red uniform and takes his seat. If Pre-S&OP actions have not been carried out, then there is unlikely to be much “Yo Ho Ho-ing”. Fortunately, everyone is in agreement and the final set of child and associated gift numbers is rubber-stamped. Everyone involved in the Christmas S&OP must operate on the same set of numbers or somebody will be disappointed.

The big day comes and Rudolph leads the reindeers in pulling the delivery sleigh across the world in a complex logistical challenge. Santa makes sure all the presents are delivered on time before little heads lift from pillows to wake parents at 4am! (Well, I did.)

 “Dashing through the snow
In a one horse open sleigh
O'er the fields we go
Laughing all the way
Bells on bob tails ring
Making spirits bright
What fun it is to laugh and sing
A sleighing song tonight”

Before you know it, there we are again on 26th December and the same robust and reliable S&OP cycle starts once more. See you next year Santa Baby!

Image courtesy of Enchange Ltd at Enchange.com

 

 

 

 

 

Tags: Christmas, Humour, Supply Chain, S&OP, Logistics Management, Inventory Management & Stock Control

Relieve your FMCG pain - secure Interim Supply Chain Support

Posted by Dave Jordan on Wed, May 10, 2017

I know you are busy. Not enough hours in the day. Deadlines rapidly approaching. Your children call you Uncle Dad or Auntie Mum. Before the stress takes its inevitable toll think about relieving the pressure without adding to head count.

Interim Manager SoftedgeWhy s Interim Management an opportunity at present? Mainly as a result of the continuing economic conditions numerous companies have folded this year and a similar number have been taken over or merged with others. Obviously companies that fold are too late to be helped although I am not sure too many actually sought the right professional help and guidance in good time.

Those companies and Private Equity players merging or buying in this period need to have their new businesses in good shape to ensure the ROI in the contract deal has even a chance of coming to fruition. When the green shoots of recovery actually start looking like shrubs, shareholders and PE owners will rightly expect their pound of flesh.

One route to accelerating and establishing integration and realignment is to use the services of an Interim Manager. Hear are 7 reasons why hiring an Interim Manager (IM) can be of benefit.

  1. Return On Investment. No, it is not more expensive than hiring full time (FTE) or temporary employees. Take all recruitment and employment costs into account and you will appreciate the efficiency of IM. You may pay your employees for turning up for work whereas IM can be remunerated against set objectives and delivery. (Consider the cost if you make the wrong choice of FTE and have to go through a lengthy, disruptive and expensive exit process!)
  2. Speed. Senior Interim Managers are readily available for Supply Chain tasks. You do not have to waste time going through a lengthy search and selection process with a fee-taking headhunter.
  3. Expertise. Interim Managers are usually seasoned professionals with deep operational experience. A vast majority will have successfully held senior roles in blue-chip organisations for long periods.  No training is required; you get a “vertical start-up”.
  4. Objectivity. Interim Managers are able to look at a given situation with a fresh set of eyes and will not be afraid of “treading on toes” or telling the boss there is a better way!
  5. Accountability. Interim Managers are not there to advise. They are in place to handle a specific project or a department in transition. Unlike full time employees they are very comfortable at being rewarded (or not) based on black and white objective achievement.
  6. Effectiveness. Possibly the most obvious contribution of IM. Once the Board has given a mandate to carry out a task, the IM will get on and do it without struggling through a bout of inertia. “Just Do It” sums this up nicely. 
  7. Commitment. Interim Managers remuneration means they have a direct financial stake in the assignment. They are not there to make friends or pave the way for recruitment. They wish to do the job well, get paid and move onto the next challenge.

If you have a difficult job to be done within a defined timetable and you do not currently have the resources in-house you should consider the value an Interim Manager can bring both to yourself and your organisation. Gaze into the future and see what tough jobs need to be done well now to ensure you are ahead of the game.

Interim Management User's Guide

 

Image credit : CELALTEBER

Tags: Interim Management, Mergers & Acquisitions, Dave Jordan, Supply Chain, CEE, Logistics Management

Supply Chains – A second look: What do all those initials really mean?

Posted by Dave Jordan on Wed, Feb 08, 2017

In common with many business functions Supply Chains adopt multiple initials and/or acronyms to describe various tasks and processes they manage on a daily basis. Those not familiar with SC-speak will often sit bemused as various initials are quoted and debated and then usually blamed for some tenuous lost sales claimed by Sales and Marketing.

Here I take a fresh look at just a small selection of those Supply Chain initials and acronyms.

SC – Super Colleagues. Well, I may be biased but that is what you usually find. Supply Chain people must react to wildly varying demands and impossible timings but more often than not they succeed to get stock to the right place at the right time.

SOP - Supports Outstanding Performance. If you do not follow an S&OP process and your business is doing well and is robust then a pat on the back is deserved. However, if your business is struggling then you might consider the benefits of S&OP which can make all the difference.

IBP – Irritating But Productive. Often considered to be a more mature version of S&OP, Integrated Business Planning can be similarly difficult to get started but when everything clicks, business benefits.

Supply_Chain_FMCG_Initials.jpgSAP - Spreadsheets Are Preferred. The use of spreadsheets is prevalent in many businesses and equally common is the number of CEO’s who believe spreadsheets are NOT being used in their workplace! They almost certainly are but what can you do about this?

IKA- Irritating, Keep Away. In mature Western European markets, big name International Key Accounts are firmly established but in many other parts of the world the reality is quite the reverse. Traditional Trade is a very important part of many developing businesses yet most fail to pay sufficient attention to the continued growth potential of the TT channel.

SKU - Sales Keep “Upping”. Introducing new SKUs really should be a cross business decision taken within the context of S&OP and with sound financial analysis. Sadly, this does not happen very often as businesses rack up lengthy SKU lists where the tail items do not even pay for themselves in turnover, margin or profit.

KPI - Keeping People Interested. The adage of “if you don’t measure then you cannot improve” is certainly true here. Take care to manage your KPI’s closely and frequently but make sure you have a set which ensures everyone knows how they impact collective team performance and results. Visibly reward against the relevant KPIs and your staff will keenly follow them.

ERP – Everyone Requires Products. The whole purpose of your Enterprise Resource Planning is to get your products to the right place at the right time and at optimum cost. Occasionally, priorities must be made between demanding customers and a good ERP will guide your decisions.

PLP -  People Loading Products. Think long and had before outsourcing your outbound logistics operations to a 3rd party as they may not be ready to take on your business, seamlessly.  Prepare thoroughly and ensure you know exactly what you want from them and the relationship. A big step that is difficult to reverse without pain so be careful!

WMS - Where’s My Stock? Your 3PLP partner should be left to run their own business as that is why you pay them. However, you need to be involved in the stock counting process or you will lose sales and experience costly year-end write offs.

4PLP - 4 People Loading Products. If you have successfully used 3PLPs for some time you might wish to take a look at what a 4PLP can offer to the business. This is certainly not for everyone but can be very cost effective.

RTM - Retail Takes Money. Whether your focus is on IKA or TT how you manage your distribution network will be a key driver of your success in the market place. It is a fact that companies spending time and effort getting their developing market TT distributor networks in good order are more successful.

FIFO – Find It, Fuss Over. When you (or your 3PLP) operate a tight warehousing operation you will know where your stock sits, how old it is and what needs to move out to avoid write off costs and the inevitable poor customer service.

OTIF - Often The Invoice Fails. If you fail to deliver orders on time and in full you invite the customer to challenge the invoice and delay payment until you have made financial adjustments.

There are many, many more examples of SC-speak but this set will do for a KO so TTFN!

Image courtesy of boulemonademoon at freedigitalphotos.net

 

Tags: SKU, FMCG, Route to Market, Dave Jordan, KPI, Traditional Trade, S&OP, Logistics Management, Distribution, Inventory Management & Stock Control

Santa & Opening Presents - S&OP is Invaluable at Christmas

Posted by Dave Jordan on Fri, Dec 09, 2016

“Dashing through the snow
In a one horse open sleigh…”

How many of you started to sing then? Yes, the festive period is fast approaching and the biggest and best Supply Chain in the world is almost ready to activate. This is always the most efficient Supply Chain whatever Gartner may say.

There is no way Santa Claus could achieve his annual success without sticking rigidly to an S&OP process, i.e. Santa & Opening Presents.

The process starts every year on the 26th December just as children start to play with the empty packaging instead of their much sought after gifts. Their engorged parents lounge sleepily in front of the television watching The Great Escape or Jason & the Argonauts – again! The loyal Elves are given their end of season bonus and packed off back to Eleveden Forest in Suffolk. Didn’t you know that is where they live for most of the year?

Before January is over those lovely people who design toys and games quickly introduce new and more exiting models which will become must-haves for countless girls and boys. Toy shops are visited and millions of children quietly note those presents they would like Santa to bring them this year. The demand slowly builds until it is time to bring the Elves back from Suffolk on the eleventh day of the eleventh month – no coincidence there! The first job for the Elves is to get the huge Christmas factory ready to run once again.

santas_sop_planning_cycle_small.jpg

In parallel with this, millions of children around the world unzip their pencil cases with a purpose. Using their best handwriting they tell Santa they have all been well behaved this year and then  list all the presents they would like to receive. This accumulated demand allows the Elf factory to start making production plans to meet a deadline that is set in stone. Is there a peakier peak period?

Money does not grow on trees so “Santa” must quickly check what can be afforded from the budget. Remember, the wish lists are always too long and you do not want 100% Customer Service  – keep “em hungry”, I say. The Pre-S&OP takes place with all stakeholders involved to ensure everything is ready to go. You want to avoid stock-outs just as much as you need to avoid expensive write-offs.

After necessary adjustments are made to the planned volumes by SKU the final S&OP takes place. Bearded Santa is fully dressed in his best red uniform and takes his seat. If Pre-S&OP actions have not been carried out, then there is unlikely to be much “Yo Ho Ho-ing”. Fortunately, everyone is in agreement and the final set of child and associated gift numbers is rubber-stamped. Everyone involved in the Christmas S&OP must operate on the same set of numbers or somebody will be disappointed.

The big day comes and Rudolph leads the reindeers in pulling the delivery sleigh across the world in a complex logistical challenge. Santa makes sure all the presents are delivered on time before little heads lift from pillows to wake parents at 4am! (Well, I did.)

 “Dashing through the snow
In a one horse open sleigh
O'er the fields we go
Laughing all the way
Bells on bob tails ring
Making spirits bright
What fun it is to laugh and sing
A sleighing song tonight”

Before you know it, there we are again on 26th December and the same robust and reliable S&OP cycle starts once more. See you next year Sant

Image courtesy of Enchange Ltd at Enchange.com

 

 

 

 

 

Tags: Christmas, Humour, Supply Chain, S&OP, Logistics Management

FMCG CEE Logistics; Transport, Trucks and Yorkie Bars

Posted by Dave Jordan on Wed, Oct 21, 2015

I like trucking, I like trucking, I like trucking and I like to truck.” Those of you who have not been on this planet very long and people who like hedgehogs will not be familiar with this Not The 9 O’clock News sketch from 1970’s UK TV. In short, the sketch showed macho truck drivers ploughing across the country flattening hedgehogs and munching on the obligatory large chocolate man-size Yorkie. (I was thinking how much smaller the Yorkie is now and when I checked it is indeed 15g and 2 chunks lighter than when I had my own teeth!)

Some of the trucks we see on the roads today are extremely high tech, modern and comfortable with hi-tech monitoring such as fuel consumption and tyre wear. They incorporate the latest motoring technology as well as a degree of driver cab luxury of which 1970’s Yorkie Man could only dream.

Tachographs have been around for ages but they are now largely superseded by satellite navigation that can track transport and shipments in real time ensuring drivers obey the rules of the road and avoid taking possibly amorous diversions they would rather keep quiet! (You should see the well-known names on trucks visiting a certain stretch of “comforting road” near Bucuresti!!!)

Load security and integrity can be monitored by a whole host of sensors keeping close watch on temperature, humidity, security seals and how often the doors have been opened and where and when. You also see some crazy looking trucks where the tops have been streamlined to cut down wind resistance and to contribute to a greener Supply Chain. Everything sounds hunky dory then as these modern juggernauts criss-cross the motorway network delivering chemicals, car spares or finished goods for FMCG and other sectors.

If you look towards the east of Europe you will find that Yorkie Man and his crumbling kit are alive and well. Yes, there are large fleets of top class modern equipment in CEE serving the internal country needs and of import and export to the EU. However, there remain a large number of smaller operators and owner-drivers who have not invested and upgraded to suit the needs of the modern transport trade. Again, there are some good examples but far too many are still using gas guzzling, fume spewing, unsafe vehicles that may be transporting your valuable goods. Remember, when a truck delivers your product they form part of your face to the customer.

Too many vehicles (well, one is too many isn’t it?) are operating on less than perfect road infrastructures with bald tyres, broken lights, poor load security and on borrowed time. Couple these failings with indifferent or a simple lack of driving skills and you have a recipe for a trucking disaster.

In particular, producer companies in those countries waiting to join the EU should take a look at how they move goods around now and start thinking about forcing an upgrade before the Yorkie gets even smaller.

Image courtesy of Decebal Popescu at Cartrans.ro

 

Tags: FMCG, Dave Jordan, CEE, Logistics Management, Transportation

FMCG: Will retailing the Amazon way see off the discounters?

Posted by Dave Jordan on Wed, Oct 14, 2015

Romania has not yet bought into online FMCG supermarket retailing in a big way. There have been some trials, tribulations and a few errors but online retailing here is this nothing like on the scale seen in UK, for example. As a tourist in Birmingham recently I awoke early due to the 2 hour time difference and decided on some breakfast retail therapy to pass the time.

Firstly, I had to negotiate the huge queue of students (going out or coming in?) and high-visibility vested workers waiting patiently for a very early dose of bakery products. Pizza slice, omelette in a bread bun and sausage rolls for breakfast? Aaaagggghhhh! There is even a Gregg’s loyalty rewards programme.

Anyway, avoiding the admittedly tempting smell of warm savoury dough I entered the large store of one of the UK’s dwindling retail giants. I say dwindling as Aldi and Lidl continue to erode their business base at a seemingly unstoppable pace. Being early in the day there were few shoppers around but the activity in the store was high due to the number of employees dashing about with trollies and scanners making up online orders.

Some moved frantically like Edward Scissorhands fulfilling orders at top speed while others dawdled along as if browsing in a shoe shop to avoid the rain. Do they assemble more than one order at a time or is it strictly a sort of online retail FIFO? What was clear was the appalling route planning.

Of all people, shop employees should now where all the products are displayed. Yes, the retailers do chop and change to try and trick us into spending longer instore and buying stuff we didn’t actually come in for but such changes are relatively infrequent. So why did these order pickers move around the store floor like balls in a faulty pinball machine?

Repeated returns were made to the same aisles to collect and scan further items for their orders. “Time is money“ and in this case time was what was being wasted. You may argue that the home deliveries all have time slots so rapid assembly is not vital but you could offer more slots to consumers or dare I say it, reduce the number of pickers employed.

As online shopping increases these huge outlets are potentially transforming into warehouses where the only activity is stock put-away and order picking. This may be on a smaller scale than by pallet load or case picking in a Distribution Centre but the exact same priority principles apply, i.e. ensure your know where the stock sits and that fast movers are readily available for rapid picking and order assembly. Maybe the retailers could learn a few things from logistics companies which will help to stem the discounter tide.

How far could we develop this approach? Are we likely to see any retailer go down the Amazon route where everything is online and consumers and retailers never the twain shall meet? Probably not but while in this flux between old fashioned aisle surfing by consumers and faceless fulfillment, the retailers may as well put a bit more thought into their order picking and assembly processes.

With that in mind I will just log onto GetGreggs.com (you saw it first here) and get a sausage & bean melt and a toffee finger doughnut delivered, now!

Image courtesy of jscreationzs at freedigitalphotos.net

Tags: Customer service, FMCG, Dave Jordan, Logistics Management, Inventory Management & Stock Control

FMCG:Top 10 Smash Hits of Warehousing & Logistics

Posted by Dave Jordan on Wed, May 20, 2015

Hello pop pickers, here is this weeks’ top 10 smash hits in this important but often forgotten part of the FMCG Supply Chain.

FMCG_top_ten_warehousing_and_logisict_hitsAt number 10 is All Systems Go by Donna Summer – Do not cut costs on your Warehouse Management System (WMS) and avoid any untried local “specials”. Make sure all stakeholders are involved in the design specification at an early stage to avoid costly and “least worst” bolt-ons later.

Staying at number 9 is Prodigy with Out Of Space - Ensure your chosen Third Party Logistics Provider (3PLP) has sufficient space or can expand to meet your growth expectation. If your 3PLP offers you a site which is boxed in and cannot expand then walk away!

Old favourites Smokie with For A Few Dollars More lie 8th – avoid the temptation to accept the lowest 3PLP quote, however tempting. Cost is not everything and if you bite on the low quote you will probably pay for it in the long run. Evaluate 3PLP offers thoroughly including which staff they intend to deploy on your business. Also, is it really cheaper and more efficient to outsource your logistics capability?

Up And Away from the Banned of St Trinians pops up at number 7 this week – your fast moving, profit generating brands should be on the floor or lower racks to facilitate picking. Those slow moving or seasonal items (in that case why do you have ANY stock?) should be on the top row and up and out of the way.

Alliyah bringing us Age Ain’t Nothing But A Number stays at number 6 – your WMS must be capable of carrying out stock ageing analysis to prevent losses from expired products. If age analysis is not carried out you will lose sales when you realise your “stock” is not actually suitable for legal sale.

Holding steady at number 5 is Counting Every Minute from Sonia – if you want to avoid a severe financial shock at the end of the year then you must take responsibility for ensuring stock is accurately counted. In addition to statutory fiscal counting you should activate routine cycle counting to ensure your data retains accuracy. Secondly, if you see a stock mismatch early enough you may be able to rectify this before memories fade and time moves on.

Keep On Truckin’ by Eddie Kendricks sits at 4 this week – whether you chose electric powered narrow aisle or standard FLT’s do a simple check and ensure battery type are interchangeable across the fleet AND sufficient extra batteries are available to ensure 24/7 coverage. Surprisingly, idle FLT’s are a common sight when battery budgets have been cut. (They only seem to run out of power when it is busy. Right?)

Sittin’ On The Dock Of The Bay by Otis Redding begins the top 3 countdown – how many loading bays does your 3PLP have or propose for a new build? You have to get stock in at the same time as you move stock out. The almost inevitable month end bonus push from Sales will expose a simple lack of doors and bays.

Living In A Box by the delightfully titled Living in a Box is at number 2 – forgive my indulgence. I think this is a great Supply Chain themed song so it gets in!

It Takes Two Baby by ageing rockers Rod Stewart and Tina Turner leads the warehousing chart this week – do not assume your 3PLP knows enough about your business to leave him alone on a day to day basis. You need daily discussions to resolve operational issues plus monthly performance reviews at an appropriate senior level. Get yourself an office in the 3PLP premises and work hard at the relationship on a daily basis.

Enchange_improve_lsp

 

Images courtesy of Stuart Miles at FreeDigitalPhotos.net and Enchange Ltd.

 

Tags: FMCG, Logistics Service Provider, Dave Jordan, WMS, Cost Reduction, Logistics Management

FMCG: New Top Ten Supply Chain Improvement Resolutions for 2015

Posted by Dave Jordan on Wed, Jan 07, 2015
Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein


How many of you will be reaching for an electric cigarette or giving up smoking altogether for the New Year?  How long will it be before visits to the gym trickle away? Will you get 5 portions of fruit and vegetables a day or will that take-away, drive-thru dinner prove irresistible? All over the world people will be making promises to themselves they would like to keep but few have the staying power to make a difference. Is this possible in your FMCG Supply Chain in 2014?

How about this revised Top 10 List of resolutions to help your businesses improve in 2015?

Supply Chain Improvement ListSupply Chain Awareness – As a start you might like to remind colleagues especially Sales & Marketing what Supply Chain is all about.

Sales &Operational Planning - If this is in place; improve! If there is no S&OP you should try it - it works! If you are agnostic about S&OP, take a look at how S&OP helped one FMCG company turn performance around.

SKU Complexity – Do you actually know how many SKUs you have and what is driving your sku complexity? Do you have amore now than when you started 2014 yet lower overall turnover? Check and take action on non-profitable SKUs and ensure resources are placed behind winners.

Route To Market – In developing markets Traditional Trade will still form a large chunk of your business. Give your RTM a thorough service and your Distributors will serve you better.

Sales & Marketing Buy-in – Wouldn’t it be powerful if everyone in your company was aligned to the same plan and 100% mutually supportive? Too much to hope for? If such a change happens you will rapidly feel the difference.

Proactive 3PLP’s – Are they meeting the agreed KPI’s? Do you have KPis as part of a Service Level Agreement (SLA)? If perfromance is not what you expect then perhaps you need to review them and revise upwards.

Reduced Stock/Inventory – The start of the year is a great time to remove that old stock. Why not give your sales a much needed post holiday sales boost with some unexpected and low cost support using stock that will be otherwise written off? Amd you know it will!

Improved Customer Service – Do you measure this and if you do is the measurement 100% honest and accurate? Companies that fool themselves on Customer Service may see short term benefits but do not succeed in the long run.

Use the ERP - Avoid spreadsheets like the plague as they undermine your business and waste time and effort. If you have invested in an ERP like SAP then ensure it is correctly implemented and apply relevant transactional discipline. Is you business running on raw data or actionable information? Think about that!

Continuously Improve – If you stand still as this awful recession slowly evaporraates it is highly likely you will be at the back of the pack. Keep innovating and improving your Supply Chain to maintain competiveness and freshness.

Naturally, you cannot do everything at the same time but if you choose to focus on a few of these areas you will discover you can significantly change your FMCG business success by getting improved and sustainable value from your Supply Chain.
Make a resolution and just do it! You don't need to be Einstein.........


Tags: Customer service, SKU, Route to Market, Dave Jordan, ERP/SAP, KPI, S&OP, Logistics Management, Distribution, Inventory Management & Stock Control

FMCG 3PLP Outsource Tendering in CEE - Top 7 Hazards

Posted by Dave Jordan on Wed, Nov 26, 2014

This process can be straight forward but a little extra care and knowledge will ensure you achieve the best solution for your business.

FMCG 3PLP HAZARDS OUTSOURCE resized 600Just a quick reality check, do you really need to outsource? Before embarking on a complicated tender are you really convinced your current in-house operation is unsuitable? Think long and hard about outsourcing or you could be trapped in a long term relationship with someone who may not care about your business as much as you do. Assuming you have taken the correct decision let us take a look at 7 things that can go wrong.

Qualification. Get an idea for which companies are likely to be interested in and capable of being your 3PLP. Do not be surprised if your list is relatively small but you should aim for 8-10 contenders in this first sweep. Contact these companies with a questionnaire asking them to outline their capabilities, pedigree and reputation and follow this up with a face to face meeting where you can get a better feel for competence and commitment.

Cost Comparison. Outsourcing is not always about cost reduction but the costs of the 3PLP contenders will be a major element in the decision. Ensure you know your current costs for the entire service you are expecting the 3PLP to provide. You need transparency on your own cost structure in order to make a valid and meaningful comparison.

Process Leadership If possible, appoint a leader from outside of the Supply Chain team, e.g. Finance. This will promote impartiality and in any case many of the key debates will be in the Finance area. For complete impartiality you might consider hiring an Interim Manager or Consultant who is rewarded on the tender process efficiency and has no longer term interest. All contenders will be trying to pick up snippets of advantageous information and you must not compromise the tender process in any way.

Time Expectations. Don't rush the process despite the pressure from above (or below) to make a change. You will be reliant on your 3PLP to support your business so make sure a timetable is agreed with all stakeholders, including your own Supply Chain people. The tender process will not be a secret however hard you try and your people will be nervous. Any changeover time should fall in a slack period so avoid your seasonal peaks and major promotional periods.

People. If you are outsourcing your existing in-house Logistics function then you are either going to make a number of staff redundant or you will be looking for the new 3PLP to take those staff on board. Either way you must treat people in the best way possible or your service levels will suffer as you make this difficult change.

If you are making existing staff redundant you must keep them fully informed at each critical step. Why not consider an escalating loyalty bonus linked to performance? If existing staff members are being offered the opportunity to join the new 3PLP then it is your responsibility to ensure terms and conditions are fair. From experience in CEE it is wise to build a "parachute" agreement into the new contract ensuring existing terms and conditions are maintained for a period of say, 12-18 months.

Beware of Distributor partners trying to step up to the mark as a 3PLP and be similarly aware of any of the big names who are not present locally but "expect to be". This means they are unlikely to enter your market unless they get your business and you might not appreciate being their new guinea-pig!

Start-up Phase. Ensure your tendering process includes a clear understanding of what will happen as the business is transferred. How soon will KPI's be at the required level? Does the 3PLP have the necessary staff with relevant skills, eg narrow aisle FLT drivers. Has the WMS been robustly tested.........Even some of the big name 3PLPs make mistakes at this crucial time.

FMCG 3PLP OUTSOURCIING HAZARDS resized 600Taking care of these 7 elements will help you move through the all-important implementation phase to a relatively steady business state without surprises.

3PLPs tend to be very slick at securing new business but some of them are not very good at keeping it!

Want to know more about logistics in the CEE region?  Check out these posts as well!

 

 

Logistics: Working With 3rd Party Logistics Providers in CEE 

Working With 3PLP's in CEE - When did you last see your stock count?

Top tips to improve your cycle counting & avoid suffering stock shock 

Image 1 courtesy of photostock at freedigitalphotos.net

Image 2 courtesy of Ambro at free digitalphotos.net


Tags: FMCG, Logistics Service Provider, Logistica Management, Dave Jordan, Supply Chain, CEE, Logistics Management, Outsourcing