Supply Chain Blog

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Tachographs have been around for ages but they are now largely superseded by satellite navigation that can track transport and shipments in real time ensuring drivers obey the rules of the road and avoid taking possibly amorous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

Supply Chain : When a bicycle is better than a Mercedes.

Posted by Stefan Cucu on Tue, Oct 07, 2014

The summer of 2004. It was 3 weeks after I had changed the job and the company. It was  a new (Supply Chain) position in an FMCG company with many people speaking native French. At that time, the mayor of Bucharest- the future Romanian president established almost overnight what the companies called at the time "blockade of Bucharest”. All trucks over 5 tonnes were not allowed to enter into Bucharest during day light.

Do you remember the time? Food spoiled on the ring road because drivers had consumed their diesel, stocks blocking the warehouses and sales plummeted dramatically. For a few weeks it was a total mess. After a while things calmed down and zones A, B, C were created in Bucharest each with appropriate entry fees. Something which Paris, Vienna, London had taken a few years to set up we made in Bucharest in a few weeks. Our style, obviously.

At the beginning things got out of control and no one knew what to do.  In Romania, politicians “defended the people from the noise and pollution made ​​by multinational companies” (I quote from the mayor’s answer to my humble attempt to make known the situation). Eventually they realised that people became nervous and probably hungry if they do not find milk and bread at the corner store.

“Why the Logistics and Sales people cannot collaborate?” - Asked my GM in a board meeting in which I was replacing my boss.  "Do not bother me unless the warehouse is on fire” said my French boss before taking his annual leave. And because the warehouse did not catch fire, on the contrary, it was blocked with merchandise up to the ceiling, I had to answer something to my GM. Well,  I tried to say something about the SCOR principles, about how bad integrated were the departments and a possible internal SLA -  but people looked angrily at me as obviously I was wasting their time.supply chain sales warehouse stock distribution mercedes

The GM saved me then, God bless him, he translated my complicated supply chain jargon into something very simple: I can understand that , Ahaa- to  organise a meeting between sales and logistics. Let`s call it VELO  (from the french Ventes et Logistique)! "

Yes, this is how VELO was born. The first version of an SLA between Sales and Logistics. The document:  one page off 2 reciprocally asked  indicators, 5 by Sales and 5 by Logistics. From what I know, it still operates successfully in that company. The power of VELO is huge. Often, a VELO is worth more than S&OP, it was proven to me on many occasions. When that happens? Usually, when S&OP is transformed into a long line of endless discussions without targets other than getting signatures on useless piece of paper. Or simply when S&OP is not known, you are under pressure and have to do something for your organisation.

A Supply Chain is strong as long as it is integrated. The problem with that is this integration is not simply possible to be achieved overnight. The vast majority of companies in Romania that I know have made real progress in integration with suppliers and customers, but still neglect internal integration. This is another important reason why S&OP fails:  lack of supervision from the GM as the power of dissolution coming from various the departments is huge. It is the famous "silo mentality" that manages to impose its strength. "I'm right" is the priority instead of profit and turnover.

S&OP, with all its simplicity, is also expensive. Obviously it can be very efficient, as efficient as a Mercedes engine: purring smoothly while the vehicle takes you to your destination, and your indicators panel (KPI`s obviously) keeps you in control.  

Just remember, on bad Romanian roads, sometimes it is simply not worth it to drive a Mercedes!  If your company departments struggle bitterly between each other, you are driving on a damaged road (the dimension of the hole is proportional to the long e-mails’ which people exchange in your organisation when blaming each other)...

Then it's time to think a bicycle (VELO) can be more effective than a Mercedes!

C`est absolument normal!

Partial image courtesy of www.freedigitalphotos.net


Tags: FMCG, Route to Market, Stefan Cucu, Supply Chain, S&OP, Forecasting & Demand Planning, Logistics Management, Inventory Management & Stock Control

FMCG Stock Shrinkage happens in the best run operations, even yours!

Posted by Dave Jordan on Wed, Aug 13, 2014

My colleague Stefan Cucu recently wrote on the subject of stock shrinkage in coolers located in HORECA outlets in Romania. One of the points he made warned Supply Chain professionals about the likelihood of stock shrinkage anywhere along the chain.

The term “shrinkage” covers a multitude of incidents but all inevitably lead to missing stock, extra cost and ultimately, poor customer service. If you and your systems think stock is available and you provide a promise to customers then finding (or not finding) missing pieces/promotional premia/cases/shrink-wraps and even pallets will not leFMCG Stock Shrinkage Sources resized 600ad to a “Happy Bunny” situation.

Here I take a look at some of the common and some of the more unusual causes of stock shrinkage.

At the factory

Apart from getting the standard QC/QA checking spot on, factory personnel should have a close look at their rubbish. Any packaging that is wasted should be 100% destroyed and factories should think carefully about sending waste to anyone other than a very honest recycler. For example, any bottles that are potentially usable can be filled with water and swapped for filled bottles along the supply chain. Yes, I have seen this happen!

At the warehouse

A minefield full of potential shrinkage opportunities. Routine cycle counting will alert management to any variances and ensure stock available to promise is really available but you should adopt the “trust is good but check is better” approach. Ensure you have clear segregation of duties so no individual has the access and authority to book stock in AND out. Monitor the relationships between operators and security personnel and rotate security shifts to avoid any “comfortable arrangements”. Although it is a pain, I would also rotate third party security companies on a regular basis. Keep an eye on damage levels too as they can always be used to substitute for good stock when backs are turned.

In the delivery truck

Installation of tachographs and Sat Nav systems have helped to minimise shrinkage during delivery but where there is an ill will there is a way. Did the driver sign off on what was actually loaded? If not, there is the opportunity to stop and remove a few cases from the inside of pallets which is not immediately obvious to the naked eye. Keep an eye on Sat Nav routings and any unexplained idle time.

On the customers delivery dock

You may have reached thus far with 100% load integrity but you are far from safety and a signed 100% OTIF delivery note. On one notable occasion when I was a Supply Chain Director in the FMCG sector a certain big name retailer continually reported shortages. Now, nothing is ever 100% perfect but when they started complaining about non-receipt of full pallets I smelled a bit of a rodent. A personal close inspection of the unloading process saw the driver sent away to an inside office to get documents stamped. While he was away the customer dock operators calmly took 2 pallets from the load and hid them in a nearby electricity building. When the driver returned he was completely powerless and could do nothing but sign against a shortage.

In the retailer outlet

No, not finished yet! In addition to the RTM drinks cooler caper described by Stefan, shrinkage can occur in store and not just through shop-lifting adventures. If you do not attach your promotional premia to the host sku securely they will be removed. Unscrupulous retailers will “ramp” the free product or item thus destroying your FMCG promotional activity but increasing their revenue. If the item being promoted is not available in the same store, e.g. a pen, then you are simply giving it away to anyone with enough nerve to slide it into a pocket.

That is just a snap-shot of what can go wrong as the possibilities to shrink your top and bottom lines are endless.

Image courtesy of Stuart Miles at freedigitalphotos.net freedigitalphotos.net

Tags: Customer service, Brewing & Beverages, FMCG, Dave Jordan, Performance Improvement, Supply Chain, Logistics Management, Inventory Management & Stock Control

FMCG Producers: The important role of motorway network infrastructure

Posted by Dave Jordan on Wed, May 21, 2014

The human heart. Unless you are a little bit dead or a politician we all have one beating away inside. Thinking a little out of the box, what an excellent supply chain the heart is! Oxygenated blood is pumped through arteries around the body in just the right quantities at the right time. Depending on how you are exerting yourself more blood is pumped to specific areas to maintain strength, speed or whatever else you are up to…... De-oxygenated blood is then automatically sent back to the heart for a recharge before entering the blood supply chain once more. Perfect!

Which brings me to Tesco, that well known UK based but increasingly international retailer. In a presentation at the recent Integrated Business Planning event in London, Steve Strachota spoke about how the UK’s motorway network was vital in keeping stores well stocked from the distribution centres. With many stores opening 24/7 the need for reliable replenishment is critical to Tesco’s success. The days of a truck only delivering in the early morning before opening time are long gone.

The pressure on the supply chain is unrelenting and the M1 in particular was singled out as the main artery to keep shelves well stocked. Now, the UK motorway network is far from perfect and sometimes resembles a very large car park but it is well planned to keep all the major towns and cities linked. Barring hold-ups and sensible rest breaks you can drive the full length of the country in about 11 hours. That is about 600miles or just under1000km in new money.

Which brings me right across the continent to Romania. A while ago I helped drive a 7.5t truck from UK to Romania for a charity I support. Driving mostly on the wrong side of the road in the right side of the cabin was quite a challenge but by sharing the driving we managed to reach Oradea at the Romanian border in just over 2 days. Some 20 hours and 600km later we had reached Bucuresti. Of course, this would be faster in a car but we were driving a relatively small truck which many FMCG retailers and producers use to move goods.

fmcg motorway network Romania resized 600I am big fan of Romania and most Romanians but the road infrastructure still lets the country down. Several years on from entering the EU and petty politics, incompetence and corruption have made sure that not many km of motorways have been built. Yes, you can get closer to the Black Sea resorts now and there is a very slick motorway linking Bucuresti with Ploiesti but not much else. Romania has such a lot to offer and with low wage rates the country really should be host to much more manufacturing. In fact, some big name producers have already closed manufacturing facilities and taken their business elsewhere.

The Romanian road network needs urgent resuscitation before the low cost producer label is no more and producers move eastwards. FMCG Producers will not wait forever for the government to get its act together. Oh and before you ask, don't get me starte on the trains.   

Image courtesy of samarttiw at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Performance Improvement, Supply Chain, Logistics Management, Distribution

FMCG Meets Top Gear: IKA Store to Shelf Supply Chain: Last 50 Yards

Posted by Dave Jordan on Wed, May 14, 2014

FMCG and Brewing producers amongst many others, carefully pack their products to meet exacting requirements for International Key Account (IKA) and Local Key Account (LKA) customers. Increasingly this includes specially collated and shrink-wrapped pallets which are cross-docked to specific stores via a retailer platform. Powerful retailers force Producers to operate to strict standards of service whether this is case fill, OTIF, CCFOT, fill level or some other agreed measure designed to ensure products reach the shelf on time. Similarly, in quality terms any damages or close to expiry product is usually rejected even if it means empty shelf space.

If a platform is in use then this may be where the Producer liability ends but that is unlikely and in any case an empty shelf directly hurts the brand owner more than the retailer. So let us assume the carefully packed and stretched pallet of assorted goods arrives at the rear of the store on time, in full and in good condition. The next piece of the chain is called the “last 50 yards/metres”; that relatively short distance from back of store warehouse to the shelf.

If you have never seen a retailer back of store warehouse operation then you should, and soon. Some may indeed be slick, finely tuned operations continuously pumping product towards consumers. Take a look behind those dirty plastic flaps and see what is going on. Be careful when doing this as at any minute a fork lift truck with Retail Stig in the saddle will burst forth with plastic a-flapping and horn a-blazing. Without any apparent care for consumers or himself Retail Stig charges past the frozen food, takes a good line past the mop heads gondola before squealing the tyres around the bon-bons and across the line! You did it …..in……shouts a manic Clarksonesque store manager.

Store WarehouseAnyway, where was I? You will find that a majority of store warehouses will be badly organised and chaotic - perhaps chaos is inherent as you do need momentum and energy to keep the stocks moving. I believe the overriding problem is that while the rest of the chain is largely controlled by skilled supply chain professionals the back of store is not. To be fair some stores are staffed by skilled individuals but the organisation has a sales mentality rather than a supply chain focus. Just because the stock is now in a “shop” there is no logical reason why the required skills should be any different.

Many Producers have recognised this and have started coaching retailers in the “last 50 yards” to transfer basic supply chain skills and procedures. Some simple initiatives like pallet marking on floors, FIFO and easy access to fast movers will pay rapid dividends to both parties and stop some of the pointless conflict that seem to feature in Producer-Retailer relationships. This is not rocket science!

And on that bombshell……..

Image credit: Colliers International

Tags: Dave Jordan, Supply Chain, Logistics Management, Inventory Management & Stock Control

Is this the most perfect FMCG or Pharma or Drinks Supply Chain ever?

Posted by Dave Jordan on Tue, Apr 01, 2014

I will not reveal the name of the organisation for obvious reasons but their Supply Chain is one very impressive, slick machine. Across the Source, Plan, Make and Deliver Supply Chain disciplines we can see excellence and leading edge systems and performance.

April Small resized 600

Source

Raw and packaging materials are bought at very competitive prices yet with equally favourable payment terms. Lead times are optimised and stock is on consignment. Supplier collaboration is a key part of the business.

Plan

S&OP is alive and kicking and visibly led from the top table. Demand and supply is finely balanced and forecast accuracy at sku (not brand) level is a minimum of 95%. Every aspect of planning is done in the ERP without a spreadsheet in sight. Stock levels are set using rolling 2-year historical data along with the weekly updated activity plans from Sales & Marketing colleagues. No month-end Sales target push!

Make

Output reliability is close to 100%. Manufacturing costs are the lowest amongst the peer group of similar companies. Production line efficiency is well above the manufacturer name-plate specification. There is zero waste and rework and this new factory follows the principles of the Japanese Institute of Plant Maintenance.

Deliver

The relationship with the 3PLP is very close and proactive. Stocks at Distributors are maintained via a replenishment system. There is no overstocking or write offs. A Route To Market assessment has been carried out and all distributors are proactive partners. Customer service levels are over 99% for all customers.

Overall Supply Chain efficiency is monitored through a short list of highly relevant and stretching KPI targets. The Supply Chain team is highly motivated and valued by colleagues. Who wouldn’t like to work in this company? What an organisation!

...but remember Always Place Revealing Information Last – Find Our Other Laughs

Tags: Customer service, Brewing & Beverages, Route to Market, Dave Jordan, Humour, KPI, S&OP, Logistics Management, Inventory Management & Stock Control