Supply Chain Blog

CEO FMCG Letter to Santa Claus (aka Father Christmas) 2017

Posted by Dave Jordan on Sun, Dec 17, 2017

FMCG/Brewing/Pharma CEO Letter to Santa ClausDear Father Christmas,,

I have been a very good FMCG CEO this year, I promise. If you want, you can check with my colleagues and shareholders. They know how good I have been this year. Apart from the out of stocks of course, oh and the little mistake when we had to write stock off and waste lots of our money. But that is not so bad is it? Other CEOs were naughty last year and they still got what they wanted from you.

I had better be honest because you will know if I am not telling the truth. We also had a problem starting S&OP and so our planning, forecast accuracy and therefore  sales were not very good. They were not really big problems so I hope you can forget about them this time, please. Next year I promise to do better, I do, honestly.

I forgot about the Route To Market (RTM) mess we had in the peak sales months but that really was not my fault. I also promise to do something about RTM next year and make sure it works properly so people who buy our products are not disappointed. I know it is bad when people come to buy our products and then spend their money on something else. I will talk to our distributors and find out what we need to do.

I know, I know, when the new ERP computer system was switched on we were not really ready for the change but we did make it better as fast as possible. I did not think we needed any outside help for the new IT but I admit I was wrong. Next time I will get it right, hopefully without having any lost sales.

The factory thing was not my fault, I think. The factory man promised me lots of product but his machines kept breaking down at the wrong times and we had to wait for the fixing men to arrive. They took ages to get the machines working and then they broke down again and again. No, it is not a very reliable factory, yet.

Does the warehouse problem count against me as well? We could not find our products when we wanted them and then when we did find them they were old and out of date and of no use. This was very sad but it will not happen again next year, I hope.

I have just read my message again to make sure I did not spell any words wrong and I see I was not as good as I thought. Actually, after reading this I am going to the chimney to take my stocking down and put it away in the Christmas storage box. I will try again next year, Santa.

Bye bye and Happy Christmas.

CEO FMCG

Image credit: HikingArtist.com

Tags: Route to Market, Christmas, Logistics Service Provider, Dave Jordan, CEO, Humour, Performance Improvement, Traditional Trade, S&OP, Sales, Inventory Management & Stock Control

An FMCG Distributor Is For Life & Not Just For Christmas

Posted by Dave Jordan on Thu, Dec 14, 2017

Ok, so you are unlikley to see this on a car bumper sticker but FMCG Distributors will have a significant impact on your sales performance, probably your variable pay bonus and therefore your CEO aspirations! How have you treated your Distributors this year? Were they the usual pain in the proverbial - failing to achieve targets, not paying on time, always moaning about trading terms? Of course, some Distributors do fit this stereotype but others are keenly trying to be treated as and to be, equal partners in your business success. But do you see this?

How are things going in Q4? Have you fallen into the trap of the “sales bonus push”? Year end stock clearance FMCG Breaking all the supply and sales phasing rules you have been trying to drum into Distributors? Did you strictly maintain discipline on Sales & Operational Planning or did the last quarter deteriorate into a “sell whatever we've got in the warehouse” scenario?

Companies that spend time and effort in proactively guiding their Distributors, providing relevant training and support inevitably succeed in the market place. Yes, at the end of the day Distributors have to stand on their own two feet but so many FMCG companies assume an organisation calling itself an “FMCG Distributor” inherently knows how to properly support any specific business.

If you do not pay attention to the Traditional Trade (TT) distribution side of your business then you are asking for trouble and that trouble usually ends in divorce along with all the discontinuity baggage separation brings. You need to avoid your choice of Distributors becoming like the English Premier League where managers get about 5 minutes to make an impact before being shown the door. (Strange though, that all these football managerial failures usually find another highly paid role; the latest being Big Sam Allardyce)

So, as we approach a special time of the year why not think about your Distributors and ask yourself if you have given them a fair crack of the whip?  If not, then you might consider a New Year resolution to develop a strategy for mutual success. This is far better than continually highlighting deficiencies and using backward looking, discipline focussed KPIs to bash them on the head.

Sit down with your RTM Distributors regularly, evaluate their strengths and weaknesses and agree to do something about the latter. Simply running through a Route To Market evaluation together can work wonders in establishing trust and cooperation. Do yourself a favour and do this now before Q1 next year also becomes history that you cannot change.

Click on the RTM link below and go!

CTA RTM Free Download resized 600

Image courtesy of stock.xchnge at freeimages.com

Tags: FMCG, Route to Market, Dave Jordan, CEO, Performance Improvement, Supply Chain, S&OP, Distribution

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

Posted by Dave Jordan on Mon, Nov 27, 2017

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

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

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

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

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

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

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

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

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

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

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

Image courtesy of Stuart Miles at freedigitalphotos.net

 

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

NHS UK Supply Chain Waste: Planning Patience

Posted by Dave Jordan on Thu, Sep 28, 2017

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

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

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

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

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

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

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

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

Image courtesy of Stuart Miles at freedigitalphotos.net

 

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

Supply Chain Performance: Budget Airlines and KPIs……

Posted by Dave Jordan on Wed, Jun 14, 2017

I have never been a fan of budget airlines and certainly not since one left me sleeping overnight in the back of beyond that is Luton Airport. That may be an exciting addition to a student’s back-pack holiday itinerary but when you have a glass back it is not so appealing.

Nevertheless, they do fly to or near to where I need to be and the prices are much cheaper if you book well in advance, don’t pay with a credit card, don’t carry any luggage, don’t eat or drink, wish to sit next to your wife or use the toilet (thank you Fascinating Aida).

So, once again I found myself on the busy Birmingham – Bucharest route after visiting the heiress and some things are inevitable on a no-frills airline. I know the dimensions of my carry-on bag but so many others either forget to check or think they will get away with a dayglo sausage the size of Sicily without paying the penalty fare. That’s how they make their money; last minute, extortion, take it or leave it.

My second frequent observation is that there is usually someone sitting in my seat when I board. Yes, they move when challenged but only to another seat which is not theirs either. I know some airlines do or did provide a free seating/chaos policy but when you have a seat allocated on the boarding pass, sit in it!

Finally, we are off the ground and ascending before soon the engines throttle back and this is when I want to shout out some helpful advice to the captain, “change gear now”. I know how planes work but that bit off take off always makes me uncomfortable. The beep of the seat belt sign going off leads to an immediate dash for the toilets (I hope they pre-paid) and a long line of shuffling bodies.

The line of casually shuffling bodies soon turns into a twitching queue of concern as the red toilet sign above the cabin remains illuminated. Phones are consulted to pass the time and refocus the mind; people even read the safety information booklet and the duty-free magazine which is anything but duty free, of course.

Finally, a Flight Attendant needs to transport a metal trolley on inedible stuff to the other end of the plane and realises she cannot possibly conquer the lavatory line and politely knocks on the toilet door. No answer. Another tap-tap-tap plus an enquiry if everything is OK also fails to change the indicator from no-go red to free flowing green. The red light seems to glow brighter as if to irritate those with crossed legs.

This is now serious as the inedible stuff is getting cold and more people are standing in the aisle than sitting in seats. The pilot is probably having to battle with the controls to keep the plane centrally balanced. Something must give and judging by the faces of the queuers, this will be very soon. The red light glows.

Then action; the queue is guided away from the toilet door and back behind the curtain. Male and female crew members are poised to open the door using the emergency switch and they don’t know what or whom they will find. The door is cracked open as male and female eyes strain to see which crew member will take the lead and help the possibly stricken passenger. The red light vanishes and the green for go appears above the curtain. Relief is at hand.

There’s nobody in the toilet. The grateful mass of people takes one step forwards as the end is finally near.

FMCG_SUPPLY_CHAIN_HUMOUR_KPI_ANALYTICS.jpgSo, what went wrong? Will the cleaning service at the destination find something a very unexpected item in the garbage area? Is someone hiding in the skin of the aeroplane plotting something nasty?

There was never anyone in the toilet in the first place and staff had forgotten to flick the switch to make it open for business. The red light stayed illuminated but it was not telling you what the real situation was with toilet occupancy and the impasse was allowed to go on for quite some time. The KPI (kay pee aye) was showing red but it was not telling you the reality and certainly not everything.

Don’t always believe your KPIs are telling you the whole story; challenge them routinely. They are frequently an indication of performance at a certain moment in time and a longer-term view is necessary as the business evolves. If your business is in trouble you may need a set of Recovery KPIs whereas a booming business on a roll may need a set which is far more forward thinking and aggressive. Supply Chain Analytics help you take the longer term view.

Blindly believing long term over or under performance can see your company quickly performance go down the pan.

Image courtesy of phasinphoto at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Humour, Performance Improvement, Pharma, KPI, Supply Chain, Supply Chain Analytics

Interim Management & Consultancy – What's the difference?

Posted by Michael Thompson on Thu, May 25, 2017
At Enchange, we have provided many supply chain interim managers for clients over the years. I was discussing our supply chain interim management services with a client recently and she asked whether she should be hiring interim managers or consultants.
 
We had a long chat and it turned out that interim managers were the right solution for her requirement.  The main reason in this case was that she insisted in retaining total control of the project and the key need was for expert resource to deliver a number of work stream projects.

So, for anyone else facing a similar dilemma here are seven key differences between interim management and consultancy:
  1. Notice  Interim managers are often placed at short notice.  Consultancy contracts usually take several months to agree and commence.
  2. Terms of reference  Interim management assignments nearly always commence with ‘implementation-driven’ terms of reference.  Consultancy contracts nearly always involve a process of analysis and usually include design work.  For an interim management contract, the analysis has usually been undertaken by the client.
  3. Project work  For project work, consultancy projects provide expertise not available in the company.  Interim management projects could normally be carried out by client personnel but resource is usually a constraint.
  4. Executive power  Interim managers are often called upon to demonstrate strong leadership from the outset of an assignment and can have a large degree of executive power.  Tough people decisions are sometimes made quickly.  It is unusual for a consultant to exercise executive authority.
  5. Client relationship  Typically interim managers become part of the client team quickly and identify totally with the needs of the client company.  Consultants, while always working closely with clients, often maintain an ‘arms-length’ relationship with client staff and identify totally with project deliverables.
  6. Contract duration  Interim management contracts are typically of longer duration than consultancy contracts.  However, the maximum duration for any assignment should not exceed 18-24 months.
  7. Fee rates are typically lower for interim management contracts.  At Enchange our rates for top quality interim supply chain managers certainly are lower.

 users guide to interim management

Tags: FMCG, Interim Management, Performance Improvement, Pharma, Michael Thompson, Supply Chain

Top 10 Times You Need Supply Chain Interim Management

Posted by Michael Thompson on Fri, May 12, 2017
Supply Chain Interim ManagementI have been talking to a number of supply chain executives during the last few weeks and something of a theme has emerged.
The theme is the immediate need for highly skilled supply chain resource, available at short notice, with the flexibility to switch off the resource at wil..….and at fee rates comparable to existing resource. “So nothing unreasonable there”, I thought.

What we actually discussed was supply chain interim management and how the placing of a specific skilled resource can have a dramatic postive impact on an organisation. We went on to discuss the typical roles that supply chain executives are currently demanding.  

With this and our recent experience with clients, I offer the following top 10 supply chain interim management roles:
  1. Resource gap. Bridging a gap prior to a full time appointment being made.  This was mentioned by everyone – “we need a planning manager …. now”.
  2. Backfill. To temporarily backfill a position because the incumbent manager is about to be seconded to a project or may be emabrking on maternity leave. “We have a large project that has started (ERP projects were mentioned a number of times) & we need an interim Head of Supply Chain”.
  3. Project Managing a specific project that would normally be carried out by company personnel but experienced resource is a constraint.  This is a common need and mentioned frequently.
  4. Temporary or part-time operational assignments the need for which will end, do not justify a full time employee or are designed to coach and train a new manager. 
  5. Holding the fort in a situation where company strategy is not decided and operational roles are unclear while the business must keep going forwards.
  6. Crisis. Managing a crisis when a unexpected event occurs, e.g. dismissal, death or unexpected departure.
  7. Post-acquisition or merger management prior to establishment of the full management team.
  8. Pre-sale management of a company or business unit in preparation for a sale.
  9. Urgent change management of strategy, cost, structure, organisation, process etc., when an external threat is recognised. e.g. sudden loss of market share, competitive move, unsustainable debt position, hostile take-over bid, etc.
  10. Turnaround management or ‘company doctor’ when a permanent position is inappropriate or the role may be perceived as too risky to attract a permanent candidate.
My discussions were with a relatively small number of people so I would welcome any further comments or indeed, requests for assistance.

 

Tags: FMCG, Interim Management, Performance Improvement, Pharma, Michael Thompson, Supply Chain

Supply Chain: The benefits of Interim Management

Posted by Dave Jordan on Wed, Mar 29, 2017

Interim SC Expert at Hand Netsize resized 600Interim Management is an approach used by companies to “make things happen” within a clear budget and without the headaches of recruiting a full time employee (FTE).  The benefits are numerous but initially……

Immediate access to expert supply chain skills and experience in your sector.

No hidden extras. You pay the daily fee rate and expenses; no more, no less.

Training for your staff to ensure supply chain knowledge and skills imparted and retained.

Experienced supply chain interim managers available now at all levels of seniority.

Remove internal hurdles and barriers to change.

International experience gained from working in many countries, companies and in relevant sectors.

Motivated to achieve results to tight time and cost objectives.

Maintain the resource while you need it without any financial burden at contract end.

Avoid permanent employee costs which are significant.

No inconvenient holidays, training courses or conferences.

Ability to challenge your supply chain status quo and make sustainable change in the business.

Generate savings and efficiency improvements in a short timescale.

Expectations should high be as you are buying international expertise.

Make your business prepared for the competition in difficult economies.

Excellent return on investment.

No political axe to grind and no bias; straightforward advice and actions.

Take a look at the Enchange approach to Interim Management, eave your details via the contact form and we will call you back. If you are not sure you need Interim Management then you probably do!

Tags: FMCG, Interim Management, Dave Jordan, Performance Improvement, Pharma, Supply Chain, CEE

An FMCG Distributor Is For Life: Not Just For Christmas

Posted by Dave Jordan on Wed, Dec 21, 2016

Ok, so you are unlikley to see this on a car bumper sticker but FMCG Distributors will have a significant impact on your sales performance, probably your variable pay bonus and therefore your CEO aspirations! How have you treated your Distributors this year? Were they the usual pain in the proverbial - failing to achieve targets, not paying on time, always moaning about trading terms? Of course, some Distributors do fit this stereotype but others are keenly trying to be treated as and to be, equal partners in your business success. But do you see this?

How are things going in Q4? Have you fallen into the trap of the “sales bonus push”? Year end stock clearance FMCG Breaking all the supply and sales phasing rules you have been trying to drum into Distributors? Did you strictly maintain discipline on Sales & Operational Planning or did the last quarter deteriorate into a “sell whatever we've got in the warehouse” scenario?

Companies that spend time and effort in proactively guiding their Distributors, providing relevant training and support inevitably succeed in the market place. Yes, at the end of the day Distributors have to stand on their own two feet but so many FMCG companies assume an organisation calling itself an “FMCG Distributor” inherently knows how to properly support any specific business.

If you do not pay attention to the Traditional Trade (TT) distribution side of your business then you are asking for trouble and that trouble usually ends in divorce along with all the discontinuity baggage separation brings. You need to avoid your choice of Distributors becoming like the English Premier League where managers get about 5 minutes to make an impact before being shown the door. (Strange though, that all these football managerial failures usually find another highly paid role.)

So, as we approach a special time of the year why not think about your Distributors and ask yourself if you have given them a fair crack of the whip?  If not, then you might consider a New Year resolution to develop a strategy for mutual success. This is far better than continually highlighting deficiencies and using backward looking, discipline focussed KPIs to bash them on the head.

Sit down with your RTM Distributors regularly, evaluate their strengths and weaknesses and agree to do something about the latter. Simply running through a Route To Market evaluation together can work wonders in establishing trust and cooperation. Do yourself a favour and do this now before Q1 next year also becomes history.

Click on the RTM link below and go!

CTA RTM Free Download resized 600

Image courtesy of stock.xchnge at freeimages.com

Tags: FMCG, Route to Market, Dave Jordan, CEO, Performance Improvement, Supply Chain, S&OP, Distribution

FMCG CEO 2016 Letter to Santa Claus (aka Father Christmas)

Posted by Dave Jordan on Tue, Dec 20, 2016

FMCG/Brewing/Pharma CEO Letter to Santa ClausDear Santa,

I have been a very good FMCG CEO this year, I promise. If you want, you can check with my shareholders. They know how good I have been this year. Apart from the out of stocks of course, oh and the little mistake when we had to write stock off and waste lots of our money. But that is not so bad is it? Other CEOs were naughty last year and they still got what they wanted from you.

I had better be honest because you will know if I am not telling the truth. We also had a problem starting S&OP and so our planning, forecast accuracy and sales were not very good. They were not really big problems so I hope you can forget about them this time, please. Next year I promise to do better, I do, honest.

I forgot about the Route To Market (RTM) mess we had in the peak sales months but that really was not my fault. I also promise to do something about RTM next year and make sure it works properly so people who buy our products are not disappointed again. I know it is bad when people come to buy our products and then spend their money on something else. I will talk to our distributors and Enchange and find out what we need to do.

I know, I know, when the new ERP computer system was switched on we were not really ready for the change but we did make it better as fast as possible. I did not think we needed any outside help for the new IT but I admit I was wrong. Next time I will get it right, hopefully without having any lost sales.

The factory thing was not my fault, I think. The factory man promised me lots of product but his machines kept breaking down at the wrong times and we had to wait for the fixing men to arrive. They took ages to get the machines working again and then they broke down again and again. No, it is not a very reliable factory, yet.

Does the warehouse problem count against me as well? We could not find our products when we wanted them and then when we did find them they were old and out of date and of no use. This was very sad but it will not happen again next year, I hope.

I have just read my message again to make sure I did not spell any words wrong and I see I was not as good as I thought. Actually, after reading this I am going to the chimney to take my stocking down and put it away in the Christmas storage box. I will try again next year, Santa.

Bye bye and Happy Christmas.

CEO FMCG

Image credit: HikingArtist.com

Tags: Route to Market, Christmas, Logistics Service Provider, Dave Jordan, CEO, Humour, Performance Improvement, Traditional Trade, S&OP, Sales, Inventory Management & Stock Control