Supply Chain Blog

Demand a Culture of Route to Market Excellence Through Outstanding Leadership

Posted by Ross Marie on Tue, Mar 19, 2019

There are many things I have seen in over 20 years in the unbelievably exciting Fast-Moving Consumer Goods Business (FMCG). There are many things I can talk about and stories I can tell. But since I was first handed the keys to a van in 1998 to stock shelves in retail, right up until my most recent board presentation to the global CEO of a FTSE 100 FMCG company, one thing has always remained constant, Leadership drives Culture


culture-leadership-rtm-finalWhat FMCG Leaders say, what they do, how they do it, and how they live it, drives company culture. In other words, it drives what we do and how we do it around here. If we want to deliver real change and improvement in Route to Market (RtM) excellence, the senior management team, from the CEO down, must fully buy into and demonstrate that change.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. The 20 Steps are split into 4 phases, Assessment, Strategy, Design and Implementation. My goal in creating the 20 Steps, and in writing these supporting blogs, is to provide FMCG leaders with a methodology or framework that will allow them to review, transform or build their RtM capability is a structured manner, covering all elements of the RtM strategy.

Over the past number of months, we have gone through the first 19 steps of my model. The focus of this post is the final Step 20 – ‘Culture & Leadership’. When we review, transform or build RtM capability, the journey will not be linear. I say this because Step 20 will not be the last thing you do, but it will drive the entire process. For example, Step 1 Review RtM Performance, involves looking at all the current elements across your RtM, you might say it involves reviewing your existing 20 Steps, including Culture & Leadership.

Here are some examples of questions you can ask under Step 20 – Culture & Leadership:

  1. Before you start your RtM journey, what is the leadership platform that will drive success? Do we have the active support of the CEO, for example?
  2. To what extent are senior management at regional or global level supportive? Who will sponsor the changes that will be required? If we do not have senior management’s active support, to what extent will we be able to drive meaningful change?
  3. Based on the results of Step 19 Functional Integration, what are the functions and departments within the organisation that have been identified and mapped out as key elements of the RtM Strategy?
  4. Have these functions and departments been involved in the RtM strategy process thus far? For example, could we rank the department involvement from a level 10 (heavily involved) down to level zero (not yet engaged with)?
  5. Who are the key individual influencers within the organisation whose opinion carries weight across key departments or functions? Have these individuals been involved in the RtM process thus far? To what level has their involvement been?
  6. Who are the key external stakeholders, whether affected by the change or not, that need to be involved?
  7. Is there specific buy in or agreement that we need to get, in order to make and facilitate these changes? Will any of the changes have any political, legal or governmental consequences?
  8. What does our overall stakeholder map look like? Do we feel there are any gaps?
  9. What are the key messages that we need to deliver to the organisation? For example, why did we start this process? What was the need that drove the change? What changes have we made? Why did we make them?
  10. How will this new approach impact our employees, on their departments and on the company? How will this improve our current position? How will these improvements better equip us for the future?
  11. How will these changes help us to beat the competition? How will these changes better equip us to service our customers? How will these changes be seen by our other external stakeholders?
  12. How will these changes effect company departments traditionally not seen as sales or RtM focused? How do we engage and bring them along on our journey?
  13. How would we describe the current company culture? How do we do things around here?
  14. How big a cultural shift are we trying to make? Are we moving from an autocratic style of management where the “boss” tells people what to do, over to an empowerment centric culture where we want to see the RtM front line staff create and build new ideas? What does the size and nature of this shift mean?
  15. In what timescale are we looking to make these changes? Is this realistic?
  16. What are the essential behaviours we want to see in the organisation to make the new RtM approach successful?
  17. How do we ensure that we are getting the essential behaviours across the organisation to deliver on our RtM strategy?
  18. Does all of the company executive committee, management board, top team, management team, etc., understand the new RtM approach and the rational for change? In other words, has the Senior Management (CEO/Managing Director, and all direct reports) been brought through the entire process to ensure active advocacy?
  19. How will the Senior Management group show their support for the new RtM approach? Will there be a specific launch of the new approach? How will they be involved? What are follow up phases to this launch? How does the entire organisation see this advocacy and Leadership come to life?
  20. What is the overall change management plan to win the necessary stakeholder buy in to deliver RtM Excellence?

I would like to thank you very much for reading any or all of my blog series on the 20 Steps to Route to Market Excellence. I hope you find this useful, and any views and comments are most welcome. Although this is the final step in the framework, we will continue to discuss key RtM issues over the coming weeks and months.

Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: SKU, Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Communication, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Smash Your Route to Market Targets with Essential Training & Platforms to Capture and Share Success

Posted by Ross Marie on Fri, Feb 08, 2019

Welcome to my blog series on Route to Market (RtM), which includes Sales, TM&D (Trade Marketing & Distribution), in the Fast-Moving Consumer Goods (FMCG) sector. I have created a model called the 20 Steps to Route to Market Excellence.

rtm-training-upgreading-draft2The purpose of which is the provide FMCG leaders with a framework to develop, review and/or build their RtM capability. The model is not prescriptive but offers guidance around the areas that could be examined, and my blog posts should be used to stimulate ideas for each step.

Over the past number of months, we have gone through the first 17 steps of my model. The focus of this post is Step 18 ‘Training & Upgrading’.

Training in RtM means examining each area within the RtM strategy, or in this case, reviewing each Step in the 20 Steps to RtM Excellence Model, and detailing the exact training requirements, who requires training, who will deliver the training and when and how it will be delivered.

Upgrading refers to an approach to ensure Continuous Improvement and innovation across our RtM. It encourages new ideas and approaches to be developed, tested, captured, evaluated, rolled out and monitored across the RtM approach. We often refer to this process as NRD (New RtM Development). This is how we spread success and capture entrepreneurial flare, in the largest and even most structured organisations.

The aim is to give our people the tools and empower them in the most effective ways.

Here are some examples of questions you can ask under Step 18 – Training & Upgrading:

  1. What are the current training programmes already in place covering RtM? How many are internal training and how many are those that require an external trainer? To what extent have we identified any training gaps in the RtM space?
  2. Based on the previous Steps in the 20 Steps to RtM Excellence, what are the training requirements arising to support each step? For example, do we have the competency to conduct Distributor Assessments? If not, what are the training requirements here?
  3. We have an agreed approach to RtM, based on Step 5. As such what are the key areas that we feel will require training? Where are the major differences in approach that require the development of new competencies? What are the related training requirements?
  4. Who classified our retail universe? Did we do this internally or use an outsourced resource? How will this be maintained? What training is required to maximise its usage and to keep the outlet classifications up-to-date?
  5. How did we design our channel classification? What does each channel mean in terms of activities, call frequencies, investment, volume, targets, in other words what are the rules? What are the related training requirements that apply?
  6. What does our approach to territory planning mean for the entire RtM team? How does it impact on their roles? Is our approach to RtM target setting fully understood? Has it changed? What is our approach to Revenue Management? What are the TM&D budgetary controls and processes? What are the training requirements to all of these key issues?
  7. How do we currently train our field force? Do we use the ‘steps of the call’ method? Do our sales teams use technology in the field? Do they know how to maximise its use? What are the related training requirements?
  8. Is our approach to sales incentives fully understood? Have we made recent changes to the scheme? Does our RtM team understand our tool kits, how and when to use them? What are the training requirements here?
  9. How have our trade incentives changed? Do we use 3DPs and do our TM&D team understand how to maximise their benefits? Do they understand how to develop and run partnership programmes with distributors? What are the training needs here?
  10. How has our approach to Key Account Management (KAM) changed? How do we ensure our KAM approach is fully understood by the entire TM&D team? How do we approach negotiation training in KAM and the wider TM&D team?
  11. How do we roll out our NRD (New RtM Development) approach and how do we train the TM&D team? How do encourage, foster and achieve cross-functional integration?
  12. What mechanisms have we considered for training? For example, will all members of the RtM team be trained together? To what extent is individual training support needed? To what extent are the training and development needs of individuals identified as part of performance management? Is this routinely considered as part of performance appraisals? If not, why not? Will there be specific programmes designed for field force representatives and back office RtM staff?
  13. Who owns the RtM training process and related programmes? To what extent is it driven by Human Resources?
  14. To what extent is performance evaluation and related training and development needs part of the Organisation’s or Sales Department’s culture?
  15. Who will deliver the training? How will this vary across each of the steps? What are the internal training capabilities? Do we have resources that we can call on in our wider company, maybe at HQ or centre of excellence level? If we need to look external for training requirements, do the required skills exist locally in our market?
  16. What is the overall training plan covering each Step? What is the related training plan and schedule?
  17. What is the overall plan for the development and upgrading of skills related to RtM? What is our NRD (New RtM Development) approach?
  18. What are the rules of the NRD process?
  19. Do we currently have a process around empowering our TM&D team to develop new RtM ideas and solutions? If not, how do we introduce this new or redeveloped concept?
  20. How do we test new RtM ideas? What is the process for this? Where does the budget come from? How is this monitored?
  21. How do we define NRD success? Who determines this and upon which criteria it is based?
  22. What happens to the successful and performing NRD ideas? How are these rolled out? To what extent are they rolled out? Are they rolled out, for example, nationally, regionally, selected territories or channels?
  23. How do we measure results from the NRD roll-out? At what point does NRD become business as usual? Are there specific hurdle rates that need to be passed? Who determines this?
  24. What is our process for continuous monitoring and re-evaluation of rolled out NRD ideas?
  25. What is our overall approach and strategy for Upgrading/NRD?

I hope you find this useful, and any views and comments are most welcome.

Next, I will cover Step 19 ‘Functional Integration’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, Sales, Distribution, RTM Assessment Tool, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Improve Your Key Account Management Approach with these Vital Tips for Route to Market Success

Posted by Ross Marie on Thu, Jan 31, 2019

Key Account Management (KAM) is how Route to Market (RtM) leaders effectively and efficiently manage the relationship with specific and strategic customers, or customer groupings, to deliver on RtM targets.

 

key-account-management-rtm-3-webCustomers are classified as Key Accounts based on a variety of reasons. For example, it could be because they have a large numbers of retail outlets all branded under the one name. It could be that they operate several bars and restaurants, that are of key importance for delivering your RtM Targets. Your wider organisation may also mandate that specific global customers are treated in a certain way. There could also be dozens of market specific reasons why you might assign a customer(s) as a Key Account.

Regardless of why a customer is assigned to KAM, the important issue is, how they are managed, how the relationship is nourished, how their growth plans are implemented and how they are serviced across our organisation. The central element to KAM is relationship.

Success in KAM Management requires careful consideration, especially if you are either new to the concept of KAM, or if you feel your organisation is not doing it right.

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the first 16 steps of my model. The focus of this post is Step 17 ‘Key Account Management (KAM)’.

Here are some examples of questions you can ask when reviewing, developing or building your Key Account Management (KAM) department or approach:

  1. Based on the RtM Strategy chosen on Step 5 and the Channel Classification in Step 7, what is our desired approach to Key Account Management?
  2. On what basis do we determine that a customer falls into the KAM arena? Is this based on size, current performance, volume, uniformity, number of outlets, ownership of outlets, location of outlets, strategic importance, etc.?
  3. If the customer has a KAM classification in other markets that we or our parent company operate in, does that have a bearing on our local classification?
  4. Will we have different levels of KAM classification? For example, should we assign the label of ‘National Accounts’ to our larger national hypermarket retailers, who have a presence across our market? Or might we assign the label of ‘Key Accounts’ to some regional larger retailers who have multiple stores in one area of our market?
  5. Where does Channel Management fit into KAM? Will we classify our business or customers into Modern Trade and Traditional or General Trade? Will KAM sit into one or both of these channels?
  6. What proportion of our overall business is Key Accounts (as opposed to the Traditional or General Trade)? How to we expect this proportion to develop in the coming years? How will this shape our approach to KAM?
  7. Will there be a RtM manager who has overall responsibility for Key Accounts regardless of which Channel, Area or Region the Key Account is in?
  8. What might this RtM manager have responsibility for? For example, would they manage and be responsible for volume, display, product range, training, strategic approach, relationship, negotiation, reporting, targeting, budgets, etc.)?
  9. Based on our Competitor Analysis in Step 4, how does our competition view KAM? Are there any learnings for us in their approach, or does their approach change our own?
  10. Do we treat all Channels and/or Key Accounts in the same way? For example, will the distributors and cash and carry’s or wholesalers in one region of the country be managed differently than in another? Will this be reflected in the structure? Would the distributors in the North of country be managed by a Key Account Manager who reports to a RtM Manager with responsibility for the North?
  11. Are we clear about the types of individuals who will manage or become Key Account Managers? Do we have specific criteria? What is it? Have we properly weighted the importance of relationship building in looking at individuals?
  12. Where does Key Account Management sit in the organisation structure? What is the relationship between KAM and the RtM field force who potentially manage and call on the individual outlets? How is communication managed between the two? In practice, do they really talk to each other or limit themselves to mandated reporting and communication?
  13. Are we clear about the levels of importance of each channel or Key Account? Have we taken into account all RtM Targets, including strategic importance to us? Have we looked at this importance/power angle from the side of the customer? How important or necessary are we to them? How does this feed into negotiation?
  14. Do we have detailed Key Account Plans for each account? Does this clearly detail what our objectives and targets are for each account? Have we worked with the account in developing these? Have we worked with the internal stakeholders who will and can influence these? Do we simply want engagement with the account, or partnership, or preferred partnership, or exclusivity? Have we looked at previous years plans and taken learnings from them? Do we include what our individual account’s future plans or aspirations are?
  15. Do our Key Account Plans cover all areas of engagement between our two organisations, for example top to top meetings, Key Account reviews, wider RtM team interaction at customer level (e.g. retail or distributor), corporate entertainment/relationship building, order placement, deliveries, feedback on promotions, information sharing (e.g. sales/EPOS data), authority/empowerment, invoicing, seasonality factors, etc.?
  16. What is our approach to negotiating Key Account Agreements? When will they be negotiated? Who will be in the room from our side? Who has the authority to negotiate and to agree?
  17. What happens in the event of a stalemate or breakdown during Key Account agreement negotiation? What will the layers of escalation be? What is our approach to negotiation training?
  18. Do we have a full negotiation strategy per Key Account covering all elements of the agreement and estimated potential scenarios? Has this been agreed and signed off by all stakeholders?
  19. How are we currently rewarding or incentivising Key Accounts? What is the current reward mechanism, e.g. rebate, discount, payment etc.? Is it based on volume or revenue or profit or other RtM targets? What is the potential role of Third Degree Partnerships (3DPs) here?
  20. What role does margin play in our relationship with our Key Accounts? Do we have the control to set it? What are the internal and/or external factors that may affect our ability to set our pricing and margins?
  21. How do we manage and control Key Account investment? Who manages this? How do we determine levels of investment per Key Account?
  22. What payment terms do we operate across our RtM? How do payment terms fit into KAM? Do we have specific payment term targets, by account, by region, by channel, by customer? Do we have the mechanisms in place to facilitate the different forms of electronic payment? Do we have minimum acceptable payment standards? What is our overall approach to payment terms in relation to KAM?
  23. Which of our Channels and Key Accounts are growing? Which are declining? How is this reflected in our overall strategic and individual approach to KAM?
  24. How do we capture learnings across KAM? Do we have a process for capturing success in one account and replicating it in another?
  25. What is our overall approach to KAM? What is our implementation plan for rolling this out?

I hope you find this useful, and any views and comments are most welcome.

Next, I will cover Step 18 ‘Training & Upgrading’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

Tags: Customer service, SKU, Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, S&OP, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Compliance, Information, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Form Lasting Alliances with Key FMCG Customers at Almost Zero Cost, How? - Third Degree Partnerships (3DPs)

Posted by Ross Marie on Mon, Jan 28, 2019

Welcome to my blog series on the 20 Steps to Route to Market Excellence model. Over the past number of months, we have gone through the detail of the first 15 steps of my model. The focus of this post is Step 16 ‘Third Degree Partnerships (3DPs)’.

Step 16 represents a different concept and approach to motivating your customers to want to deliver on your targets. I hope it is helpful, and I welcome any feedback. So, what are Third Degree Partnerships (3DPs)?

incentives for fmcg customers with third degree partnerships in rtm

Third Degree Partnerships (3DPs) are where a Fast-Moving Consumer Goods (FMCG) company identifies its customers key issues, costs or constraints, and then forms a partnership with a service provider who can solve them for the customer, at a significantly reduced cost.

The benefit for the customer is access to cheaper services. The benefit for the service provider is access to more customers. The benefit for the FMCG company is the ability to use the provision of a 3DP service as if it was a trading term or key account payment to the customer, with almost zero cost.

In short, we identify our customers key issues, we then identify a service provider who can solve them, and we use our size and clout (maybe even our global reach?) to negotiate a much-improved price or access to the service for our customers. We then decide what we want in return for providing our customers with access to this 3DP club.

What would we want in return? Examples include, product listings, exclusivity of some form, increased product range, pricing or other promotions, improved display, minimum volume targets, brand dialogue, use of a new distributor, access to a territory, etc.

Why would you use 3DPs instead of a cash payment or discount? Several potential reasons. For example, maybe you have significant pressure on Route to Market (RtM) budgets and need to spend less in the key account or customer payments area. Maybe you need access to a new strategic channel and the costs of entry would eliminate profitability. Maybe you are facing pressure and need to boost sales but have no budget for promotions. Maybe you are facing significant competition and need a fresh approach to work with certain customers.

Think of 3DPs as a type of rewards club for our customers. They may require time to set up but have little associated cost for us as FMCG leaders, provided we do the ground work.

Here are some examples of questions you can ask under Step 16 ‘Third Degree Partnerships (3DPs)’:

  1. Based on the Channel Classification in Step 7, what are the different segments of customers in our market?
  2. Looking at each customer segment, which are the most appropriate or suitable for 3DPs? Where will 3DPs have the most potential value or be the most valued?
  3. Would there be a greater applicability in the less organised General Trade versus the more organised Modern Trade, for example?
  4. Do we feel providing our Horeca owners with access to reduced cost services will be as beneficial as providing reduced cost services to international retailers?
  5. Could the customers in question get access to these reduced cost services themselves? If so, why have they not done so? Is there still a value in these services?
  6. Is there any specific channel in which we are under-performing? What are the reasons for this? What are the defining characteristics of the channel? Could a 3DP help us here?
  7. Have we included and looked at the specific geographic issues, challenges and nuances within our specific market, to map out our local customers’ challenges? For example, the islands of Indonesia, the congestion in Bangkok, the vast geography of African countries, the severe temperatures in Russia, to name a few?
  8. Considering each customer segment, what are the customers’ key issues, costs or constraints? In other words, what are the problems our customers are facing for which we could provide solutions?
  9. Looking at each of these key issues, costs or constraints, can we identify service providers who can solve these?
  10. Are these potential service providers local to the market? Is there a potential for us to bring in external suppliers to the market? Would we want to do that? Does that create more issues for us in setting up the 3DP or does it make the 3DP more powerful?
  11. Can bringing in external service providers as part of a 3DP create barriers to entry for our competition and barriers to exit from the 3DP for our customers?
  12. Are there particular services that we, as an FMCG company, benefit from, that we can in turn provide to our customers through 3DPs? Can we use our size and scale to negotiate a package or price and offer access to our customers in return for something?
  13. What services might we offer as a 3DP? For more inspiration, download our Implementing Third Degree Partnerships (3DPs) in Route to Market Guide here.
  14. Have we prioritised the potential services that we may offer as part of our 3DPs? Have we ensured that the 3DP programme will not reduce focus from achieving our RtM targets but instead assist with them?
  15. Have we looked at why we would use a 3DP instead of another incentive? Have we detailed what we would ask for in return for access to a 3DP?
  16. How will the 3DP programme be managed? Will key accounts manage the programme? Will we require additional resources in the RtM function to do this? Must this be done on a national level or will we allow regional implementation?
  17. Have we involved our legal colleagues in the contracting process to make sure there is no exposure for us from the services provided by the service provider(s)?
  18. Have we conducted a risk assessment to look at any specific local or other issues that may affect the 3DP programme?
  19. Taking all the above into account, what would the overall 3DP programme look like?

I hope you find this useful, and as I said, views and comments are most welcome.

Next, I will cover Step 17 ‘Key Account Management (KAM)’. Please subscribe to the blog on this page, to ensure you don’t miss the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps click here.

 

3rd degree partnership download

 

Tags: Brewing & Beverages, FMCG, Route to Market, Performance Improvement, Traditional Trade, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Doing Business in Africa, Communication, Retail, RTM, Promotions, Ross Marie, RtM Strategy, 20 Steps to RtM Excellence

Distributor Assessment Essentials to Deliver Sales Growth and Improve RtM Strategy

Posted by Ross Marie on Fri, Oct 12, 2018

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

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

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

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

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

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

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

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

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

Improve Manufacturing Performance with Total Productive Maintenance

Posted by Dave Jordan on Thu, Aug 23, 2018

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

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

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

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

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

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

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

Image credit: corbindavenport.blogspot.co.uk

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

FMCG & Pharma: Top 10 Tips for a Tip Top Supply Chain

Posted by Dave Jordan on Mon, Jul 16, 2018

Only a few months into the year and I am hearing the same old complaints about the economy and business being in general ill health. However, there is a new recurring theme which popped up at various parties and gatherings over Easter; “my company doesn't seem to do anything different and just hopes business will improve”. Not going to happen, no way!

FMCG_PHARMA_SUPPLY_CHAIN_TIPSCertainly learning by your mistakes is a powerful message but banging your head against a brick wall for a number years is a rather pointless and painful experience and reflects dire leadership. Those companies that identify failings and shortcomings in their supply chain AND do something about them will be best prepared to beat the competition.

Based on client feedback and impact analysis of “before and after” performance I list our top 10 tips to tip top Supply Chain performance. 

  1. Route To Market – Has the march of the International Key Accounts stalled? Traditional Trade Distributors may still be a large chunk of your business and they are capable of scratching out growth but only if you support them. Give your RTM a thorough service and your Distributors will serve you better.
  2. Sales & Operational Planning - If this is in place and working well, great but there is no doubt you could improve it. If there is no S&OP you should use it! If you are not yet a believer of S&OP check out “What has S&OP ever done for us?".
  3. Reduced Inventory – Why not give your sales a boost with some unexpected and low cost support using stock that will be otherwise written off? I detect numerous companies “encouraged” stock into the trade for year end and only the residual stock disposal companies will benefit if stock gets too close to expiry.
  4. SKU Complexity – When did you last study your complexity? Do you have any idea what complexity is doing to your business? Understand your sku complexity and check if it appropriate for your business.
  5. Improved Customer Service – A number of major global companies still do not measure CS to any degree of accuracy or honesty.  Companies that fool themselves on Customer Service rarely succeed.
  6. Proactive 3PLP’s – Are they meeting the agreed KPI’s? If they are then perhaps you need to review them and revise targets upwards, again and again.
  7. Sales & Marketing Buy-in – This is still a problem, I fear. If only everyone in your company was aligned to the same volume/value plan and 100% mutually supportive. Think what sort of competitive edge that would provide.
  8. Use the ERP - Avoid uncontrolled spreadsheets like the plague! They undermine your business and waste time and effort. If you are considering a fresh implementation of an ERP then chose a partner with experience in the field. I mean real operational experience and not bought-in fresh out of university, suited “experts”.
  9. Continuously Improve – If you are in the same position in 12 months time then you will be dropping towards the back of the pack and will be ill equipped to compete. Keep innovating and improving your Supply Chain.
  10. Supply Chain Awareness – A very important tip top number 10. There is more to supply chain than trucks and sheds - for the uninitiated this is what Supply Chain is all about.

Check out the top 5 as a priority and then seek an expert partner to lead you through the process of change in the next 5. Don’t be in the same position this time next year; do something!

Image courtesy of Stuart Miles at freedigitalphotos.net

Tags: FMCG, Route to Market, Logistics Service Provider, Dave Jordan, CEO, Performance Improvement, Pharma, KPI, Traditional Trade, S&OP, Cost Reduction

Manage Supply Chain Expectations with Service Level Agreements (SLA)

Posted by Dave Jordan on Wed, Jul 11, 2018

If you do not specifically agree on what is expected between two parties before you start a relationship then anything and everything but success is likely.

You buy a new car and you get a contract that tells you what is covered by the guarantee and for how long in time or in distance travelled. From your side you will be expected to pay the same people to periodically maintain the equipment at peak condition.

Travelling by air? You buy a ticket to Bucuresti and you know when and where it will take off and hopefully land you and how much baggage you can take. There are rules in place for delayed take off and excess and lost baggage. You might not like these rules but that is what you have agreed to by investing in the ticket. (Before you say it, I know certain airlines stretch the boundaries here yet people still fly on them!)

Service Level Agreement resized 600While it may not be as popular as it used to be, marriage is still perhaps the most widely used Service Level Agreement (SLA) in the world. The names of the two parties are made very clear to a number of witnesses and depending on your brand of religion there follows a list of statements you have to agree to or the marriage ceremony does not continue. You even get a certificate which is in effect a contract or your SLA. Of course, this does not go down the detail of who does the washing up or who gets up at 3am to feed the baby but it does set out clear expectations.

Should the husband run off with the woman for the chip shop then a divorce is highly likely. Think of the arguments about who gets to keep Eric the hamster if there is a parting of ways. Alternatively, you could use one of those “pre-nuptial” agreements favoured by plastic Hollywood-types who think a long relationship is several months in their world so far away from reality.

In all cases, it reflects “you scratch my back and I scratch yours” or sometimes “you stab me in the back and I take you to court”.

Despite SLAs being a vital part of daily lives why do FMCG. Brewing, Pharmaceutical companies fail to have the same in place for their suppliers, IKA/TT customers and internal departments within the S&OP framework? Such an approach holds people accountable for the service they provide and at the same time making the penalties clear in the event of failure.

SLAs do not have to be a lengthy tome of text but should contain enough information for both parties to be 100% clear about what is expected from the relationship. Include some relevant and why not stretching KPIs and you have the basis of a relationship that may flourish rather than end up in the divorce courts.

No relationship in business or in private life is perfect but why not start out by writing down what level of service you expect to provide to each other?

 

Tags: FMCG, Route to Market, Logistics Service Provider, Dave Jordan, Performance Improvement, Supply Chain, CEE, Traditional Trade, Logistics Management

FMCG New Product Development (NPD) is a key part of S&OP

Posted by Dave Jordan on Mon, Jun 25, 2018

There is enough disruption and discontinuity in supply chains without the necessary evil or pleasure of new product development (NPD) and product change getting in the way.

Just when everyone has become used to ordering, storing, picking, delivering or merchandising that pretty blue bottle with the picture of a carrot on the adhesive label, someone decides it is a good idea to relaunch the brand/SKU or replace the label with a shiny shrink-wrap label featuring a spud. The vegetables of choice are irrelevant as I just did not want to highlight any particular sector but no doubt the farmers will be up in muddy arms.

If your business operates a classic innovation funnel then well done to you. However, if you do not run one at all or you do and it is not linked to S&OP then you run the risk of:

  1. Out of Stock (OOS) and real lost sales
  2. Poor Customer Service.
  3. Overstocked inventory
  4. Write off and destruction costs
  5. Losing your job.......

The funnel is not rocket science although the people at the Brand Gym reckon an “innovation rocket” is far more effective for growth. The funnel can be depicted in many ways but all are very simple, e.g.

Integrate NPD with S&OP

At each decision gate the relevant NPD leader must feed information into the S&OP process to avoid the 5 pitfalls listed above. Existing stocks can be run down in a controlled manner and new stocks ramped up to ensure continuity and more importantly, correspond to any breaking TV or other advertising campaign. Is there a bigger waste of marketing budget than appearing on TV when the product is not yet ready for consumers to buy?

Inevitably there may be write off when you relaunch or make a product change but as long as you co-ordinate within your S&OP process these amounts can be minimal and manageable. What the CEO does not want is an unexpected cash loss from write off appearing in the results unexpectedly. Marketing might well claim a successful launch but the profitability could be shot to bits and actually be negative once obsolescence costs are allocated.

Depending on your accounting convention the cost of write off will end up in “supply support” or “supply chain others” when in fact the funds should be deducted from the fat marketing budget. If marketing people do not manage the innovation or change process closely then they should feel some of the pain. Far too often they crack open the celebratory bubbly while causing problems in other departments and for the company in general.

Change is inevitable and supply chains have to continually manage change as it will not and should not go away. However, wouldn’t it be a refreshing change if marketing fully bought into S&OP?

 

Tags: FMCG, Dave Jordan, CEO, Performance Improvement, S&OP, Forecasting & Demand Planning

FMCG Supply Chain: KPI Scorecards - Don’t look back in anger

Posted by Dave Jordan on Wed, May 30, 2018

UK has been my base for a few days and even in that short time I have started to genuinely think I must now be a different nationality if not from a different planet. When my denim jeans rip at the knees it is time to throw them out.  I do not have a badly drawn and inappropriately placed tattoo. Nothing on me is pierced or decorated with metal, precious or otherwise.

I do not have a preference for Ant or Dec – the “best” UK double act in a sea of tepid TV reality dross? What is Keith Lemon all about? So many TV channels yet so little talent and even less TV shows worth watching. I put litter in waste bins. I still know how to queue. Even my waistline is now considered trim. I own music recordings where the performers wrote the lyrics and play the instruments and don’t get me started on that things like the Kardashians. 

Nevertheless, there is something consistent. Something that has not noticeably changed since I packed my company leaving gift suitcases in 1991 and departed for the Saudi desert. Traffic Wardens.

FMCG_KPI_SCORECARD_SUPPLY_CHAIN.jpgBeing a Traffic Warden is a universally hated career choice and possibly third on the detest list after Tax Inspectors and Bankers these days with Politicians being universally disliked, of course. In the UK wardens patrol the streets looking for vehicles illegally parked even for a short time or even if the front bumper/fender overlaps the authoritative  yellow lines by a few mm.

Why do they exist; the role that is, not the people? What good are they doing for the general public and the fuel duty/road tax cash-cow motorist? Are they here to keep the Queen’s highways, byways and pavements clear of transportation obstacles to allow free flow of vehicles, people and prams? Or, are they here to generate as much revenue as possible for councils and police authorities?

Is their role to gently correct errors, show understanding and guide people on their future behaviour or are they here to discipline, penalise, visually allocate blame with a sticky yellow ticket and generally strike fear and hate into drivers? Should people hide and shy away from traffic wardens and treat them with mistrust or should they be seen as a welcome, integral part of day to day UK living.

Friend or foe? Beauty or beast? Pariah or paragon? 

So what does your Supply Chain team think about your monthly KPI Scorecard discussions within your IBP/S&OP process? Is it a meeting all about blame and backwards looking fault finding and discipline? Or is it what it should be, an open discussion about what needs to be done better by everyone in the current and coming periods?

You certainly must learn the lessons of past shortcomings but applying the learnings to the future is a far more positive and healthy experience for everyone. Supply Chain Analytics can assist you in reaching a much more mature approach to running your business effectively and without people being at each others throats.

Applying a “…don’t look back in anger” approach will lead you and the business to a much more profitable oasis within the market place.

Image courtesy of iosphere at freedigitalphotos.net

 

Tags: FMCG, Dave Jordan, Performance Improvement, KPI, S&OP, Supply Chain Analytics, IBP