Supply Chain Blog

SC and Sales senior team squabbles: Always bad for business

Posted by Dave Jordan on Thu, Jul 05, 2018

Another sign of getting old I guess. When was the last time you watched a football match when no tattoos were on show and the haircuts did not look like something out of the Time Warp musical? As I write England is still involved yet we are all waiting for the inevitable elimination on penalties. At least it won’t be to Germany this time – what rotten bad luck boys!

sales-supply-chain-disagreementIn other news I see The Donald and Kim Jong-un have finally met face to face after a great deal of public bitchiness. That must have been the bad hair day to end all bad hair days; an orange bird’s nest and something that looks like a greasy black croissant. Funny, after so much apparent dislike that these 2 diverse characters actually seem to get on well with each other, in public at least. Even if you don’t like someone you may still have to do business with them and that can be difficult.

The bird’s nest-croissant situation reminded me of many FMCG and Pharmaceutical companies where the Sales and Supply Chain Directors do not co-operate very well. Commonly they fail to see that doing business is just that and difficult discussions and criticism is not personal. However, when relationships break down (or don’t even start) you find that precious time is spent trying to prove the other party wrong.

While the focus should be on beating your competition, you may find that 2 of your key operational directors are motivated in a very different direction. You can hear your competitors laughing as the in-fighting worsens and the conflict cascades down the business to those operating at lower levels. Decisions are being made in order to trick or trip the other department and ensure KPIs are missed and fingers can be pointed. What a complete waste of time, effort and experience!

Such behaviour has to be tackled head-on and it needs the Chairman or CEO to bang heads together and quickly. From a leadership perspective it is vital that the CEO does not appear to take sides or knee-jerk react to information received.

One of the frequent causes of Sales-SC conflict is a poor alignment of Key Performance Indicators. When setting KPIs for the senior team it is important to ensure that a few principles are observed:

  1. Some KPIs must be shared. If a bonus relies on performance of some common KPIs then you are more likely to put the personal stuff aside and do what is best for the business. Stop allocating silo based KPIs.
  2. KPIs should be equally stretching. Any imbalance will surely lead to a bitter and twisted relationship for all involved.
  3. Share out the recognition. Sales tend to be seen as the in-market heroes yet everyone else in the company is working to support that success. If the quarter has gone well, congratulate everybody.

If the Presidents of USA and North Korea can get along despite many, many differences in style and opinion then surely there is hope for your Sales and Supply Chain Directors.

Image courtesy of Ben Schonewille at freedigitalphotos.net.

 

Tags: Dave Jordan, CEO, KPI, Supply Chain, Sales

FMCG S&OP: Who is the stooge in your process?

Posted by Dave Jordan on Mon, Jul 02, 2018

Laurel and Hardy, Morecambe and Wise, Abbott and Costello, Little and Large, Hale and Pace, May and Johnson. These are examples of double acts where one party plays the straight/stooge and apparently serious man while the other plays the fool/jester. I admit I am not too sure who is who in the last example.

Having suffered 2 weeks of UK television recently it was difficult not to see the latest popular double act of Ant and Dec popping up at frequent intervals (mostly Dec in the medium term though!). My jury is out on these two as they appear to be part of a UK TV talent vacuum glibly presided over by a man who looks like a dark-haired Max Headroom – youngsters, Google it. I always thought Simon Cowell was that nice bloke who rescues badgers from drains in Surrey but there are 2 of them!

S&OP Success Through TeamworkAnyway, the point is that these performers work through their contrast in styles and the way each party plays off the other to score points and generate laughs. For some reason the first name in the act title is usually the funny or less serious partner who generates the gags and generally puts down the straight partner. This notation is also consistent with Sales & Operational Planning with OP being the collective remainder of your FMCG, Brewing or Pharma business.

Why do so few Sales people – at any level of seniority – get S&OP? In fact do any Sales people really get S&OP and recognise the process as one for common good in a company? If only there was a way of replacing sales bonuses with cross-discipline, volume/value bonuses. While the straight man of the team endeavours to supply on time in full against the forecast the joker waits until the last few days of the month to sell anything including his granny to make the required number and secure a bonus. And thus, the monthly cycle repeats again, and again, and again.

If you pump too much unwanted inventory (done pretend its sales) into the market sooner or later you will need to destock your distributors and/or International Key Accounts (IKA). Distributors have always been ripe for a bit of extra loading here and there to manipulate the sales figures but do not fool yourself this does not happen with IKA. It does and with the modern power of IKA accounts you might find yourself with a very unwelcome stock return and a difficult to refuse request for compensation and refund.

Frequently, when things go wrong in the market place the Sales people will chirp up with something like “that’s another nice mess you’ve gotten me into” as a prelude to their Teflon blame-storming. S&OP requires a team effort to succeed as a process which will lead to better performance in the market place. No planning or forecasting process is ever perfect but a little more diligence and team playing from the funny man would bring immediate and lasting results.

 

Tags: FMCG, Dave Jordan, Humour, Supply Chain, CEE, S&OP, Forecasting & Demand Planning, Sales

Your FMCG Supply Chain: The end of January is nigh!

Posted by Dave Jordan on Wed, Jan 24, 2018

Where has that first post-holiday month gone? Suddenly it’s the 24th of January and there are only 7 calendar days and 5 working days until you close the month. Adopt panic stations despite what Corporal Jones of Dad’s Army would say.

Are you ahead of the required run rate or are you suffering the usual FMCG malaise of looking to push stock into the trade in the last few days? After all, nobody at HQ likes missing the first period target of the year, do they? I’d guess you have about 60% of your turnover complete which leaves you with 40% to plan, make, deliver and most importantly, invoice in those last 5 business days.

The chaos this causes to supply chains is rarely fully understood in other disciplines. This is what month end loading does and this list is not exclusive. Selling stock that is not actually required in the market only because you need to generate turnover and profit…….

  1. Blocks up warehouses AND wallets for the next period.
  2. Overloads capacity in warehouses as high levels of stock try to get in and out at the same time and often through the same doors.
  3. Raises costs as transport availability is stretched and prices are at a premium. (You know who is loading the trade when the truck queue snakes around the warehouse late into the evening!)
  4. Distorts demand signals for sold SKUs not in the plan.
  5. Creates huge pressure and long hours for the supply chain team and 3PLPs.
  6. Disrupts promotional planning due to stock not being available for co-packing.
  7. Causes inevitable errors in picking, packing and invoicing due to excess volume against a ticking clock.

….and then a very, very quiet first week of the succeeding month.

Nobody expects you to achieve 4-6% of monthly sales on each working day; life is not like that. Everyone along the supply chain including customers and consumers have cash flow and space constraints as well as competitive pressures but over loading the last week of the month must stop. Blindly loading stock to meet numbers is an unsustainable practise and against corporate codes of business principles. Add this to the disruptive chaos caused and there is no doubt it is negatively impacting your long-term business aspirations.

FMCG_S&OP_SALES_LOADING_TRADE.jpgIf trade loading is a problem, then you just have to bite the bullet and take a hit in the month and why not in January to continue the rest of the year as you mean to go on? Of course, you will not win the corporate monthly sales award but stopping the routine of heavy loading in the last week of the month will put you on a far more secure and reliable footing both in terms of market performance and reputation.

You need to take steps to erradicte this behaviour but your pain can be minimised by…..

  1. Running a genuine S&OP process, which is visibly led from the top team.
  2. Encouraging staff to pass actionable information throughout the business and avoid data bombing the next functional silo. Stop trying to prove others wrong; prove them right!
  3. Being brutally honest as it’s always the best policy. It’s business, not personal.

We are in the final week of the month, what lengths will you go to in order to reach the monthly target? Think very, very carefully.

Image courtesy of vectorolie at freedigitalphotos.net

Tags: FMCG, Dave Jordan, S&OP, Forecasting & Demand Planning, Sales, Inventory Management & Stock Control

FMCG Supply Chain: What is your 2018 Planning Priority?

Posted by Dave Jordan on Wed, Jan 17, 2018

We already find ourselves at 17th January so not many days left to ensure your monthly top and bottom lines are on target. Good luck with that if your business (& body!) is only just shaking off the holiday excesses. What is top of mind? The sagging month to date sales rate? The slow return to normal of the S&OP meeting schedule? The upcoming corporate audit? No. Top of mind is where to go on your summer holidays and to get this booked as soon as possible.

Get your holiday slot booked at the office and make sure you sync with school holidays and soon you will be surfing the internet checking out all the best deals. Flight only or hotel included? What about airport transfers? Do we go with full service airlines or suffer the middle of the night, cattle-class treatment on a low-cost flyer? Long term car parking at the airport? Oh, look at the kids go free offers – no I don’t believe it either; nobody gets a holiday for free, well except possibly Mrs Queen and free-loading MPs.

You may even create a dreaded Excel spreadsheet listing potential destinations and a matrix of all the travel options and applicable costs. Carefully you will fine tune the list until you really have found the best deal with the most convenient and least expensive travel. After the briefest of discussions with the rest of the family the bookings will be done and dusted well before the end of January. What a personal masterclass in forward planning!

FMCG_ACTIVITY_PLANNING_SALES_WINE.jpgYet you still have no idea on your FMCG acivity plans for the next 6 months let alone a much longer horizon. If you left your holiday plans to the last minute you would probably struggle to find something decent. Yes, if you are single or a couple minus mini debt creators then you can just turn up at the airport and see what seats are available and take it from there. You may well be sleeping on a beach or in a hostel where there are more joints than an orthopaedic ward and the only pillows are inflated wine box bladders but so what, you will cope. However, with small people in tow that last minute gambling option will rarely be entirely appropriate.

Back to your activity planning or lack of it. Some of your major in-market initiatives will be annual events around Spring Cleaning or Easter or a seasonal weather peak so being late with those is unforgiveable as they should be fixtures in your rolling plan. Other promotions will be tactical or at short notice due to market dynamics such as competitor activity or price increases (prices rarely drop do they?). Nevertheless, most of your activity planning for the next 12 months should be firm with a further 12 months of tentative plans which firm up as the S&OP process passes through each month.

Short notice opportunities are ok if you can manage the same without affecting those that have been carefully planned. Marketeers may demand a special promotion to take account of some topical and usually scandalous news or about the latest air-head to emerge from the Big Brother house. If you can, so be it but let these impact on the ones that really matter at your peril. Topical opportunistic activities will probably be sexy and raise a guffaw, but seldom do they contribute much to your top and bottom lines and they don’t impress the suits at HQ.

People outside of supply chain somehow think that promotions and special offers magically appear outside of all the usual planning processes. They don’t. If you stick in a last-minute giggle promotion, then be very sure you are disrupting regular day to day activities about which you will no doubt complain.

You should try inflated wine box bladders; great for camping!

Image courtesy of recyclethis.co.uk

Tags: FMCG, S&OP, Forecasting & Demand Planning, Sales, promotions

Your FMCG Supply Chain in 2018: 5 Problematic Predictions

Posted by Dave Jordan on Wed, Jan 10, 2018

Chris Rea has finally found the correct turn off, a lot of people in Africa still don’t know its Christmas and the novelty Santa toilet seat cover is back in the box. Oh, and chocolate Easter eggs are in the shops 4 months in advance. Christmas and the New Year holidays are well and truly over, and the clock is already ticking down on the month of January.

FMCG_PLANNING_S&OP_INVENTORY.jpgAs I type it is the 10th of January, so you have 15 working days left to get your year off to a flying start. And once January has gone and the short month of February flies by you will be well into the 1st quarter. Time is already running out so do you know your supply chain priorities for 2018?

Here I make 5 predictions on what will happen with your FMCG supply chain this year:

SKU Complexity

The one in/one out policy for new SKU introduction will be overridden by sales and marketing plans that overestimate the benefit of additional SKUs. Despite the usual guarantees and commitments, you will end the year with far more complexity than you started. You will retain the same number of key SKUs that account for 80% of your business but maintaina rat’s tail of SKUswhich contribute little to turnover and profit.

Inventory

Your inventory cover will remain high as demand planners knee-jerk stock build as they do not understand which specific SKUs are driving the excess. You will set stock reduction targets by shaving the number of days cover and while this may allow you to tick a KPI box it does not remove the underlying causes. You belatedly consider some clever supply chain analytics to see past the one-dimensional limitations of ERP functionality.

Spring/Easter/Ramadan Campaigns

Preparations will be last minute as deadlines for receipt of artwork are missed despite the supposed rigours of the NPD and SAP processes. Agreed volumes will be eventually be shipped only to sit on the shelves after the target period causing a knock-on detrimental effect to subsequent promotional schedules and regular demand. Your target for reduction of write-offs and waste will not be achieved and by some distance.

Sales Peaking

All your best efforts to avoid selling huge amounts of product in the final week of the month fall on deaf and dumb ears. The business continues to struggle as insufficient resources are available at month end to manage the sales push. Despite the source of the problem the sales team bleat on about lost sales when they actually mean lost bonuses.

S&OP

This should be the most important process in the business, but it isn’t working and you know it! In companies where all departments fully buy-in to the success of the process, the in-market results are stunning. Despite spending a fortune of the ERP your staff operate the business in a series of silo based, underground Excel spreadsheets which are littered with cell errors and inconsistencies. Business results are reported in the ERP but this is not a true reflection of how processes are applied.

Perhaps that is an imperfect storm on what may happen within your supply chain, but one thing is certain. If you do not do something different to what you did last year, then you are looking at best at flat results rather than a fat bonus.

A happy new year to you and your supply chain!

Image courtesy of Aimee Jordan at AimeeJordan.co.uk

Tags: FMCG, S&OP, Forecasting & Demand Planning, Sales, Inventory Management & Stock Control

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

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

FMCG Route To Market Challenges; Learn from IKEA

Posted by Dave Jordan on Sun, Nov 19, 2017

There is no excuse in visiting IKEA on a Sunday before watching 22 millionaires with daft hair styles kick a football around on live telly. The weather was cold and the air was full of autumn drizzle and as I turned into the car park the scale of the folly dawned on me; the IKEA car park was bursting at the seams. Cars were on pavements, on grass verges and on the approach road; grim.

There were entire extended families pouring out of cars and into the store. In parallel,   equal numbers were exiting before trying to squash brown flat-packs of “destroy it yourself” furniture and fittings called Grult, Splad and Twong into and onto impossibly small cars.

What do these people do when they have removed all the air from their cars? Do they give granny and granddad a few coins to take the bus home? There is no way you can fit all the people and the flat-pack must-haves into some of these cars.  Maybe that is why IKEA provides free rope on the loading bay; it is to strap the unfortunate grandparents onto the roof of the car.

Oh well, here now so might as well join the hoards of people unable to control a shopping trolley; absolutely no sense of direction and with variable but low levels of short-term memory. I hooked a yellow bag over my shoulder, picked up a pencil and I too became a zombified IKEA shopper!

I know there is a science to store layout design whether it is a Tesco supermarket, a Hornbach DIY store or an M&S type outlet. The store owner wants everyone to see everything at least once and they want exposure to be just at the right time when for example, the shopper has been subliminally convinced that the bright pink Plobo stool would look really nice in their kitchen (believe me it won't).

Ikea Shop Floor FlowOh, but the chaos this causes in an IKEA store! Being a supply chain type I would make the whole store strictly one-way with shoppers not permitted to double-back to soft furnishings or for a forgotten low energy light bulb. In fact, if I had my way I would make the floors with a defined downhill gradient and ensure trolley wheels were oiled hourly to help people on their way, through the broken furniture bargain section, past the cheap fast food and out into the car park. What about a small battery pack on each trolley which delivered a persuasive electric tingle if you tried to push the trolley against the traffic? Too extreme, possibly?

Think of all the wasted hours and effort of moving all the way through the store then insisting on reversing the entire route and getting in the way of everybody else. Then came my eureka moment. I realised where I had seen this behaviours before and why I perversely enjoyed dodging the trolleys in the IKEA maze.

This is precisely what many FMCG, Brewing and Pharmaceutical companies suffer in their Route to Market distribution planning every single day. Wasted miles, wasted fuel, wasted hours and in all that time there are customers not being serviced.

RTM Assessment toolIf your sales are struggling along towards the end of the year and the stream of excuses for gaps appears endless, you might take a close look at how much time your sales people spend travelling to, selling to and guiding distributors. If your sales team has adopted the IKEA system logic then you have just spotted a huge opportunity to improve your Route to Market (RTM)performance.

Get out from behind the desk and have a closer look. Get some IKEA rope, tie yourself to the roof a salesman's car and see where some simple experience, thought and logic can significantly add to your bottom line. 

Too busy to ease yourself out of that IKEA chair? Then seek out some professional resource to take a cold hard look at how you operate RtM in the traditional trade.

IKEA image courtesy of A littleSprite 

Tags: Route to Market, Interim Management, Dave Jordan, Supply Chain, Traditional Trade, Sales, Distribution, RTM Assessment Tool

FMCG SKU Proliferation: You DON'T need lost sales in Q4

Posted by Dave Jordan on Mon, Nov 13, 2017
Extra SKUs sneak onto price lists when nobody is looking. Sales & Marketing colleagues prefer new launches with lengthy SKU lists different flavours, different sizes, different colours, new packaging etc. How many shelf facings do they want? How do these decisions get through S&OP meetings? (You do run an S&OP process, don't you?)

Do you know this SKU proliferation is likely to affect your customer service? Rather than delighting more and more customers you maybe disappointing them and wasting countless Euros at the same time. Introducing an SKU is a cross business decision, or should be! When considering new SKU introduction at your next Board or S&OP meeting then the supply chain people should ask some testing questions.

Cost per SKU. Have you ever sat down with your Management Accountant and calculated how much it costs to have an SKU on your price list? Sales staff will bemoan the rising listing fees but in reality the cost of an SKU is much, much more. Including, e.g.

  • An employee must spend time buying the different label, dyestuff, cap, box, etc.
  • The new raw material/packaging must be stored in a warehouse.
  • Someone must call it off at the factory.
  • The factory must schedule and make the SKU.
  • The finished product is stored in a warehouse.
  • Someone at the operating company must plan the SKU.
  • Transport into and ex-factory.
  • Transport to Distributor or Retailer etc, etc

All of these activities and many, many more ensure that the cost of having an SKU on the books is significant. In a very rough rule of thumb the cost of having any 1 SKU on the books of a medium-sized company is typically 30,000 Euros per annum.

Factory complexity. Time is money in factories as they try and make their assets sweat and get as much out of the gate as fast and cheaply as possible. Each colour or perfume change or label or pack size adjustment stops the production line and steals valuable time which you cannot recover.

Logistics. Each individual SKU requires a dedicated pallet or rack or bin location. The more SKUs you have the more money you are paying for space. When you have 16 variants of the same shampoo pack size you can understand why picking errors occur, lowering your customer service and causing lost sales.

Interim_Management_FMCG_Dave_Jordan_SKU_Complexity.jpgPlanning. At year-end low value SKUs really drag your business down as resources are applied to plan and deliver SKUs to market which may increase your volume number but not your profit line. Your scarce resource should be focussed on delivering those SKUs that make a real difference to profit rather than spending time on low value/slow moving SKUs which may actually have to be written off in the long term.

SKU rationalisation. Ok, so despite the above you are drowning under SKU complexity. Far too many organisations launch a new SKU and then fail to revisit the data assumptions on which it was first introduced. Firstly, if a new SKU is not even expected to deliver at least 30,000 Euros (or whatever your in-house figure may be) profit then DON'T LAUNCH IT! For all SKUs on your price list you should carry out an SKU Rationalisation exercise preferably quarterly but at least annually. SKUs that do not meet profit/margin/volume/GP criteria should be placed on watch. If they remain below your cut off points then it is time to propose a delisting.

The ideal time to carry out that rationalisation exercise is before you submit Annual Plan 2018 and certainly before the end of 2017. Your staff will be concentrating on the day to day operation so recruitment of an external resource to carry out the segmentation is advisable. The temporary recruit will be dispassionate and unbiased and will deliver a proposal which is right for the business and not just right for some. 

Of course, there will always be special cases like SKUs that constitute a range or a niche local jewel but as long as these are the exceptions then you have a chance of a fast flowing, efficient and reliable supply chain ready for 2018. 

Need more expert advise from readily available talent to address SKU Complexity? Please click here. 

Image courtesy of Supertrooper freedigitalphotos.net

Tags: Customer service, SKU, FMCG, Interim Management, Dave Jordan, S&OP, Sales

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