Supply Chain Blog

First-Class FMCG Territory Planning is Crucial in RtM Strategy for Sales Growth

Posted by Ross Marie on Thu, Nov 15, 2018

Territory Planning for Fast Moving Consumer Goods (FMCG) companies is about dividing up a piece of geography into different subsets, based on certain criteria, usually geographic proximity. It allows FMCG companies to effectively and efficiently service their customers, whilst allowing the organisation to target specific resources at each individual territory.

territory-planning-4 (002)Territory planning saves time and money by avoiding overlaps where more than one resource from the same company tries to service or sell to the same client. It also helps to ensure that all outlets within a specific geography get covered, by assigning management of a territory to one resource. It facilitates local knowledge capture, new outlet openings, closures, understanding competitor activity, capturing consumer and other trends, to name a few. Territory Planning also allows the assignment, measurement and management of Route to Market targets (volume, share, brand distribution, display, range, POS material placement, etc.).

One of the key elements of Territory Planning is simplicity. For example, pick a piece of geography, maybe a city in a state, a district in a country, or one small island out of many, and then assign one TM&D rep to manage and be responsible for that Territory and all the outlets in it. If you need to also assign additional resources like Telesales Reps, Merchandisers, Sales Promoters, Channel Managers, Key Account Managers, and Telemarketing Reps, etc., be careful who carries the overall responsibility. Any territory needs overall management.

Here are some examples of questions you can ask under Step 8 – Territory Planning:

  1. What is the DIME Approach (Direct, Indirect, Mix & Everything in between) in your Market? What does that mean for territory planning? Which outlets do we cover, and which outlets are covered by indirect channels?
  2. Do you have an influence on the territories of your indirect channel? Can you increase your influence? Are these distributors fully cooperative partners? Are they exclusive?
  3. Based on the RtM approach that we are taking, are we looking to take on new distributors or replace existing ones, and what impact will that have on our territory planning?
  4. Are there any existing sales territories in place? Have they been reviewed as part of Step 1 in the 20 Steps to RtM Excellence? If so, what are the results?
  5. Based on the review of the current territory map, what are the key areas for improvement? How would these improvement areas translate into new or revamped territories?
  6. Are there any specific issues that we need to be aware of when reviewing the territories, whether internal (regional, resources, launches, etc.) or external (competitive actions, distributors, government/political, etc)?
  7. How does the local geography impact on forming territories?
  8. Are there specific infrastructure constraints that we need to be aware of?
  9. Are there any existing external geographical factors that would potentially shape any territory formation? Is the geography split into islands, into counties, into districts, into regions, via postcodes, etc?
  10. Are we reviewing or designing territories for field force members who will call to retail outlets (sales reps, TM&D reps, merchandisers, sales promotion, etc.) and/or will there also be territories for back office support and remote activities (telemarketing, telesales, customer service, etc.) or for a combination of both?
  11. Which resource will be assigned to overall territory management? Who will be accountable? Will Key Account or Channel Managers have some or a joint responsibility for certain outlets across territories?
  12. Are we looking to cover the entire geography or are we looking to target specific cities or population concentrations, or volume levels, or other criteria, or a combination of these?
  13. Based on the results of the outlet and channel classification, what impact is there on my current territory map?
  14. How would a potential new territory map look with the required resources to service the outlets?
  15. What would the call frequencies for each outlet look like across the territories and what are the target calls per day?
  16. Are there different activities that need to be assigned to different call frequencies? If so, what are they?
  17. Given the above, have we accurately defined the size, scope and geography of each of our territories?

My goal here is to get leaders in the Route to Market environment thinking about all the elements involved in RtM strategy, one of my key messages is to keep it simple, but we still need the detail.

This post is part of my blog series on the 20 Steps to Route to Market Excellence model. This post focuses on Step 8 ‘Territory Planning’. You can read about the previous steps here. I hope you find this useful, and I welcome any views and comments below.

Next week I will cover Step 9 ‘RtM Structure’. 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: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, RTM, retail, Information, Distribution, Sales, Route to Market, FMCG, Brewing & Beverages

Take Ownership of Channel Classification for a Killer Route to Market Strategy

Posted by Ross Marie on Fri, Nov 09, 2018

Let’s start at the beginning. When we talk about Channels, we are referring to channels of distribution to get products from a manufacturer to a consumer or customer. There are many ways to achieve distribution, e.g. direct to consumers (e.g. online, mail order), through retailers, through wholesalers then retailers, through wholesalers then cash & carry’s and then retailers, through other types of intermediaries/agents, and the list goes on and on.

channel-classificationFor consumer goods, when we discuss Channel Classification, we are talking about identifying all potential and possible routes to the consumer, and dividing them up into homogeneous groupings, often based on physical format. The main benefit of doing this is so that we can effectively manage, resource and measure performance of these channels to achieve our RtM goals.

For example, an FMCG company may service the retail outlets across a country through 3 main channels, Grocery, Convenience and Horeca (Hotels, Restaurants & Cafe's/Catering). The channels may be further split into sub-channels – e.g. Grocery could be split into Discounter, Hypermarket, Supermarket, etc. This is mainly based on the format of the stores and who owns them. Channel Classification does not generally take into account outlet specific criteria such as volume, location, consumer profile, footfall, opening hours, engagement opportunity etc., for this we need to look at Outlet Classification.

Channels of distribution can vary significantly depending on sector. For the soft drinks, confectionery or tobacco industries, the “Vending Channel” could be a significant source of revenue and focus but may not even be on the radar for other sectors.

Here are some examples of questions you can ask when looking at Channel Classification:

  1. What are all the potential and possible channels of distribution that you can use to get product to your consumers or customers?
  2. How do you currently segment your universe and classify channels and sub-channels?
  3. Which channels do you currently focus on?
  4. Which channels and sub-channels do you not focus on or are you not present in? What is the reason for this?
  5. Are you measuring the performance of your current channels and sub-channels?
  6. What is the current channel performance based on volume, share, brand distribution, display, range, TM&D opportunities, etc.?
  7. Which channels have the most growth potential?
  8. How does the previously reviewed Consumer Behaviour & Trends impact on future channels?
  9. To what extent are you using or focusing on the more ‘traditional’ channels in your industry? For Example: Modern Trade, Traditional Trade, General Trade, Online, Digital, Direct Sales, Key Accounts, Wholesale, Cash & Carry, Warehouse, Grocery, Discounter, Convenience, Mom & Pop, Pharmacy, Organised, Independent, Horeca, Nightlife, Hypermarket, Supermarket, Petrol, Kiosks, Open Windows, Street Vendor, Self Service, Counter Stores, Vending, On Trade, Off Trade, etc.
  10. Are there any potential niche or alternative channels you could be targeting?
  11. Are you looking at direct to consumer options, e.g. mail order, telesales, online? Are these relevant in your field?
  12. What approach are you taking to digital and e-Channels?
  13. Will you look to target specific activities or resources at the different potential channels?
  14. How will you resource each channel in future with people and money vs how you currently operate?
  15. Will you have channel managers and how will responsibility be shared if channels cut across regional geography splits?
  16. Which channels offer the best growth potential?
  17. Which channels offer the best access to current and/or potential customers or consumers?
  18. Which channels offer the best TM&D opportunities?
  19. Based on your Competitor Analysis (Step 4 of the 20 Steps Model), how does your current and potential future set up compare?
  20. What are the agreed target channels, resource requirements and training needs?

This post is part of my blog series on the 20 Steps to Route to Market Excellence model. The model is designed to give FMCG managers a step by step guide to building or reviewing their RtM strategy to maximise growth opportunities. This post focuses on Step 7 ‘Channel Classification’. You can read about the previous steps here.

I hope you find this useful, and I welcome any views and comments below. Next week I will cover Step 8 ‘Territory Planning’. 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: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, RTM, retail, RTM Assessment Tool, Distribution, Sales, Traditional Trade, Route to Market, FMCG, Brewing & Beverages, Customer service

Essential Competitor Analysis Tips to Improve Route to Market Strategy and Execution in FMCG

Posted by Ross Marie on Thu, Oct 18, 2018

Over the last number of weeks, I have been writing a blog series on my 20 Steps to Route to Market Excellence model. You can read more about the the steps I have already discussed here. My goal is to provoke business leaders in the Fast Moving Consumer Goods (FMCG) community to really think about every element of their RtM, and to question and analyse the decisions they will make (building) or have already made (reviewing). Is my RtM Strategy and Execution as good as it could be?

The 20 Steps are split into 4 phases, Assessment, Strategy, Design and Implementation. This blog focuses on Step 4, ‘Competitor Analysis’, which is the last step in the Assessment Phase, and is the last step to take before consideration of your approach to RtM strategy.

competitor_analysis_enchangeBusiness leaders today fully understand the need for competitor analysis. It is a cornerstone of any business strategy, but as with all elements of RtM strategy, it is all about the detail. Understanding what your competitors are doing, why they are doing it, how they are doing it, what their results are, and why you are different, is key to any effective sales and distribution or RtM strategy.

Below are some of the questions you should ask under Step 4 – Competitor Analysis. An important consideration is the availability of open source, legally available and reliable data and information – e.g. internal company data, field force knowledge, trade publications, industry reports, trade visits, etc.:

  1. How are our direct competitors executing their RtM Strategy? What is their DIME approach to distribution (Direct, Indirect, Mix & Everything in between)?
  2. What are the differences between their RtM and ours?
  3. What are the differences in their performance and ours? What is their brand distribution, volume & share vs ours?
  4. What are the factors that we believe are behind that?
  5. How are other non-competing organisations, still in our sector, executing their RtM strategy?
  6. How is that different to mine and why?
  7. Are there elements from competitors’ operations that we should look to evaluate, either positive or negative?
  8. Are there lessons to be learnt or mistakes to be avoided?
  9. Looking across the 20 Steps, ask yourself, what is their approach to the 4D’s (Distribution, Display, Dialogue, Digital)
  10. How does the competition classify their outlets, or their channels? Do they use the traditional norms, or do they target specific avenues?
  11. How do they set up their territories and what is their trade structure and FTE’s?
  12. Do they get sales data from the trade and what metrics do they measure? Do we know how they target their field force?
  13. Do they have specific planograms and trade promotions? Are they active in POS placement?
  14. Do they have a trade incentive and /or engagement programme?
  15. What is their order capture method? How are they using technology in the field?
  16. How are they leveraging Digital (with regards to sales channels, order capture, engagement, promotions, trade incentives, trade marketing, etc.)?
  17. What do we know about competitor distributor activities? Who are they partnering with? Has this changed in the last 5 years? What is their distribution effectiveness?
  18. Do we see evidence of their successful initiatives in one area being rolled out to other territories?
  19. How do they manage key accounts? What is their overall relationship with the trade?

There are many questions you could ask here, and I would encourage you to think about which are the most relevant for your markets and industries. Give Competitor Analysis the importance it deserves to gain a well-rounded, in-depth knowledge of your competition and feed this into your RtM strategy.

I hope you find this helpful, and I appreciate your views and comments below. I will pick this up again next week, with Step 5 RtM Strategy & the 4D Approach. Please subscribe to the blog, you can do so on this page, to ensure you don’t miss out on the latest updates on RtM excellence in execution and the 20 Steps model. If you would like to know more about the 20 Steps to RtM Excellence, please visit our website here.

Tags: 20 Steps to RtM Excellence, RtM Strategy, Ross Marie, promotions, RTM, retail, RTM Assessment Tool, Distribution, Sales, Route to Market, FMCG

FMCG Forecasting: Ice Cream, chocolate & pregnancy

Posted by Dave Jordan on Thu, Aug 02, 2018

You will have to bear with me for a while on this one. Do you know that on average 85% of expectant women suffer food cravings during pregnancy? Apparently, the top 5 are:

Pickles   5%  - yuk, that surprised me too.
Cheese  11% - get those calories in.
Crisps/chips 15% - much needed salt.
Chocolate 17% - feel-good food.
Ice Cream 23% - junk food craving or just indulgence as you put on weight anyway?

Satisfying these cravings over the 9 months must lead to a significant extra expense (which might actually gently prepare prospective parents for the post-natal costs that will not go away for a very long time).  This leads me to consider that there are specific windows in the calendar when opportunities for cost effective pregnancy cravings exist.

If you crave chocolate, then the best time for a pregnancy should include Christmas when you can take advantage of everyone buying you chocolates anyway plus the post-holiday BOGOF and more promotions to get rid of all the excess stock in retail. If you need a chocolate fix it does not matter if it is in the form of a stack of standard bars or if it is a box of chocolate Wayne Rooney/Shrek figurines. As long as you satisfy the chocolate fix then all is very well with the world.

If you are really clever with your timing you might be able to stock up with discounted chocolate products in January that last you until Easter. Then, everyone aware of your craving can buy you chocolate again and then you can gorge on endless stocks of 2 for 1 bunnies.

ice-cream-demand-planningLike the majority of women in this survey my wife craved ice cream. This would have easily manageable had we been in UK but were located in Jeddah, Saudi Arabia. Even in the cooler months getting ice cream from a shop to the home freezer required an ice box. Without some sort of chilling system anything you bought would quickly revert to sugar, fat and water. To avoid emergencies, we had to overstock at home but ease of availability meant this rapidly diminished and led to numerous middle of the night dashes to find more ice cream.

So, if your must-have food is ice cream when is the best time to be pregnant and not break the home budget? If you are in the northern hemisphere then September/October is the ideal time to have an uncontrollable ice cream craving. Take a look at your local supermarket and you will see that the most promoted/discounted products are ice creams. BOGOF is common and as the time passes you will eventually see buy 1 get 4 free or more until the stock is finally exhausted, the product expires or the store wants the retail space returned.

I know it is very difficult to forecast demand for ice cream. Global weather is becoming increasingly unpredictable and even a few short weeks of a gloomy summer can ruin producers’ sales campaigns. Producers do have very sophisticated tools that monitor the weather, providing indexes and algorithms to understand likely demand but nothing can be 100% perfect.

Weather sensitive businesses must be expending considerable resources on trying to get more reliable demand signals as the annual write-off costs continue to hit results. These financial loses will probably rise as our climate becomes even less predictable.

Good news for expectant mothers but bad news for shareholders, CEO’s and CFO’s everywhere.

Ice Cream Image courtesy of David Castillo Dominici at freedigitalphotos.net

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

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

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

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

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, Forecasting & Demand Planning, Sales, promotions, S&OP

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

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