Supply Chain Blog

Break Down Departmental Silos Through Functional Integration for Route to Market Success

Posted by Ross Marie on Fri, Feb 15, 2019

The FMCG business is like a team sport. There are sales people sent into the field, to sell more products and beat their targets. There are players put on the sports field, charged with scoring points and winning the game. In both scenarios, if the people behind the scenes don’t do their job, those on the front line can’t deliver. It’s that simple.

functional-integration-rtm

Route to Market (RtM) professionals need inventory to fulfill orders, budgets to execute Key Account agreements, Point of Sale (POS) material to help increase sales, devices to record information, take orders and communicate, vehicles to visit customers, etc. The RtM/Sales or TM&D (Trade Marketing & Distribution) function must have clear and open two-way communication with all the other business functions. Functional Integration is a cornerstone to any successful RtM strategy.

My first lesson in the need for Functional Integration came when I was a Sales Rep for an FMCG multinational in the late 1990’s. The Marketing Department was doing a big push for one specific brand. They sent every rep a large package of POS material with clear instructions to place it in retail. The main POS material was a cash mat. Cash mats are designed to be placed next to the till, on the counter between the retailer and the consumer, and are where the retailer can place notes and coins as part of the consumers change from their order. They protect the retailers counter, make it easier for the consumer to pick up their change and they can provide a great opportunity to communicate with the consumer at the actual point of purchase.

These particular cash mats were beautiful pieces of POS material. They were very high quality, the message they communicated was very clear and they were also very durable. But there was one big problem. They didn’t fit into the available space in the retail stores. There had been no interaction, consultation, or communication between the RtM function and the marketing function during their development. A lot of money could have been saved if there had been proper Functional Integration.

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 18 steps of my model. The focus of this post is Step 19 – ‘Functional Integration’.

Here are some examples of questions you can ask under Step 19 – Functional Integration:

  1. Based on the RtM Review in Step 1, what are the other business functions that your RtM, Sales or TM&D department currently interacts with? Have you explicitly identified them?
  2. Are there currently ‘rules of engagement’ for the different interactions with the other functions, or has it just evolved?
  3. For each business function or department, to what extent have we identified the nature of the integration required? For example, what key processes are involved? What are the related process inputs and outputs? Have levels of inter-departmental performance been defined? Are these levels of performance explicit? If so, how has performance been defined? Do internal Service Level Agreements (SLAs) exist, for example?
  4. Based on the new RtM Strategy in Step 5, how will the functional interaction with the RtM department and other functions change? What new rules of engagement need to be established? How will this be measured?
  5. What is the nature of the integration with Supply Chain? How do we feed information into the Supply Chain Department? For example, who decides what the demand will be over the next few months? What are the implications for the Logistics Department? Has the RtM Department fed into these processes?
  6. Do we have an S&OP (Sales & Operational Planning) Process? Has the RtM Department fully bought into this process? Are we represented in it? Is it clear what information we should feed into this process? For example, what is the role of the RtM Department in the Demand Review Process?
  7. Who receives our information on Out of Stocks in the field? What actions are taken based on this? How do we prevent them? What help do we need to do this?
  8. Do we accept product returns from customers? If so, who manages this process and what departments interact with this?
  9. How does the RtM department interact with the Brand Marketing department? Has this process been formalised? How often do representatives from the marketing department attend trade field visits?
  10. Does the RtM Department feed into Point of Sale (POS) material development? If not, why not?
  11. Do we place any promotional trade assents in the field? Who manages this process? Who provides feedback on their applicability and usefulness? Who tracks and manages them as assets of the business? What is our process for this and which function is responsible?
  12. How does the RtM Department interact with the Finance Department? Who sets prices, margins, budgets and discounts within the RtM department? How does Finance fit in with this? How do we currently feed trade information into Finance? How will this change under any new RtM Strategy?
  13. How do we open new accounts with customers? Are any other departments involved? Who sets payments terms? Do we offer credit? Who then sets individual customer credit limits? How does the RtM department feed information into this?
  14. How do we collect payment from our customers? Is it all electronic? Do we accept any other forms of payment? Do we accept cash? What are the processes and procedures for this? Which departments are involved? Do we have a Security or Health & Safety Department or Function? Is this part of HR? How do we interact with them?
  15. How do we interact with the IT department? Do we have a CRM solution or hand-held device that is used to take orders and record market data? Who maintains this? Who feeds them information about its real-world application and actual issues?
  16. How does the RtM Department interact with the HR Department? For example, do we have a system for performance appraisals? Who is responsible for RtM Training & Development? Who manages performance appraisals? How do receive the company policies & procedures? How can or do we feedback on them?
  17. Who manages our company equipment, like cars, phones, tablets, laptops, uniforms, etc? How do we provide feedback on these? To whom?
  18. How does the RtM Department interact with the corporate/public affairs or PR department? For example, how often do they make trade visits? How do we feed information to them? How can they speak publicly or address key issues about our products or communications, without speaking to the department who deals with our customers?
  19. How open are we as a department? Do we have regular conferences and regular meetings? Do we invite other departments? Do we actively manage our relationship with other departments? Do we try to attend other departments key meetings?
  20. What is our plan to on board the other company functions to our new approach to RtM? Have we consulted them throughout the process to accelerate buy in? Have we looked at which specific areas within the 20 Steps to RtM Excellence will impact on which specific functions?
  21. What is the overall strategy to ensure the RtM Function is integrated with all necessary departments and functions across the organisation?

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

Next, I will cover the final step, Step 20 ‘Culture & Leadership’. 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, Traditional Trade, S&OP, Cost Reduction, Sales, Distribution, RTM Assessment Tool, Inventory Management & Stock Control, Information, Retail, 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

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

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

Supply Chains - Whats do all those initialisms mean?

Posted by Dave Jordan on Wed, Jun 27, 2018

Like many business functions Supply Chains use multiple initials and/or acronyms to describe various tasks they manage on a daily basis. Those not familiar with SC-speak will often sit bemused in meetings as various initials are quoted and debated and then usually blamed for some tenuous lost sale claimed by Sales and Marketing. Here we take a look at just a small selection of those initials.

SC – Super Colleagues. Well, I may be biased but that is what you find is usually the case. Supply Chain people have to react to wildly varying demands and impossible timings but more often than not they succeed to get stock in the right place at the right time.

SOP - Secures Our Performance. If you do not follow an S&OP process and your business is doing well and is robust then a pat on the back is for you. If your business is struggling then you might consider the benefits of S&OP which can make all the difference.

SC Abbreviations resized 600

SAP - Spreadsheets Are Preferred. A common problem in many businesses and what is also common is the number of CEO’s who believe spreadsheets are not being used in their workplace! They probably are but what can you do about it?

IKA- Irritating, Keep Away. In Western Europe the big name Key Accounts may well be the future of retailing in the FMCG sector but in many other parts of the world the reality is quite the reverse. Traditional Trade is a very important part of many businesses yet most fail to pay sufficient attention to the continued development and growth of the TT channel.

SKU - Sales Keep Upping. Introducing new SKUs really should be a cross business decision taken within the context of S&OP and with sound financial analysis. Sadly, this does not happen very often as businesses rack up lengthy SKU lists where the tail items do not even pay for themselves in turnover and/or profit.

KPI - Keep People Interested. The old adage of “if you don’t measure it then you cannot improve it” is certainly true here. Be careful not to have too many KPI’s but make sure you have a small set which ensures everyone knows how they impact team performance and results. Reward against the relevant KPIs and your staff will target them keenly.

3PLP - 3 People Loading Products. Think long and had before outsourcing your logistics operations to a 3rd party. They may not be ready to take on your business seamlessly.  Prepare thoroughly and ensure you know exactly what you want from them and the relationship. A big step that is difficult to reverse so be very careful!

WMS - Where’s My Stock? Your 3PLP partner should be left to run their own business as that is what you pay them for. However, you need to be involved in the stock counting process or you will lose sales through out of stocks (OOS , there's another one) and experience costly year-end write offs.

4PLP - 4 People Loading Products ………..but perhaps slightly faster? If you have successfully used 3PLPs for some time you might wish to take a look at what a 4PLP can offer your business. This is not for everyone but can be very effective.

RTM - Retail Takes Money. Whether your focus is on IKA or TT how you manage your distribution network will be a key driver of your success in the market place. It is a fact that companies spending time and effort getting their TT distributor networks in good order are far more successful.

There are many, many more initials used in Supply Chain but this set will do for a kick off so TTFN!

Tags: SKU, FMCG, Route to Market, Dave Jordan, KPI, Traditional Trade, S&OP, Logistics Management, Distribution

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

Balanced Scorecard KPIs: Keeping Track of Business Performance 

Posted by Dave Jordan on Thu, Mar 29, 2018

How do you keep track of Supply Chain performance within your FMCG, Brewing or Pharmaceutical business? You do, don’t you? If you are not measuring any KPIs then perhaps you should stop here, read this KPI piece and then pop back and carry on.

You can measure and report in many formats as long as you measure appropriate KPIs for your business. One of the most pointless tasks is calculating and reporting a “KPI” which is in fact worthless and of no beneficial interest. Colleagues in Sales & Marketing usually assume they are immune from KPIs as they gleefully sit back and let the Supply Chain guy take the flak at Board meetings. In reality however, the actions of everyone in the company must be reflected in one or more KPIs. If there is anyone in your business who is not impacting a KPI in some way then perhaps you might consider a round of head-count reduction!

The following is a demonstration example of a Balanced Scorecard of business KPIs. While many are indeed Supply Chain related you need only look at Sales Forecast Accuracy to see how other departments can influence that measurement to a far greater extent. KPIs are designed (usually 2 or 3 per discipline) and presented within the company Scorecard.  Target performance threshold levels are agreed (RAG – Red, Amber, Green) and presented monthly within the S&OP process to measure success and target further improvement.

Supply Chain KPIs

There will undoubtedly be more PIs calculated around the business but those in the scorecard really must be the priorities; those that provide actionable information.

The use of simple colour notation allows business managers to see exactly where problems exist allowing them to focus resources. Conversely, you quickly see what is going well and where you might have to raise the bar to maintain and improve further.  (If you are measuring your KPIs at the same level as 5 years ago then that may reflect a business which is stagnating.)

Whatever design you use it does not really matter but:

1. You must measure KPIs relevant to your overall business strategy and performance.

2. You must report them promptly and widely.

3. They must be discussed at the top table, routinely.

4. You must review and delete/insert new KPIs as the business need develops.

5. You must ensure the targets are stretching but achievable as a constant red display is demotivating.

While KPI stands for Key Performance Indicator it could easily be considered as Keep People Interested!

Image courtesy of Enchange.

 

Tags: Brewing & Beverages, FMCG, Dave Jordan, Performance Improvement, Pharma, KPI, Supply Chain, S&OP

FMCG Supply Chain dates to remember: Advanced Planning

Posted by Dave Jordan on Wed, Jan 31, 2018

February is here but blink and you will miss it as it is not a leap year. You cannot change January performance and February should be quite firm by now, so you need to be looking further ahead in your S&OP. Much further ahead.

What is coming soon in the wonderful world of FMCG and others?

Valentine’s Day 14th February. Yes, I know it is cheesy, but it is a prime time for chocolates and greetings cards and if your stock is not in place already, don’t bother. I can still see discounted Christmas chocolate on the shelves and I am sure the same will be true after the big red heart day.

Spring. An important period particularly in eastern Europe where a thorough house cleaning is the order of the day. Surfaces and fabrics are thoroughly cleaned and presents an opportunity for homecare producers to get an early boost in sales.

Easter April 1st. A huge confectionery event and fairy early in the year so you get to nibble nice, crisp chocolate rather than warmish stuff – ugh! Take care though because as mentioned above, you will probably be discounting your stock for several weeks after the event. Perfect for chocolate lovers but not great for retailers, your profit or core SKU brand planning.

Orthodox Easter 8th April. Usually a more religious and less chocolatey event but increasingly becoming like the earlier Easter. The dates are very close to each other this year, so this should not cause any significant planning and distribution challenges for global and regional producers. If you are slick enough you could transfer any obvious excess from the April 1st event into Orthodox markets, labelling permitted of course.

Eid al-Fitr. Mid-June. The holiday marking the end of the fasting month of Ramadan. A huge, huge surge in the demand for food and drink across several work-free days. If food and drink producers in Middle East and North Africa get their planning wrong during Ramadan and the following Eid, then the annual results are immediately in danger.

FMCG_PLANNING_ADVANCED_S&OP_DAVE_JORDAN.jpgSummer. While some events are fixed and in the diary years in advance, the appearance of the sun in the northern hemisphere remains unpredictable. This is an annual nightmare for drinks and ice cream producers as despite all the algorithms and predictive tools demand is difficult to guage, in Europe at least. In the hotter months the key aim must be for your key SKUs to be available 100% of the time. This may lead to future write-offs but if the sun pops out and your products don’t…….. 

Eid al-Adha late August. Another Islamic celebration which is perhaps not as grand as Ramadan Eid but as it is in August this year you can be sure chilled liquids will be in high demand. Unike in Europe, the sun is not shy in shining brightly in the ME and NA regions.

Back to school September. Paper, pens, pencils and Peppa Pig lunch boxes will fly off the shelves in preparation for the new school year. Look at the major retailers and you will see a very wide choice and surely not everything is sold. In fact, I remember seeing a huge stock of Bob the Builder merchandise on sale in rural markets in Uganda one Christmas. You have to get rid of it somewhere!

Thanksgiving 22nd November. A mainly North American food fest but with similar celebrations in Netherlands, surprisingly. Large family feasts and open-house entertaining ensure a peak for foods and drink manufacturers.

Christmas. Not much to say here except sales of everything in FMCG-land and many others reach a crescendo of demand as December progresses.

There are many other important peak seasons which may be global, continent-wide, regional or very local but all of them must be considered in your forward planning. If you don’t get it right someone else will push their products in front of consumer's faces.

If you want to be successful, then all these events and more should already be in your 2019 planning process. No typo there, yes 2019! Rather like driving a car on a long motorway, the further you are able to look ahead the easier it is to deal with unexpected hazards.

Image courtesy of Supertrooper at freedigitalphotos.net

Tags: FMCG, Dave Jordan, S&OP, Forecasting & Demand Planning, Integrated Business Planning

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