Supply Chain Blog

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

Key Performance Indicators or just monthly data dumping? 

Posted by Dave Jordan on Tue, Mar 27, 2018

Last month I spent a few weeks enjoying the UK weather disaster as 10mm of snow brought life to a halt. While there I moved the heiress into her new apartment - not a flat now as student days are over, very posh. Hopefully, that will be the last time I have to manage boxes down a narrow and winding staircase and my glass back can get a much needed rest.

Job done, I made my way back to base with an unpleasant 15 hour delay on BlueAir but at least there was no jobsworth amongst the crew.  Despite the weather I continued my minimalist approach to clothing to ease my way through the various security screenings. I wore no belt, no watch, no metal at all in an attempt to glide through the checks without being patted, prodded or made to make a second pass through the metal detector. Unfortunately, my innocent pack of UNO playing cards looks like plastic explosive, apparently.

The end of the world was in progress on arrival back in Bucharest. Heavy dark and angry clouds were dispensing precipitation by the bucket load and it was relentless. The sleet quickly soaked my UK grade Arctic coat and everything underneath including socks.  Futile attempts at shelter included the held-aloft flat newspaper and the rather dangerous shopping bag with eye holes over the head. Even the all in one little black bin bag number a girl was wearing (or was it a dress?) was ineffective in diverting any of the torrential downpour. This was a real storm without escape where complete saturation was guaranteed and inevitable. 

I felt rather like an FMCG CEO. Saturated by data that people believe he/she needs to see in order to run the business. Not actionable information but raw data. Completely submersed in meaningless numbers and perceived trends. Often, that data is aimed at passing the buck to other departments for failure or lack of success or to ensure backside protection during the post-mortem that takes place long after the month or quarter or whatever period has closed.

Even if you do not run a swish ERP you need to be able to address in-market issues while you still have a chance of making a difference. However, to do that you need to receive information which quickly converts to relevant knowledge and then facilitates actions. To actually see the reality of market performance you don’t need masses of numbers, you need facts.

image.pngIf you don’t have a KPI or Balanced Scorecard then sort one out quickly. If you already monitor performance in this way then take a long hard look at what is actually being reported; is it for the benefit of the reporting colleague/department or for the benefit of the entire company?

Remember that KPIs never tell the full story. When a KPI refuses to improve despite all efforts it may well be due to the impact of another completely different and apparently unrelated measure. In such cases you should adopt a Supply Chain Analytics Approach to deep dive into the detail and really see what is happening all along your Supply Chain.

Image courtesy of SupplyVue at Concentra

 

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

Supply Chain Improvement via Analytics - well worth a closer look!

Posted by Dave Jordan on Wed, Mar 14, 2018

Just when we thought winter had been and gone it bit back nastily with a short, sharp shock of bad weather including snow and bitter cold. Typically, UK was unable to cope and as an example I spent 5 hours looking out of a cabin window at Birmingham airport while 10mm of snow gently fell. Eventually I arrived back in Bucharest to find significantly more snow yet very little disruption, as usual.

What else is hitting the headlines at the moment? POTUS Donald Trump thinks it’s a good idea to tackle the problem of gun attacks in schools by arming teachers. Is your cuppa too sweet? Of course, add more sugar. Waistline too big? Eat more food. Everybody except POTUS and the NRA considers introducing more guns to schools is a bad idea.

On the business front, February is over in its usual short, yet sweet way and we are now well into March as the end of the first quarter for many companies draws near. Your ability to make an impact on the Q1 results is slowly vanishing and if you are short at the top or bottom then you should still resist the urge to push stocks into the trade.

Just as arming maths teachers is plain daft, pushing more stock into the trade is similarly unwise yet it remains a go-to solution for some. As bad as this is, what is worse is that it is highly likely you already have too much inventory dotted along the chain. From a planning manager perspective this is about just in case rather than just in time!

A few questions to honestly ask yourself:Supply_chain_analytics_inventory_control_&_reduction.jpg

  • Do you know the precise stock level that will deliver your target service levels and in market sales?
  • Do you know what you need to change to achieve your supply chain and ultimate business targets?
  • Do you genuinely understand what is happening inside your own supply chain?

Like those mustachioed David Bedford money lending look-alikes, you are not alone.

In the last 10 years or so, despite investments in sophisticated ERP and other supporting systems, huge opportunities to further improve supply chain performance have become available.

Why should you be interested in Supply Chain Analytics? It’s………

  • Free: An initial free test drive on a sample of your data will indicate the potential benefits.
  • Fast:  A proven step by step data loading process from your existing source systems.  You don’t have to wait for a lengthy IT implementation to benefit from Supply Chain Analytics.
  • Instant: The software is pre-built with analytics reports, calculations, trends and data collation capability.
  • Accessible: A secure cloud-based platform with access from your PC, tablet or mobile.
  • Profitable: You are weeks away from starting the process of saving millions of Euros AND reaching those ambitious sales targets.

Don’t be frightened by Supply Chain Analytics; they are the future leading towards your Supply Chain excellence. A selection of stunning case studies will be published shortly. Take a look and then get involved.

Image courtesy of Loveluck at freedigitalphotos.net

Tags: FMCG, Dave Jordan, Pharma, Supply Chain, Inventory Management & Stock Control, Supply Chain Analytics

FMCG Supply Chain: Chaff innovation, is it worth it?

Posted by Dave Jordan on Wed, Feb 07, 2018

By the end of February over 19% of the year will be behind you. Think about that for a minute. If you follow a financial calendar year you probably put your Annual Plan to bed in October and now nearly 20% of the available selling time has already gone. Shocker!

How would you describe progress so far? Pick a phrase:

Steady progress in a challenging environment.

Defending share under concerted competitor pressure.

Starting to deliver anticipated operational improvements.

Bottom line erosion due to conversion rates.

Sales dip on change in consumer behaviour.

Excuses, excuses, excuses!

FMCG_SUPPLY_CHAIN_INNOVATION_GROWTH.jpgCertainly, there are many, many reasons why performance is not up to expectation and not everyone in a particular sector can achieve their objectives. Unless you are creating new demand, there is only 1 pie for you and your competitors to feast upon. What’s up your sleeve could be innovation.

After the mad rush to end last year and kick off 2018 now is a great time to review your innovation programme. In the same way in-market activation planning should reach far into the future, your innovation funnel should be planned on at least a 12-month rolling basis and longer depending on your specific lead times.

So, do you have some big bold innovations on which your annual plan was designed? Something that competitors do not have? Perhaps your boffins in white coats have come up with a new ingredient or chemical combo that really does make colours brighter and whites whiter. Being able to bring something genuinely new to consumers is a marketing and sales dream to drive growth.

Or is your ‘innovation’ simply another round of at best cosmetic refreshment and at worse, not really innovation at all? If your funnel is packed full of chaff you may not understand how this can adversely affect your supply chain. Here are just a few examples of chaff innovation which probably cause more damage to the business than what is generated in return.

  1. A new label for a bottle.
  2. ‘New & Improved’ when the new formulation is a cost saving tweak.
  3. A salami job on your SKU, e.g. the incredible shrinking chocolate bars.
  4. Economy packs which need a degree in mathematics to understand the offering.
  5. X% extra free and BOGOF.

Don’t get me wrong, you do need to do some of this type of stuff but don’t kid yourself you are innovating.

Many companies fill up their innovation funnels with events which are activities rather than growth generating innovation. Don’t do it! Activities rightfully have a place in your business model, but it is important to understand the impact these have on your business. Each activity requires resources to be deployed across all functions to get the SKU in front of consumers. Is the benefit of the activity really paying back when you consider the cost and time expended?

Look at the dictionary definitions and bear these in mind when you are next presented with an innovation funnel update.

Innovation:  the introduction of new things, ideas, or ways of doing something

Activity: a thing that you do for interest or pleasure, or to achieve a particular aim

Image courtesy of Stuart Miles atfreedigitalphotos.net

 

 

 

Tags: FMCG, Dave Jordan, CEO, Supply Chain, INNOVATION

Santa & Opening Presents - Christmas S&OP For Parents

Posted by Dave Jordan on Fri, Dec 15, 2017

“Dashing through the snow
In a one horse open sleigh…”

How many of you started to sing then? Yes, the festive period is fast approaching and the biggest and best supply chain in the world is almost ready to activate. This is always the most efficient supply hain whatever those nice chaps at Gartner may say.

There is no way Santa Claus could achieve his annual success without sticking rigidly to an S&OP process, i.e. Santa & Opening Presents.

The process starts every year on the 26th December just as children start to play with the empty packaging instead of their much sought after gifts. Their engorged parents lounge sleepily in front of the television watching The Great Escape or Jason & the Argonauts – again! The loyal Elves are given their end of season bonus and packed off back to Eleveden Forest in Suffolk. Didn’t you know that is where they live for most of the year?

Before January is over those lovely people who design toys and games quickly introduce new and more exiting models which will become must-haves for countless girls and boys. Toy shops are visited and millions of children quietly note those presents they would like Santa to bring them the following. The demand slowly builds until it is time to bring the Elves back from Suffolk on the eleventh day of the eleventh month – no coincidence there! The first job for the Elves is to get the huge Christmas factory ready to run once again.

santas_sop_planning_cycle_small.jpg

In parallel with this, millions of children around the world unzip their pencil cases with a purpose. Using their best handwriting they tell Santa they have all been well behaved this year and then  list all the presents they would like to receive. This accumulated unconstrained demand allows the Elf factory to start fixing production plans to meet a deadline that is set in stone. Is there a more peakier peak period?

Money does not grow on trees so “Santa” must quickly check what can be afforded from the budget. Remember, the wish lists are always too long and you do not want 100% Customer Service  – keep “em hungry”, I say. The Pre-S&OP takes place with all stakeholders involved to ensure everything is ready to go. You want to avoid stock-outs just as much as you need to avoid expensive write-offs.

After necessary adjustments are made to the planned volumes by SKU, the final S&OP takes place. Bearded Santa is fully dressed in his best red uniform and takes his seat. If Pre-S&OP actions have not been carried out, then there is unlikely to be much “Yo Ho Ho-ing”. Fortunately, everyone is in agreement and the final set of child and associated gift numbers is rubber-stamped. Everyone involved in the Christmas S&OP must operate on the same set of numbers or somebody will be disappointed.

The big day comes and Rudolph leads the reindeers in pulling the delivery sleigh across the world in a complex logistical challenge. Santa makes sure all the presents are delivered on time before little heads lift from pillows to wake parents at 4am! (Well, I did.)

 “Dashing through the snow
In a one horse open sleigh
O'er the fields we go
Laughing all the way
Bells on bob tails ring
Making spirits bright
What fun it is to laugh and sing
A sleighing song tonight”

Before you know it, there we are again on 26th December and the same robust and reliable S&OP cycle starts once more. See you next year Santa Baby!

Image courtesy of Enchange Ltd at Enchange.com

 

 

 

 

 

Tags: Christmas, Humour, Supply Chain, S&OP, Logistics Management, Inventory Management & Stock Control

An FMCG Distributor Is For Life & Not Just For Christmas

Posted by Dave Jordan on Thu, Dec 14, 2017

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

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

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

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

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

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

Click on the RTM link below and go!

CTA RTM Free Download resized 600

Image courtesy of stock.xchnge at freeimages.com

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

FMCG: I’m a Supply Chain expert…Get me out of here!

Posted by Dave Jordan on Sun, Dec 03, 2017

The definition of celebrity is a famous person, VIP, very important person, personality, name, big name, famous name, household name, star, superstar, celebutante, leading light, giant, great, master, guru. In that case why do I only know 3 people from the 2017 series? One boxer, a footballer with an ironic surname and Boris Johnson’s father. I don’t know Mr Johnson either, but he helped produce Boris the buffoon so probably deserves to endure a degree of hardship.

I guess I have lived outside the Brexit zone too long and simply do not appreciate the celebrity importance of this collection of egos but some of these people are obscure. If they are stars or household names, then surely everyone will get a go at being handsomely paid to eat crocodile tongues on holiday down-under. My turn must come!

What’s more the show is being presented by the best UK double act since Morecambe and Wise……UK TV is becoming a veritable talent vacuum.

FMCG_CONSULTING_TALENT_HUB_INTERIM

Dare I say it, but a similar dynamic is emerging in the world of supply chain consulting. With business media site like LinkedIn being unregulated you can add whatever you wish to your profile and work history. Unless someone notices a blatant fabrication and takes the time to suggest a text correction, this becomes the accepted reality where the term “expert” is overused. I even recall one LinkedIn member set his status as “Current Company: Unilever – Position: Owner”!

Another definition for you; expert - having or involving a great deal of knowledge or skill in a particular area. That level is not achieved easily or in a few years and being employed for many years in supply chain does not mean you can simply switch to become a credible consultant. From personal experience making that change after almost a lifetime in an FMCG multinational (no, I wasn’t the owner either) is not easy.

There are 2 important elements to being a successful consultant after working on the other side of the fence. Real and deep expert knowledge is a given but the task of imparting that to often cautious or even suspicious clients is the difficult part of the job. When you work in industry you have the authority of your work level or job title which make things happen. When consulting you have diddly-squat authority and making things happen and stay happened is a tough new skill to learn.

When you are in the market for consultancy expertise you must carry out some degree of due diligence. Check out and corroborate the claims of past success with particular focus on how expertise was deployed in the receiving organisations.

Don’t be taken in by the “expert” moniker and use something like the Talent Hub to find out who is availableand what they have actually achieved in the wonderful world of consulting.

It's a jungle out there!

Image courtesy of Stuart Miles at freedigitalphotos.net  

 

Tags: FMCG, Interim Management, Supply Chain, CONSULTING

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

NHS UK Supply Chain Waste: Planning Patience

Posted by Dave Jordan on Thu, Sep 28, 2017

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

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

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

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

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

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

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

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

Image courtesy of Stuart Miles at freedigitalphotos.net

 

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

FMCG Turn-around Intensive Care Recovery KPIs

Posted by Dave Jordan on Wed, Sep 06, 2017

On a daily basis the amount of care we give to the human body is remarkably little. When you are feeling in good shape the best the body can hope for is a good wash, a brush of the teeth and a slap of moisturiser if you are a bit of a girly. What else? Haircut and manicure perhaps oh, and possibly a check that your weight has not dropped that desired 10% overnight.

Considering the complexity of the human body and how we cannot live without it we do not spend too much time analysing how it is performing. We probably spend more attention on our cars and IT gadgets. Why is my PC running so slow? The car is overheating, I must check this now. Such symptoms are immediately of prime importance and top of mind and must be addressed now!

This all changes when we are feeling unwell. Suddenly we are taking our temperature, blood pressure and pulse rate. Blood tests may be needed. You may be wired up to monitor to see how the heart or brain is functioning. The body is now getting the intensive care it needs in hospital. Recording and monitoring this raft of data is the route to a hopefully full and speedy recovery.

FMCG_RECOVERY_SUPPLY_CHAIN_KPIS.jpgIf your business is operating well and there is even some growth in these testing times then the usual keep fit-heart monitoring Balanced Scorecard KPIs are reported weekly or monthly. The focus is usually on getting your stuff to customers and onto shelves at the right time, in the correct quantity and at the lowest cost. Along with other company measures, e.g. finance, HR, SHEQA, the scorecard shows the health of the business.

When all is not going smoothly however, the Balanced Scorecard may need supplementing with other measures. In companies where sales are below expectations and cash flow has dried up you need intensive care focus in that area. This does not mean you stop generating the Balanced Scorecard as this will contain important financial and non-financial measures. Instead, you need to place the sensors in the critical locations.

What about when things are not going well? Measuring the usual set of KPIs is all very well but when you are in a mess you need some intensive care. For businesses struggling with tight cash flow here are top ten tips for some relatively simple Recovery KPIs:

  1. Sales-out Sales-in do not guarantee you a final cash sale to a consumer so focus on the final sales transaction.
  2. Discounts Control how much discounting is taking place by those generous sales people. Is it authorised in advance and at the correct level?
  3. Debtor Days This is money owed to you so negotiate favourable terms and constantly review. If 60 days has been in place for years then it is about time this was challenged so apply some pressure.
  4. Creditor Days You owe this money but if you upset suppliers they will stop supplying! Renegotiate where possible and do your best to pay on time as you never know when you really need a favour.
  5. Overdues Where money is due to you and has exceeded the agreed terms you need a persuader to get on top of late payers.
  6. Forecast Accuracy Do not look at every single SKU; apply segmentation principles. Determine which SKUs are important and make a healthy profit, focus here.
  7. Lost Sales Investigate every significant lost sale and systematically apply a 100-year fix so mistakes do not recur.
  8. Potential write off Monitor stock age internally and at distributors and avoid this criminal cash waste.
  9. RM/PM stock If you are overstocked you should not re-order and you might consider selling some items. Your stocks should be aligned with those important SKUs identified above.
  10. Finished Goods stock Again, ensure your key SKUs are always available in the required quantities. Promote any excess or slow-moving stocks to generate income and minimise potential write off.

In addition to the sensible tight control of discretionary spend this approach can stabilise your vital signs and guide you back to a healthy glow without the intensive glare of the suits from HQ.

Imag courtesy of moggara12 at freedigitalphotos.net 

 

Tags: FMCG, KPI, Supply Chain, Cost Reduction, Inventory Management & Stock Control, balanced scorecard, Recovery