Supply Chain Blog

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

Retail Outlet Classification in RtM Strategy, an Essential Element or a Complete Waste of Time?

Posted by Ross Marie on Thu, Nov 01, 2018

Firstly, what is Outlet Classification? It is a process of segmenting every individual outlet, meaning every point of purchase, based on a set of company specific agreed criteria that you will design, e.g. volume, location, consumer profile, footfall, opening hours, engagement opportunity etc. This will then allow you to target specific activities, resources, brands, SKU’s, promotions, metrics, etc., at a specific outlet groupings level. The main benefit of Outlet Classification is the ability to target your product offerings at specific outlet groupings, regardless of who own them or what their retail format is.

fmcg-rtm-outlet-classification

Outlet Classification must not be confused with Channel Classification. Channel Classification, which will be covered in my next post, tends to group outlets together based on format. For example, an FMCG company may service the retail outlets across a country through 4 main channels, Grocery, Convenience, Horeca and Wholesale. These 4 channels may be further split into sub channels, Convenience could be further split into Organised, Mom & Pop, etc. This is mainly based on the format of the stores and who owns them. Outlet classification focuses on specific factors pertinent to your industry and company. It allows you to become much more targeted with your service model. A specific Outlet Classification grouping could contain retail outlets from all channel classifications, but grouped together based on specific consumer profile or location criteria set by you.

Here are some examples of questions you can ask under Step 6 – Outlet Classification:

  1. Do we know all of the outlets in our geography – including name, address, etc? If not, do we have plans to reach the total target universe?
  2. Will we call on the points of sale ourselves?
  3. Will our distributors call on them or will the outlets collect the product?
  4. What percentage of outlets will we cover either directly or indirectly?
  5. What are the criteria that we could classify our outlets under?
  6. On which criteria can we classify using existing data we or our distributors have, and what criteria requires an outlet visit?
  7. Should we classify and visit all outlets, or should we focus on a subset based on a certain criteria?
  8. Do we have the skill set, coverage and resource to do this ourselves?
  9. If not, then is the service available in my market and what are the resource requirements?
  10. Are there options to do a phased on the job classification or is a specific focus and resource required?
  11. Will we have a different approach to dealing with the outlets based on size, total volume, our volume, category volume, share, display, location, accessibility, consumer profile, footfall, opening hours, engagement opportunity, owner vs staff operated, shopper entry, time spent in outlet, potential growth, TM&D opportunities, credit risk, etc?
  12. What will those different approaches be?
  13. Do current key account agreements effect how we may classify/treat/service specific outlets?
  14. What is the timing required to finish the classification?
  15. What are the criteria for assigning call frequencies and resources (people, money, time) based on the classifications?
  16. What are the training needs arising out of outlet classification?

Arguments can be made against Outlet Classification. If you are in a market entry scenario, with limited resources, with established distribution channels, you may decide that Outlet Classification at this stage would be a drain on resources. But if you are a national player looking for country wide distribution, effective Outlet Classification as part of an overall Route to Market strategy could be the difference between winning and losing in that market.

This post is part of my blog series on the 20 Steps to Route to Market Excellence model. One of the main goals of this blog series is to demystify RtM strategy and to provide FMCG leaders with a step by step guide to follow when reviewing or building their RtM plans.

The overall 20 Steps are split into 4 phases, Assessment, Strategy, Design and Implementation. This post focuses on Step 6 ‘Outlet Classification’. This is the first step in the Design phase and would be undertaken after a full review of your current RtM (Assessment phase), and the development of your new RtM Strategy (Strategy phase). You can read about the steps under the previous phases here.

I hope you find this useful, and I welcome any views and comments below. Next week I will cover Step 7 ‘Channel Classification’. 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, Traditional Trade, Route to Market, FMCG, Brewing & Beverages, SKU, promotions

How to Build a Competition Slaying FMCG Route to Market Strategy

Posted by Ross Marie on Thu, Oct 25, 2018

Welcome to my blog series on the 20 Steps to Route to Market Excellence model.  The purpose of this model is to assist and guide consumer goods professionals when they are putting together their strategic and operational plans to tackle their Route to Market (RtM). 

route to market strategyThe 20 Steps are split into 4 phases, Assessment, Strategy, Design and Implementation.  Over the last number of weeks, we have gone through the first 4 steps which cover the Assessment phase on the model.  We now move to the next phase of the model, Strategy.  The focus of this post is Step 5, ‘RtM Strategy & the 4D Approach’.  Whilst it may be the only step in this phase of the model, it may well require more time than any previous step. 

This step is where we bring together all the information we have gathered and reviewed during the Assessment phase.  We have reviewed every element of our current approach looking across the 20 steps, we have mapped out the entire marketplace and the total number of points of purchase.  We now understand our consumer trends, and what the realities of our marketplace bring.  We have assessed our current and the potential distribution models and we have analysed the competition.  Now it is time to reflect on all of this and to make the big strategic decisions as to our approach to the 4D’s (Distribution, Display, Dialogue and Digital). 

It is in this step that we will define and decide upon our DIME Approach (Direct, Indirect, Mix & Everything in between).  Our DIME Approach details out our distribution model.  We may choose to distribute Direct to retailers (via our own owned distribution network or via a 3rd party), or we may use Indirect distribution through intermediaries like wholesalers, distributors or cash & carry's.  We may also have a Mix of Direct and Indirect distribution.  But our DIME Approach will be clearly defined in this step.

Below are some of the questions you should ask under Step 5 – ‘RtM Strategy & the 4D Approach’

  1. What are the organisation’s goals? What is the Sales Function/Trade Marketing Function or Route to Market Function charged with delivering?
  2. What are the specific distribution, display, dialogue and digital goals to be achieved?
  3. What are the revenue, volume and share goals to be achieved?
  4. Do the short term, 12 month goals and the longer 5 year goals support one another or do they suggest that a different approach to RtM is needed?
  5. What is the budget available to deliver these targets?
  6. What processes do we need to adapt or put in place to support our strategy?
  7. What are our constraints? Do we have access to the required skilled people to fill roles?  What, if any, are the legal or regulatory constraints?  Are there other constraints particular to our market?
  8. Will we have a national approach, a regional approach, a channel approach and/or a key account approach? Will we have a prioritised mix of these approaches?  If so, based on what criteria?
  9. How do we measure success? What data and metrics do we require? 
  10. What is our approach to order capture?
  11. What will we equip the sales force with and what is our approach to training and internal incentives?
  12. What is our overall approach to key account management, trade incentives and trade engagement?
  13. Considering our current market position, that of the competition, what is our DIME Approach (Direct, Indirect, Mix & Everything in between) to deliver our goals?
  14. Will we use direct methods of distribution and manage it ourselves or will we use distributors? Will we use a mix of direct and indirect?  What are the development needs of our distributors?
  15. What are the different RtM options and combinations available?
  16. Have we identified key individuals both internal (sales/trade function & cross functionally) and external to the organisation who we can bounce RtM ideas off? Have we then consulted with and sought advice from these key individuals on the available RtM options?
  17. Using scenario planning, what are the best options available and how would these be ranked?
  18. Based on the chosen DIME approach are there any other decisions that need to be made before we design this strategy?
  19. How best can we present our strategy in a way that engages Stakeholders?

This step requires real clarity of thought and honesty.  You need to work closely with the members of your team, you need to include cross functional and interdepartmental teams, and together you can map out your own RtM Strategy and approach to deliver your goals.

I hope you find this helpful, and I appreciate your views and comments below. I will pick this up again next week, with Step 6 ‘Outlet Classification’. 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, RTM, retail, RTM Assessment Tool, Traditional Trade, Route to Market, FMCG

Distributor Assessment Essentials to Deliver Sales Growth and Improve RtM Strategy

Posted by Ross Marie on Fri, Oct 12, 2018

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

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

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

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

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

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

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

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

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

Your Guide to Consumer & Market Mapping to Improve RtM Strategy for Sales Growth

Posted by Ross Marie on Thu, Oct 04, 2018

Welcome to Step 2 of the 20 Steps to Route to Market Excellence. You can read more about the overall model and the steps I have already discussed here:.

The second step is ‘Consumer & Market Mapping’.  This is where you will review how you are currently reaching all the potential places from which your consumers are buying, to maximise sales growth.

consumer-market-mapping-rtmIn the consumer goods business, buying trends, brand distribution, product availability for consumers, and reach, are things managers live and die by. The measurement of these are also critical as they can be a key factor in understanding poor performance or in delivering success. For example, you may have a first-class Route to Market model for retail right across your market, but what if your consumers are moving to digital channels? Or your internal availability/brand distribution measure may show 95%+ on your system, but what if your RtM doesn’t cover all available points of sale?

This is where Step 2 of the 20 Steps model comes in. Here are some examples of questions you can ask under Step 2 – Consumer & Market Mapping:

  1. What are the current buying trends of my consumers?
  2. How have these trends shifted in recent years and do we expect them to change soon?
  3. What are the market specific geographic challenges and realities that we need to be aware of?
  4. What are the current number of available points of sale in my market?
  5. Do we have this data available? If so, at what level of detail and how is it maintained?
  6. Do we need to conduct an ‘Every Dealer Survey’ to map all the points of sale? What are the constraints involved? Could we do this internally or do we need to look externally?
  7. What is the split between direct vs indirect points of sale?
  8. How many points of sale are we reaching?
  9. What are the gaps and why has this happened? Was this a strategic decision or natural development?
  10. To what extent are there any specific ‘cost to serve’ issues?
  11. To what extent is the picture similar for our direct competitors and can we learn from them?
  12. What about the picture for other companies who do not compete with us in our sector?
  13. What is the population spread of consumers in relation to our coverage of points of sale?
  14. What percentage (best estimate) of the target consumers are we reaching?
  15. What are the key battlegrounds and must win areas for the market?
  16. Where are our gaps in relation to this and how are we going to bridge them?
As with each of the 20 Steps, the key is getting into the detail, getting behind the data and understanding the actual reality of your company’s marketplace and not just your own historical view of it.

Getting these foundation steps right in the Assessment phase of the 20 Steps to RtM Excellence can be the difference between beating or missing those sales targets.

I hope you find this helpful, and I appreciate your views and comments below. I will be continuing my series on the 20 Steps to Route to Market Excellence, with Step 3 Distributor Assessment in my next post.

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, RTM, retail, RTM Assessment Tool, Traditional Trade, Route to Market, FMCG

The FMCG Leaders Guide to Route to Market Strategy & Execution in 20 Steps

Posted by Ross Marie on Wed, Sep 19, 2018

Wouldn’t it be great if someone developed and shared a step by step model detailing how to build and improve route to market execution, sales execution and trade marketing strategic and operational plans? After 20 years in RtM and after working with Enchange and some of the biggest multinationals around the world, I have now developed just such a model.

First things first, where did it all start?

In the summer of 1998, I had just finished my Degree and Masters. Tom Hanks was searching for Private Ryan and I had yet to get my first mobile phone. The dot com bubble had yet to inflate and I was desperate to get my first ‘sales’ job with a company car. I really wanted to start my career, I wanted to begin my climb up the sale ladder, I wanted to follow in my father and brothers’ footsteps, but more than anything, I really wanted the independence of my own transport. It’s amazing how you view the world at 21!

As it turns out, I did start my sales career that summer. I joined an agency in Dublin, doing sales promotion and merchandising with Showerings (Allied Domecq) and Grants of Ireland. My focus was the spirits division in the grocery sector. I also finally got that company car (sort of). My red 1998 Diesel Ford Courier Van, it may not have been the sales man’s dream Beemer or Alfa, but I loved that little van. Most importantly, my career had started, and I was on my way.

Moving on into Diageo later that year and then entering the tobacco industry for 15 years, mainly British American Tobacco, allowed me to experience in detail the breath of roles across the sales, route to market and trade marketing and distribution functions. When you work in the tobacco industry, and you can’t communicate with consumers on billboards, or TV, or almost anywhere, you live and die by route to market (RtM) execution. I loved that challenge.

Following a successful and enjoyable career working for multinationals, I joined a specialist supply chain and RtM consultancy company, Enchange. Enchange shared my passion for RtM execution and has been delivering RtM improvement programs with amazing results for some of the world’s leading companies for the last 25 years.

Together, we have spent the last number of years refining our approach and building a model for RtM execution. I would now like to introduce you to the ’20 Steps to RtM Excellence’.

20 Steps to Route to Market Excellence

 

This methodology not only combines decades of RtM experience, it brings a strategic approach to delivering excellence in RtM execution. It gives you a systematic step by step approach to driving sales and share growth while meeting consumer’s needs.

The 20 Steps are split across four phases of Assessment, Strategy, Design and Implementation. Over the next weeks and months, I will be sharing more and more information on each of the 20 steps, how they work, how they build on each other and how they can transform an organisation to deliver sales growth.

I hope you will find this helpful and I would really appreciate your views and comments below. Please also sign up to our 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: RTM, RtM Strategy, RTM Assessment Tool, Distribution, Ross Marie, FMCG, Route to Market, Traditional Trade, 20 Steps to RtM Excellence

FMCG cost savings versus sales & marketing budgets!

Posted by Dave Jordan on Mon, Aug 13, 2018

There is your dilemma. You need to save cash towards an expensive year-end holiday but you really do not know the best place from where to take the money. Do you take it from your day to day current account which is already set up to pay the routine monthly bills and invoices? Do you take funds out of an investment account that has not yet actually matured?

In effect, the money in the current account is already committed and the expected appreciation in the investment account is still to be delivered which puts me on my soap box for today’s topic.

When times are tough and cost savings are required why do the senior bods always look to Supply Chain in the first instance? Unlike those colleagues with a fondness for endless agency lunches there is very little discretionary spend to be found in the vast majority of Supply Chain operations. OK, there may be some team building budget, business travel and a small entertainment allowance but where else can you save money?

There is not a lot you can do to have an impact in the short term. What could you do?

1. Negotiate better RM/PM prices? Yes, but this will not filter through to the bottom line very quickly.

2. Increase efficiency in your factories? Yes, but again not likely to hit the balance sheet any time soon.

3. Reduce head count along the Supply Chain? Certainly effective but think about notice periods and compensation obligations and not least the effect on efficiency and reliability.

FMCG Pharma cost savings supply chain resized 600You will have contracts in place for most services with 3 or 4PLPs for warehousing but as long as pallet space utlisation, storage efficiency and shrinkage etc is under control there really are few opportunities and certainly no “low hanging fruit”.

People often rant on about how sales and marketing people are the real stars of any FMCG or Pharma show and without them nothing happens. Think about it, if you do not have any product available to sell it does not matter if you have the best sales pitch or the most memorable TV advert, does it? In simple terms the SC gets the stuff there and S&M might, repeat might, sell it!

Supply Chain people and processes get the product into Traditional Trade and Key Account outlets and how they do it is relatively inflexible in terms of discretionary spend along the way. So when you are looking for savings why do you assume they must come from Supply Chain and not from the huge sales and marketing budgets? The promised client discounts have not yet delivered and the proposed new TV advert is a long way from having an in-market impact.

Certainly, you have to keep control of costs and a rolling annual target is a sensible plan for any business but 2-3% Supply Chain reduction every year is commonly small beer compared with multi-million S&M expenses. Diverting your valuable Supply Chain resources to scrimp and save these small percentages simply takes people off the day to day priority of getting your SKUs onto shelves.

Those Supply Chain “savings” may not actually be money in the bank.

Image courtesy of cooldesign at freedigitalphotos.net

Tags: FMCG, Dave Jordan, CEO, Pharma, Supply Chain, Traditional Trade, Cost Reduction

FMCG Mergers & Acquisitions - Why acquired brands fail to deliver

Posted by Dave Jordan on Wed, Jul 18, 2018

Let me get straight to the point on this one. Why do so many FMCG mergers or acquisitions frequently result in the apparent death-knell of once proud and promising brands? I am not going to name any names but if you think about it there have been some real clangers dropped by blue-chip FMCG giants.

Purchased companies or individual brands are usually already reasonably successful in order to attract new owners. Yes, sometimes companies will divest weaker brands or brands no longer core to their portfolios but you will struggle to sell a clearly decaying brand name. A real hospital pass if ever there was a branded one.

I am studying such a case in Europe at the moment where the FMCG brand acquisition is about 12 months old so plenty of time for smooth integration or so you would think. Marketing activity has not changed and I am also assured above and below the line advertising spend has been maintained at pre-acquisition levels. That in itself is unusual as sellers usually spend big to make a brand more attractive at sale time.

So why does an apparently attractive acquisition fail so quickly? Nothing at all to do with marketing or finance but everything to do with the extended Supply Chain. Just to be clear here I do not consider the Supply Chain to end at the distributor’s warehouse in Traditional Trade markets you commonly find in CEE, Africa and the Middle East. You need Supply Chain skills to get products on to shop shelves and then keep them replenished. With due respect to salesman and women, they are trained to sell.

Supply chain rtm m&a resized 600The newly acquired brand that was purchased with buoyant sales and a high profile has been dragged down to the level of the existing brands by inadequate Supply Chain and Route To Market (RTM) operations. Frankly, it did not stand a chance and it is no wonder the company wanted to buy a top selling brand when their own were performing so badly. However, the reasons for failure were all in-house as the once top selling brand plunged the depths.

There was no formal Supply Chain department with planning, logistics and customer service roles scattered around in Finance and Sales departments. There was no focus and no single person to co-ordinate and run a functioning Supply Chain. Forecasting accuracy; what’s that? Stock cover; no idea. S&OP; forget it Customer service; no!

Couple that level of disorganisation with a bonus-centric, forecast averse sales force trying to run the distribution chain through to the TT shop shelf and it is no wonder all the presentation arrows were red and pointing south.

When considering an acquisition to bolster sales and profit make sure your existing SKUs are not already blighted by lack of care an attention to your Supply Chain and RTM.

Image courtesy of renjith krishnan at freedigitalphotos.net

Tags: FMCG, Route to Market, Mergers & Acquisitions, Dave Jordan, CEO, Traditional Trade, Forecasting & Demand Planning, Distribution

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

Posted by Dave Jordan on Mon, Jul 16, 2018

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

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

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

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

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

Image courtesy of Stuart Miles at freedigitalphotos.net

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

Manage Supply Chain Expectations with Service Level Agreements (SLA)

Posted by Dave Jordan on Wed, Jul 11, 2018

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

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

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

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

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

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

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

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

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

 

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