PROCUREMENT; supply chain blending is a must-have skill

By | Business Complexity, Data Analytics, Leadership, Marketing Procurement, Point of Purchase, Retail Fixtures, Shopper Marketing, Supply Chain | No Comments

If you are in Marketing Procurement and are looking for a mantra to guide you throughout 2018 then there is no better one to consider than “One size does not fit ALL”. It is wrong to assume that one supplier can provide a best-in-class solution across all the requirements of a supply chain. This is especially true when considering the complexity of spend areas like retail investment programs. These types of programs require highly skilled disciplines such as market research, shopper marketing, conceptual design, technical engineering, production management, logistics optimization, merchandising etc. These all need to work seamlessly together to deliver the best possible outcome.

“If you expect a supplier to do everything, you will only be able to receive an average at best solution, where there is no discernible competitive advantage.”

There is a growing trend in the marketplace for companies to outsource the management of complex supply chains to just one company. In this way, they are able to reduce internal complexity as they now only need to hold one supplier accountable for delivery. The challenge however, with this approach, is that in all likelihood that one company will not have the skill base or resources to provide a high level of performance for every step of the supply chain. If only one area of the supply chain does not function well then it can significantly impact the final outcome and the level of value that is delivered overall. To abdicate the responsibility for overseeing the supply chain to an outside company is risky at best and, in most cases, will significantly erode the value that should be delivered.

The reason that there is still a growing trend to move to a single source supplier is due in part to one small but very important fact; the responsibility for data capture, insights and performance reporting is also outsourced. As an example, I continually come across instances where cost saving reports are generated by the suppliers themselves, with no validation undertaken through any other means.

“Abdicate the responsibility for data capture and performance reporting to your supplier and you will become the least knowledgeable party in the relationship.”

So, what other approaches can be considered? The other traditional method of sourcing marketing requirements is to adopt the “preferred supplier” strategy where several competing suppliers are identified and included in all future tenders. This does have the advantage of ensuring a highly competitive focus on a specific area. However, the problem with this approach is that the entire supply chain is generally not considered. Tenders are usually disconnected from supply chain outcomes and this breaks the chain and negatively impacts overall performance.

The real opportunity lies in BLENDING; working with the best possible suppliers but in a way that they are seamlessly integrated across the entire supply chain and all working to generate the same outcomes.

Key principles are:

  • Supply Chain over Purchasing
  • You in Control over Supplier in Control
  • Specialists over Generalists
  • Connected over Isolated
  • Flexible Supply over Single Supply
  • Waste Reduction over Margin Reduction

Here are six very simple key principles to bear in mind when seeking to implement a blended approach:

1.Big Picture

The only result that matters is the one that positively influences the end customer. Own the supply chain and focus on the final outcomes. Ensure there is clarity and focus on your goals. Embed continuous learning.

2.Gain Control

Put yourself in control. Make sure you have the data you need. Become better informed than your suppliers. Ensure your data sources are stable, reliable and owned by you. Act on the insights generated. Validate all your decisions.

“What gets measured gets improved.”  ~ Peter Drucker, considered the father of Modern Management

 3.Find the best

Don’t settle for average. Find the best providers. Seek competitive advantage by developing the best outcomes. Do not accept mediocrity. Identify tangible points of differentiation as this is what will give you the edge in the market.

4.Connect the dots

Ensure clarity on roles and accountability. Focus on handovers. Identify possible break points and ensure there are agreed remedial actions. Link the data, so dependencies are clear. Always use data visualization to help identify areas of improvement.

“Without data, you’re just another person with an opinion.” ~ W. Edwards Deming

5.Embed flexible sourcing

One size does not fit all. Ensure the supply chain is flexible and can embrace new sources of supply. Blend local production with centralized supply to always deliver the best solution. Achieve this by controlling the data, specifications, standards and processes.

6.Focus on waste reduction

Remove waste and you create value. Discard anything that does not directly influence the final customer. Treat people’s time as an investment and find ways of improving the Return on this Investment. Always demand transparency.

“Blending is a business technique that seamlessly connects high quality services into a fully integrated supply chain to deliver the maximum influence on the end customer.”

Here’s to a very successful 2018.

If you would like more information on how LeanPie can transform your shopper experience supply chain, please feel free to contact David at david.newberry@leanpie.com

Why outsourcing is beneficial to retail investment programs

By | Business Complexity, Leadership, Lean Manufacturing, Marketing Procurement, Point of Purchase, Retail Fixtures, Supply Chain | No Comments

As a supplier of retail fixtures and shopper marketing programs to some of the world’s leading brands and retailers there is a question which we are always asked. “Do you have your own factory?” It is an important question that should be asked but it is not the question itself, but it is the answer that is looked for, that continues to puzzle. When we reply and inform the client that no we do not have our own factories, this is immediately assessed as a weakness in our offering.

BUT is this really the case?

“Outsourcing is a very powerful strategy that enables a company to leverage market innovation, new technologies, specialist talent, sourcing flexibility, cost efficiencies and risk management.”

In today’s global marketplace, it is critical that companies are able to respond in a timely fashion, to any challenge or opportunity that presents itself. This is as important to how the company goes to market as it is to how it operates and Procurement have a leading role in ensuring that the company is agile enough to respond quickly and sufficiently to improve operational performance.

“The measure of intelligence is the ability to change.”  Albert Einstein

So here are 8 reasons why outsourcing provides significant advantages over in-house manufacturing:

1.Innovation

Innovation is a consequence of the scale and depth of ideas that are put forward. By limiting innovation to one company, the level of innovation that can be achieved will be significantly curtailed.

2.Design focus

Companies that have in-house manufacturing will design to their own production capabilities and expertise. This will not necessarily deliver the right solution for the client. In a market where creativity and differentiation are essential to ensure shopper engagement, it is imperative that the focus for design is on desired outcomes rather than on what can be manufactured.

3.Production techniques

Retail investment programs can be highly complex and can include a variety of different substrates and production techniques. No one supplier can manufacture all the requirements in one factory, so there will always be elements that will be outsourced. When you don’t have outsourcing expertise the overall outcome can be significantly compromised.

4.Engineering skill

New techniques, tools and innovations are always coming to market. By outsourcing, you can always ensure that you have access to the required talent and engineering skill without relying on investment and in-house training to take place.

5.Capacity demand management

The level of requirement will always fluctuate and by restricting yourself to just one source of manufacture can limit your ability to scale up or down as required.

6.Flexibility of supply

The world is constantly in flux. Substrate prices change, currency exchange rates move, shipping rates fluctuate. Nothing stays still. This is why flexibility on supply is essential. A client must be able to source the right solution at any given moment and not be restricted or constrained to one source of supply for a given period.

7.Cost efficiency

When you have in-house manufacturing you have an ongoing overhead that you need to cater for. In many cases when you have spare capacity, the costs of this have to be made up in future production. When outsourcing, you can seek out the most efficient factories. In addition you can consider other locations and countries where substrate prices, labour rates, land costs and conversion rates are lower.

8.Risk management

Managing risk is becoming increasingly important. The real value in adopting an outsourcing approach is that you switch your focus from supplier management to supply chain management. With the right partner you can model the supply chain to be able to respond to any event or circumstance. In addition, you will receive increased transparency over the entire supply chain, leading to improved CSR management of all suppliers involved in the supply chain.

So when that same question is asked in the next meeting, please take a moment to reflect on what an outsourcing specialist can provide. They can help transform the management of a very challenging and complex spend area through insights, innovation, transparency, flexibility and overall supply chain modelling.

If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” Lee Kuan Yew

If you would like more information on how LeanPie can transform your shopper experience supply chain, please feel free to contact David at david.newberry@leanpie.com

Remove the 5 key roadblocks to global retail investment programs

By | Business Complexity, Culture, Customer Experience, Distributed Teams, Leadership, Marketing Procurement, Point of Purchase, Retail Fixtures, Shopper Marketing, Supply Chain | No Comments

In Marketing one of the hardest things to achieve is consistency of brand execution across multiple markets. This is especially true when the presentation of your brand in physical retail outlets is a very important part of your marketing mix.

The role of Marketing is to emotionally connect your brand with the customer. From one country to another, customer needs and expectations will vary. Combining this with different cultures, beliefs, language, etc. it is clear that brand engagement needs to be customised. Then add the different retail landscapes into the mix and the level of complexity changes again.

This creates the so called “perfect storm” for local markets to go their own way and shun any attempts by the global brand teams to establish a coordinated and synergistic approach to retail investment. Does this sound familiar?

“The three rules of marketing; everyone has an opinion, every opinion is different and every opinion is right”

So what are the main barriers facing global and regional teams who are trying to implement regional programs and how do you overcome them? Here are the five main roadblocks, that we are sure you will have heard of before:

1.The centre doesn’t understand my market

Regional retail investment programs often fail before they are started. The reason is that not enough data and corresponding insights have been gathered to ensure there is a clear understanding of the differing retail environments that are to be invested in. It is imperative therefore that this weakness is addressed. Consider undertaking retail outlet assessments and using augmented reality tools to test how certain concepts may work across markets.

“Collective wisdom will always outshine individual judgement. This has never been truer than in shopper marketing.”

2.”This program won’t work in my market”

The challenge is that the focus for the program ends up on the materials being designed. Each market looks at the materials being proposed in context of their own retail landscape and this is when they see issues. The focus needs to be switched to desired outcomes. The objective is all about delivering the most compelling and immersive experience possible to the customer to influence purchase behaviour. Develop a Purchase Decision Journey that connects every touch point into a consistent retail experience for key outlet types. If everyone can become aligned around the journey and the desired outcomes, then gaining commitment to the regional program is so much easier.

3.”There is no ability to customise the materials”

In many cases, materials are designed without a clear definition of their exact role from the customer’s perspective. This also impacts the way they are deployed. In addition, materials are often looked at in isolation of each other. Establish a retail investment kit for each specific outlet type. Build in customisation so that materials can be “flexed” to deliver a specific customer experience that meets specific brand, product or outlet objectives. This will remove the need for many local markets to have unique alterations.

4.”I can source it cheaper”

Invariably, when this position is put forward, it is more often than not a comparison of apples and oranges. The materials being compared are not to the same specification.

For an objective like-for-like assessment to be undertaken of the various potential sources of supply, there is a need for accurate and full availability of technical specifications. If a full technical specification is not available, then this claim has absolutely no validation.

5.”I need to buy locally”

Having a local source of supply is usually put forward for two reasons; lower cost and speed of response. Once you have full technical specifications you need to engage with a supplier who can provide full flexibility on supply. A supplier who can provide a supply chain model that meets the local market needs and can be adapted as requirements change. You need a supplier who can arrange offshore production (for lowest cost), local manufacture or a combination of the two.

“For a regional retail investment program to succeed, you need to switch the focus from the materials being developed to the customer experiences that you wish to deliver.”

So in summary, the format for running regional retail investment programs has to be fundamentally adapted to include the following 5 key criteria:

  1. Market insights on the differing retail environments
  2. A clear and aligned Purchase Decision Journey for each outlet type
  3. Customisable retail outlet investment kits
  4. Detailed technical specifications for every item
  5. A flexible supply model that can support offshore and local sourcing

By following these principles, many of the challenges of implementing regional or even global retail investment programs can be removed.

If you would like more information on how LeanPie can transform your shopper experience supply chain, please feel free to contact David at david.newberry@leanpie.com

Ditch mediocrity and transform supply chains in 2017

By | Business Complexity, Culture, Leadership, Lean Manufacturing, Lean Thinking, Marketing Procurement, Point of Purchase, Productivity, Retail Fixtures, Shopper Marketing, Supply Chain | No Comments

next-big-thing

It is that time of year where a significant number of articles are written about the key trends that will be happening in the year ahead. I don’t know about you but I find that businesses don’t really pay any attention to these types of predictions and it takes forever for companies to adapt to market changes. There are only ever a few individuals who are willing to take a risk and actually set out to make a real difference to their business by implementing real change.

So this is for you, the mavericks, the pioneers and the risk-takers who won’t accept the status quo and where the word “mediocre” is consigned to the dustbin.

I am specifically going to focus on non-core supply chains. So here is my list of predictions for 2017. To be honest, it is more a wish list than a set of trends, but in my mind the individuals and teams who follow these principles will add significant value to their companies and transform how supply chains are managed.

1.SaaS (Software As A Service) will become Software And Services

Many people see software as a means to fix broken processes in companies but this is just not the case. Software is an enabler. It provides organisations with the opportunity to be more efficient about how they manage part of their business BUT it cannot fix underlying problems where processes are broken or skills are deficient. The challenge with supply chains is that they are complex, multi-disciplinary and require every element to function efficiently. If they don’t and one element is broken then the supply chain falls over. This is why TCO (Total Cost of Ownerhip) was introduced to ensure that there is responsibility defined for the entirety of the process.

In many cases, organisations don’t have the depth of experience and skills to ensure that a supply chain operates in the way it should and so they rely on suppliers to fill in the gaps. The end result is that these suppliers act in their own best interests rather than putting the customer first. This has created an opportunity for a new type of software company that not only provides software but wraps services around it in a highly transparent way that addresses these market shortfalls. Supply chain leaders need to embrace these new types of organisation and transform their supply chains.

2.Networkers will become the leaders

I have to say my biggest bugbear is when individuals within large organisations create barriers to information flow. They never respond to a communication, their phones are automatically directed to voicemail and worst of all they say they’ve passed on your details to colleagues who will get back to you if they need to. So how likely is it that these people have conveyed the opportunity successfully? I doubt if they even understand what the opportunity is.

The individuals who will prosper in this new networked economy will be those people that “Pay it Forward” and seek to help people both internally and externally connect. Too many people believe that an organisation comprises employees only. This is just not the case. The success of any organisation depends on all stakeholders; employees, partners, suppliers and most of all customers. Everyone has a contribution to make to the success of the company and their voices must be heard. So, if someone calls, set aside 5 minutes and take the call. You will never know what you can learn and what opportunities might await.

3.Transparency will be the No1 priority

There is a lot of focus on analysing data but the question I always ask is do you have the data you need? In so many supply chains there is little to no real transparency. You may have prices but you don’t know what the true costs are from your suppliers. It is like the iceberg, you only see a small part of the puzzle. It is imperative that supply chains are opened up and every element and every cost is transparent, so a real understanding develops of what all the cost drivers are from start to finish.

Strive for transparency but do this with the principle that transparency will help create additional value that can be shared. If you see transparency just as a means of reducing margins, with no other end result, you will promote and encourage the lack of information sharing that you face today.

4.Real-time updates will take precedence over historical reporting

The vast majority of company reporting has been focused on historical reporting. The problem for procurement and for supply chains is that this information comes too late to address any issues that have arisen or to create additional value. The problem with complex supply chains is that if an issue is not addressed immediately then the problem only gets worse. How often have you received that call from the supplier that your shipment will be three weeks late? Clearly a problem like that did not happen overnight.

It is imperative that real-time data becomes a priority. This should take precedence over any other form of reporting. Remember if you can’t influence the outcome then the data and subsequent analysis has limited merit.

5.Procurement will switch from margin reduction focus to removal of waste

Lean manufacturing principles have transformed a number of industries and functions, but procurement have been slow on the uptake to adopt these principles. Procurement’s main focus has to be to obtain the best possible price and this in general has always been focused on reducing the margin taken by the supplier e.g. negotiating the final delivered price. This needs to change. Procurement need to take ownership of the process and to switch their focus to finding ways to remove waste, where resources (people, time and money) do not contribute to the final outcome. This requires leaders to look internally as well as externally.

Consider this: A one hour meeting attended by seven people is the equivalent of one Full Time Employee. Also consider how long it takes to get anything done. Perhaps your diary is so booked that you are not able to see a supplier for 6 weeks. Well that is 6 weeks of potential opportunity to add value back to the business that has been lost. It doesn’t take long to identify significant opportunities to dramatically reduce waste in this way and to add real value back to the business.

How many of these principles will you be supporting next year?

If you would like more information on how LeanPie can transform your retail fixture and permanent POP supply chain, please feel free to contact David at david@leanpie.com

Forget Big Data, give me Real-time Data now

By | Big Data, Data Analytics, Marketing Procurement, Point of Purchase, Retail Fixtures, Supply Chain | No Comments

Blog data

There continues to be significant discussion on the topic of Big Data. Big Data is the term used to describe very large data sets that need to be analysed computationally as they are simply too large to be reviewed in a manual way. By using the latest analytics software, you are able to identify and reveal patterns, trends and associations between the huge numbers of data points. This helps you better understand the relationships at play, how various parties are behaving and what interactions are taking place. This unearths new opportunities or potential challenges that were previously hidden.

So how does this relate to a Marketing Procurement function? It is likely that more data is now being captured on the goods and services that marketing are procuring. As these data sets increase in size, analytics can help uncover hidden value. However, what is more important is understanding which data points are valuable and can be acted upon. I like to refer to this as Small Data. Not all data has the same value and it is therefore imperative to identify what data is critically important and can influence commercial performance. The second step is to make sure that the quality of this data is accurate, robust and able to be analysed.

An obvious example is, how you might classify all the goods and services that marketing are buying. If there is no standard classification system in place and every party is using their own unique terms, then you would need to rely on key word analysis and this is less than optimal. The second factor is the degree or depth of classification system you use. If every display rack is just classified as “Display Rack” then counter units, floor-standing units, wall mounted units and promotional units would all end up being classed the same and any analysis would be just too high level. 

The starting point, when approaching data analysis, is to not only look at the data you have but more importantly to identify what data you NEED. Data has no value if it cannot be actioned. Identify the actionable “Small Data” that you require and then put in place structured processes that enable you to capture this. For Marketing Procurement you need to look at the various supply chains as your means to capture this data.

The other factor that is critical for Marketing Procurement is the need to gain access to the data in real-time. If you are able to capture data from the supply chain, at the start of the process and in real-time, there is a huge opportunity to influence and add value. If your only access to data is internal data (Purchase Orders) and after the event, the opportunity to add value has gone. Here is why:

  • Marketing investments are constantly changing, so having historical data for an investment that won’t happen again has limited to no value
  • If there is missing or inaccurate information, trying to obtain this after the event is very time consuming and in many cases futile as suppliers have no incentive to help
  • After the event, there ends up being a reliance on the supplier to provide the information you need, on their timeline and in their format
  • You will always be the last to arrive at the party and as such the level of influence you can bring will be dramatically reduced

So, how can Marketing Procurement use data to transform how they can add value. Here are some tips:

  1. Identify what data you need
  2. Establish the standards by which that data needs to be provided
  3. Identify the supply chains where that data will originate
  4. Ensure you identify the front-end of the supply chain and always include that is your approach
  5. Introduce new processes, procedures and systems to those supply chains to make sure they are fully transparent and can provide you the data you need, when you need it

The reality is that if you are involved from the beginning and you are able to obtain the data you need in real-time, your ability to influence will increase exponentially. End-to-end supply chain management with a strong data – insights driven strategy will unlock significant value.

This is the approach that sits at the very heart of why LeanPie was founded. If you are looking to transform how you design and procure retail fixtures and Point of Purchase materials, you should look no further. We commit to “Clarity and Control through Precision” based on:

  • Clarity – transparency – cloud technology (transparent data)
  • Control – governance – lean processes (real-time data)
  • Precision – engineering skill – talented experts (structured data)

There is no downside to talking to us and you might unlock some data that you didn’t know before. We look forward to hearing from you at david.newberry@leanpie.com