Home | Back

On Thursday June 3rd EyeOn hosted the 9th knowledge network event for the Food & FMCG industry.

05-07-10


On Thursday June 3rd EyeOn hosted the 9th knowledge network event for the Food & FMCG industry, which was attended by some 30 supply chain executives.

 

Topic of the event was ‘Planning for Value’.  The following trends were identified:

1.       More and more value based decision making instead of only on volume

2.       More focus on the integral contribution margin of products, also in planning

3.       Real integration of  finance in the S&OP process is key

4.       Continued focus on cash and working capital

 

Based on the interviews held by EyeOn the 4 topics were discussed in more detail during a break out session and 2 industry presentations of Vion Food Group and Friesland Campina.

EyeOn presented a “Money Tree” framework for Planning for Value, consisting out of the 4 main branches: Cash ,scenarios, profitability and Financial S&OP.

 

 

1.       Cash

  • Will remain to be king in 2010.
  • More and more supply chain managers however see a healthier balance between reducing working capital and  and making new investments in products and innovation. Investments in optimizing the supply chain are focussed on creating more responsive supply chains to better cope with  current volatile markets

 

2.       Scenario’s

  • Over 75% of the companies apply scenario planning in some way. Most of them still do this more ad-hoc than structural.  Tooling is not seen as critical and Excel often still does the trick.
  • Execution of scenario planning is more and more based on both volume and value instead of only in volume.
  • The tension with controllers is felt. “We have to accept that a picture of the future is always blurry ”
  • For a good scenarioplan,selecting the most important drivers is key; This depends not on systems but on knowledge and people!

 

3.       Profitability

  • In general standard costing methods  are used and dynamic costing is only done on request. In the more volatile environment of Food & FMCG this is outdated and dynamic costing should be used to optiomise integral profitability
  • SCM has more influence on value creation then experienced by supply chain managers themselves  Supply chain needs to be more aware of the pivotal role it can play in this process.
  • Of course planning always has to find the traditional balance between internal efficiency and customer satisfaction. But more and more planning is providing value based information which leads to better decision making on a broad spectrum of the business (f.e. portfolio management)

 

4.       Financial S&OP

  • Availability and transparency of (value) information (due to separate ICT applications) is still a challenge and has to be worked on
  • Finance should not be neglected in S&OP; most of the time they support the same target of more value based decision making. Supply chain however should help  finance from a focus of backward reviewing towards forward steering!
  • Strive for continuous involvement of finance  in S&OP instead of only during budget periods or ad hoc

 

   

Supply chain managers  need to  transform from volume based decision makers to value based decision facilitators driving value thinking in their company.

Lets harvest the fruits of the money tree!

 

 

 

back