Company U Supply Chain Service Level Improvement Research:Based On Pareto Analysis

While most of the companies in Fast Moving Consumer Goods (FMCG) industry enjoy this booming market, they should always keep in mind that inter and extra risks and challenges are everywhere. However, the reality is that most of the Service Level of the Manufacturers in FMCG industry is far beyond the clients’requirement, as well as effective Service Level improvement plans. Therefore, this research concentrates on tackling the long time issue regarding to how to improve the FMCG Manufacturers Service Level effectively.Taking Company U, a giant manufacturer in FMCG industry, as an example. Service Level of Company U in Asia, Africa and Russia (AAR) Region did not performed very well in the past2years from2011to2012with its performance below the annual targets. With the understanding of what the Supply Chain Department of Company U is facing now, a careful research was conducted regarding to the reasons why the Service Level was not improved. Based on the research, a "5Step Continuous Improvement Process" based on Pareto Analysis was proposed to solve the problems. First analyses the Service Level data of493Country&Category (C&C) Combination in AAR Region with Pareto Analysis, which leads to top80%Potential Sales Case Losses C&C combinations. Then, for each of the top80%loss C&C combination, again use the Pareto Analysis to deep dive the top Level3Loss Tree Reasons and Store Keeping Unit (SKU) that cause the biggest Potential Sales Case Losses. Both Pareto Analyses play a key role on identifying the key C&C combinations for Service Level improvement and its loss tree reasons as well as SKUs respectively. According to the analysis results, a regional team can further discuss appropriate action plans with the representatives on that particular country or category. A sounded feedback mechanism is also set up to guarantee the actions are executed promptly.3months after the implementation of the "5Step Continuous Improvement Process", the YTD Service Level in AAR region exceeded the target for the first time in March2013. Potential Sales Case Losses were also declined steadily started from2013. The actual performance of Service Level in2013proved that this approach truly solved the problem that haunted Company U Supply Chain.Pareto Analysis and "5Step Continuous Improvement Process" can truly help the Manufacturers in FMCG industry to identify the key areas for Service Level improvement. Moreover, with features such as simple, efficient and quantitative, other companies that face similar problems can easily adopt Pareto Analysis.