I’m doing a fairly long-term turnaround project in (primarily) chilled food, and the experience of the past few months is that retail volumes are generally holding up (people stop eating out, but they don’t stop eating!) but margins are extremely tight. Recent raw materials prices increases are proving very hard to pass on, and all the press hype is about deflation which hasn’t really worked its way through the supply chain (yet). Possibly the cost pressures will ease slightly, but it seems that the sterling rate against the dollar and the euro will keep input prices high.

In that environment there will definitely be a need for specialists in materials cost management, and with some businesses going into administration (eg Findus in January 09, and others to follow…) there may well be very short notice requirements for production transfer interims. there is always a need for lower business costs, but in general though, I don’t believe business confidence will improve sufficiently till later on this year for companies to start new projects that may then call for more interim support.

What’s the experience of demand for interims right now? Simon – have you got a feel for that?

Richard

The lack of mobility of perms due to housing/finance issues could be good but the temporary flood of recent redundees may not be so good for contracts and rates in the short-term.
Areas that I see as possibles for development are:
1) Supply chain finance – ie larger companies using their leverage with their own bankers to obtain better banking terms and financing arrangements for their suppliers. This is beginning to happen and gives extra business to the particular banks, usually better terms to smaller suppliers and potentially lower financing coasts to the introducing company and potential lower back-office charges as invoices are generally settled directly by the bank – opportunities for Supply Chain Finance people.

2) As I have mentioned in the Retail Blog – innovative pricing strategies that go beyond the usual bogofs etc could well yield better returns – opportunities for finance / pricing specialists who could take value/portfolio more flexible approaches

3) I also feel there are possibilities for Treasury specialists as there is a trend and an opportunity for smaller suppliers to band together in `loose` consortiums to use their combined leverage if they are uncomfortable with `1` above.

4) Another trend is the increasing prevalence of `bartering` – there are few specialising in this field but companies are definitiely looking at this but don`t really understand it. Interims that do could provide viable `managed` alternatives to the usual `distress` selling that occurs these days. Furthermore, if you are in-between barters 9ie you`ve sold but not bought) the HMRC recognises `traded £s` as cash on the Balance Sheet.

5)More play could be made on using the networks of interims on assignments as this is one of our USPs. Making introductions is a definite vote winner, particularly for references and gaining additional assignments.

6) There will be a definite need to tighten supply chains in terms of relationships and info sharing as recent events have shown that JIT `losse` networks have significant short-comings. Interims that have an ability in this area will be in demand.

7) The full ramifications of what has happened over the past year or so are not fully known but there should be a healthy tick-up of work in the compliance/controls area and particularly centred around risk aversion. FMCG has been more attuned to this than most other sectors but there should be demand for good finance interims in this field.

From April it will be incumbent upon companies to go through mediation (as distinct from Arbritration) before going legal. THis is to make dispute resolution quiker, less costly and to alleviate pressure on the courts. THere is a shortage of trained and certified mediators and with all this restructuring, rationalisation, down-sizing etc etc there will be lots of disputes hence lots of mediation but not enough mediators…good opportunity for Interims with this added certified comptency – once in to a client it could lead to other things!

Anyway, those are my thoughts for the day.

Yes I am seeing a lot more companies focusing on utilising interims skills in driving quick change, where the Interims don;t last as long, but their ability to get immediately into the detail, recommend solutions and implement quick wins a must. Also, there are headcount (FTE’s) freezes out there, which for all those from an FMCG permanent background generaly means more Interims to pcik up the slack.

With the number of business competitors getting smaller (through administration, takeovers etc), at some point the switch will indeed be to growth in terms of volume, sales and profit.

The biggest change I have seen so far and potentially in the short to medium future is the larger focus of companies on cashflow. I do not see this changing and those that can link this with the P&L, BS, operations and strategic thinking should be in a good place, whether permanent or interim.

Cost control must be linked to productivity control in conjunction with delivering the service to customer in a consistent fashion. Far too much is wasted in reactive measures as planning as a guessing game, rather than getting close to customers to understand there business in order to aid your own or the one you are working with.

The company that is able to always be on the front foot by constant review, monitoring and planning will always fair better through challenging times and with an Interim’s speedy; review, implementation and response we can make 2009 a good year.

I don’t know what 2009 will bring or indeed when, but am positive there will be many Interim opportunites as companies survey the scene after taking initial costs out through the usual people reduction and find they cannot do what they need to do with the resources at hand

For me the key to success is to concentrate on the value added by interims and move away from the ‘day rate’ discussion which in the current economy can simply be seen as expensive.

The pressure on cost will always be there even in buoyant economies and inflationary times as companies seek competitive advantage. Interims will need to demonstrate even better than before how they will add value using their experiences as icons of change and innovators as well as driving the usual cost out scenarios

I am looking forward to hearing how Interim Partners plan to sell in the enhanced Interim proposition in the current market and what I/we all can do to help in the process

Back to you Simon

Yes everybody has to eat, but as more announcements are made regarding job losses there will be a move to trade down, as witnessed by the retailer adverts. Even Hugh and Jamie’s drive to improve food quality will have little affect. This will in turn drive a need to focus on cost reduction / value engineering so that the profit line is not too badly affected.

As our banking colleagues continue reap the rewards of their efforts there will be very little capital spend in FMCG unless projects have already been planned and financed. A further fallout from the banks is the continuing decline is house prices which will cause anybody to thank long and hard before relocating. So recruitment may take longer when people do move, or they will not move. The permanent market does appear to be much quieter now, particularly the support functions.

All of the above means that most companies will look at how to save costs in-house, inevitably this will start with the support function and some will go to far in terms of numbers and will realise this, too late and will require expertise. Which will mean good quality Interims. The trick will be to convince them this is what they need. This will take some doing as the pressure on the profit line will continue for some time, almost certainly into 2010 and probably beyond.

It is also likely there will be consolidation between sites and the strong taking advantage of the weak. So a need for Interims to help in the transfer process.

2009 started off very, very quiet but now seems to be picking up, with pressure on daily rates.

In summmary I believe within FMCG – there will be a need for Interims, with a Proven track record, to carry out cost saving exercises from Q2 on an increasing basis, aid in product transfers, as well the traditional filler role, but probable, for longer. All in all a greater need for Interims

In the meantime if this does not happen take the advice from above have a good holiday and spend some quality time with the family.

All in all a good time to be a proven Interim

1. New and possibly novel ways of getting in front of the real decision-makers to “sell our wares”.
2. Convincing potential clients that our charges really will generate savings, representing a benefit and not just another cost especially when compared with the lower fees offered by the recently redundant temporary interims who are happy to take lower rates while they find a “proper job”.

Hopefully this is where the interim providers can help.

The bottom line: Do differently, try to identify clients’ real needs whilst resisting the temptation to simply lower day rates.

And another thing…..

The current state of the housing market means that even if companies want to recruit permanent staff, many candidates are unwilling or even unable to relocate. Good news for Interims…..

And th loser is..ASDA. They may have the cheapest goods but the store layout not to mention the car park layout make if a frustrating experience for one to part company with one’s readies. Note the number of people who give up waiting and just leave their trollies and walk out. It happens regularly in Wembley where I used to shop. They have not understood that less is more as far as space between isles is concerned. They need much more space between the end gondola and the tills. There is chaos on Saturdays and Friday evenings. There are not enough tills open at peak times and the self checkout space is manned by insufficiently trained people. I won’t shop there again whatever the price.

Moral of the story. The sale of all FMCG is enhanced by a positive shopping experience.

Past recessions on this scale are something of a rarity and it may well be that key decision-makers have little direct personal experience of managing through them. I expect there will be a certain reluctance to take any radical action initially (risk averse, not sure what the future holds, don’t want to be seen to over-react, let’s wait for the numbers ….). After the initial “paralysis by analysis” phase, I would anticipate a rush for the barricades on the basis that everyone else is doing something we must make sure we are not left out.

For the interim providers, this probably means a quiet Q1 with steadily increasing enquiries so that Q2 is more “normal” (if there is such a thing) and with the potential for Q3/4 to become manic as increasing numbers of clients are fishing for help in a shrinking pond of competent interims/consultants. Business is generally a zero-sum game and there are always winners as well as losers even in the present climate. Clients will soon realise that taking no action may not be the safest option.