Delivering a solution that enables all participants in the process to work collaboratively to deliver profitable trade promotions at a leading food and drink company

Background

The client is a major supplier of branded and own label products to the big supermarket chains in the UK and mainland Europe. A significant proportion of sales and profit comes from the over 1,000 promotions the company runs each year.

Maximising the profit from promotions depends on two key factors – first of all making sure the promotion is financially viable by balancing the anticipated demand and promotion price with the cost of buying or manufacturing the goods. At the best of times this is a difficult equation for account managers, brand managers and procurement to handle.

Secondly the logistics of the promotion have to be exemplary. Marketing, merchandising, manufacturing and supply chain managers have to collaborate closely to ensure that goods and promotional materials are in the right place at the right time. The challenge is made more difficult because unexpected spikes or lack of demand can occur at the individual store level, which requires inventory to be redirected very quickly. Add to this the fact that at any one time the whole logistics function is dealing with multiple promotions for different key accounts and the whole activity becomes extremely complex.

Historically, the tools for forecasting and managing promotions had been brand focused. However, a change from being product/brand focused to allowing key account managers to sell the full portfolio of the company’s products to each of the major retailers exposed and exacerbated the problems the company already had – coordinating promotions across the company’s historically fragmented systems.

The Solution

The Group IT Director set out to find a solution that would allow the company to adopt a more collaborative approach to trade promotions management. He was looking for a single solution for managing all aspects of promotions. But, at the same time, he didn’t want either a system that was over-engineered and unnecessarily complex, or one that was built from scratch and, therefore, not based on standard SAP functionality.

After careful evaluation he chose a solution proposed by Pivot plc, which utilized the functionality of the SAP Advanced Planning and Optimization component and SAP Business Objects Business Intelligence platform.

The solution provides a single version of the truth for all promotion activities – both financial and operational. Potential promotions negotiated by sales are entered into the system, which provides up-to-date and accurate information to all those involved. Workflow is used to prompt participants take appropriate actions at the correct time and in the correct sequence.

From the financial side, brand managers can create sales projections while buyers and manufacturing managers can work on the related costs. The two sets of information can quickly and easily be brought together to establish realistic prices and profitability.

At the same time marketing, merchandising, manufacturing and supply chain managers can collaborate on the operational aspects of the promotions to ensure all the necessary activities to produce a successful promotion are coordinated and carried out on time.

By their very nature promotions are fluid. The beauty of Pivot’s solution is that immediately any change occurs, for example a new forecast or price change, everyone involved is informed immediately, providing a closed loop system that enables appropriate action to be taken proactively.

Once promotions are finished the details and results are captured in a solution based on SAP Business Objects Business Intelligence for reporting and analysis. Previously the company could only monitor and analyze the top forty promotions at best, it would take a fortnight and there would still be debate about whether the data was accurate or not.

Today Pivot’s solution allows the company to rapidly identify the better performing promotions by product, by account and by their contribution to overall business performance. It provides a growing source of practical intelligence that can be used to improve decision making about the viability and anticipated results of requested promotions. As a result, the company is in a better position to negotiate deals with its key accounts and drive greater profitability.