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FORUM #SAPFORUM Benchmarking Success in Consumer Products with Value Engineering Stephen Hollier
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Benchmarking Success in Consumer
Products with Value Engineering
Stephen Hollier
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Agenda
• Value Engineering
• Benchmarking
• Customer Innovation
• Call to Action
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SAP Value Lifecycle Value Discovery
Diagnose business process performance
Assess areas for best practice adoption
Build and validate the business case
Align with CEO / Board agenda
Value Optimization
Measure performance
Identify improvement
Define action
Leverage best practices
Value Realization
Design for value
Define KPI’s to track
Identify and manage risk
Design governance model
Value
Lifecycle
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SAP Value Engineering
Content
Benchmarking 10,000 submissions
25 industries, 30 process areas
Assess KPI’s and best practice
adoption relative to top quartile
benchmarks.
Business Transformation
Studies Proof points of value realised
Training and Tools
Value Academy 7,500 attendees
2,500 companies
Company specific training
academies to develop value
management capabilities
Value Lifecycle Manager Online tool to support business
case development
Services
Strategic Innovation Innovation workshops using
Design Thinking principles and
leveraging new trends and
technologies
Business Case “Outside-in” or collaborative value
assessment
Value Realisation Governance and processes to
deliver value on time, on budget
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Responsive Supply Networks
Best People and Talent End-To-End Processes
Product and Service Leadership
High Performing Assets
Superior Customer Value Strategic IT Operational Excellence
Benchmarking Surveys
Human Capital Management
Talent Management
Financial Excellence
NPDI
Trade Promotion Management
Sales Effectiveness
Finance
Financial Compliance
Order to Cash
Enterprise Health Check
Total Cost of Ownership
Business Intelligence / Analytics
Enterprise Information Management
Supply Chain Planning
Transportation Management
Warehouse Management
SRM/ Procurement
Manufacturing
Enterprise Asset Management
EH&S Compliance
HR Shared Services
Financial Performance and Risk Management
Cash to Cash
Finance Shared Services
Value Management
Best Run IT Lean Enterprise
High Performance Analytics
Implementation Services
Customer Contact Centers
Mobility
Customer Service and Support
Retail Merchandising
Public Finance
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SAP Value Management Centre https://valuemanagement.sap.com
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Benchmarking can be used in many ways
Establish Performance Baseline to Prove Success 2
Intra-company/ Global Benchmark 3
On-going Performance Management 4
Opportunity Identification / Prioritization 1
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Benchmarking Performance Analysis
Framework
Performance
Drivers
Key Performance
Indicators
Performance
Analysis
Framework
Effectiveness
Trade Spending as a % of Revenue
% of Product Sales sold on Promotion
Technology
System Landscape
Use of Technology
Best Practice Adoption
Current Level of Best Practice
Desired Level of Best Practice
Efficiency
FTE’s per $100m of Trade Spending
Out of Stock % during Trade Promotion
Effectiveness
Efficiency
Recommended
and Actionable
High Impact
Strategies
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Type Metric Company Peer Group
Average Top Quartile
Effectiveness
Trade Spending as a % of Revenue 25 12.8 5.3
Average Annual Fund Overspend (in %) 6.0 2.9 0
% Of Annual Product Sales Sold on Promotion 50 45 25
Productive Spend as a % of Total Spend on Trade Promotions 80 43 60
% of Trade Promotions Resulting in Incremental Volumes 100 76 90
% All Commodity Volume (ACV) of Trade Promotion Execution 70 65 90
Timely Insight into Trade Promotions 3.0 2.7 3.0
Invoice Accuracy Rate 99 93 98
% of Deduction Balance which is Legitimate and Payable to Customer 95 90 98
Efficiency
Actual Days of Stock 33 31 10
Out of Stock % When a Promotion is Running 2 8 3
FTE’s per $100 Million of Trade Spending 16.7 26.4 6.3
Deduction Balance as a % of Revenue 7.0 4.7 1.8
TPM: KPI Performance
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Effectiveness of TPM Systems and Processes
% of promotions resulting in incremental volume
How effective is your organization at replicating your most effective promotions? 80.6 72.5
11 %
Low High
% of productive trade spend
How effective are your trade promotions at growing category volume? 49.5 38.1
30%
Low High
% of productive trade spend
How effective are your processes and systems at tracking the incremental volume resulting from
trade promotions? 62.2 36.7
70%
Low High
% of productive trade spend
How effective are your processes and systems at tracking the return on investment of trade
promotions? 56.0 38.4
46%
Low High
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Best Practice Assessment
Trade Promotion Measurement and Analysis
0
1
2
3
4
5
6
1 2 3 4 5
TOP 25% Average
Customer Coverage Customer Importance
Best Practice Ranking 1
Adequate information is available on baseline and incremental
volumes to track the impact of promotions on promotion
objectives
2
Company has the ability to centrally manage trade plans by aligning
sales promotions with all/any supporting events such as advertising
plans and media buying
3
Company has the ability to perform real-time analyses of trade activities
to help identify the most successful and effective promotions, and to
adjust current promotions
4 Trade Promotion Management spends are measured and reported
in customer profit and loss statements
5
Company can systematically track and account for all costs related
to trade activities, which aids compliance with accounting
principles and government regulations (eg.SOX)
Best Practice Listing
1 = No Coverage 5 = Full Coverage
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Improvement Strategies
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Tangible Benefits Tangible Benefits % Impact
Revenue
Increase in promotional sales
Reduction in out-of-stocks
3-5%
10-40%
Operating cost
Reduction in fund overspend
Improvement in trade spend efficiency
Reduction in forward buying
Lower deductions
Reduction in manual administrative work
0-5%
1-10%
5-10%
40-70%
15-20%
Working capital
Reduction in inventory levels
Reduction in re-allocation of finished goods
Reduction in outstanding payments
3-5%
10-20%
5-40%
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Innovation
Cloud In-memory Mobile
Global markets Millennials
Data Content
New business
networks and
supply chains
New monetization
models
Co-innovation with SAP
Design thinking enabled by technology
New technologies
New value sources
New business models
New markets
Knowledge
workers
Social networking Economic
cycle
New trends
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Innovation Workshop Discover Design Deliver
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Call to Action
Contact your Account Executive to Coordinate VE Resources 2
Develop a Business Case 3
Set up a Customer Innovation Workshop 4
Participate in Benchmarking 1 https://valuemanagement.sap.com
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Thank you Contact information:
Stephen E. Hollier
Senior Principal, Value Engineering
SAP UK Ltd
07966 975 207
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