Presented by Janet Dorenkott janetd@relationalsolutions.com

440-899-3296 x225

Joint Business Planning & Maximizing Trade Spend ROI

Kristy Garrey,440-899-3296 x231kgarrey@relationalsolutions.com

Janet & Kristy – Bio’s

• Over 20 years of experience in information technology.

• Founded Relational Solutions in 1996 and co-owns with

Rob York.

• Focused on data warehousing, data integration & business

intelligence solutions

• Specialize in the complex issues associated with integrating

point of sale and syndicated data for the CPG industry &

developed applications including POSmart and BlueSky,

designed for handling data complexities unique to CPG

companies.

• Member of Retailwire’s Braintrust

• Founder of the Demand Signal Repository Institute on

LinkedIn.

• Participated in the implementation of over 200 data

warehouse and BI projects for companies that include

Chrysler, Chase, Timken, Xerox, Glaxo, Smuckers, P&G

and many others.

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

Goals for Today

Define what JBPS requirements are today

Discuss the Win/Win Necessity

Explain why Trade Planning is so critical

to JBPS

Describe what retailers expect today

Define the role of TPM/TPO/TPI

Offer case study ROI’s

“Top 10

“Companies

on the

Move”Acquired BlueSky Integration Studio

“Best at integrating POS with

Internal data”

Cleveland

Weatherhead 100

Fastest Growing

Businesses

Oracle Developer of the Year

Data Warehouse & BI Consulting

1996 - 98 1999 - 01 2002 – 04 2005 - 06 2007 - 08 2009 - 10 2011 – 12 2013 2014

BlueSky“Coolest New

Technologies”

DataStage ETL Best ImplementorsAward

Informatica’sPartner of the

Year

Selects BIS to integrate POS & TradeEdge

Selects POSmart to

embed in DSR

Best Software”

Finalist

Company Background

“Data Warehouse of the Year!”

SAP Certification

& Partnership

Best of Cleveland Award

CGT Readers Choice Award

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

What is Joint Business Planning?

Identify Objectives

Level o

f D

iffi

cu

lty

Greatest Impact

New Product Analysis

Prioritize Objectives

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

Trade Spend ROI

Promotion Optimization

Potential Impact of OOS

Understanding Returns

Timeliness of Shipments

Buyer Meetings are not JBP

JBP is More & More Critical

Highest Spend Priority 2nd Highest Corp. Expense

Trade Spend: Typically 15%-20% of Gross Revenue

The Challenge

Time

Time required for data gathering and analysis across all retail segments is next to impossible

Resources & Coverage

How many resources are required to cover all promotions across all retail segments

Data integration

Integrating and aligning at a common level for planning data, shipments and consumption is very complex

No consistency across retailers

Clean historical data

For all data sources

Shipments – palets/cases to eaches

Consumption – syndicated data vs. direct downstream retailer

Trade Plans – spreadsheets or 3rd party application

Where is the COMMON REPOSITORY for harmonized, aligned data for ALL future learnings

Info

rma

tio

n

Time

R I S K

10 Days

Earliest Point when

an Accurate Decision

can be made

Amount of Information

Needed to make an

accurate decision

How Long Does it take to React?

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

Info

rma

tio

n

Time

LOW

RISK

Additional Information

Available when integrated

Amount of information currently

available to make a decision

1 Day

Increased

Employee

Productivity

Earliest Point when

an Accurate Decision

can be made is now 1 day

Faster, More Reliable, Consistent

Information

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

Kroger/Publix

Costco/Sam’s/

Convenience

Shipments

Other POS data

EDI/FF/txt/Access, etc

Wholesaler/Dist

AC Nielsen/IRI/Spectra/

TD Links/RSI/Mkt 6, etc.

Submit Reports

Most time spent gathering disparate data

•G a t h e r i n g

•C l e a n i n g

• I n t e g r a t i n g

•J u s t i f y i n g

?

Inconsistent reports leadto questionable decisions

Target/Giant Eagle

Wal-Mart, Shiloh

Retail Link, EDI/AS2

??

? ?

??

Why You Need To Care About Technology

Publix/Meijer

POSmart

Consistency

• Easy Access to Information

• Improved Productivity

Streamline DataGathering

Synchronize, Integrate & Validate POS

Wal-Mart/Shiloh

EDI /AS2/Retail Link

Promo/Forecasts

Kroger/Publix

Nielsen/Spectra/RSI

Shipping

Sam’s/Costco

Walgreens

IRI/Mkt6/NPD

EDI, AS2

Target/POL/IR

Wholesaler/Dist

Convenience

Productive Meetings

The Importance of Integration & Harmonization

Military,

Distributor

Budget

Nielsen, IRI,

TD Linx, etc.

Shipments

Forecasts

Reports

Scheduled

Shipments

Sources

RetailersWalMart

Food Lion

Costco

Kroger/DunH

Home Depot

Sam’s

Distributors

POSmartIntegrate, Validate,

Synchronize & Manage

BlueSky

Or Other BI Tool

Can feed other systems

POS

Integrator

BIS

EDI, Text, Flat

Files, Access,

Retail Link,

Partners

SAP, JDE,

DB2, Oracle,

JDA Users access

via web

3rd Party Data:

AC Nielsen/IRI

Spectra/NPD

Forecast

Shipments,

Promo, Vendor

TradeSmart

POSmart

An Enterprise Architecture

What is TPM, TPO & TPI?

TPM – Trade Promotion Management

TPM is defined as the upfront process of creating trade promotion

plans

There are many trade planning applications

SAP, Siebel, Oracle, IBM, Excel Spreadsheets,etc.

Typical Users – sales reps, marketing, trade teams

Weakness

Very little exposure to success factors

Relies on sales rep “hunch” factor

Little understanding of actual outcomes

No ROI analysis

What is TPO & are Companies

really doing it?

TPO – Trade Promotion Optimization

The choice of trade promotional activities and their timing are

arranged so the predicted results will progress the achievement of the

company's sales and marketing objectives.

According to AC Nielsen, only approximately 1% of all CPG companies

are implementing TPO

Low adoption rate due to complexities of gathering, harmonizing and

feeding back trade spend information

TPI – Trade Promotion Intelligence

The ability to leverage an enterprise architecture. Automation,

integration and harmonization of various trade components

The intersection of plans, shipments and consumption as it relates

to trade promotions

The ability to accurately analyze the outcomes of trade

promotions and compare to planning expectations across all retail

segments

The ability to understand whether or not promotions were

properly executed and the amount of retail compliance

Leverages a common repository for all historical promotions which

enables multi-year analysis/comparison of trade spend initiatives

Offers the ability to feed results to other systems – planning,

supply chain, predictive, merchandising, etc.

Rule-based system. Allows for a streamlined process where

ROI calculation is consistent and accurate

Process driven capabilities allowing visibility to non-compliant

events

Insight into planned spending to retail execution by event or

product is visible up the hierarchy

Use cost information to understand your true margins and

contribution

Provide visibility to historical pricing to protect against margin

erosion

Knowing “sell-through” and supply chain visibility by

incorporating shipments

Requirements of Trade

Intelligence

• ROI: Measures effectiveness/efficiency of a trade promotion event

• Promotion Effectiveness Index: Which promotions generate the largest

incremental gains

• Incremental Weeks: Promotion generated x additional weeks of sales

• % Lift: Promotion drove x% increase in sales

• Promotion Efficiency: % of promoted volume that was incremental to the

brand/PPG

• % Sell Through: Remaining inventory affects event ROI and forward buy.

• Promo Event Tactics Analysis – Results indicate potential revisions to

tactical mix to improve ROI.

• Purchase Frequency Analysis: Optimize promo event timing, compliment

the product life cycle.

Utilize the results of important KPI’s to positively affect and direct

current and future Trade Marketing.

Shipments are Key!

Relational Solutions, Inc.

Revenue is not the whole picture

Revenue – COGS – Trade Spend = ROI Dollars

What are your initial margins? How far can you afford to discount?

Did having too much cause margin erosion in non promoted weeks? (subsidize

regular sales unnecessarily)

Be Truly Collaborative with your Retail Partners!

Case StudyThe Category Team is presenting its trade

promotion results to the retailer and needs

understand which promotions are working

best and which ones need adjustments. A

report with traffic lighting is needed to easily

highlight areas of importance.

Relational Solutions, Inc.

Relational Solutions, Inc.

Joint Business Planning Sessions requires

Collaboration between retailers &

Manufacturers.

Manufacturer ships cases/pallets/displays,

how does that translate to consumer units?

Is your organization supply side or demand driven?

How much product does your case/pallet/display

hold?

Can the Retailer realistically move that amount of

product in the promotional time period?

Retailer offers consumers many brands and

has limited shelf and back room capacity.

Consideration for Retailer constraints drives

collaborative partnerships

Consumer deserves the freshest product

possible.

Improve JBPS with Retailers!

- Understand ROI for Wholesaler and Retailer

- Know that Events are working for BOTH you and the customer.

- Create Win-Win during JBPS (Joint Business Planning Sessions) with Retailers

Relational Solutions, Inc.

Winner for

Retailer but

not Supplier

Winner for

Supplier but

not Retailer

BlueSky Report for JBPS

What is Baseline?• Baseline is the expected sales in the absence of a particular marketing

variable like price promotion

• To determine the effectiveness of a given marketing tactic, one needs to

first determine the benchmark baseline sales level

• Baseline sales should be relatively stable estimates without wild spikes

in volume for any given period

• Should be extendable to all retail segments (FDM, category killers such

as Home Depot & Lowes, Club Stores, etc.)

• Use of aggregated vs. disaggregated data

• IRI & Nielsen use disaggregated data (ie. store level)

• Most others use aggregated data (chain/banner level)

Baselines

• IRI and/or Nielsen syndicated service

• 3rd party modeling formula

• We use Baseline Sales to determine Incremental

Sales lift based on your actual Total Sales during

the Promo Event

• ROI (Return on Investment) really reflects Return on

Incremental Sales

• Incremental Sales are calculated from Baseline Sales

• There are several methods used to calculate baseline

sales, pick the one you are most comfortable with.

Automated

Harmonization

& Integration

Dashboards&

Analysis

Plan

Improvement

Trade• Shipments• Products• Plans• Syndicated

BlueSky & PromoPro

• Planning Data

• Shipments

• Consumption

• IRI

• AC

Nielsen

• POS

• Master Data

• Forecast Data

• COGS

• Other

Source Data

Complex

Source Data

Integration & Harmonization is Key!

Relational Solutions, Inc.

Integration

Engine

TradeSmart

• ROI

• Lift

• Margin & Contribution

• Full Aligned & Accurate

• Updated as data comes in – no latency

• The TRUTH database!

Syndicated

Data

SAP/ERP/CRM

Retailer POS

OLAP

Cached

Reports

Specialized

Analytics

Mktg/CRM

Supply

Chain

Manufacturing

Forecasts

Demantra

Agility

Manugistics

Feed

Operational

Systems

POSmart

EDSRSource Data

Feed

BI

Systems

POS

Shipments

Supply

Chain

Forecasts

Master Data

Finance

Leveraging the Future

Maximize Value & Feed Information

back into TPM

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

Post Event Report

Relational Solutions, Inc.

Bad For

Customer

Bad For

Manufacturer

Case Study 2

Marketing would like to determine whether

having a product on promotion cannibalizes

other products in its category. To do so, a

Bump Chart is required that depicts both

Volume and Price.

Relational Solutions, Inc.

- Understand if cannibalization is happening across Brands.

- How does price impact volume?

Buns are

cannibalized

when Biscuits

are promoted.

BUSINESS OBJECTIVE

Post Event Bump Chart

Relational Solutions, Inc.

Fine Tune Your Promotions

• Group Promo PG’s into Events• Create event at Retail

• Realign Promo PG’s dates and Events• To align with sales

• Override base and incremental by Event

• Override base/incremental values when needed

• Allocate Spend to Units

• In order to not double count units sold, spend must

assigned to units

Make Your TPI AccurrateEssential workflow interface to

allow fine tuning of promotion

alignment with shipments,

plans and consumption.

What do we do now?

Evaluate Your Needs

What is your annual trade spend budget?

What is your company’s commitment to

improving trade spend ROI?

How much time is spent today evaluating

trade spend?

What is your coverage?

Start with a Roadmap

Start With a Roadmap Understand current methods

Reporting, Data gathering, Number of users

Experience of users, Consistency among teams on metrix

Total number of promotions, Annual trade spend

Historical data available?

Level of granularity for data (consumer units or cases)

Type of data available (plan, consumption, shipment, COGS)

Do all departments speak the same language (Category Management/Sales/Finance/IT)?

Do you speak the same language as your retail partners?

Current PPA metrics used today

How are they calculated

How are they sourced (ie. ERP, Nielsen, IRI, DW, etc.)

Reverse engineer metrics (disassemble and analyze components)

What is current coverage

“Gap Analysis” between current method and “best practices”

Evaluate IT infrastructure

DW, Databases supported, BI Tools, Environmental needs (Dev, Prod, etc)

Staff skills and ability to manage PPA application

Lay out steps and milestones to get to an integrated best practices solution

Expected timeframe, Level of difficulty, Resources needed

Expected ROI and payback period of application

Incremental approach leads to overall data

consistency

A staging area is required to cross reference,

integrate and synchronize data

Star Schema’s are required for certain databases

Architect before loading cubes

Business rules are defined & agreed upon

Single source of information – The truth

database

Knowing what a sound architecture is

Architecture Fundamentals

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

Improved Retailer Relationships

Better recognition and reduction of out-of-stocks.

Improved demand forecasting through more granular demand

inputs.

Improved optimization of supply chain.

Better and timely collaboration with retailer partners, through

shared insight, can be ‘game changing’

Improved success of new item launches at the retailer and store

level

Maximized ROI on trade promotion activity—pre, in-flight and post

event analysis.

Improved product development through enhanced consumer

insight

Better visibility of product movement off the shelf for customer call

centers

Executive management visibility and reporting - strategic

Improved sales and decreased costs

Joint Business Benefits

Property of Relational Solutions, Inc. By Janet Dorenkott February, 2014,

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