BI in FMCG Industry- Raj Basu.ppt

1、1,BI in FMCG Industry - Raj Basu,2,Major changes in FMCG industry,Indian Consumer changesLarger disposable incomeMiddle class segment bulgingGreater global exposure Greater appetite & demand for global productsDifferentiated product & service requirementsFMCG space dynamicsExplosion of products Expl

2、osion of markets (Kirana & Organized Retail)Rush of new playersGlobal players bringing process and intelligence maturityIncreasing competitionSupply chain bottlenecksImpact on FMCG strategy & operationsIncreasing Flexibility Outsourced Contract ManufacturingDemand driven supply chainImproving Custom

3、er serviceRetail outlet segmentationCustomized Retail serviceSupply Chain segmentationGreater Organizational AlignmentEPM, Divisional Scorecards Integrated Sales & operations planningGreater Customer focusDemand analysisProduct charateristics,3,EPM/BI needs of the FMCG Industry,Rapid EPM adoption fo

4、r Org Alignment & strategy managementBalanced Scorecards (Strategy Maps, Business Scorecards)Budgeting, Planning & Consolidation systemsOperational performance managementFinancial Analytics for greater ROCEWorking Capital Optimization (C2C Cycle)Debtor AnalyticsPayables AnalyticsInventory Optimizati

5、onTreasury Cash AnalysisCustomer AnalyticsTrade Promotion AnalyticsWD ProfitabilityOutlet performanceChannel AnalysisIntegrated Consumer Demand & market performance visibilitySupply Chain AnalyticsSupply Chain Performance ManagementProduct Cost & profitability analysisOperational Planning efficiency

6、Inventory visibility & optimizationSupply Network efficiencySpend Analytics,Operations AnalyticsPlant Performance ManagementMES Analytics,4,Key BI Trends in the FMCG industry,Major Indian FMCG players are making rapid strides in enabling Business & Competitive intelligence as a key differentiator Mo

7、st of the large FMCG companies are centralizing BI as a shared service on a common platform across its businesses and brands with a razor like focus on getting Best-In-Class serviceMost of them are already deep into state of art Business Intelligence ability to check on an outlet consumption pattern

8、 on a handheld before meeting the ownerability to analyze secondary sales based promotions rather than primary uptakeability to provide outlet based actionables rather than market level inputs like OOS, poor AVF scores etcGlobal players are even further aheadTrade Promotion Analytics, Segmentation b

9、ased promos, supply chain bottleneck alerts, route optimization and advanced forecasting and predictive demand models,5,EPM Objectives,FMCG majors are interested in implementing a Performance Management (PM) program across the enterprise, in order to align goals and strategies with operational objec

10、tives, plans and responsibilities within the organization.,6,Perspective,Key Imperatives,Key Questions,Financial,Customer,Internal Process,Learning & Growth,Effect,Cause,Results,Action,“Profitability” “Return on Capital Employed”,“Consumer Satisfaction” “Market Share”,“Efficiency”,“Knowledge” “Innov

11、ation”,Vision & Strategy,To Satisfy our shareholder, whatfinancial objectives must we accomplish,To achieve our financial goals, whatcustomer needs, must we satisfy,To satisfy our customers, whatinternal business processes, must we excel in,To achieve & maintain our competitive position, how must th

12、e organization the Organization learn & improve,Balanced Scorecard incorporates a double loop feedback around both internal business processes and external outcomes,Classic Balanced Scorecard Framework,7,Decision-making challenges at ITC Businesses,Business Performance Mgmt Executive, Functional, Un

13、it Level ScorecardsEmployee Performance Mgmt Personal Scorecards,Impact of Food FG Warehouse location on Food Categories operating marginsImpact of Leaf stock at ILTD on price elasticity at ITDImpact of potato sourcing bottlenecks on Bingo Freshness,Fact Based Decision-Making / Actionable Intelligen

14、ce,Organizational Alignment,Integrated Analysis across value chains,Operational,Exception based operations at the FactoriesStock optimization across supply chain nodesFast tracking complaints from High Value CustPersonnel workload mgmt across stores,Tactical,Targeted Promotions & variable pricingOut

15、let Segment specific service packagesProfitability based supply routesDemand driven inventory management,Analytical Capability,Performance Visibility,Promotion & marketing impact trackingSupply Chain bottlenecksSKU velocityLogistics impact on operating marginsStore Allocation efficiencyReservation P

16、ipeline vs Forecast360 deg Customer Views360 deg Supplier viewsCost variance trackingOrder-To-Fulfillment, Cash To-Cash, Procure-To-Pay cycle times,Outlet Service Route OptimizationOutlet SegmentationAnalytical Forecasting Six Sigma AnalyticsPrice Elasticity AnalysisBCG Portfolio AnalysisHuman Produ

17、ctivity AnalysisLoyalty Analytics,8,EPM driven BI at a US Food Distribution Major,Strategic Goals,Strategic Metrics/Scorecards,Demand Initiatives,General AnalysisSales Force EffectivenessTrade Promotion EffectivenessMarketing EffectivenessMarket Analysis,Spend AnalysisSupplier Performance AnalysisIt

18、em & Brand AnalysisBid AnalysisCompetitive Analysis,Business Functions - Functional Metrics, Reports, Alerts, Scorecards, What-If Analysis, Guided Analysis,IT Functions - Dashboards, BI Tools, Databases, ETL, Data Models, Metadata,Sourcing Initiatives,Supply Chain Initiatives,Customer Initiatives,So

19、me Analysis Areas,General AnalysisSegmentation AnalysisContract ComplianceBusiness Review AnalysisCustomer ProfitabilityAnalysis,Delivery EffectivenessSKU rationalization EffectivenessBackhaul EffectivenessCarrier Performance Analysis,Some Analysis Areas,Some Analysis Areas,Some Analysis Areas,9,A s

20、ingle BI System should support the EPM Model,Visual Audits,Sales Force & CRM,WD System,Data Warehouse (Data Storage),BI Layer (Business logic, number crunching, metric/report generation ),Source Systems,SAP,ETL Layer,Data Extraction, Cleansing, Staging, Transformation & Loading,Performance Managemen

21、t Model,Excels,PLM,HRMS,Outlet Sales, Invoices, Purchase Orders Inventory, Transport Orders, Stock Tr Orders, Salary Advice, re-distribution Costs,Business Plan, Forecast, A/R, A/P, Visual Merch Audit, Production Plans, Market Research, Production Jobs,A common data set populatesthe entire model ena

22、bling :-ScalabilityEPM, Data, BI ModelSystem Performance Integrationdata linkagesbusiness rules,10,Some benefits of integrated modeling for FMCG,Impact of raw material shortage on retail offtakeAnalysis of a request for a short runner on Factory productivity vis-vis customer service Correlate/factor

23、-in market demand (IMRB) into AE performanceDecision on extending Promotions based on raw material availabilityAnalyze impact of sales strategies/norms on Market standingAnalyze synergy opportunities like sharing warehouses, transportation sharing and backhauling, reverse logistics etc across catego

24、ries,11,Typical BI Transformation Roadmap,Define Performance Mgmt Model,Define BI Strategy,Create BI Governance Model,BIImplementation,BI Change Mgmt,BI Value Mgmt,Supply Chain Transformation,Brand Management Transformation,Process Improvement Transformation,Major Organization Transformations,Need a

25、 Performance Mgmt & BI Transformation to empower & measure effect of transformation !,EPM & BI Workshops,Awareness Creation Appreciation of Best Practices Intent Generation,Framework Metrics Models Scorecards Alerts Linkages/Alignments Analysis Flows Dashboard Designs Biz Case/ Info Needs Get Mgmt B

26、uy-In,Technology Drivers App Architecture Data Architecture Platform Selection Vendor Selection Initiatives Roadmap Effort Estimation,Identify SponsorCreate Steering CommCreate Execution CommComm to all stakeholdersSet expectations/TimeCreate Project Plan,Business RequirementsSystem RequirementsDesi

27、gnDevelopmentTestingDeployment,Training CommunicationBiz Process ChangesExpectation MgmtUsage MonitoringBI Support ProcessesRisk mgmt,KPOCustomer ServiceBusiness ImpactBI Perf MgmtBI RoIBI Enhancements,BI Transformation Roadmap,12,BI Program Change Mgmt Challenges & Strategy,An effective Change Mana

28、gement strategy for BI Program starts at the Kickoff and ends at satisfactory system adoption and positive customer feedback. However, Change Management is an ongoing process and is part and parcel of an effective BI Governance Model. bringing people on board, convincing them of the value, goading t

29、hem to use it the right way, measuring business improvements.BI, being a non-critical business application needs cultural process changes to leverage the investment, which makes it even more challenging and critical aspect of achieving success,People Participation,Processes,Systems,Culture,Change,Bu

30、siness Sponsorship Business Buy-In, Ownership Identify Business Change Agents Remove Business IT gaps Remove fear of Retrenchment Create Senior Mgmt Champions to spread the message,Identify and Plan for process changes early on Create effective communication channels and joint project plans with oth

31、er process owners Cultural and governance change needs to go along with process changes,Identify & Plan all systemchanges early on (Frontline systems may need to have more checks and measure to improve data quality) Create effective communication channels and joint project plans withother System own

32、ers Communicate all system changes to the Organization,Business Driven Program Showcase Business Benefits Keep business in loop during change in scope Embed in biz processes like sales review etc Pre-empt business needs Communicate effectively Repeated Multi-media training Measure adoption, usage an

33、d publish figures Publish success stories,Key Questions for Change Mgmt Planning What will change ? Why will it change ? How will it change ? Who will change it ?,Change is enabled through 4 key change perspectives,13,Enterprise BI Strategy for ITC,BI Strategy,Execution Plan,Service & Maintenance,Go

34、vernance Model,BI Vision,BI Needs/ Painpoints,BI Business Case,Scope Definition,Implementation Roadmap & Project Plan,Architecture (Data, System) Tool Selection,Execution Model(Inhouse/Outsource) Vendor Selection,BI Budget,Service Model (Outsource, Managed BI Svc),Service Vendor Selection,Service Qu

35、ality Management,Service Improvement,Customer Focus,Risk Management,Value Assessment,Organization Alignment,BI Business CaseUnique Sales & Customer view Unique Spend & vendor view Supply chain wastes Asset utilization gaps Higher employee productivity Greater IT ROI Single Analysis Platform across b

36、iz areas Excel intelligence democratization !,Business Intelligence Mission (SYSCO):Provide a single view of timely, accurate, consistent & actionable information across the enterprise through a common user interface accessible anytime, anywhere to authorized users, thereby enabling fact based decis

37、ion making.,14,So Whats Driving Trade Promotions?,New product introductions.In 2003, 33,700 new FMCG items in the US marketplace alone up from about 32,000 in each of the previous two years. Declining shelf space. Median US store size has declined since its 1999 peak of 44,843 square feet, following

38、 nine consecutive annual rises. Wider assortment range in both North American and European stores constrains shelf space yet more. Private-label products. Private-label products now account for between 15% and 20% of items sold in US supermarkets, 22% in Europe, and a staggering 42% in the UK. Resul

39、t - large and rising trade promotion spend 10 FMCG firms interviewed by Forrester planned 2003/4 trade promotions at 16% gross revenues It all adds up to more than $100 Billion per year Based on 2003 revenues, the 50 largest FMCG manufacturers. Its the single largest element of expense for FMCGs, bu

40、t the least well controlled. Typically CFOs use a complex tangle of spreadsheets and enterprise app extracts to track trade promotion dollars but have no way accurately to estimate in advance the impact of a planned promotion. CRM based approaches typically just rely on sales estimates of trade prom

41、otion impact, thus ensuring that trade promotion accruals and supply chain preparations are based only on guess work No wonder senior execs get mauled by regulators and shareholders alike,Source : Forrester Research,15,Closed Loop Process BEGINS with Analyzing Performance and Opportunities in the Bu

42、siness,Plan, Simulate and Evaluate Scenarios,3,Analyze Opportunities for Brands and Markets,2,Analytics,Operational,16,Source: Brandweek November 25, 2002/Cannondale Study,Despite such large spends, not many manufacturers have succeeded in measuring promotion effectiveness,“Half of all promotional e

43、xpenditure is wasted . the problem is nobody knows which half!” William H. Lever, Chairman, Unilever Corporation,Of all investments, promotional spending is the highest whilst knowledge about their return and effectiveness is the lowest.For promotions, the driver is what was done the previous yearMo

44、st promotions are NOT evaluated in an objective and systematic fashionThere are no management KPIs to measure the business.,17,2.5%,1.5%,10.0%,ROS,“Manage Promotion Driven Costs”,“Redeploy Inefficient Spending”,80-90% of promotions are not profitable for manufacturers Consumers are unaware of 51% of

45、 items bought on sale Only 50% of manufacturers measure event profitability,Potential Manufacturer Value Chain Improvement (as a Percent of Sales),Percent of Sales,Manufac-turing Labor,Freight,Fixed COGS,Salesforce,Distribu-tion labor,Inventory Carrying Cost,Diverting and All Other,.4-.6%,.2-.3%,.2-

46、.4%,.3-.6%,.1-.2%,.2-.3%,0-.1%,Up to 2.5%,Source: Accenture Industry Experience and Trade Promotion Study,Substantial Opportunity for Manufacturers,Research suggests that FMCG manufacturers can achieve up to a 40% increasein return on sales through improved trade promotion management.,18,Some typica

47、l Trade Promotion Effectiveness KPIs,19,Trade Promotion Analytics Hierarchy of Needs,Operational,Tactical,Strategic,Evaluate Promotions Effectiveness,Ensure shelf availability,Measurement of Sales KPIs Store level, SKU level, Lift%, Drop%,Determine Order Status,Determine Promotion Costs,Demand Manag

48、ement,TP Scenario Planning,Determine and analyse Causals,Customer Behaviour Analysis,Inventory Management,Evaluate Store/Account Profitability,Measure promotion impact on sales volumes,A N A L Y T I C S,20,TPM Applications Key Interfaces,ERP,CRM,Operational Application,POS,Customer Analytics,Invento

49、ry,SYNDICATE DATA,Retailer Promo penetration data,Total cost of promotion,Retailer Invoice data,Inventory Availability,Order Backlog,Analytical Application,Forecast Accuracy,Base Demand,Historical Sales Trend,Sales Performance Brand-Account level,Customer Master Data,Product Master Data,Price Master Data,SCM,Store Promo Adoption,Consumer Off-take,Channel Spends,Stock-Out data,Consumer Billing Price,Store level forecasts,Planogram Compliance,