the industry’s leading edge process… how trading partners...

©2012 Winston Weber & Associates, Inc.

The Industry’s Leading Edge Process… How Trading Partners Gain the Highest ROI on Collaborative Business Planning (CBP)

Win Weber Chairman & CEO

Winston Weber & Associates

©2012 Winston Weber & Associates, Inc. ©2012 Winston Weber & Associates, Inc.

“The traditional relationship between retailers and suppliers is best characterized as one of mutual respect, cooperation, peaceful coexistence and distrust”

“To someone outside the industry it would appear most retailer/supplier relationships are based on the ‘What’s in it for me’ philosophy instead of ‘What’s in it for us’ philosophy.”

“We must encourage retailers and suppliers to bridge the gap and work together for mutual benefit.”

“Both retailers and suppliers must accept the fact that without mutual benefit, or a win/win relationship, there is no partnership.”

W. Weber

Before We Begin…3 Minutes Of History

©2012 Winston Weber & Associates, Inc. ©2012 Winston Weber & Associates, Inc.

Optimum Category

Performance

• Increased Unit Volume • Increased Sales Revenue • Increased Profits • Increased Market Share • Improved Customer Service • More Satisfied Customer

• “Best Cost” Buying • Use all Available Vendor Funds • Increase Inventory Turns • Improve Promotion Effectiveness • Improved Promotion Efficiencies • Improved System Efficiencies

Supplier/ Retailer

Leverage

Lower Cost

Before We Begin…3 Minutes Of History Partnering is any Situation where the Retailer/Supplier Relationship is one where there is Agreement to Leverage Combined Resources for Competitive Advantage

Cost Leveraging


Typical Joint Business Planning Processes

• No updated, consistent or formalized process across the business

• Primarily based on a supplier push model- selling market position, strategies and brand plans to the retailer

• A tendency to focus on tactical and transactional issues with a short term focus

• Insufficient understanding and communication of retailer’s strategies, objectives and capabilities …under prepared for effective dialogue

• No clear and consistent approach for Top-to-Top meetings

• 75% of all “Top-to-Top” meetings are spent reviewing past performance with both parties talking at each other

• Lack of clear process for actioning collaborative initiatives that result from Top-to-Top meeting

• Inconsistent annual plan development process

Let’s Talk About Today


Let’s Talk About Today

Only 20% of suppliers believe that their strategic collaboration efforts have achieved significant impact and 80% say it has delivered only minimal to moderate results

Only 35% of retailers believe that suppliers really understand them while 65% say suppliers do not know enough about them

Significant improvement must be made to satisfy the demands of the retailer, the supplier and importantly the shopper


For Maximum Effectiveness, Neither the Retailer nor the Supplier can “Go It Alone”

• Neither party has all the data, analysis and insights

• Neither party has all the knowledge, expertise and resources

• Neither party controls all of the marketing levers to attract and convert consumers/shoppers

Now, Let’s Talk About The Future


The Future…Collaborative Business Planning

Collaborative Business Planning An approach by which manufacturers and retailers are strategic partners through alignment of strategies, sharing and development of shopper insights and solutions, and application of efficiency enhancement initiatives leading to sustainable and mutually beneficial results longer term

•Focused on opportunities and solutions…initiative based

•Annual/longer term planning/performance

•Sharing of consumer and shopper-centric insights

•Translation of insights into action

•Aligning on operational/functional opportunities

• Integration of knowledge/information is required currency to “play”

•Broadly or selectively applied


• Offers sufficient flexibility to fit any retailer situation

• Results in more aligned and impactful business planning

• Ensures a sharp focus on issues and opportunities leading to shopper centric solutions

• Produces a much higher return on investment for resources deployed .

A Process That…

A supplier or retailer who wants to be a winner in today’s environment, and in the future, has no choice but to adopt the CBP process

Collaborative Business Planning


Strategic Collaboration Framework Strategic Collaboration Framework

Shopper Insights

Category Management

Shopper Marketing/Consumer Marketing

Supply Chain

Growth Enablers

Growth Enablers

Efficiency Enhancers

Efficiency Enhancers

Resource Alignment

Strategic Alignment

Information/Data Sharing

Retailer Executive Sponsor

Merchandising Leadership

Manufacturer Executive Sponsor

Customer Management Leadership

Functional Coordination

Common Goals and Measures

Success Factors

Joint Planning

Success Factors

Information Technology

Subject Matter Expertise

Store Service/Execution


Customer Alignment Goal and Strategy

Customer Value Proposition

Customer Segmentation

Business Review and Assessment

Customer Profile

Customer Strategies and Requirements

Brand Strategies, Objectives and

Tactics

Shopper Insights and Platforms

Market, Customer, Competitive

Analysis

Trade Promotion Strategy and

Process

Logistics/

Supply Chain Improvement

Strategic Direction

Go-to Market Strategy

Customer Assessment/

Strategy

Analysis, Insights, Marketing Plans,

Other Initiatives to Fuel Collaborative

Planning

Elements Required to Drive An Effective CBP Process


Low Size /Performance of Customers (Quantitative Measures)

High

High

Low

Readiness/ Receptivity of Customers to

CM and Shopper

Marketing

Customer Segmentation Framework

Index: Avg. = 100

Meaningful Segmentation Drives Resource Investment

Inde

x:

Avg.

= 1

00

Quadrant III: Lower ROI, but

Strong Probability of Collaboration

Quadrant IV: Minimal ROI Probability

Quadrant I: Strongest ROI

Probability

Quadrant II: Strong ROI Potential


The 3 Tiered Collaborative Business Planning Process

Strategic Collaboration

Strategic Alignment Meeting

2-4 Key Strategic Initiatives

Annual Customer Planning

Selective Collaboration

Annual Plan Alignment Meeting



Tactical Collaboration




Shopper Centric

Solutions

Operations/ Functional Initiatives

Pre-planning Analysis/ Insights

Initial Plan Development

Customer Plan Development and

Finalization

Internal Strategy/Plan

Alignment

Shopper Centric

Solutions




Customer Plan Development

and Finalization


Alignment

Shopper Centric

Solutions




Customer Plan Development

and Finalization


Alignment

Team-to-Team Team-to-Team





Shopper Centric

Solutions

Annual Customer Planning and Management





Finalization

Internal Strategy/ Plan Alignment

Team-to-Team

Key Process Design Components

• Foundational strategy, process and capability elements required to drive CBP

• Customer profile, business assessment and strategic plans to build customer knowledge

• Detailed meeting preparation, principles and structure for Strategic Alignment Meetings (Top-to-Tops)

• High level process guidelines for Team-to-Team meetings to plan and execute strategic initiatives

• An integrated annual planning process to bring collaboration to life

Strategic Collaboration Process Construct


• Successes and challenges • 3 year history of volume trends and drivers • Review of key business drivers • Competitive landscape and performance • P&L overview

Business Review and Assessment

Advanced Customer

Profile

• Customer structure • Key customer strategies and metrics • Customer Purchase Decision Process • Requirements and expectations for vendors • Strategic collaboration readiness

• SWOT analysis • Sustainable competitive advantages • Keys to winning with the customer • Growth objectives and strategies- 2-3 year horizon • Resource requirements

Customer 2-3 Year

Strategies

Customer Knowledge and Strategy Tool Box Developed on Front End of Collaborative Process





Shopper Centric

Solutions






Finalization


Team-to-Team

Pre-Meeting Preparation and Communication

Pre-Meeting Process • Collaborate to identify and secure

agreement on issues/ opportunities to be discussed

• Develop formal agenda for the meeting

• Determine pre-meeting preparation for supplier and retailer

• Conduct internal meeting to discuss key issues and approach for the meeting

• Develop and send pre-meeting communication to retailer/supplier

48 hours in advance





Shopper Centric

Solutions






Finalization


Team-to-Team

Strategic Alignment Meeting Success Factors

Success Factors • Limited Number Participants • Executive/Senior Team Leaders • 60%+ time on future • Open Discussion • Idea Exchange • Pivotal Strategy Alignment • Consumer/Shopper Focus • Customer/Shopper Focus • Broad Goals • Near/Longer Term • Resource Alignment • Initiative Agreement


Outputs of the Meeting-Goal and Strategy Alignment

Core Business and Merchandising Strategies xx xx xx

Key category merchandising strategies/objectives xx xx xx

Retailer Strategies

Core Business and Customer Strategies xx xx xx

Key category merchandising strategies/objectives xx xx xx

Supplier Strategies

Overall Sales Growth Same Store Sales Growth Key Category Sales Growth

Retailer Growth Objectives Overall Sales Growth Same Store Sales Growth Key Category Sales Growth

Supplier Growth Objectives

xx xx xx

Leverageable Areas of Strategic Alignment


Outputs of the Meeting- Alignment Initiatives Area of Focus Description of Alignment Initiative Timing Team-to-Team

Leader Shopper Focused Initiatives

Initiative 1 • X • X

Supplier Resource Retailer Resource

Initiative 2 • X • X

Supplier Resource Retailer Resource

Operations/Functional Alignment Initiatives

Initiative 3 • X Supplier Resource Retailer Resource


Other/Input into Annual Business Planning





A) Financial Measures

1. Growth 2. Net profits 3. Gross margins 4. Market share

B) Shopper Insights

Measures

1. Trips 2. Basket size 3. Core shopper acquisition

C) Strategic Initiatives

1. Initiative w 2. Initiative x 3. Initiative y 4. Initiative z

D) Trade Funding Update

1. Projected funds generated 2. Projected funds spent 3. Funds pacing

E) Causal

Measures

1. Distribution 2. Shelving 3. Merchandising 4. Pricing

Senior-level Scorecard Category-level Scorecard

F) Operational Measures

1. Inventory 2. Service levels 3. GMROI

Outputs of the Meeting- Shared Scorecard





Shopper Centric

Solutions






Finalization


Team-to-Team

• The outputs of the Strategic Alignment Meeting will be cascaded down into a Team-to-Team process for planning and execution

• The outputs will be classified into two categories with a Team-to-Team process for development of each.

• 3 -4 longer term strategic initiatives

• Annual Business Plan inputs

Outputs of the Meeting- Cascaded Down





Shopper Centric

Solutions






Finalization


Team-to-Team

Analyze, Review and Course Correct

Tactic and Program Development

Retailer and Supplier

Team-to-Team Platform Alignment/Planning Meeting

Insights Synthesis Market

Assessment Category Analytics

Shopper Research

Implementation Plan

Shopper Centric Solutions Development Proven

“Insights into Action” Approach





Shopper Centric

Solutions






Finalization


Team-to-Team

• Retailers will have varying interest in these types of initiatives for collaboration

• Cross functional initiatives may

include: • Supply Chain/Logistics alignment • Retail-ready packaging • Store execution support • Information technology alignment • Sustainability

• The selected initiatives are cascaded down to a team-to-team process for planning and execution with cross functional resources from both retailer and supplier

Operations/Functional Initiative Development





Shopper Centric

Solutions






Finalization


Team-to-Team

• Outputs from the Strategic Alignment Meeting will also feed the collaborative Annual Customer Planning Process:

• Alignment on key brand priorities

• Alignment on key retailer priorities

• Profitable volume driving programs






Shopper Centric

Solutions






Finalization


Team-to-Team Marketing

Sales

Customer

Jan 2012

Feb 2012

Mar 2012

Apr 2012

May 2012

Jun 2013

Customer Pre-Planning Meeting

Customer Plan “Team-to-Team Collabor-ation” Meeting

•New itemsd •Consumer/shopper programs

•Strategic initiatives

Release of topline F’13 brand strategies

F13 Marketing Plan Kick-off & go/no go 1st Half F’13 innov-ation

Receipt of Over-arching brand strategies and

platforms

Top-to-Top Strategic Alignment Meetings

2nd Half Customer Plan Collaboration Meeting •New items

•Consumer & shopper marketing •Strategic initiatives

Customer Present-ations 2nd Half F’13 firm 1st Half F’13 soft

Final F’13 Advert-ising plans

Jul 2013

Aug 2013

Sep 2013

Oct 2013

Nov 2013

Dec 2013

Customer Present-ations •1st Half F’13 firm •2nd Half F’13 soft

Finalization of F’13 market-ing plan &

preview of 2nd Half F’13 innov-ation

Finaliz-ation of 2nd Half F’13 market-ing plans

Final F’13 AOP alignment

F’13 customer segment-ation and

invest-ment rate release

2nd Half F’13 innov-ation release

Release of F’13 planning materials, new items, trade strategies,

DSMP

Quarterly sales & market-ing leader-ship

review of F’13 plans

F’13 customer team plan develop-ment

Quarterly sales & market-ing leader-ship

review of F’14 plans

Integrated Annual Customer Planning (Marketing, Sales and the Retail Customer)

Collaborative Business Planning Must Be Fully Integrated


Selective Collaboration



Shopper Centric

Solutions






Finalization


Team-to-Team

Selective Collaboration Conducted With Tier 2 Customers

• SVP level involvement

• Annual Plan Alignment Meeting • structured for maximum productivity

• Focus on annual planning inputs

• Strong focus on shopper centric initiatives…driven by global insights and platforms

• Selective strategic initiatives


Tactical Collaboration



Shopper Centric

Solutions






Finalization


Team-to-Team

Remaining Customers Engaged In Tactical Planning

• No Annual Plan Alignment Meeting with senior executives

• Regional Sales Managers/Brokers • Tactical planning only

• Minimal plan customization

• Modified Version of Selective Business Planning process


Introduction- CBP Process & Strategy

Key Play Book Elements

1.Customer Knowledge and Strategic

Plan 2. Strategic Alignment Meeting 3.Team-to-Team Process for Strategic

Initiatives

4.Preview- Integrated Annual Planning Process and CBP activation timeline

Collaborative Business Planning Play Book

A CBP Playbook Utilized For Training And Consistency


Keys to Success

•Raise Level of Engagement/Collaboration •Listening, Dialogue & Sharing •Mutual Benefit

•Key Strategies •Objectives & Goals •Alignment Opportunities •No Two Retailers are Alike

•Insights Into Activation •Market Analysis & Customer Segmentation •Strategies & Growth Platforms

•Comprehensive Training •Reinforcement at all Levels •Objectives/Measures Tracking via Scorecard

“Tone from

the Top”

Develop Retailer

Knowledge

Analysis &

Insights Driven

Consistent &

Disciplined Process

Tone From

Top


The Industry’s Leading Edge Process… How Trading Partners Gain the Highest ROI on Collaborative Business Planning (CBP)

Winston Weber and Associates

Thank You! If you would like to learn more please contact Win Weber at

winweber@winstonweber .com

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