tpm: beyond the basics - afs technologies · tpm: beyond the basics 2019 afs user conference ......

TPM: Beyond the Basics2019 AFS USER CONFERENCE

“Enhancing the Value of Today’s Consumer Goods Manufacturers and Distributors Through Advanced Analytics - WiiFM”

Kurt KaiserVP, Business Development

Specializing in consumer goods sales and trade/ revenue management, Kurt helps manufacturers design and activate plans to optimize return on investments in sales processes, talent, technology, and analysis.

Chris RiceVP, Sales & Marketing

Chris is an industry veteran with extensive experience in sales and marketing with expertise in TPM, TPO, Post Event Analysis, strategic trade and marketing planning, shopper insights, and retail execution. Chris has helped many clients make improvements to their trade planning processes and systems.

© Exceedra 2019. Confidential & Proprietary

Agenda

• Intro / Purpose of session

• Trade Maturity Path

• Foundation of a profit mindset

• Post Event Analysis

• Predictive planning

• Integrated Business Planning

• Change Management


YOU ARE HERE

TPM CBP

PEA

STP

JBP

TPO

Session Purpose• Discuss the logical path of the trade improvement journey• Building on TPM foundation• High level preview advanced capabilities & what they can

do for you• Journey to Integrated Business Planning & Revenue

Management© Exceedra 2019. Confidential & Proprietary

TPM provides the foundation, workflow visibility, & insight to sales planning & settlement activities

Plan

ExecuteSettle

Analyze

Relative to what you were doing before in spreadsheets you can draw better conclusions about the performance of your promotions.


But there is much more that can be done in trade promotion analytics.

The starting point is having a profit/contribution mindset.

Next, focus on INCREMENTAL contribution. For without this, you cannot properly measure…


Return

Investment

Return = Incremental ContributionInvestment = Trade Spending


Incremental

Base

In order to measure incremental contribution, you need to break volume out between base and incremental

• Base Volume is the volume in absence of promotional activity

• This is a calculated measure that has been known to spark debate

• The best base volume forecast is statistically generated in a repeatable, system generated process that allows for the comparison across customers

• Incremental is calculated from base (total promotion volume – base)


Use ROI to ID and compare the performance ofpromotions

2) Total Promo Contribution $ = Total Promo Volume - COGS

1) Base Contribution $ = Base Volume - COGS

3) Incremental Promo Contribution $ = Total Promo Contribution $ - Base Contribution $

= ROIIncremental Promo Contribution $Promo Trade Spend

* 100


Capturing improvement opportunity requires an ROI mindset built upon key capabilities

Source: PwC Strategy&© Exceedra 2019. Confidential & Proprietary

TRADE

PROMOTION

OPTIMIZATION

POST

EVENT

ANALYSIS

TRADE

PROMOTION

OPTIMIZATION

POST EVENT

ANALYSIS

TPOINTEGRATED

DEMAND

PLANNING

INTEGRATED S&OP

IBPTRADE

PROMOTION

OPTIMIZATIO

N

TRADE

PLAN

TPMBUSINESS

PLANEXECUTION

VOLUME

PLAN

Customer

Business

Planning

Strategic

Trade

Planning

Journey to Integrated Business Planning

• The trade improved journey takes the path from the foundation to more advanced Trade Promotion Optimization (TPO) capabilities

• Integrated sales forecasting with the demand planning & S&OP process optimizes capabilities across the enterprise

“Foundation” “Advanced” “Optimized”


Post Event Analysis

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

• 2 week TPR Promotion (In Store Dates) @ $5.00 Unit & 5 week shipment period - $.50 Billback on shipments• $.25 / unit EDLP running for the full year• $.25 / unit SCAN during In Store Promotion dates• 50% margin

Week 7 Week 8

Scan 8,000 units

Shipped 10,000 units

Base 4,000 units

In Store Dates

Shipment Dates

BB 10,000 X $.50 = $5,000

Scan 8,000 X .25 = $2,000

Tl Scan 8,000 – 4,000 base = 4,000 Incremental Units

EDLP 4,000 X $.25 = $1,000

Total Trade$5,000 + $2,000 +$1,000 = $8,000

4,000 Incremental Units x $5.00/ unit = $20,000 incremental Revenue * 50% margin= $10,000 incremental contribution

$10,000 / $8,000 * 100 =

125% ROI

100% Lift


Post Event Analysis – Forward Buy

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

• $10,000 / $8,000 * 100 = 125% ROI• Week 6 Base is 1,000 units• $5.00 X 1,000 X 50% margin= $2,500 in forward buy lost contribution $• FORWARD BUY $7,500 incremental contribution $ / $8,000 trade = 93% ROI

Week 7 Week 8

Scan 8,000 units


Base 4,000 units

In Store Dates

Shipment Dates

Forward Buy


Post Event Analysis – Cannibalization

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Scan 1,500 units


Base2,000 units

In Store Dates

Shipment Dates

1,500 Scan – 2,000 base = - 500 units

“Negative Incremental”

But wait….there’s more to the story….

• A promotion on the Small Size cannibalizes the Large Size, which has a 60% margin$8.00 / unit X (500) units X 65% Margin = $2,600 in lost contribution on Large Size

If included in the ROI$7,500-$2,600 / $8,000 X 65% Margin

= 61% ROI

This volume & contribution $ loss needs to be accounted for in the Customer Business Plan

Large Size Volume


Customer Business Planning (CBP)

• Statistical Base Volume Forecast

• Takes into account seasonality

• Trend

• Changes to Authorized Distribution List for new items, discontinued items, void items, etc.

• Adjust base for all distribution changes

• New Store Openings/Closing

• Other adjustments not in data history

• EDLP programs

• Long Term Agreements

• All other spend that is NOT a promotion – i.e. slotting, sampling, trade shows, sponsorship, etc

• Shopper Marketing***

• Add promotional events

• Shopper Marketing Events that have measurable incremental volume lift***

• Total volume and activity plan that generates a Customer P&L

• Compared to assigned objectives for volume & profit

• “Actualized” throughout the year as executed

Base Volume Planning

Total Customer

Volume Plan

Distribution, New Items,

Adjustments

EDLPs, LTAs, & TERMS

Promotions

The Volume Build Process


Predictive Planning

• Use AI to predict future promotions• Use data science & machine learning to improve promotion effectiveness & sales forecasting in a user

friendly, easy to adopt solution• Automate and embed in the Customer Business Planning process to make it sustainable

Common CBP Questions• If I run same Promo A vs Promo B, which one

drive more incremental contribution $? • Which has a greater ROI?• What if I decrease by SCAN allowance what does

that do to my contribution $?

Check Historical Lift on same products to sense

check the prediction

Manufacturer & Retailer Predicted Promo Scorecard


Supporting Revenue Management

With the foundation in place & advanced capabilities for Post Event Analysis and Predictive Planning, Revenue Management is enhanced from the analytics to drive insights and strategy

Annual Planning Process Channel/Cross Customer InsightsPromotional Tactic Analysis


Integrated Business Planning

Common Base Volume Forecast MethodologyIntegrated Reconciliation

Sales Forecast Demand Plan Supply Plan

Sales & Operations Planning


Foundational Principle - Holistic View of Change across the Organization

Alignment around WHY

the business is looking

to change

What skills and capabilities

are going to be required in

the future?

Understanding of future

state changes in

business process

What systems are going to

be deployed to effectively

enable change?

S T R AT E G Y PROC E S S ORG AN I Z A T I ON T E CHNO LOG Y

SUCC E SS© Exceedra 2019. Confidential & Proprietary

Change Management– Keys to Success

Align Project with Organizational Culture

Incorporate Change Management from the Onset

Maintain Business Engagement Throughout

Focus on Opportunities to Improve Processes

Create Ownership Through Iterative Design

HOLISTIC CHANGE

STRATEGY

EXECUTIVE ALIGNMENT

AGILE METHODOLO

GY

PROCESS FOCUS

SALES ENGAGEMEN

T

BENEFIT REALIZATION

OWN INITIATE

UNDERSTAND

ENGAGE

ADOPT


So how do you begin the journey to go beyond the basics of TPM and implement an ROI mindset? The starting point will be to be able to identify incremental profit in your plans and actual performance.

Wherever you are in your journey, know that AFS can help define the route that you take to help you get to your destination.

If you are looking for assistance, consider an AFS Strategic Value Assessment or SVA. This is a project in which our team of experts can help you understand our capabilities and design a strategy to get to your next “destination”.


Integrated Business Planning & Revenue Management

The Exceedra Enterprise Solution is a comprehensive platform that can be deployed in a modular approach. This allows clients to easily phase

in capabilities over time to support their trade improve journey providing a better Total Cost of Ownership than disparate tools or custom

development.


THANK YOU!

Q & A

Next Session: Next Track Session Title (from agenda)


tpm: beyond the basics - afs technologies · tpm: beyond the basics 2019 afs user conference ......

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