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How global should global TPM roll-outs really be?
Peter A. Hoijtink, Strategy& - Amsterdam
Exceedra Conference
21 March 2017 Exceedra Conference
Prepared for Exceedra ConferenceStrategy& | PwC
With you today….
Executive summary
Peter leads PwC Europe’s Food and Agri Industry team
and is an experienced strategy consultant to the Food
industry
Peter has a background in the industry (Unilever and
Grolsch) and is working in the area of trade management
excellence since then
He has worked on a range of projects that include
Corporate Strategy Development, Market Assessment,
Market Entry Strategy Development, Pricing & Revenue
Management, Sales & Commercial Effectiveness and
Operating Model design
Clients that Peter has been working for include among
others, Unilever, AB Inbev, Perfetti Van Melle, Friesland
Campina, Coca-Cola and Red Bull
Peter A. Hoijtink
Consumer & Retail
Strategy& _ Amsterdam
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Introduction to Strategy& TME Practice
Our perspectives on Trade Management
Approach to capability transformation
Key take aways
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• Strategy& has a dedicated expert team that focuses exclusively on Trade Promotion Excellence
• Most of our TME staff have 8+ years of experience on a variety of TPE programs
• Our team is global with staff in North America, Europe, Australia and Asia
• Strategy& provides an unparalleled depth of experience and expertise
A dedicated
team with deep
experience
20+ year legacy
• Strategy& (Booz & Co) pioneered the concepts of Trade Promotion Excellence over 20 years ago …
• … and we have continually served our clients with their TME programs over the past 20 years
• Many of our early TME thought leaders are still with the firm
Capabilities from
strategy through
implementation
• Strategy& has extensive experience assisting our clients with all aspects of their TME programs
• We are the leading service provider to full range from TP Strategy capability development to technical
implementation
• Rated Best In Class Consultant by Consumer Goods Technology (CGT) Readers (Ranked #2 out of 10) - 2014
• Rated “First to Call” for Trade Promotion by AMR Research (now part of Gartner)
• “First in Customer Experience in TPM” by Consumer Goods Technology (CGT) - 2011
• Won “2007 - Customer Management Award” for TPM implementation Consumer Goods Technology (CGT)
A distinguished
track record of
results
With a 50+ team with deep expertise, we are dedicated to helping clients improve their end-to-end TME capabilities
Our TME difference
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Our perspective on trade management is shaped by our work with a broad range of consumer goods manufacturers…
Client examples Types of projects
1
2
3
4
Assess commercial capabilities across organization
based on internal and external best practices and
implement a capability building roadmap
Support Trade Management system selection and
implementation, focusing on usability, performance
and business alignment and support with
pilot/implementation
Optimize trade spend analytics in modern and/or
traditional trade while building both pre- and post-
event analysis capability in the organization
Develop funding framework and closed-loop
planning process to accelerate growth, enable
channel pricing alignment and support customer
planning effort
Source: Previous Strategy& project experience, Strategy& analysis
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…and complemented by our bi-annual Customer Planning & Trade Marketing Benchmarking study
Strategy&’s customer planning trade management benchmarking21 of the below manufacturers participated in the study
Good mix of F&B companies and other CPGCompanies large and small participated
by s
ec
tor
3 2 3 13 21
Food & Beverage
Personal Care
Household Care
Multipleby r
eve
nu
e
10 4 4 3 21> $30 Bn
$10-30 Bn
$5-10 Bn
$1-5 Bn
Source: Strategy& Trade Management and Customer Planning Survey 2015, Strategy& analysis
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Introduction to Strategy& TME Practice
Our perspectives on Trade Management
Approach to capability transformation
Key take aways
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There is a clear burning platform for building TPM capabilities…
• Trade spend is a significant cost item that
often increases every year, driven by the
competitive retail landscape and increasing
promotion pressure
• There is lack of insights into the
effectiveness of the spend which limits
ability to optimize (ineffective)
• Managing the trade spend and promotion
calendar is cumbersome and requires
significant manual intervention (inefficient)
Need to improve TPM capabilities
Source: Previous Strategy& project experience
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…however, TPM programs are difficult to get right and require investment in understanding required capabilities
Examples of Poorly-Run TPM Implementation
Company
Major Beer Mfg. &
Distributor
Leading Beverage
Company
Multinational Medical
Products Mfg.
Leading Diversified
FMCG Mfg.
Leading Household
Good Mfg.
Multinational Food &
Beverage Company
Major Consumer
Goods Company
• $14M write-off of TPM program that was substantially over budget and over a year behind schedule
• $7M overrun resulted in the selection of Strategy& to replace the original system integrator
• Poor implementation leading to a $5M write-off and a HBR; Strategy& replaced the SI;
• Global TPM program costing > $50M halted by business leader due to very poor user reception
• $105 M Siebel TPM implementation that delivered only very basic capabilities; roughly 4x the original budget
• Massively problematic and over-budget SAP TPM implementation; total cost of ~$ 80M
• $6 M write-off of problematic TPM implementation
Situation Overall Assessment
• There are two common types of implementation failure
– Failure to deliver the capabilities originally envisioned
– Major delays and budget overruns
• Two primary reason behind these failures are:
– Not investing enough time beforehand to understand the details of the specific business models and functionality needed
– Not having the right business and/or systems partner
Source: Interview of senior company executives, Previous Strategy& project experience
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Building TME capabilities requires a holistic approach and is a substantial Business Transformation
• Target setting
• Funding
• Planning
• Sell in
• Execution
• Post-event
analysis and
tracking
• Predictive analytics
for merch. events
• Pricing analysis:
- EDLP pricing/
sensitivity
- Competitive price
gaps
- Channel pricing
- Regional pricing
• Development of
guidelines
• Key systems:
- TPM
- PEA
- TPO
- Retail Execution
• Enabling technical
environment:
- Data
warehousing/
architecture
- Systems
interfaces
• Roles and account-
abilities across:
- Brand
- Sales & Planning
- Revenue Mgmt.
- Field Sales
- Finance
- IT
- Demand
Planning
• Skills and training
• Aligned incentives
Embed the
“Strategic”
Processes
Install the
Analytical Engine
Deploy the
Systems
Align the
Organization
• Develop roadmap
for success
• Set improvement
targets (business
case)
• Highlight quick-wins
and reward new
behaviors
Drive Business
Transformation
1 2
4 3
5
Trade Management Framework
Source: Strategy& Analysis
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A robust TPM system is the foundation on which leading/ advanced capabilities can be built…
Promotion entry
Support for all
payment /
settlement methods
Real-time
checkbook
management and
analysis
Trade funding and
budget allocation
Well-defined
approval and
spending control
processes
Post-Event
Analysis
(PEA)
Trade
Promotion
Optimization
(TPO)
Integrated
Business
Planning
Defined process for
performing post-
event analysis to
measure event-
level performance
Reporting tool that
matches syndicated
consumption / POS
data with promotion
plans and trade
events (i.e.,
facilitates ROI
calculations)
“What-if” scenario
planning with event
libraries
Analytical models
for predicting
promotion
performance
Two-way integration
with demand
planning system
Trade promotion
plans automatically
linked,
communicated, and
incorporated into
demand planning
algorithms
Customized new
item, special pack,
and club pack
forecasting
processes
Joint
Business
Planning /
Customer
Profitability
Online, interactive
plans – joint
planning with
retailers)
Focus on both
customer and
retailer profitability
Integrated planning
and execution
across all relevant
functions (e.g.,
single agreed upon
forecast )
Full-volume plan
management with
base / incremental
volume tracking
Support for monthly
forecast submission
by brand / packsize
Tracking metrics
including profit
measures
Plan / actual
progress against
performance
targets
-----------------------------
Base volume levers
Planning modes
Scenario planning
Foundational Capabilities
“Basic functions that
drive operational efficiency”
Advanced Capabilities
“Sophisticated capabilities that
drive trade spend efficiency”
Aspirational Capabilities
“Emerging capabilities that drive
superior cross-functional performance”
Trade Promotion Management (TPM)
Trade PaymentsPromotion Planning
& Sales Forecasting
Continuum of Trade Promotion Excellence (TPE) Capabilities
Advanced
Foundation
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The benefits of improving TME practices are significant; typically, 1% to 2% of sales or 10% to 25% of total spend
BenefitsTypical trade spending improvement opportunityImprovement on trade spent, %
• We have run trade programs for many CPG companies ‘end-to-end’, covering all elements of trade spend and cost (including cost-to-serve)
• ROI improvements on trade spend ranges between 10% and 25%, whereas the main “buckets” of improvements are in:
– Improved effectiveness of trade spend and fund allocation for increased profitability
– Improved planning and incentives (promotions ‘optimization’, counterparts for base-driving conditions)
– Improved execution efficiency (reduction of forward buying and improved pass-through)
– Improved promotional ROI (optimizing cost/revenues for individual promotions)
– Base pricing aligned to drive brand health and positioning
25%
15%
10%
HighLow Median
Source: Previous strategy& project experience, Strategy& Analysis
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Introduction to Strategy& TME Practice
Our perspectives on Trade Management
Approach to capability transformation
Key take aways
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Due to user adoption being crucial for success, TPM implementations require a business driven design approach
Approaching design via a business driven approach allows us to best address the multiple complications associated with TPM implementations and configure a solution that best meets business needs
TPM Implementation Considerations
Interaction points
Non-Standardized Processes
• Company and customer approaches to planning and funding typically are highly varied
• Lack of standardization necessitate flexibility in the system to support differences
No Comprehensive Out-of-Box Solution
• Understanding this, solution vendors have designed major TPM packages to be highly configurable
• There is no standard out-of-box solution that addresses all functional needs of the business
Multi-Stakeholder involvement
• Multiple stakeholders across various functions requires facilitation to bring perspectives into agreement or to a common understanding
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1. Solution orientation of key users not always sophisticated
2. TPM is a front-end solution and in that sense needs to be tailored to Go to Market model and data availability
3. Business case is output oriented (the result of the optimisation), not process oriented (efficiency), like with ERP or planning capabilities
Trade Funding
TPM Interaction Points
Plan
Creation
Plan
Maintenance /
Forecasting
Payments
Interactions/processes are typically different by customer
Ideally approached viaBusiness Driven Design
Specifics off TPM capabilities
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Successful TME capability programs progress through several phases; with substantial effort prior to implementation
Phases of a Trade Capability Transformation
1) Key Functional Areas are: 1. Master Data 2. Sales Volume Forecast, 3. Planning, 4. Payments 5. Funding;
2) For a mature market with known future vision for trade capability; Source: Strategy& Analysis
12-18 months24 weeks 8 weeks2 4 weeks 2 weeks
Phase 1 Phase 2 Phase 3
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6. Build, Test,
Deploy &
Support
5. Detailed
Functional
Design
4. Program
Structuring
3. System
Selection
2. Key Design
Concepts
1. Vision
Definition
Where can we
improve our
capabilities and
drive value for the
organization?
How do we want
to evolve our
capability and
what value will
we deliver? Who will we
partner with? What exactly are
we going to do
and how will we
do it?How will it work?
Key Questions
Is it working as
planned?
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Introduction to Strategy& TME Practice
Our perspectives on Trade Management
Approach to capability transformation
Key take aways
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A global TPM Capability roll out should be tailored to the different markets, GtM models and business cases
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Concluding
• Many TPM implementations fail because they do not deliver the capabilities originally
envisioned and/or have major delays and budget overruns
• Each market requires different capabilities based on GtM model, maturity levels of trade
and data availability, possibility clustered via archetypes
• The Business Case of TPM is mainly build around advanced capabilities (PEA, TPO,
etc.), whereby foundational requirements is a prerequisite
• This business benefits are in essence based on “local” NPV, so TCO should also be
seen “Local”: then standardised global solutions are not always the best
This means:
• Building TPM capabilities on a global scale should take local capability requirements,
data availability and trade maturity into account as well as local “business cases”
• Working with “archetypes” could be a solution, whereby the scope of archetype specific
requirements determines the IT solution(s) selection and functionality
• This often results not in a global roll-out of one supporting solution, but in a global roll
out of capabilities, clustered by archetype, often with a blend of solutions, or a solution in
two or more versions
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The combination of Strategy& and PwC can support in the full range of our clients’ trade needs
Highly focused effort to
quantify and segment the
potential benefits from
improving trade promotion
effectiveness
Program
Structuring
Systems
Diagnostic
System
Implementation(Including Our
Proprietary PEA Tool)
Funding
Program
Restructuring
Strategy Execution
Formulation of a robust, 2-3
year customer planning /
trade promotion strategy
Development of guidelines
to help customer teams
improve their trade
promotion efficiency
Focused effort to structure a
customer planning and trade
transformation program,
focused on process,
organization, analytics, and/or
system improvements
Programmatic effort to
capture trade promotion
efficiencies via improved
customer planning
Leading or supporting
implementation efforts to
upgrade out-dated and/or
ineffective trade systems
We offer our own
proprietary post-event
analysis tool: Performance
Analyzer
Assessing a client’s
current customer
planning and trade
systems, focusing on
usability, performance
and business alignment
Restructuring a client’s
trade funding program,
balancing multiple factors
Trade Strategy
“Get the
Money” (Leveraging
SWAT Teams)
Opportunity
Sizing
Guideline
Development
Range of trade related project support
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Strategy Impact
www.strategyand.com
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