Speakers Nick Sorvillo, Nick Sorvillo & Associates Mike ... · Speakers Nick Sorvillo, Nick Sorvillo & Associates Mike Pommer, VP Analytics, Genpact, Inc. In this session, learn how

Leading Your Analytics Driven Customer Team through ChangeLeading Your Analytics Driven Customer Team through Change

SpeakersNick Sorvillo, Nick Sorvillo & Associates

Mike Pommer, VP Analytics, Genpact, Inc.

In this session, learn how the intelligent enterprise gains the ability to constantly look forward,adapt, and continuously push greater effectiveness.

Promotion Optimization Institute Spring 2013 Summit

• At Kraft, we tended to look at Trade Promotion as… A critical element of achieving volume Maintain relationships with our retail partners A competitive traffic building tactic

• Key Business Question: Why do we spend 60+% of our marketing on Trade Promotions to

affect 20% of the business?

Definition of InsanityDoing the same things over and over – Expecting Different outcomesDefinition of InsanityDoing the same things over and over – Expecting Different outcomes

Aren’t we overlooking what the consumer needs from us?Aren’t we overlooking what the consumer needs from us?

Promotion Optimization Institute Spring 2013 Summit2

CONSUMERS ARE IN CONTROL: consumers choose media and brandthey want to interact with themselvesCONSUMERS ARE IN CONTROL: consumers choose media and brandthey want to interact with themselvesPromotion Optimization Institute Spring 2013 Summit

Introducing Integrated Business PlanningIntroducing Integrated Business Planning

• Consumer relationships with CPG brands has increasingly become morepersonal Consumers are demanding an understanding of how brands fit into their

lives i.e., “be relevant or perish” Communication touch points have exploded i.e., “be where I am when I

want you” Communities have become “trusted advisors” Products need to provide functional and emotional benefits while

servicing consumers under their rules

• CPG’s opportunity is to harness our insights, delivering the right products, at theright time, in the right venue, through the right communication …

Current Situation And The Opportunities It Provides BrandsCurrent Situation And The Opportunities It Provides Brands


Brand Success=

Functional+

Emotional+

Cultural BenefitsPromotion Optimization Institute Spring 2013 Summit5

• Its not enough to affect 20% of the business ..what about the other 80%

• If we really believe in the power of brands, there are alternatives

• Execute against ALL reasons consumers buy through Integrated BusinessPlanning Consider this Practical Example – Kraft Hockeyville

A Case for Change: Its Not About Promotions... Its About IntegratedBusiness PlanningA Case for Change: Its Not About Promotions... Its About IntegratedBusiness Planning


Brands Are Evaluating What Will Make A DifferenceFinding “The SOUL” Of The Brand

Commoditization

7

Features, prices,functionaldifferences

Engagedrelationships, digitalseeking

Brand Relevance

Rationalsensory focus

Emotional,social connections

Sense andrespond

Winner:store brands

Winner:national brands,

consumers

Promotion Optimization Institute Spring2013 Summit



New Digital ActivitiesNew Digital Activities

Analyzing an exploding palette of connections to reach and persuadeAnalyzing an exploding palette of connections to reach and persuade


New Digital ActivitiesNew Digital Activities

Conversations Discussions

OpinionsReviews/

Comments

Traditional Mix Tactics: Good CoverageTraditional Mix Tactics: Good Coverage

TV In-Store Price

Social Media

Streaming Video

Banner Ads

E-coupons

How It Works: Single Source Repository & Learning LabAddresses

Unique Brand Consumer TouchPoints

Relevant Messaging

Linkage to Full MarketingMix

Tracking P & L Impact

Optimized Brand Plans

Adjusted Plans

Integrated BusinessPlanning

“Single Source onSteroids”

• Improves Media Plans

• Tailored dialogue withconsumers where and whenthey want it

• Optimizes spending across all marketingcomponents –Including Trade

• Reset of Plans based on IntegratedMarketing Intelligence

• Provides further guidance onImprovement

11

Delivering Improved Marketing Learning Through IntegratedBusiness Planning … Finding “The Soul” Of The BrandDelivering Improved Marketing Learning Through IntegratedBusiness Planning … Finding “The Soul” Of The Brand


CONSUMERS ARE TELLING US WHAT THEYWANT.


WHAT KIND OF EFFECT WILL YOU HAVE?


THE REVOLUTION STARTS HERE.


Consumers “Be Relevant In My Life Or Perish”

Leading Your Analytics Driven Customer Team through ChangeLeading Your Analytics Driven Customer Team through Change

SpeakersNick Sorvillo, Nick Sorvillo & Associates

Mike Pommer, VP Analytics, Genpact, Inc.

In this session, learn how the intelligent enterprise gains the ability to constantly look forward,adapt, and continuously push greater effectiveness.


• In the TPO world we tend to focus on predictive models, lift factors, and financialmetrics

• Analytics can also be applied to the more mundane activities of how things actuallyget done

Process Analytics• Understanding how outcomes, key performance measures, activities and key

performance drivers are linked.• Looking for ways to improve achievement of the KPM’s that are important to you.

• How does your achievement rank against best practice?• What can you do for incremental improvement?

Driving Change - Process AnalyticsDriving Change - Process Analytics


Process Improvement – What are Lean andSix Sigma Methodologies?

Lean Six SigmaGoal Eliminate “waste”

Improve Work FlowImprove ProcessCapabilityEliminate Variation

Approach “Cookbook” StyleBased on Best Practice

Statistical ProblemSolving Approach

ProjectScope

Driven by Value StreamMapping

MultipleApproaches

Time toValue

Weeks Months


DepartmentalProcessimprovementinitiatives

One programacross dept.'sgeographies,function’s

200+ metrics. Notactionable

50 critical,actionable metrics

From To

Smallerimprovements insilos

15%+ year on YearproductivityMulti MM $ riskreduction

Banking Industry Example:

Significant Improvement across 3 Yeartime frame

Key BusinessOutcomes

Increase Sales andGross Margin for

“TradePromotion” $$

invested

PromotionPlanning

Promo Sellin & Set up

Settlement-Deductions

Post EventEvaluation

Key Performance MeasuresSub-Processes

xx

xxxx

99.89%

34.43%

xx

5%

23%

xx

42.53%

xx

25%

% of plans that meetfinancial objectives

% of Account ApprovedPlans

that meet financialobjectives/goals

% Invalid TradePromotion Deductions

/ total deductionstaken

% Collections from totalinvalid Trade

Deductions (collected /ending deductions AR

xxxxxx

PromoExecution

xxxx

xx

No./% of plannedpromotions executedper promotion plan

agreements (timing andperformance specifics)

Present plan toaccount for

approval

Key Performance DriversActivities

xxxx

xx

% of completed tradepromotions analyzed

with minimallysufficient data (salesimpact vs. goal, total

expense, performanceachieved vs. plan)

xxxx

xx

Deliver Volumecommitment to

supply chainplanning team

xxxx

xx

Receive Back updocuments and

Code short pays asvalid / invalid

deductions

Prioritize andcollect from invalid

deductions

Auto Offset / writeoff deductions

below cashtolerance

Process Offset /write of to clear

Validation

xxxx

xx

xxxx

xx

99.89%

34.43%23%

xxxx

xx

"TAT for account approval"

% of promotions wherevolume commitment is

delivered beforeproduction deadline

Accuracy of codingdeductions (Audit based)

% $ collected / % $ invaliddeductions per month

$ & % deductions resolvedper cash tolerance/ total

closing AR

% of total Count & $ Valuewritten off per month

Create Contracts xxxx

xx% Accuracy of ContractsSetup or Update

Improving level 3 drivers can leverage Key Business OutcomesImproving level 3 drivers can leverage Key Business Outcomes


Process Map – Promotion PlanningProcess Map – Promotion PlanningLevel 1

Outcome

Level 2Sub-Processes

Level 3Activities

• % of plans complete 'XX" weeksbefore promotion start date(internal guidelines for no. ofweeks)

• (% of plans that meet financialobjectives) - (% Tradepromotions plans meetingobjectives)

• Committed funds versus plan

• MAPE (accuracy) of analytics

• % Coverage of Revenue inStrategy Development

• Turn around time of PromoStrategy Developmentbased on Historicalanalysis, geography andbrand

• Availability of HistoricalData and Variables e.g.Promo Type, Discount %,Placement & Feature,Frequency by brand and bycustomer.

• TAT for building andrefiningmodels/predictiveanalyses

• Complexity of modelingor methodology (no. ofindependent non-co-linear variables used inModel)

• Number of predictableVariables

• TAT for Analysis,Forecasting & ScenarioPlanning

• % Promotions outsideguidelines (requiringEscalated Approvals)

• TAT for receiving escalatedapprovals.

• TAT for Internalnegotiation & review

Development ofPromotion Strategy

Build & RefinePromotional

Planning Models

Formal analysis usingapproved

methodologies &approaches

Set up promotions in system

Business Outcomes1. Increase Sales and Gross Margin for “Trade Promotion” $$ spent 2. Increased visibility to Trade Promotions spend3. Increase Fill Rates 4. Customer Satisfaction

KeyPerformance

Measures

KeyPerformance

Drivers

PromotionPlanning


PromoExecution

Settlements- Deductions

Settlements- Claims


Promotion Planpublication and handoffto Customer Mgmt-Field

Sales

• % of plans timelyconsolidated andcommunicated to allinternal customers

• TAT of Promotion Setup• % promotions entered in the

system before promo startdate

•% of plans complete 'XX"weeks before promotionstart date (internal guidelinesfor no. of weeks)

•(% of plans that meetfinancial objectives) - (%Trade promotions plansmeeting customerobjectives)

•Committed funds versus plan•MAPE (accuracy) of analytics

Case Study – Promotion PlanningCase Study – Promotion Planning


• Client Business Issue:– Client implementing new TPO/TPM application

demanding 5000+ account/SKU level modelsto be developed, and refreshed in a real timeenvironment. Need for robust, timely andscalable development solution.

• Recommended Solution: Process diagnostic and SME team deployment

to execute. Developed business rules to increase turn

around time of field utilization• Organization, Process, Data, and Technology

Considerations: Continuous improvement in effort utilization

via 6 sigma process improvements. Ongoing R&D to test and implement

• Benefits:• 2X-3X improvement in lift estimate vs legacy system.• Ability to quickly re-evaluate and re-estimate for

changing field conditions.

Goals for model analytic production exceeded.Immediate impact from “baked in” R&D for analytics

and process improvement.

Key components of end state

Best Practice Example: Promotion PlanningBest Practice Example: Promotion Planning


Description• Process: identify best practices/top

promotions overall and for key COT; Ensurethat timing and promo strategy links tomarketing vision/plan

• Technology: Integrated system to includeboth sales and financial data; System tohouse/share marketing/trade promotioncalendars

• Policies/procedures: Growing goal for % oftrade plans that are linked to / consideredwith the marketing plan.

Synchronize trade promotion calendar with marketing calendar; drive integrated business planning

Best Practice

• Business outcome: IncreaseVisibility

• Measure: TAT forpreliminary trade strategy;Yes/No for synchronization;% accounts submitting postpromo evaluations

• Impact: Increased % ofpromotions linked to brandvision & timing; Increased %promotions delivering higherROI and lift

Notes: Do’s and Don’ts

Examples

Trade promotion calendarsynchronized with marketingcalendar for optimum synergy andimpact. Initial development oftrade strategy based on robustanalytics on historical data – whatworked what didn’t

How to do it?

Process Map – Settlements-DeductionsProcess Map – Settlements-DeductionsLevel 1

SEP


Level 3Activities

• Deductions Days Outstanding (Formula : Anydeductions balance as on date Divided byDeductions Incurred * 365) same calculationas DSO

• Absolute number and % Trade Deductionstaken over total closing AR

• % Invalid Trade Promotion Deductions / totaldeductions taken

• % Collections from total invalid TradeDeductions (collected / ending deductions AR)

• Carrying Cost of Deductions (how muchreserve you nedd to carry because ofdeductions ... outstanding )

• 5. Cost of every deduction dollar collected

• Cash tolerance limitdefined in system

• $ & % deductions resolvedper cash tolerance/ totalclosing AR

• TAT for building and refiningmodels/predictive analyses

• ComplNo. of days from days ofreciept of short payment toreceipt of documents

• Accuracy of coding deductions (Audit based )

• No of days taken to codedeductions (BIC 2 days??)

• % Deductions where Back upsare not received

• exity of modelling ormethodology (no. ofindependent non-colinearvariables used in Model)


• % auto match rate ( deductioncreated auto hets matched upwith promo id )

• No of days taken to settle validdeductions

• ($ & % valid deductions settled/ total closing AR )- (% and $invalid deductions/ TotalClosing AR )

• % 3rd Party owned deductions( Brokers, distributors)


below cashtolerance

Receive Back updocuments and Codeshort pays as valid /invalid deductions

Settle valid deductionper relevant promo id

Process Offset / write of toclear Validation


KeyPerformance

Measures

KeyPerformance

Drivers

PromotionPlanning


PromoExecution


Settlements- Claims


Prioritize and collect frominvalid deductions

• % $ collected / % $ invaliddeductions per month

• % and $ deduction resolvedin < 30 days ( total - Old +new)

• % and $ deduction resolvedin > 90 days

• Offset policy -

• % of total Count & $ Valuewritten off per month

• Absolute number and % TradeDeductions taken over total closingAR

• % Invalid Trade PromotionDeductions / total deductions taken

• % Collections from total invalidTrade Deductions (collected /ending deductions AR)

• Carrying Cost of Deductions (howmuch reserve you need to carrybecause of deductions outstanding )

• Cost of every deduction dollarcollected

Case Study – Deduction ProcessingCase Study – Deduction Processing


• Process redesign: cross functional coordination andcooperation; standardized process

• Deductions strategy: prioritization based on value,coding of deductions, forecasting model to reviewdeductions

• Enhanced reporting and automation

Performance/Improvement over time Process Improvement Solution

Deductions Days Outstanding

2316 14

2010 2011 2012

Deduction value over 30 days $38MMTotal deduction value 44%

Business Impact:Deductions decrease

Improvement in performance of the drivers of key activities, and their linkages:• DSO decreased to Industry Best Practice Level• Reduction in Working Capital for $2Bn Company of $38M

Deductions Management : Web access to top retailers websitesDeductions Management : Web access to top retailers websites


Best Practice

Implement direct access for top retailers websites to access invoice and back ups directly

How to do it?Description Key components of end state

• Process: Identification of customersproviding access, and negotiation ofterms.

• Technology: Internet connectivity with DS

• Policies/procedures: Develop policy fordata sharing

• Single transaction andworkflow to obtaindocumentation. Elimination of“hand-off’s” andmiscommunications.

• Business outcome: Moretimely resolution of issuesand resolution of upstreamor downstream issues leadingto customer taking deduction

• Measure: Reduced TAT

• Driver: Robust website access

• Impact: Back up documentscan be procured with less TAT

Case Study – Promotion PlanningCase Study – Promotion Planning


• Client Business Issue:– Client implementing new TPO/TPM application

demanding 5000+ account/SKU level modelsto be developed, and refreshed in a real timeenvironment. Need for robust, timely andscalable development solution.

• Recommended Solution: Process diagnostic and SME team deployment

to execute. Developed business rules to increase turn

around time of field utilization• Organization, Process, Data, and Technology

Considerations: Continuous improvement in effort utilization

via 6 sigma process improvements. Ongoing R&D to test and implement

alternative data or methodologies.

• Benefits:• 2X-3X improvement in lift estimate vs legacy system.• Ability to quickly re-evaluate and re-estimate for

changing field conditions.

Goals for model analytic production exceeded.Immediate impact from “baked in” R&D for analytics

and process improvement.

Key components of end state

Best Practice Example: Promotion PlanningBest Practice Example: Promotion Planning


Description• Process: identify best practices/top

promotions overall and for key COT; Ensurethat timing and promo strategy links tomarketing vision/plan

• Technology: Integrated system to includeboth sales and financial data; System tohouse/share marketing/trade promotioncalendars

• Policies/procedures: Trade plan cannotproceed without link to marketingplan/approval; Trade plan must be builtusing historical findings

Synchronize trade promotion calendar with marketing calendar; drive integrated business planning

Best Practice

• Business outcome: IncreaseVisibility

• Measure: TAT forpreliminary trade strategy;Yes/No for synchronization;% accounts submitting postpromo evaluations

• Impact: Increased % ofpromotions linked to brandvision & timing; Increased %promotions delivering higherROI and lift

Notes: Do’s and Don’ts

Examples

Trade promotion calendarsynchronized with marketingcalendar for optimum synergy andimpact. Initial development oftrade strategy based on robustanalytics on historical data – whatworked what didn’t

How to do it?

Process Map – Settlements-DeductionsProcess Map – Settlements-DeductionsLevel 1

SEP


Level 3Activities

• Deductions Days Outstanding (Formula : Anydeductions balance as on date Divided byDeductions Incurred * 365) same calculationas DSO

• Absolute number and % Trade Deductionstaken over total closing AR

• % Invalid Trade Promotion Deductions / totaldeductions taken

• % Collections from total invalid TradeDeductions (collected / ending deductions AR)

• Carrying Cost of Deductions (how muchreserve you nedd to carry because ofdeductions ... outstanding )

• 5. Cost of every deduction dollar collected

• Cash tolerance limitdefined in system

• $ & % deductions resolvedper cash tolerance/ totalclosing AR

• TAT for building and refiningmodels/predictive analyses

• ComplNo. of days from days ofreciept of short payment toreceipt of documents

• Accuracy of coding deductions (Audit based )

• No of days taken to codedeductions (BIC 2 days??)

• % Deductions where Back upsare not received

• exity of modelling ormethodology (no. ofindependent non-colinearvariables used in Model)


• % auto match rate ( deductioncreated auto hets matched upwith promo id )

• No of days taken to settle validdeductions

• ($ & % valid deductions settled/ total closing AR )- (% and $invalid deductions/ TotalClosing AR )

• % 3rd Party owned deductions( Brokers, distributors)


below cashtolerance

Receive Back updocuments and Codeshort pays as valid /invalid deductions

Settle valid deductionper relevant promo id

Process Offset / write of toclear Validation


KeyPerformance

Measures

KeyPerformance

Drivers

PromotionPlanning


PromoExecution


Settlements- Claims


Prioritize and collect frominvalid deductions

• % $ collected / % $ invaliddeductions per month

• % and $ deduction resolvedin < 30 days ( total - Old +new)

• % and $ deduction resolvedin > 90 days

• Offset policy - ???

• % of total Count & $ Valuewritten off per month

• Absolute number and % TradeDeductions taken over total closingAR

• % Invalid Trade PromotionDeductions / total deductions taken

• % Collections from total invalidTrade Deductions (collected /ending deductions AR)

• Carrying Cost of Deductions (howmuch reserve you need to carrybecause of deductions ...outstanding )

• 5. Cost of every deduction dollarcollected

Case Study – Deduction ProcessingCase Study – Deduction Processing


• Process redesign: cross functional coordination andcooperation; standardized process

• Deductions strategy: prioritization based on value,coding of deductions, forecasting model to reviewdeductions

• Enhanced reporting and automation

Performance/Improvement over time Process Improvement Solution

Deductions Days Outstanding

2316 14

2010 2011 2012

Deduction value over 30 days $38MMTotal deduction value 44%

Business Impact:Deductions decrease

Improvement in performance of the drivers of key activities, and their linkages:• DSO decreased to Industry Best Practice Level• Reduction in Working Capital for $2Bn Company of $38M

Deductions Management : Web access to top retailers websitesDeductions Management : Web access to top retailers websites


Best Practice

Implement direct access for top retailers websites to access invoice and back ups directly

How to do it?Description Key components of end state

• Process: Identification of customersproviding access, and negotiation ofterms.

• Technology: Internet connectivity with DS

• Policies/procedures: Develop policy fordata sharing

• Single transaction andworkflow to obtaindocumentation. Elimination of“hand-off’s” andmiscommunications.

• Business outcome: Moretimely resolution of issuesand resolution of upstreamor downstream issues leadingto customer taking deduction

• Measure: Reduced TAT

• Driver: Regular websiteaccess

• Impact: Back up documentscan be procured withoutdelay

The “Promise Analytics Applications will:• Significantly improve predictive power• Simulations will drive down risk

The “Reality” Large investment in $’s and time and complexity Utilization weak

• Large “change management” issues• Complexity and time investment by users

Driving Change – TPO Applications-Platforms: Failure to anticipatethe level of change leads to disappointmentDriving Change – TPO Applications-Platforms: Failure to anticipatethe level of change leads to disappointment


• Global soft drink company goalto drive planning to theSKU/account level, forwardlooking for next 26 weeks

• Custom Application Developed.

• Field teams needing up to 12hours per week to support

• Application Failed

Moral – Application withoutConsidering Process Changes

increases risk.

Case Study: Application ImplementationCase Study: Application Implementation


Analytics - DataAnalytics - Data

Best Practice Implications for Driving Change

Too Much Data..Too Little Understanding

• Analyze the entire data Eco System (cause and effect) Focus on data that drives the important KPI’s

• Define merchandising variables that drive results.

• Evaluate consumer oriented KPI’s… After all they call theplays

• Develop continuous insight .. We are in an ever changingworld Promotion Optimization Institute Spring 2013 Summit

Case Study: “Real-time” Continuous Analytic Solution for Forecasting & InsightCase Study: “Real-time” Continuous Analytic Solution for Forecasting & Insight

• Client Business Issue:– Increase forecast accuracy and insight into key

causal factors for 70+ CPG brands with robustconsumption models

• Recommended Solution:– Continuous analytic process aligning a dynamic

integrated database with analytic applicationsserviced by a combined on-shore/offshoreanalytic team.

• Organization, Process, Data, and TechnologyConsiderations:

– Alignment of disparate data sources to makeanalysis available for key business deadlines,migration from multiple “silo-ed” forecastestimates to a single consumption basedconsensus estimate, deployment-validation ofanalytic best practice.

• Benefit:– Increase in forecast accuracy– Speed to insight from continuous data availability

+15% Improvement monthlyforecast accuracy, significantinventory savings and cost

efficiencies



Thank You!Thank You!


Documents

Speakers Nick Sorvillo, Nick Sorvillo & Associates Mike ... · Speakers Nick Sorvillo, Nick Sorvillo & Associates Mike Pommer, VP Analytics, Genpact, Inc. In this session, learn how