how to move from the opinions to facts - sascommunity€¦ · · 2013-10-04how to move from the...
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Slide 1Nestlé Italiana S.p.A.
How to moveHow to movefrom the OPINIONS from the OPINIONS
to FACTS to FACTS Sale Forecasting SystemsSale Forecasting Systems
in Confectionery Division of in Confectionery Division of NestlNestlèè ItalianaItaliana SpaSpa
by G.Ricci, M.Rinchi, G.ZaniniSpeaker: Guelfo Zanini
Slide 2Nestlé Italiana S.p.A.
NestlNestléé Italy Group: Italy Group: !! Turnover: 2.735 mil Turnover: 2.735 mil €€
!! Products: 2600Products: 2600
!! Customers: 150.000Customers: 150.000
Slide 3Nestlé Italiana S.p.A.
WORLDWIDE COMPANYWORLDWIDE COMPANYDifferent sites for Commercial, Logistic and Production departments
SPECIALIZED FACTORIES SPECIALIZED FACTORIES High level of exchanges between the markets
MANY DISTRIBUTION CHANNELS MANY DISTRIBUTION CHANNELS ((WhereverWherever, , WheneverWhenever, , WhateverWhatever))
Different purchasing behaviours
SERVICE LEVELSTOCK LEVELWASTE
TIME TO MARKET
Flow CoordinatorPARTNERSHIP ROLES IN SALE FORECASTING PROCESS BETWEEN COMMERCIAL AND SUPPLY CHAIN FUNCTIONS
DEMAND PLANNER: from PERFORMER to PROACTIVE ROLE
the “Forecast Specialist”
• TO MAINTAIN FINALISED SALE DATA BASEShistory of the performances
• TO PROVIDE THE STATISTIC & METHODOLOGICAL SUPPORTbudget and canvass goals must be coherent and consistent
• TO CHECK THE TREND OF ACTUAL SALES AGAINST THE TARGETS
. Fine-tuning of targets (shared)
. Updating of the forecasts (independent)
Tasks of Demand Planner:
SALE FORECASTING REQUIRES
• EXPERTISE:Knowledge of the markets involved Knowledge of the phases of Product Life CyclesKnowledge of the cause-effect relationshipsKnowledge of customer and product potential
• TOOLS:systems, for sales planning and control models
EXCELLENCE IN THE SALE FORECAST PROCESS IS THEJOIN RESULT OF BOTH THESE AREAS!
In the context of widespread and dramatic change, the expertise may be linked to unforeseen factors
IF expertise and the system are both missing at the same time, then collapse is assured!!
Methods and tools allow organisations to survive
SO THE DEVELOPMENT OF A BUSINESS INTELLIGENCE SYSTEM (METHODS AND TOOLS) IS
A STRATEGIC FACTOR
BECAUSE:
it allows for Business Knowledge Continuity
it accelerates the (re-)building of Expertise
THE IMPROVEMENT OF THE OPERATIONAL SALES FORECASTING SYSTEM IS A MUST:
– to increase the process efficiency– to facilitate the integration within planning process
BUT IF THE RESULTS AND DEGREE OF ACCURACY REMAIN UNCHANGED: THEN THIS IS NOT ENOUGH!
TO IMPROVE FORECAST QUALITY A NEW APPROACH IS NEEDED TO LINK SALE FORECASTING VALUES WITH THE KEY PARAMETERS THAT EXPLAIN THE SALES FORECASTS
TWO AREAS:TWO AREAS:
1.1. BUSINESS INTELLIGENCE systems,BUSINESS INTELLIGENCE systems,to increase the to increase the ““qualityquality”” of salesof salesforecasts, cause/effect relationshipforecasts, cause/effect relationship
2.2. OPERATIONAL SALES FORECASTS systemsOPERATIONAL SALES FORECASTS systemsto accelerate the daily management processto accelerate the daily management processof operational sales forecasts (detail, of operational sales forecasts (detail, control,..) control,..)
GOALS
To introduce methods and tools oriented to Opportunity & Risk Analysis and Market Trend Analysis for the development of effective Action Plans
Top-DownBuilt-in Simulation models based on:
• Projection of the Key Parameters(Trend Analysis, Product Cycle Life)
• business relationship between causes and effects, in terms of quantitative benefits (promotions, new products,..)
Steps:• Aggregation of statistical sales data for products by multiple
attributes (to ensure the continuity to the historical series: old-new items link)
• Building of Customer Clusters based on static and dynamic elements (distribution channel, customer role, purchasing behaviours)
• Identification of “Key parameters” of the Product/Channel (numerical coverage, weighted distribution, market shares, stock turnover, returns, medium purchase, fidelity, variability,…)
• Building-in of Warehouse Planning Data(historical series based on sell-in & sell-out, commercial events, ..)
• Impact Analysis on Trends and Commercial initiatives (market shares, consumption, price and competitor analysis. Simulations)
• Projection of the Key parameters by historical Series Analysis (trends)
GOALSTo develop Bottom-up models, compatible with Top-down ones, to provide thorough forecasts for the product/channel mix
To build-in Actual vs. Target control models able to provide very rapid feedback on:
achievement of target quantitiesactual ↔ target
causes of varianceskey parameters justification
NORMAL TRADE (Push)
CUSTOMER SHARES
MEDIUM PURCHASE
ORDERS FREQUENCY
GROCERY (Pull)
MARKET DISTRIBUTIONdealing with Customers
TURNOVER on the POINTS of SALE
LISTING/DELISTING
CONSUMER PROMOTIONS
PRODUCTS I&R
PROMOTIONS onTradeConsumers
DISCONTINUITY
NielsenIRI
OperationalSale Forecast
Systems
DWH
PLANNING
HLP
MPS
DRP
IMSP
MRP
SAS
CommercialDWH
SAP
Master DataSales OrdersInventory Mngt
Legacy
NielsenIRI
SAP
Master DataSales OrdersInventory Mngt
SAS
CommercialDWH
DWH
PLANNING
HLP
MPS
DRP
IMSP
Legacy
MRP
OperationalSale Forecast
Systems
SASSASBusinessBusiness
IntellingenceIntellingencePlanningPlanningorientedoriented
EventsLEARNING
-LOG
New
Slide 20Nestlé Italiana S.p.A.
Main SAS Tools:
-EnterpriseMINER
- EnterpriseGUIDE
- SAS STAT- SAS IT- SAS GRAPH
Slide 21Nestlé Italiana S.p.A.
B.U. Objectives- income- real grow DEFINITION OF COMMERCIAL ACTION PLANS
SALE ANALYSIS:- consumption’s- competitors- prices
PRODUCT PERFORMANCES:- market share- stock turnover- (trend, product life cycles)
OPPORTUNITY AND RISK ANALYSIS by PRODUCTS AND CHANNELS
INNOVATION & RENOVATIONPRIORITIES
CALCULATION OF TARGETS :- Quantities- Key Parameters
CM/BU
Slitting of objectives by:- MKTG organisation- Distribution Channel
Check on Results
I & RPROJECTS
BUDGETINGBUDGETING
PROMOTION INITIATIVES PLANS
TARGETSKEY VARIABLES
SPLITTING OF OBJECTIVES BY: PRODUCTS, CHANNELS & PERIODS.
COMMERCIAL ACTIVITIES CALENDAR
(initiatives, events)
CLUSTER OF PRODUCTScategory (type of consumption)
CLUSTER OF CUSTOMERS(selection, purchasing behaviour)
TYPICAL PROFILES(evolution of events)
MIXpotentials for SKU
ACTUAL VS TARGET CHECK
EXPECTED SELL-INACTUAL SELL-IN
Volumes
CUSTOMER SHARESTOCK TURNOVERPEI INITIATIVESMODIFICATION IN CHANNEL STOCKS
Key parameters REVISEDREVISEDTARGETSTARGETS
NEWNEWINITIATIVESINITIATIVES
OPERATIONALOPERATIONALFORECASTSFORECASTS
DATA AVAILABLE
DATA ANALYSIS CULTUREDATA ANALYSIS CULTURENew New approachapproach toto problemsproblems::factsfacts ((structured salesstructured sales data)data) vsvs.. opinionsopinionsuse use of Tools andof Tools and IntelligenceIntelligence
THE RIGHT INFORMATIONTHE RIGHT INFORMATIONProducts portafolioProducts portafolio ((CategoryCategory, , BrandBrand, , ……))CustomersCustomers portafolioportafolio (ICCC, BCG(ICCC, BCG MatrixMatrix, , ……))TTS TTS reductionreduction (Promotion (Promotion optimizationoptimization))
PROCESS INTEGRATION PROCESS INTEGRATION betweenbetweenOPL (I&R, OPL (I&R, promotional initiativespromotional initiatives))Sales PlansSales PlansOperational Operational SaleSale ForecastsForecasts
USEFULL INFORMATION FOR THE BUSINESS
BB
EE
CC
OO
MM
EE
Past Today Final target
ACCURACYACCURACY 60-70% 75÷80% >85%
REDUCTION OF SURPLUSFINISHED PRODUCTS - 40% - 80%PACKAGING MATERIALS - 30% - 50%
SERVICE LEVELLOSS IN SALES 2% 0,9% 0,5%
ORDER MODIFICATIONS 20% 8% 5%
PRODUCTION PROGRAM 65-70% 75% 90%ACCURACY
BENEFITS
REMOVAL/REDUCTION:
- UNREALISTIC OBJECTIVES
- NOT TARGETEDPROMOTIONS
- LACK OF UNDERSTANDING OF REAL PROBLEMS ANDNEEDS
INTANGIBLE BENEFITS
RESULTS:
- LESS EXPENSIVE COMMERCIAL ACTIONS
- REDUCTION OF RETURNS
- MORE EFFECTIVE PROMOTIONS(Cost/benefit)
- COHERENT I&R(Risks-opportunities)