BI in FMCG Industry

- Raj Basu

©Company confidential 1
 Major changes in FMCG industry
• Indian Consumer changes
• Larger disposable income
• Middle class segment bulging
• Greater global exposure
• Greater appetite & demand for global products
• Differentiated product & service requirements

• FMCG space dynamics

• Explosion of products
• Explosion of markets (Kirana & Organized Retail)
• Rush of new players
• Global players bringing process and intelligence maturity
• Increasing competition
• Supply chain bottlenecks

• Impact on FMCG strategy & operations

• Increasing Flexibility
• Outsourced Contract Manufacturing
• Demand driven supply chain
• Improving Customer service
• Retail outlet segmentation
• Customized Retail service
• Supply Chain segmentation
• Greater Organizational Alignment
• EPM, Divisional Scorecards
•Integrated Sales & operations planning
• Greater Customer focus
• Demand analysis
• Product charateristics
©Company confidential 2
 EPM/BI needs of the FMCG Industry
• Rapid EPM adoption for Org Alignment & strategy management
• Balanced Scorecards (Strategy Maps, Business Scorecards)
• Budgeting, Planning & Consolidation systems
• Operational performance management

• Financial Analytics for greater ROCE • Operations Analytics

• Working Capital Optimization (C2C Cycle) • Plant Performance Management
• Debtor Analytics • MES Analytics
• Payables Analytics
• Inventory Optimization
• Treasury Cash Analysis

• Customer Analytics
• Trade Promotion Analytics
• WD Profitability
• Outlet performance
• Channel Analysis
• Integrated Consumer Demand & market performance visibility

• Supply Chain Analytics

• Supply Chain Performance Management
• Product Cost & profitability analysis
• Operational Planning efficiency
• Inventory visibility & optimization
• Supply Network efficiency
• Spend Analytics

©Company confidential 3
 Key BI Trends in the FMCG industry

• Major Indian FMCG players are making rapid strides in enabling Business &
Competitive intelligence as a key differentiator

• Most of the large FMCG companies are centralizing BI as a shared service

on a common platform across it’s businesses and brands with a razor like
focus on getting Best-In-Class service

• Most of them are already deep into state of art Business Intelligence
• ability to check on an outlet consumption pattern on a handheld before
meeting the owner
• ability to analyze secondary sales based promotions rather than primary
uptake
• ability to provide outlet based actionables rather than market level inputs
like OOS, poor AVF scores etc

• Global players are even further ahead

• Trade Promotion Analytics, Segmentation based promos, supply chain
bottleneck alerts, route optimization and advanced forecasting and
predictive demand models

©Company confidential 4
 EPM Objectives
FMCG majors are interested in implementing a Performance Management (PM)
program across the enterprise, in order to align goals and strategies with
operational objectives, plans and responsibilities within the organization.

Incr Share

Superior
Holder value

Insight
Consumer
Sustained Effective Model To Identify Capability

Develop
Profitable growth Measure PerformanceDevelopment Needs
Accelerate Improve
Organic Growth Productivity
Key
Business
HR Effectiveness
Benefits

Adopt New Technology For

Manufacturing Flexibility
Process Efficiency
Organizational Strategy
Customer Satisfaction Alignment Communication
Financial Performance

Objective Measures Initiatives

Business
Performance

Vision Level 0 : Corporate

Strategy Communication
Closed Loop - Feedback

Strategic
Objective

Functional Level 1 : Business

Functions
Objectives

Unit
Objectives

Individual
Objectives Level 2 : Units

©Company confidential 5
 Classic Balanced Scorecard Framework

Perspective Key Imperatives Key Questions

Vision &
Strategy

Effect Results
Financial “Profitability” To Satisfy our shareholder, what
financial objectives must
“Return on Capital Employed”
we accomplish

Customer “Consumer Satisfaction” To achieve our financial goals, what

“Market Share” customer needs, must we satisfy

Internal “Efficiency” To satisfy our customers, what

Process internal business processes, must
we excel in

Cause Action
To achieve & maintain our competitive
Learning “Knowledg position, how must the organization
& Growth e” the Organization learn & improve
“Innovatio
n”

Balanced Scorecard incorporates a double loop feedback around both internal business processes and external outcomes

©Company confidential 6
 Decision-making challenges at ITC Businesses
Organizational Alignment
• Business Performance Mgmt – Executive, Functional, Unit Level Scorecards
• Employee Performance Mgmt – Personal Scorecards

Fact Based Decision-Making / Actionable Intelligence

Tactical
• Targeted Promotions & variable pricing
• Outlet Segment specific service packages
• Profitability based supply routes
• Demand driven inventory management
Operational
• Exception based operations at the Factories
• Stock optimization across supply chain nodes
• Fast tracking complaints from High Value Cust
• Personnel workload mgmt across stores

Performance Visibility Analytical Capability

• Promotion & marketing impact tracking
• Supply Chain bottlenecks • Outlet Service Route Optimization
• SKU velocity • Outlet Segmentation
• Logistics impact on operating margins • Analytical Forecasting
• Store Allocation efficiency • Six Sigma Analytics
• Reservation Pipeline vs Forecast • Price Elasticity Analysis
• 360 deg Customer Views • BCG Portfolio Analysis
• 360 deg Supplier views • Human Productivity Analysis
• Cost variance tracking • Loyalty Analytics
• Order-To-Fulfillment, Cash –To-Cash,
Procure-To-Pay cycle times

Integrated Analysis across value chains

• Impact of Food FG Warehouse location on Food Categories operating margins
• Impact of Leaf stock at ILTD on price elasticity at ITD
• Impact of potato sourcing bottlenecks on Bingo Freshness

©Company confidential 7
 EPM driven BI at a US Food Distribution Major

Strategic Strategic
Goals Metrics/Scorecards

Demand Sourcing Supply Chain Customer

Initiatives Initiatives Initiatives Initiatives

Some Analysis Areas
• General Analysis
• Sales Force Effectiveness
• Trade Promotion
Effectiveness
• Marketing Effectiveness
• Market Analysis
Some Analysis Areas
• Spend Analysis
• Supplier Performance
Analysis
• Item & Brand Analysis
• Bid Analysis
• Competitive Analysis
Some Analysis Areas
• Delivery Effectiveness
• SKU rationalization
Effectiveness
• Backhaul Effectiveness
• Carrier Performance
Analysis
Some Analysis Areas
• General Analysis
• Segmentation Analysis
• Contract Compliance
• Business Review Analysis
• Customer Profitability
Analysis

Business Functions - Functional Metrics, Reports, Alerts, Scorecards, What-If Analysis, Guided Analysis

IT Functions - Dashboards, BI Tools, Databases, ETL, Data Models, Metadata

©Company confidential 8
 A single BI System should support the EPM Model
Performance Management Model

A common data set populates

the entire model enabling :-

• Scalability
• EPM, Data, BI Model
• System Performance
• Integration
• data linkages
• business rules

BI Layer (Business logic, number crunching, metric/report generation )

Outlet Sales, Invoices, Purchase Orders Business Plan, Forecast, A/R, A/P,
Inventory, Transport Orders, Stock Tr Orders,
Data Warehouse Visual Merch Audit, Production Plans,
Salary Advice, re-distribution Costs (Data Storage) Market Research, Production Jobs

Data Extraction, Cleansing, Staging,

Transformation & Loading ETL Layer

Source Systems
TM&
SAP Visual Audits HR Perf
Sales Force
& CRM WD System Excels PLM HRMS

©Company confidential 9
 Some benefits of integrated modeling for FMCG

• Impact of raw material shortage on retail offtake

• Analysis of a request for a short runner on

• Factory productivity vis-à-vis customer service

• Correlate/factor-in market demand (IMRB) into AE performance

• Decision on extending Promotions based on raw material availability

• Analyze impact of sales strategies/norms on Market standing

• Analyze synergy opportunities like sharing warehouses, transportation sharing

and backhauling, reverse logistics etc across categories

©Company confidential 10
 Typical BI Transformation Roadmap
Major Organization Transformations…..

Brand Management Transformation

Process Improvement Transformation

Supply Chain Transformation

…Need a Performance Mgmt & BI Transformation to empower & measure effect of transformation !

BI Transformation Roadmap

Define Create
EPM & BI Define BI BI
Performance Mgmt BI Governance BI Value Mgmt
Workshops BI Strategy Implementation Change Mgmt
Model Model

wareness Creation Framework

Technology Drivers Identify Sponsor Business Requirements Training KPO
ppreciation of Best Metrics Models
App Architecture Create Steering Comm System Requirements Communication Customer Service
Practices Scorecards
Data Architecture Create Execution Comm Design Biz Process Changes Business Impact
tent Generation Alerts
Platform Selection Comm to all stakeholders Development Expectation Mgmt BI Perf Mgmt
Linkages/Alignments
Vendor Selection Set expectations/Time Testing Usage Monitoring BI RoI
Analysis Flows
Initiatives Create Project Plan Deployment BI Support Processes BI Enhancements
Dashboard Designs
Roadmap Risk mgmt
Biz Case/ Info Needs
Effort Estimation
Get Mgmt Buy-In

©Company confidential 11
 BI Program Change Mgmt Challenges & Strategy
An effective Change Management strategy for BI Program starts at the Kickoff and ends at satisfactory system adoption and positive customer
feedback. However, Change Management is an ongoing process and is part and parcel of an effective BI Governance Model. bringing
people on board, convincing them of the value, goading them to use it the right way, measuring business improvements.

BI, being a non-critical business application needs cultural process changes to leverage the investment, which makes it even more challenging
and critical aspect of achieving success
Key Questions for Change Mgmt Planning
What will change ?
Change Why will it change ?
How will it change ?
Who will change it ?

Change is enabled through 4 key change perspectives

People Participation Processes Systems Culture

• Business Driven Program

• Business Sponsorship
• Business Buy-In, Ownership
• Identify Business Change
Agents
• Remove Business IT gaps
• Remove fear of Retrenchment
• Create Senior Mgmt
Champions to spread the
message
©Company confidential
• Identify and Plan for
process changes early on
• Create effective
communication channels
and joint project plans
with other process owners
• Cultural and governance
change needs to go along
with process changes
• Identify & Plan all system
changes early on
(Frontline systems may need to
have more checks and measure
to improve data quality)
• Create effective
communication channels
and joint project plans with
other System owners
• Communicate all system
changes to the Organization
• Showcase Business Benefits
• Keep business in loop during
change in scope
• Embed in biz processes like
sales review etc
• Pre-empt business needs
• Communicate effectively
• Repeated Multi-media
training
• Measure adoption, usage and
• publish figures
• Publish success stories
12
 Enterprise BI Strategy for ITC
Business Intelligence Mission BI Strategy
(SYSCO):
BI Vision BI Needs/ BI Business Case BI Budget
Provide a single view of timely,Painpoints
accurate,
consistent & actionable information
across the enterprise through a common
Execution Plan
user interface accessible anytime,
anywhere to authorized users, thereby Execution Model
Implementation Architecture
Scope
enabling fact based decision
Definition making. (Inhouse/Outsource)
Roadmap
Vendor Selection
(Data, System)
Tool Selection
& Project Plan

BI Business Case
Service & Maintenance
Service Model Service
•Unique
Service Sales & Customer view
Service
(Outsource, Vendor Selection •Unique
Quality Spend & vendor
Improvement
view
Managed BI Svc) Management
•Supply chain wastes
•Asset utilization gaps
Governance•Higher
Model employee productivity
•Greater IT ROI
Organization
•Single Analysis
Customer Risk Value Platform across biz
Focus Management Assessment Alignment
areas
•Excel intelligence democratization !
©Company confidential 13