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The State of TPM TECH SOLUTIONS GUIDE:

Data & Analytics

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Consumer goods companies are making progress in their efforts to address marketplace disruption


CONTENTS OCTOBER 2018

VOLUME 26 NUMBER 5

COVER STORY

CGT ADVISORY BOARDS EXECUTIVE COUNCIL

Tech Trends Report 2018

Our 15th annual “state of the industry” report finds consumer goods companies making steady progress in their efforts to address marketplace disruption. For the second year, CGT surveyed readers to get their take on the key tools and technologies that are helping them keep pace with increasingly demanding consumers.

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Departments 03 EDITOR’S NOTE The more things change, the more budgets stay the same. 20 TECHNOLOGY SOLUTIONS GUIDE: Data & Analytics CGT presents a comparison chart of solution providers on the forefront of data and analytics for the consumer goods industry. Plus, a roundtable of industry experts provide thought leadership for companies navigating this critical business need. 27

INDUSTRY INSIGHT

Addressing the Technology Imperative Wipro’s Srinivasan Rajamani gives CGT his perspective on key trends in technology-driven transformation.

Special Reports 11

TRADE PROMOTION MANAGEMENT REPORT 2018

Making It Real

Consumer packaged goods companies are working toward a more informed future that uses deeper insights, better metrics and faster response times to modernize the traditional TPM process. CGT’s first TPM-specific research report looks at key trends in this critical business practice.

Julia Anderson Smithfield Foods

Constance Howlett Estée Lauder

Denny Belcastro Kimberly-Clark

EJ Kenney SAP

Tony Bender Edgewell Personal Care

John Phillips PepsiCo

Michael Forhez Oracle Mike Gorshe Accenture Jon Harding Conair Corp. Justin Honaman Accenture

Kevin Puppe Johnson & Johnson Doug Rammel BAI Suavecito John Rossi Steve Sigrist Newell Brands Swan Sit Nike

EDITORIAL

Kevin Barnes Ferguson Enterprises Tony Bender Edgewell Personal Care Rick Brindle Mondelez International Ann Dozier Southern Wine & Spirits Michael Ferrara HairUWear Jon Harding Conair Corp. Peter Hatch Reynolds American Inc. Service Co. Chris Hobson VF Corp.

Constance Howlett Estée Lauder Betsey Nohe Morton Salt John Phillips PepsiCo Kevin Puppe Johnson & Johnson Doug Rammel BAI Suavecito Steve Sigrist Newell Brands Dan Woo Nestlé USA Filiz Yavuz Perry Ellis International

RESEARCH

Werner Graf, Chair Mindtree Gene Alvarez Gartner Lora Cecere Supply Chain Insights Michael Forhez Oracle Nona Cusick Capgemini Simon Ellis IDC

Don Lanham Hitachi Consulting Meena Surti Patel Cognizant Cheryl Perkins Innovationedge LLC Steve Rosenstock Clarkston Consulting

Consumer Goods Technology (USPS 0011-255, ISSN 1530-8421) is published 6 times per year: February, April, June, August, October and December, by EnsembleIQ, 1 Gateway Center, 11-43 Raymond Plaza, FL16, Newark, NJ 07102. Subscription rates: $89 for U.S. addresses; $99 for Canadian addresses; $109 for all other addresses. Single copies are $20; add $2 for postage to Canada, or $5 to other countries. For Air Mail, add $65. Copyright 2016 by Ensemble IQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or information storage and retrieval system without permission in writing from the publisher. Periodicals postage paid at Newark, NJ 07102 and additional mailing offices. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@ wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to: Consumer Goods Technology, PO Box 1842, Lowell, MA 01853-1842.

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More from Less

MANAGING DIRECTOR AND PUBLISHER Albert Guffanti aguffanti@ensembleiq.com

The more things change, the more budgets stay the same. That might be the most striking conclusion from CGT’s 15th annual Tech Trends Report (page 4). Over the course of 2018, we’ve been covering a lot of innovative technology initiatives taking place across the consumer goods industry. Among them: • The rapidly increasing use of artificial intelligence/machine learning to dramatically improve consumer insights gathering and analysis, as well as to expand and enhance consumer engagement — and, in the best use cases, the development of systems that can achieve both goals at once. • The transformation of existing infrastructures to address the new, omnichannel marketplace, thereby providing the flexibility to continue delivering truckloads of product cost-effectively and efficiently to thousands of stores, while adding the ability to profitably (some day, at least) directly ship single items to specific consumers. • The deployment of cloud architecture to facilitate the cross-functional visibility and collaboration that has been an unfulfilled wish at most companies for a long time. • The development of IoT-enabled products that greatly enhance the user experience while also mining data that can inform future rollouts and enhance the user experience even more. • The introduction of voice communication to a consumer marketing playbook that seems to get thicker and more challenging (but also more engaging) by the day. • The emergence of blockchain as a means of providing visibility and transparency throughout the supply chain, from original product source to ultimate end user. But what might be more impressive than any of these efforts is the fact that, in most cases, they’ve been accomplished by innovative, industrious professionals who were required to make substantial changes to their operations without any significant increases to their budgets. They’ve been asked to change the future with the same budget as last year, so to speak. We tip our caps. Elsewhere, while it might be hard to see innovation within survey data, there certainly seems to be at least a little lurking within the results of this month’s other report, a deep dive into trade promotion management (page 11). It’s the first time CGT has fielded a full research study on TPM, and we’d like to thank content partner Capgemini for structuring the survey and providing their insights about its implications. “Management” probably isn’t the best word to explain how consumer packaged goods are operating these days. “Optimization” doesn’t really work either, since few companies are merely working to improve the status quo anymore. Instead, they’re seeking more outside data, greater internal transparency and more streamlined processes that will let them work as close to real time as possible to meet the evolving needs of consumers. And the need to keep improving is great: Although survey respondents don’t necessarily expect to see any major increase in spending on the tools of trade promotion, they do expect a continued rise in allocations. Like I said at the beginning, the more things change, the more budgets stay the same. Peter Breen, Editor-in-Chief

EDITORIAL Editor-in-Chief: Peter Breen pbreen@ensembleiq.com Senior Editor: Nicole Gillo ngillo@ensembleiq.com Contributing Editors: Tim Binder, Jamie Grill-Goodman, Patrycja Malinowska, Charlie Menchaca, Samantha Nelson SALES Associate Brand Director: Bill Little blittle@ensembleiq.com EVENTS Vice President, Events: Ed Several eseveral@ensembleiq.com Director, Event Planning: Patricia Benkner pbenkner@ensembleiq.com Director, Event Content: John Hall jhall@ensembleiq.com MARKETING Marketing Manager: Tina Davis tdavis@ensembleiq.com AUDIENCE ENGAGEMENT Director of Audience Engagement: Gail Reboletti greboletti@ensembleiq.com Audience Development Manager: Shelley Patton spatton@ensembleiq.com ONLINE MEDIA Director Product Development: Jason Ward jward@ensembleiq.com Online Project Manager: Whitney Gregson wryerson@ensembleiq.com PROJECT MANAGEMENT/ PRODUCTION/ART Vice President, Production: Kathryn Homenick khomenick@ensembleiq.com Creative Director: Colette Magliaro cmagliaro@ensembleiq.com Custom Project Manager: Kathy Colwell kcolwell@ensembleiq.com Custom Project Manager: Judi Lam jlam@ensembleiq.com Production Manager: Patricia Wisser pwisser@ensembleiq.com Subscriptions: 978-671-0449

CORPORATE OFFICERS Alan Glass Executive Chairman David Shanker Chief Executive Officer Richard Rivera Chief Operating Officer & Chief Financial Officer Korry Stagnito Chief Brand Officer Therese Herbig President, Enterprise Solutions Joel Hughes Chief Digital Officer Jennifer Turner Chief Human Resources Officer Tanner Van Dusen Senior Vice President, Innovation

CORPORATE OFFICE 8550 W. Bryn Mawr Ave. Ste. 200 Chicago, IL 60631 Phone: +1 773-992-4450 Fax: +1 773-992-4455 www.consumergoods.com

CONSUMERGOODS.COM | OCTOBER 2018 | CGT

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Consumer goods companies are making progress in their efforts to address marketplace disruption BY LISA TERRY

SPONSORED BY

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onsumer goods companies are under tremendous pressure to interpret and respond to the evolving expectations of their targets: friction-free, multi-channel shopping experiences; one-to-one relationships; authentic and transparent branding; socially and environmentally responsible conduct; and the nearinstant availability of goods wherever, and whenever, they choose. Fortunately, alongside the rise of the consumer-focused mobile and digital technologies that fueled this revolution has been a proliferation of tools and platforms enabling brands to adapt. And brands are embracing these tools, hoping to modify existing systems and processes and adopt new capabilities across the enterprise to respond to evolving consumer demands. But as they continue to funnel resources toward modernizing core business systems, building out direct-to-consumer platforms and infusing artificial intelligence into more areas, companies must stretch their still-conservative IT budgets to cover experimentation with emerging options like internet of things connectivity and blockchain. All of these tasks come as chief information officers are challenged to transition their responsibilities from “simply” being the keepers of IT to becoming IT ambassadors, partnering with business unit leaders across the organization to leverage the best technology in collaborative, strategic, business-building ways. CGT fielded its annual “Tech Trends” survey to check in with companies on how they’re leveraging IT to address the aforementioned challenges. Following are key results from the survey.

Agendas Expand Faster Than Budgets To start off with some good news, IT budgets seem to be reflecting the scope of necessary change: 44% of survey respondents reported budget increases in 2018 (with 47% reporting flat growth), but 56% are expecting a boost in 2019 (Figure 1). What’s more, IT spending as a percentage of total revenue among respondents was 2.7%, a number that’s slightly higher than other industry reports but, optimistically speaking, could F I G U RE 1 :

point to a growing understanding of IT as the catalyst for future success and digital transformation as a business imperative. At Smithfield Foods, transforming the business has meant adding budget and additional staff in areas including cloud support and monitoring, program management and analytics, according to Julia Anderson, global CIO. Elsewhere, Conair’s single-digit budget increase was also focused on new digital initiatives (see page 9). Increasingly, the ratio of budget to sales isn’t a predetermined target but is built from the ground up, as zero-based budgeting has taken hold in many industries. “Nowhere has the interest been greater than in the consumer goods sector, where industry leaders are delivering savings that would have seemed impossible a few years ago,” according to McKinsey.

Analytics Leads Investment Areas Like many other industries, consumer goods views analytics as the key to responding to rising customer expectations. That belief is reflected in their IT spending patterns (Figure 2). In 2018, almost half (46%) increased their investment in tools for insights and analytics, followed by supply chain (34%), marketing (31%) and sales (29%). The source of those funds, however, is shifting. Earlier handwringing over “rogue” tech spending by the business units has become commonplace as more business applications became available via software as a service. Without the need to run software on internal infrastructure, it’s been easier for business units to attain required applications without the need for IT’s services — or its “permission” (Figure 3). According to Edward Kenney, SAP’s senior vice presidentglobal head of consumer products, agribusiness, one outcome of the trend toward business units acquiring cloud services on their own has been decentralized decision-making and the increasing availability of cloud-based solutions. Companies now are beginning to combine “best of cloud” and enterprise-level solutions to enable integrated, end-to-end business processes, which

IT Budget Growth

2018

2019

Remained the same

47%

Increased by 1-10%

26%

Increased more than 10%

18%

Decreased by 1-10% Decreased more than 10%

9% 0%

Increase by 1-10%

53%

Remain the same

35%

Decrease by 1-10% Increase by more than 10% Decrease by more than 10%

9% 3% 0%

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changes the role of IT with respect to budgets and decisionmaking, he says. “I don’t think that is ever going to go back to where it was,” Kenney says. “I definitely see the business taking a more active role going forward.”

F I G U R E 2:

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46%

Insights/analytics

34%

Supply chain

The Impact of E-Commerce Ongoing changes in consumer shopping behavior have finally drawn CGs from all product categories into e-commerce, in support of retailer customers as well as for their own nascent direct-to-consumer efforts. Sixty three percent of survey respondents reported an increase in IT spending directly related to e-commerce, 46% at “conservative” levels and 17% with more substantial boosts (Figure 4). The remaining 37% of respondents say the adoption of e-commerce tools hasn’t affected overall spending levels. Nevertheless, a solid e-commerce infrastructure will be essential for CG companies looking to keep pace with market trends. According to Kantar Worldpanel, while the overall fast-moving consumer goods (or consumer packaged goods) market grew 1.9% globally and 0.5% in the U.S. in 2017, online-only sales rose 15% globally and 29% domestically. Regardless of the effect on spending totals, e-commerce is clearly altering the way companies operate, with three areas experiencing the greatest impact (Figure 5): • The need to develop and deepen relationships with consumers via marketing (81%), which involves such tech-heavy practices as digital marketing, content personalization, product information management and search engine optimization. • A corresponding reworking of sales practices (61%), including customer management, account planning, retail execution and trade promotion management. • An overhaul of supply chain capabilities (47%) covering such needs as single-product logistics, accelerated speed to market and direct-to-consumer delivery. “This is all new territory,” says Tony Bender, former CIO and vice president of global business services at Edgewell Personal Care. “A lot of what we’re doing is through partnerships, particularly in terms of pick-pack fulfillment. We’re partnering with third parties that can provide that capability because it wasn’t a core competence of our business.” While 33% of respondents identify direct-to-consumer sales as a critical component of their future go-to-market strategy (Figure 6), only 18% called it critical today — although 6% said it’s already core to the business. One word of caution to the 27% of respondents who say directto-consumer is not, nor will be, critical to their business: A lot of packaged goods companies used to say that about e-commerce. Of course, more traditional support for the e-commerce efforts of retailer partners is a pretty significant adjustment in itself. At Kimberly-Clark, “We’re helping our retailers build that extended

Areas of Spending Increases

31%

Marketing

29%

Sales

23%

No increases in spending

17%

Manufacturing

3%

Other

F I G U R E 3:

IT vs. Business Unit Spending

3%

Spending migrating to BUs without IT involvement

63%

IT continues to manage most spending

14%

BUs already manage much of the spending

20%

IT always has input, but spending is migrating to BUs

F I G U R E 4:

Impact of E-com on Spending

Conservatively increased spending

46% 37%

No impact on spending Substantially increased overall spending Substantially increased spending in new areas

F I G U R E 5:

14% 3%

Areas of E-commerce Impact

In which areas has e-commerce had the greatest impact? 81%

Marketing

61%

Sales

47%

Supply Chain Product Development/ Manufacturing

11%


Tech Trends InsightsIndustry Insights

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AI is Ready for Prime Time in Consumer Goods

Q

Artificial intelligence has been identified as “critical” to future success. What are the primary benefits it’s bringing to consumer goods manufacturers?

REILLY: It’s all about shifting time from “causation” to “ideation.” Virtually every leader we talk with in the Senior Vice consumer goods world struggles with this. They have President, Sales barely enough time to determine what happened in the and Marketing last reporting period and not enough time to figure out AnswerRocket what to do about it. They need to get creative with retail partners, brand strategies, media mix — the list goes on. It takes much too long to understand the changing landscape, which hamstrings efforts to do what humans do really well: get creative and drive actions to deliver growth. Fortunately, our industry benefits from the trifecta of AI skills: huge volumes of data that change over time, with many unknown underlying factors and complex effects of every decision.

Pete Reilly

“ An AI insights feed should relieve a brand manager from ever having to browse data directly.”

Q

Much of the early testing and implementation of AI tools has taken place in the marketing function. What have companies learned so far? REILLY: Companies that implemented AI early on started with simple scenarios and automated away the most repetitive tasks, working up toward higher and higher value functions. The type of deep learning that works really well right now is what [AI guru] Andrew Ng calls “supervised learning.” Think of this as being like how you learned in school. You get some examples and answers, and you can then extrapolate from the examples you learned. From enough example inputs and outputs, neural nets can start to learn what will happen, given a set of inputs.

Q

In our Tech Trends survey, insights/analytics was identified as a priority area for implementation. What should be the key objectives here? REILLY: To focus on the desired business result, which is often bottom-line growth. Like a newspaper that signals items worthy of attention, an insights “feed” should relieve a brand manager from ever having to browse data directly. Reams of KPI reports don’t have to be reviewed when AI is already scouring all of that information in real time for the important events that need attention.

Machines can voraciously take in the volume of data produced by CG businesses and point out important events that a business expert should review. Over time, the machine learns to point out an insight and what action to recommend for it.

Q

Where else in the enterprise should companies be placing an emphasis right now? REILLY: I’d emphasize the parts of the business that drive revenue: sales, category management, brand management, etc. Modeling all of the moving parts of a CG business involves vast amounts of data and computing power at a scale that is only now coming into focus. Today’s market mix models will give way to demand simulators tracking and responding in real time.

Q

Despite the recognition of AI’s potential, a lot of companies have been slow at implementation. How do companies move beyond the current obstacles? REILLY: Another thing Ng talks about is the idea that “anything a human can do in one second, a machine can either do now, or will soon be able to do.” He suggests looking for things that humans can do in one second as potential targets for automation. One example he gives is the task of evaluating a security video. A human can evaluate the current scene in security footage in one second. How many people, where are they headed? Are they carrying anything? Analyzing the health of a brand is similar in many ways: Is share increasing or decreasing? Penetrations? Value? Volume? Which brand has the highest increase in share? Companies should look for these opportunities and start experimenting.

AnswerRocket supports some of the largest global brands with AI-powered analytics. The platform is designed for business leaders seeking immediate insights to fuel bottom-line growth.


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shelf so that, if they don’t have an item in-store, they have the capacity to deliver it or have it available for [pickup],” says Denny Belcastro, the CPG’s vice president of industry and customer collaboration. “That has added another level of complexity [in order to have] the right product at the right place at the right time.”

Obstacles to Progress Despite the acknowledged need for change, there still are a significant number of barriers slowing the adoption of new tools and technologies. While 11% of survey respondents say they’ve eliminated all significant obstacles (Figure 7), an array of issues challenge many others — led not unexpectedly by lack of budget and other resources (26%) and the existence of entrenched legacy infrastructure and systems (20%). More surprising are the number of respondents who say their companies are still hampered by the lack of a strategic plan (17%) or a lack of urgency among senior management (14%). Executives interviewed by CGT concur that changing the culture overall represents another significant hurdle. “Many people will assume that, once we have the technology, all of our problems are solved,” says Joel Warady, chief sales & marketing officer at Mondeléz International’s Enjoy Life Foods. “Technology is a tool, and unless you change your processes to maximize the efficiency of the technology, it can’t do any good.” “You are talking about significantly disrupting well-established business models,” agrees SAP’s Kenney. “In this environment, it may be talent and culture that emerge as some of the biggest challenges that companies must address.”

Modernizing the Enterprise There are a number of common steps that companies are taking to meet these new market demands (Figure 8). They’re modernizing legacy systems and adopting new technologies in equal measure (both 51%), steadily moving toward cloudbased platforms (34%) and integrating third-party apps and services (29%). For many companies, these efforts are aimed at making the organization more agile and responsive to change. According to A.T. Kearney, retailers and consumer companies leave more than $345 billion dollars a year on the table due to their lack of agility. Edgewell has spent the last few years consolidating multiple enterprise resource planning systems amassed through acquisitions. The company now has embarked on “Project Fuel,” an IT enablement phase that takes a close look at meta-processes that drive the business. “We are simplifying and streamlining to allow us to effectively leverage technology,” Bender explains. “We’re using more partnerships [and] leveraging cloud-based solutions. We’re

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Expectations for DTC

Complete the sentence: Direct to consumer sales are... a critical component of our future go-to-market strategy.

33%

not critical to our business, now or in the future.

27%

a critical component of our current go-to-market strategy.

18%

the core of our future business.

15%

the core of our business today.

F I G U R E 7:

6%

Obstacles to IT Adoption 26%

Lack of budget/resources

20%

Entrenched legacy infrastructure/systems

17%

No strategic plan in place

14%

Lack of urgency among senior management

11%

We have eliminated all significant obstacles Lack of alignment between business and IT

3%

Time constraints

3%

Security concerns

3%

Other

3%

F I G U R E 8:

Steps Toward Transformation

Which steps is your company taking to drive change? Modernizing legacy systems

51%

Adopting new technologies

51% 34%

Moving to the cloud Integrating third-party apps/services

29%

Developing web-based applications

29% 23%

Deploying AI/machine learning Implementing mobile technologies

20%

Implementing IoT technologies

20%

Implementing advanced robotics

6%

Adopting blockchain technologies

3%

Other

3%


FI G U RE 9 :

Areas of Omnichannel Impact

Priorities for Change

Which functions are you modernizing to reflect the omnichannel marketplace?

60%

Marketing Sales

57%

Insights/analytics

57%

Supply chain

54% 14%

R&D Manufacturing Other

FI G U RE 1 0 :

9% 3%

Priorities for Change

Which areas has your company identified as priorities for change? 59%

Business intelligence/data analytics Supply chain

44%

Consumer marketing/engagement

44% 41%

New product development Sales & operations planning

35%

ERP

35%

Retail execution

32%

TPM/TPO

32%

Manufacturing

29%

Customer management/collaboration Other

26% 3%

partnering with third parties to help manage the overall infrastructure so that we can focus more on value-added activities.” The scope of these efforts is wide, with sales, marketing, insights/analytics and supply chain all target areas for a large portion of CG companies (Figure 9). Kimberly-Clark is leveraging a SaaS-based cloud solution to support the sales organization by providing critical data much faster. “Enhancements or revisions to ... consumer promotion, trade promotion, pricing action, and things like that are all driven to the cloud,” explains Belcastro. “Every Friday, I can download the latest and greatest information, which is probably three days old at that point. I used to have to wait a month or six weeks.”

The wide range of modernization needs is also echoed in the enterprise areas that CG companies have identified as priorities for change (Figure 10). In keeping with the analytics focus, business intelligence is the most-cited area by a significant margin (59%). Next comes supply chain and consumer marketing/engagement (both at 44%), followed by new product development (41%) and sales & operations planning and ERP (35%). At Smithfield Foods, the high priorities include becoming more data-focused and analytics-driven, leveraging robotics to automate more pieces of the supply chain, and adding product lifecycle management solutions to support innovation in packaged and fresh goods. “We’re also building out collaboration so that many can innovate and learn, and then have the structure to come back and share” their experiences, Anderson says. “We could have people picking out 20 different devices to do scanning, or video monitoring, or analytics, [but] we don’t want that. We want one or two solutions that really work for us and make it easy to consume for our business.” Conair’s analytics efforts have covered social media and digital marketing. “We’ve been doing that for over two years,” says Jon Harding, the company’s global CIO. “The next stage of modernizing our consumer engagement is when a consumer has a problem and reaches out to us. We’re looking to modernize all those interactions.”

Tools of Change There is no shortage of IT buzzwords in consumer goods, and they’re often accompanied by generous allotments of hype. But many of these buzzy tools are delivering real value to help CG companies transform (Figure 11). Three technologies share the top tier of applications considered critical to future success: mobile applications (55%), cloud-based architecture (48%) and AI/machine learning tools (39%). Mobile apps not only encompass marketing and social media use cases, but also consumer product enhancements. ColgatePalmolive, for example, unveiled a smart electronic toothbrush that uses artificial intelligence and a mobile app to provide realtime feedback about brushing activity. “Everything’s got to be mobile,” says Conair’s Harding. “Ecommerce sites obviously have to be responsive-designed so they function well on mobile. We might have some products that can be controlled from phones. But you have to be careful that you don’t go over the top.” The second tier of critical technologies involves tools whose potential uses are still being determined: augmented/virtual reality and robotics (18%), and blockchain and IoT (12%). Samsung, as one example, uses VR to help consumers visualize TVs in their own homes. AR, meanwhile, has become a common sales tool in the cosmetics category, where it’s used

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FI G U RE 1 1 :

Keys to Future Success

Which technologies does your company consider critical to future success? 55%

Mobile applications

48%

Cloud-based architecture

39%

AI/machine learning tools

F I G U RE 1 2 :

AR/VR tools

18%

Robotics

18%

IoT tools

12%

Blockchain

12%

Other

12%

Priorities for Artificial Intelligence

In which areas has your company implemented AI tools?

50%

Insights/analytics

43%

Marketing

30%

Sales Supply chain

20%

Other

20% 13%

Manufacturing R&D

3%

to let consumers virtually test products in stores and at home. Robotics is spreading beyond manufacturing and the supply chain. Edgewell is exploring the technology for process automation in areas such as customer service or accounts payable. “Certain steps in that process are very clearly defined in terms of the rule set,” says Bender. “When these conditions occur, those kinds of things can be automated. You don’t have to have a human do them.” Edgewell already uses chatbotstyle technology in service management to create a self-service experience for IT’s internal customers.

Help (AI) or Hype (Blockchain)? AI is already impacting many functions across the enterprise, but none more significantly than insights/analytics (Figure 12).

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Other areas of heavy application include marketing (43%), sales (30%) and supply chain (20%). KitchenAid is among the companies enjoying material results from AI in marketing. One year after implementing AIbased social media management tools, the company reported 90% growth in its fan base and 143% growth in consumer interactions, the company said recently. Successful companies will use AI and machine learning to break down existing cross-functional teams and form new dynamic networks, leveraging insights from massive amounts of data that reside in distributed environments — sometimes in different languages, formats and platforms, according to Michael Forhez, global managing director for consumer markets at Oracle. “In principle, we’re far more capable of moving along this course expeditiously, efficiently and effectively through advanced technology than was scarcely possible only a few years ago,” says Forhez. “The question is, will we?” These are much earlier days for blockchain, which might be why 33% of respondents called it “an overblown, over-hyped technology that probably has a few useful applications.” Still, 45% of executives said it is “a promising next-gen tool that will deliver significant business value,” and 21% called it a “potential game-changer.” “There are a lot of initiatives underway,” says SAP’s Kenney. “I expect that, once we see early success with a few high-value applications, application and adoption will accelerate rapidly.” Applications have varied widely, from Chinese e-commerce giant Alibaba tracking the details of production, logistics, customs, inspections and third-party verifications, to AB InBev preventing fraudulent ad campaign reporting. Enjoy Life Foods envisions blockchain aiding consumers with allergy concerns, the type of track-and-trace application that also appeals to Smithfield Foods to offer greater product transparency. But Smithfield’s Anderson also sees blockchain simplifying processes such as exporting; the company has joined several industry consortia with partners (like Walmart) exploring those possibilities.

Shaping the Future Delivering to that informed, demanding, technology-empowered consumer is challenging companies to reorganize, retool and rethink almost every aspect of their traditional business. Fortunately, technology is also capable of enabling that change. The challenge comes in crafting the best strategy to select, adopt and leverage the available solutions to become the agile, customer-centric organizations that will succeed in this vastly different marketplace. CGT


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TRADE

PROMOTION MANAGEMENT

REPORT 2018

MAKING IT REAL:

The State of Trade Promotion Management Exclusive research examines current trends and future goals for the consumer goods industry

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CONSUMER GOODS TECHNOLOGY

TRADE

PROMOTION MANAGEMENT

REPORT 2018

STATE OF THE INDUSTRY

The State of Trade Promotion Management CONSUMER G O O DS CO M PAN I ES WA N T D E E P E R I N S I G H T S , B E T T E R ME T R I C S A N D FA S T E R RE SP ONSE TIMES FROM THEI R TPM PRO CESS ES B Y C G T S TA F F

There may be no business function in greater need of real transformation than trade promotion management — largely because there’s no business function that comes with a higher price tag. Yet a crucial marketing practice that commands as much as 25% of gross sales is often still hindered by outdated processes and inefficient legacy tools — despite all the changes taking place elsewhere in consumer goods organizations in response to the new digital economy. In fact, CGT’s 2018 Tech Trends Report finds that only 32% of consumer goods companies have identified TPM as a priority for change, and only a few have made it their top priority (see page 4). In order to assess the current state of TPM and learn what trade practitioners are doing — or wish they were doing — to update and improve their own systems and processes, CGT joined with Capgemini this fall to field a survey. The following is an overview of results, which paint a picture of a practice moving steadily into the digital age.

The Readiness is Not All Acknowledging the fact that trade promotion is a critical aspect of the consumer packaged goods business is not an issue among respondents. More than two-thirds (69%) say their company considers the practice “extremely important,” and nearly all (94%) ascribe some level of importance. However, survey results overall point to dissatisfaction with existing systems, general disapproval over program performance, and even some professed ignorance about general effectiveness, as will be discussed below. While there is widespread understanding that trade promotion is vital, many companies have hesitated to make necessary changes to their processes. For instance, not a single respondent to the survey could say

that they were “completely satisfied” with the quality of performance analytics they can access on a daily basis; 63% say they are “somewhat satisfied,” while 37% express dissatisfaction. When it comes to improving performance, respondents pointed overwhelmingly (67%) to the basic need to improve promotion planning and optimization as the single most important area of focus. Coming in a distant second was the need to boost program execution at retail, an achievement that has long proved troublesome for CPGs at the mercy of store employees (Figure 1). It might also be noteworthy — and certainly good news for legacy TPM providers — that only 3% consider the need to replace technology solutions as the most important area to cover. That’s somewhat surprising, considering the stated level of trade promotion optimization technology that respondent companies have. Only 11% consider their tools to be “highly advanced,” with the ability to leverage multiple, internal and external data sources using artificial intelligence to predict performance (Figure 3). Another 28% believe themselves to be “advanced,” with the ability to use historical, point-of-sale and syndicated data to deliver promotion recommendations (without the use of AI). But that leaves 42% of companies still operating with only “basic” capabilities, making predictions using historical data but utilizing no other resources. And even more concerning are the 17% of companies that still aren’t using a TPO tool.

All About the Data Drilling deeper down into data and insights, respondents were somewhat divided on what type of data is most important for gaining insights. The most obvious source was the one most often cited, with “accurate” historical performance results being cited by one-third of respondents (Figure 2). Syndicated research

Survey Demographics CGT fielded this survey during August-September by reaching out to consumer goods professionals in its community. Only responses from verified employees of CG companies are included in the results presented in this report. Respondents skewed toward large companies with more than $1 billion in annual revenue (57%) versus small and medium sized businesses (43%)

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CGT | OCTOBER 2018 | CONSUMERGOODS.COM

In terms of roles, 50% work in the sales function, 25% in marketing and 14% in IT/data science, with the remaining 11% spread across finance and various management positions. Sales function respondents identified as being responsible for trade promotion/revenue management, field sales or retail execution; marketing respondents were focused on either brand or category management.


F I G U R E 1:

data (from usual suspects like IRI, Nielsen, GfK and NPD) was selected by 19%, while one-fourth of respondents expressed a desire to move beyond more traditional streams, selecting consumer demand/shopper intelligence as most important. Historical and POS data are also considered to be most important for optimizing ROI forecasting, with 56% of respondents pointing to both as “most critical” to the process. But nearly onethird (31%) identify data from relevant consumer promotions and events, and 22% call for syndicated data — both of which again illustrate efforts to broaden the range of insights that drive the planning process (Figure 4). This goal is also evident in industry-wide efforts to coordinate trade promotions with other consumer marketing activity, including both corporate events and focused consumer promotions. Results in this area were fairly positive, with all respondents claiming at least some level of alignment, 14% even professing to be “always aligned” and only an equal 14% saying they “rarely” coordinate activity (Figure 5). Respondents overwhelmingly (82%) believe that integrating consumer promotion event data into trade planning would improve ROI, with 24% saying it would “dramatically increase” results and 58% projecting a more marginal impact (Figure 12). Correspondingly, data from digital consumer promotions (64%) and corporate advertising schedules (18%) are viewed as the elements that would be most effective to optimize ROI. Going beyond company-specific data, 15% of respondents also point to social media sentiment as beneficial (Figure 13). Alleviating the crtical issue of out-of-stock situations could be a major benefit of a move toward daily measurement of trade promotion performance, a capability that is becoming increasingly possible for many consumer goods companies. Nearly half (46%) of respondents say that daily tracking could “potentially end” out of stocks (Figure 6). The greatest benefit, however, would be the ability to arm retailers with better intelligence about store traffic, basket makeup, and shopping behavior that, in turn, would give CPGs better planning intelligence, according to respondents. It also would help CPGs better align trade and consumer activity, they say. Better intelligence also can be influenced by retailers who collaborate more openly in the planning process (according to 40% of respondents), improve program compliance in stores (26%) and provide daily inventory data (20%), respondents say (Figure 7).

Efforts to Improve Measurement In terms of the metrics most critical to understand before executing a promotion, respondents note sell-in volume (66%) and predicted incremental POS (51%) as the top 2 (Figure 8), with the second coming as a surprise to CGT survey partner Capgemini (page 14). Incremental sales is the top priority to measure after

What is the most important area of focus for improving trade promotion performance?

67%

Promotion planning and optimization Promotion execution at retail

17%

Data and insights

14%

Replacing technology solutions

3%

F I G U R E 2:

Which of these data types is most important for gaining insights?

Accurate historical performance results

33%

Consumer demand and shopper intelligence

25% 19%

Syndicated research data Retail point-of-sale data Store inventory tracking data

17% 6%

F I G U R E 3:

Which statement best describes the current level of your trade promotion optimization technology? Basic: Use predictive planning on historical data but don’t use other external data

42%

Advanced: Use historical, POS and syndicated data to deliver recommended promotions (but no AI)

28%

Don’t own or have access to a TPO

17%

Highly advanced: Can leverage multiple sources of internal/external data via AI to predict ROI Don’t know

11%

3%

the promotion (also 66%), followed by compliance rates and amounts of cannibalization/halo effect (Figure 9). Baseline measures took a hit from respondents, only 6% of whom were “highly confident” in their accuracy for reflecting non-promoted volume or “highly satisfied” with the frequency in which they’re received. Attitudes toward performance measurement aren’t a whole lot better, with only 9% of respondents professing to measure

CONSUMERGOODS.COM | OCTOBER 2018 | CGT

13


CONSUMER GOODS TECHNOLOGY

TRADE

PROMOTION MANAGEMENT

REPORT 2018

FIG U RE 4 : Keys to ROI Forecasting Which components are most critical to “optimizing” the ROI forecasting process (select two)?

Historical trade promotion data

56%

POS data

56% 31%

DTC promotions and event data

28%

Sell-in data

22%

Syndicated data Store inventory data

8%

FI G U RE 5 : The State of Promotion Alignment How often are your trade promotions aligned with your corporate marketing events, direct-to-consumer promotions or e-commerce promotions?

Sometimes

69%

Always

14%

Rarely

14%

Don’t know Never

3% 0%

basic metrics (sell-in volume, revenue, profitability, POS) “very well” and 24% stating that they do the job “poorly” (Figure 10). With such low opinions of measurement capabilities, it’s at least reassuring that most companies feel their promotions typically achieve the planned objectives — if one’s standards aren’t terribly high: only 27% of respondents say they hit their goals with better than 75% of promotions; 27% claim to still be in the dark about results (Figure 11). Of course, it goes without saying that addressing all these issues is critically important for CPGs, since the practice is expected to remain just as vital to success in the future: 49% of respondents expect trade spending to increase over the next five years, and only 17% believe allocations will decline. (The rest expect funding to remain the same). The more things change in the consumer goods industry, the more they may very well stay the same.

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CGT | OCTOBER 2018 | CONSUMERGOODS.COM

Positive Steps to TPO Transformation C P G S A R E H E A D I N G T O WA R D A FA R MO RE I N F O R ME D F U T U R E

Executive focus on trade promotion has grown substantially over the past decade. The recent burst of technology, social media, e-commerce and consumer online purchasing collectively have had this impact. Financially, the huge spending levels at consumer packaged goods companies — it’s typically the second highest BY ROB HAND line item on the corporate balance sheet — have TRADE PROMOTION brought trade promotion into the top tier of DOMAIN LEAD digital transformation priorities. CAPGEMINI In the survey, 59% of respondents report that their company’s attitude toward trade promotion is now extremely important; 67% believe that promotion planning and optimization is their single most important issue, and another 17% believe that retail execution is most critical — higher than in previous surveys of past years.

Data and Analytics Only 14% of survey respondents say that data and insights are the most important single area of focus, which is not consistent with the responses provided for all of the survey’s other related questions (Figure 1). Given the expanding number of initiatives around big data and the growing use of advanced artificial intelligence and machine learning technology in trade promotion, demand planning, and consumer marketing, we are able to determine that data and insights clearly play a critical role. There is a great deal of work to be done to improve levels of satisfaction with current analytics tools and results, however. No respondents said they were completely satisfied with the quality of performance analytics to which they have daily access; 63% professed to be “somewhat satisfied” and 37% said they were unsatisfied. This is a trend that must change, especially considering the staggering amount of money and resources being invested in big data and analytics tools. The survey showed that the most critical data for trade promotion is historical performance results (Figure 2). Evaluating responses from just marketers (see Survey Demographics), we find that 25% feel consumer demand and shopper intelligence is most important. The trend toward greater integration between trade promotion and corporate direct-toconsumer marketing is gaining strength. We therefore expect this figure to climb over the next few years as companies begin combining and aligning trade promotion with corporate marketing planning. The typical cadence for trade promotion performance metrics has been on a weekly basis. However, the marketplace is beginning to demand higher frequency of performance intelligence, and this was


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CONSUMER GOODS TECHNOLOGY

TRADE

PROMOTION MANAGEMENT

REPORT 2018

clearly reflected in the 71% of respondents favoring daily reporting (Figure 6). The benefits to both CPGs and retailers are numerous, including better tracking of market basket/pantry loading and in-store shopping patterns. The support for daily data analysis also includes the ability to better track response to consumer-direct marketing campaigns and to facilitate more timely responses to social sentiment (Figure 6). Past survey data has found that OOS conditions can be the cause of failure to achieve positive ROI in as many as two-thirds of poorly performing campaigns. That trend may be improving, with 57% of respondents here saying that OOS conditions occur in less than one-third of their promotions. But almost one-third did not know if OOS conditions impacted promotions. POS data contains far more information than most CPG companies receive, especially if they buy it from syndicated research providers. Twenty percent of respondents say retailers need to do a better job with on-shelf inventory management (Figure 7). Direct POS acquisition could help that visibility. A considerable amount of money and focus has been devoted to identifying and rectifying OOS conditions, especially from the supply chain, transportation and logistics lines of business. Yet we continue to have this problem. Even when daily inventory data is available, most trade promotion and supply chain systems fail to provide sufficient alerts to take appropriate actions. Respondents were in strong agreement that being able to track inventory daily could potentially end out-of-stock conditions at the shelf. Of course, daily tracking is only beneficial if the appropriate actions can be taken when alerts are sounded that low inventory conditions exist — either in the supply chain, warehouses or store stock rooms. In fact, the survey indicates that the solution most often requires action on the store floor: poor stocking practices by the retailer and failure to adequately audit conditions by retail execution merchandisers. This is a growing issue among Capgemini’s clients, and one that seems to be a growing focus among retail and CPG executives. Most CPGs will admit to a need to increase the effectiveness of their trade promotion analytics, and nearly one-third of the executives polled feel their analytics are either poor or non-existent (Figure 10). Almost two-thirds believe that their analytics tools and performance measurement are at least satisfactory, with only 9% saying they feel their company does very well (as indicated by their ability to measure multiple metrics on promotions). Regarding pre- and post-promotion analyses – specifically, which metrics are most commonly measured and reported – the survey asked respondents to identify their top two metrics (Figures 8 and 9). For pre-promotion, we expected the top two selections to be sell-in volume and revenue. Not surprisingly, sell-in volume was

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CGT | OCTOBER 2018 | CONSUMERGOODS.COM

Benefits of Daily Measurement What would be the greatest benefits of daily trade performance measurement (select two)?

F I G U R E 6:

Let retailers better track store traffic, market basket/pantry loading and in-store shopping patterns to provide CPGs with better planning intelligence

71%

Better align trade performance with real-time consumer response from digital marketing

49% 46%

Potentially end out-of-stock problems Allow for more accurate, timelier response to social sentiment analysis

34%

How Retailers Can Help Brands What’s the most important action retailers can take to increase ROI for packaged goods partners?

F I G U R E 7:

11% Make more shopper (i.e. loyalty) data available

3% They can’t really do anything

40% Collaborate more openly in promotion planning

20% Provide daily inventory data to better track onshelf availability 26% Improve compliance across all stores

Pre-Program Measurement Priorities What are the most important metrics to measure before executing a promotion (select two)?

F I G U R E 8:

66%

Sell-in volume

51%

Predicted incremental POS

40%

Incremental sell-in revenue

29%

Store-level inventory Predicted incremental retail gross profit

14%


TPM REPORT

THOUGHT LEADERSHIP Sponsored Content

Becoming a Modern, Faster Organization CONSUMER GOODS COMPANIES MUST CONNECT THE FRONT OFFICE TO BE RELEVANT TO CONSUMERS

JASON MURPHY Managing Director, Consumer Goods & Services-Software Strategy & Development ACCENTURE

For companies looking to improve their trade promotion performance, what are the most critical areas to address? MURPHY: For trade promotion management to perform well, the data needs to be accurate and timely. While consumer goods companies are starting to achieve a greater level of data sophistication and availability, there’s still a lot of work to do to ensure the information is consistent and reliable across markets and categories. Big consumer brands need to operate with speed by moving to become a modern operation. This requires them to operate as a “living business,” one that is more fluid, responsive and predictive to ever-changing consumer behavior. Successful companies will be the ones who move from outdated price and promotion processes to arming account teams with the tools to organize products around how consumers are behaving in real time. Consumer goods companies need to consider the bigger picture when considering the trade and consumer marketing spend. Reliance on technology and business processes alone will not yield improved performance. TPM can only truly be optimized if the skills of teams are augmented with the technology. The need to improve the planning process by better understanding consumer demand has become critical. What’s the best way to accomplish this? MURPHY: Companies must learn from the disruptors and agile incumbents that are focused on reinventing how they reach consumers in the digital age wherever they may be. And in today’s data-driven world, it all comes down to consumers. It’s about talking — and listening — to them, putting their needs and desires front and center in the planning process. It means acquiring the agility to flex the business quickly and responsively toward shifting consumer demand patterns. And it means capturing the value in the ongoing explosion of advanced technologies. Companies can now achieve a greater level of sophisticated planning that can be organized around retailers and consumers alike. By identifying and mapping patterns and trends captured from performance data over time, account teams will have the ability to make better informed — and profitable — promotion and funding decisions. Looking ahead 10 years, is TPM still as critical to the consumer goods business as it is now? Why or why not? MURPHY: Without question, TPM will remain critical to the consumer goods business. However, we can expect to see a change in the way trade funds are allocated, as well as in the tactics and mechanics deployed. It is likely that TPM will remain an important part of a modern consumer enterprise. And while we are seeing a greater choice and availability of tools in the marketplace, the emergence of technologies such as artificial intelligence are enabling companies to get closer to predicting and anticipating demand — taking the ways in which account teams plan their trade spend to another level.

Accenture is a leading global professional services company providing a broad range of services and solutions in strategy, consulting, digital, technology and operations.


CONSUMER GOODS TECHNOLOGY

TRADE

PROMOTION MANAGEMENT

REPORT 2018

the top metric. Most sales reps will agree that it’s their number one objective, and compensation programs clearly reflect that. The same thought applied to sell-in revenue. However, it was not the second highest metric. What is surprising was the selection of “predicted incremental POS” as the second highest selection (Figure 8). More CPGs are adding POS to the compensation matrix for sales reps. This is an excellent sign that more serious attention is being paid to the ultimate results of the promotion at the cash register, moving away from the historical practice of pushing product volume into the channel without regard to the end sale. Additional evidence of this trend is that “incremental POS sales” was cited as the most important metric for post-promotion performance analysis (Figure 9). This indicates that trade planners are paying more attention to the end goal of reaching consumers and driving them into stores. Cannibalization/halo effect and in-store execution compliance were both also high; however, as companies expand and acquire, promotions that avoid cannibalizing other products will become tougher to plan and execute without higher quality data. Retail profitability was not a key metric, but the future of collaborative trade promotion planning will depend on increased attention and focus for trade promotion systems in the future. We see a higher level of promotion success when the analytics enable a sales rep or account manager to prove reliable retail profitability during planning efforts.

Assessing Baseline Management Baseline management is beginning to play a far more critical role in promotion planning than ever before. Development and maintenance has traditionally been the responsibility of demand planning, where baselines are calculated and passed to the promotion planners who determine incremental volumes to be achieved. Only 17% of respondents believe that baseline accuracy is a reliable metric for post-promotion measurement (Figure 9). We

Post-Program Measurement Priorities What are the most important metrics to measure after a promotion has been executed (select two)? FIGUR E 9 :

Incremental POS sales

66% 66%

Cannibalization and/or halo effect of promotion

46% 46%

Promotion execution compliance

46% 46%

Retailer gross profit Baseline accuracy

18

26% 17%

CGT | OCTOBER 2018 | CONSUMERGOODS.COM

continue to see evidence that baseline updates are not occurring frequently enough, causing inaccurate values and calculations as the basis for determining the incremental targets required for promotion planning. Most respondents do consider the frequency of baseline updates to be satisfactory. But many respondents are not confident in the accuracy of their baselines — specifically because they don’t reflect realistic non-promoted volume (the amount of product sold without any incentive). The majority of Capgemini’s TPx clients are concerned about baseline accuracy, and we are seeing efforts to improve things. More sophisticated technology and practices will reveal more issues, and will therefore require additional adjustments to the approach that companies use.

Optimizing the Planning Process Nearly all respondents report having some form of optimization tool to assist in trade planning (Figure 3). This indicates the critical importance of precision and trust in predicting promotion ROI. But very few respondents claim to enjoy highly sophisticated TPO solutions that leverage advanced technology in AI, machine learning or other forms of cognitive computing. The adage, “Garbage in, garbage out” is highly applicable to promotion optimization. For starters, we know that on average, as much as one-third of promotions fail to produce positive ROI. OOS conditions are to blame for a significant portion of those failures. But it’s important to consider the source of the data used to feed the optimization engine. Historically it has originated from one of two sources: historical results and/or the combination of syndicated and POS data. To confirm this, we asked survey respondents to pick the top two data sources used for promotion optimization, scenario modeling and projected ROI of new promotions (Figure 4). POS and historical performance data were both selected most often. That’s not unexpected, because those two sources are the

Confidence in Performance Metrics How well do you measure the basic metrics of promotion performance? F I G U R E 10:

3% Don’t measure promotion ROI 9% Very well (multiple metrics) 24% Poorly (no ongoing analysis)

64% Satisfactorily (a few reports)


Ability to Achieve Objectives How often do your trade promotions achieve the overall objectives set by the planner?

Impact of Outside Data on Trade Performance Which data elements would be most effective for optimizing and predicting promotion ROI?

FI G U RE 1 1 :

50%-75% of promotions

30% 27%

Don’t know 18%

75%-90%

9%

Impact of CP Alignment on Trade Performance How would integrating consumer promotion data into planning intelligence impact the ROI of your trade promotion?

F I G U RE 1 2 :

24% Dramatically increase

12% Wouldn’t make much difference increase

6% It could potentially decrease ROI

3% Corporate PR campaigns 15% Social media sentiment analysis 18% Corporate and/or regional advertising media schedules

15%

50%-75% More than 90%

F I G U R E 13:

58% Marginally increase

most commonly available, especially for large retailers such as Walmart, Target and Kroger. Confirming our suspicions, corporate direct-to-consumer marketing promotions and events data were selected by nearly one-third of respondents, indicating the increasing role this data plays in aligning trade with other activity. Sell-in data (past volume and revenues generated from promotions) is usually considered part of the historical, but we chose to separate it because many CPGs don’t have strong, detailed performance data (like tactics, timing, products/promoted groups, individual costs, settlement amounts). A healthy portion of respondents listed this as a major data source for promotion optimization. The lesson here is to ensure that sufficient data sources exist to provide a broad and accurate sampling of data to fuel effective predictive analysis. Elsewhere, many respondents indicate that digital CP results (mobile, SMS, online) are the most important data additions to TPO (Figure 13). Advertising continues to play a huge role in consumer engagement for CPGs, and aligning those schedules and

64% Digital consumer promotion (online, mobile, SMS)

event calendars with the trade calendar is a critical requirement for improving performance and avoiding channel conflict. Social sentiment also is a powerful tool, used in a real-time scenario to gauge the consumer environment and either leverage a positive sentiment about a product or company or avoid spending money in a negative environment. Specific to impacting ROI, more than half of respondents say consumer promotion data will marginally increase ROI, but another quarter believe it will drive a dramatic increase (Figure 12). On that topic, most respondents feel that their trade promotion activity is at least “sometimes” aligned (Figure 5). This is surprising, since we continually see traditional information and communication barriers between marketing and sales inhibiting effective integration into the trade planning process. What we are seeing is an encouraging trend among TPx vendors to enable some degree of integration between the marketing and trade calendars.

Making Progress About one-fourth of respondents say their promotions meet objectives more than 75% of the time. Sadly, the same percentage don’t even know how well their promotions do, as they have no visibility into performance (Figure 11). More open collaboration with retailers is key to fixing this. Overall, the survey illustrates considerable progress being made toward more effective trade promotion management and execution. With the advent of increasingly sophisticated technology and tools, today’s CPGs are able to collect and synthesize critical data sets, revealing insights and actionable information never before possible. They can overcome the historical challenges inherent in measuring effectiveness and embark on a new future where the significant investments in trade promotion can be effectively measured and managed — and ultimately will translate into a positive impact on the company’s bottom line. CGT

CONSUMERGOODS.COM | OCTOBER 2018 | CGT

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Tech Solutions Guide

2018

DATA & ANALYTICS

SOLUTIONS

GUIDE

In this edition of the Technology Solutions Guide series, CGT presents a comparison chart of solution providers on the forefront of data and analytics. To kick things off, a roundtable with experts from AnswerRocket and SAS provide thought leadership on navigating the challenges and opportunities involved in effective, efficient data management and analytics.

It’s now generally Q understood that a strong business analytics practice is

MIKE FINLEY Chief Scientist AnswerRocket

DAN MITCHELL Director, Global Retail & CPG Practice SAS

mandatory for future success in the consumer goods industry. What obstacles are still in the way of achieving this for some companies?

FINLEY: The greatest obstacle may be that experts who know the consumer goods market are largely not the same individuals with analytics and modeling skills. Businesses that want to invest in big data and data science need to transfer the knowledge of brand experts and category SPONSORED BY

20

CGT | OCTOBER 2018 | CONSUMERGOODS.COM

managers into the lines of code and training sets that are the new currency of artificial intelligence. The results of analytics and AI will be nonsense without a collaborative partnership between the old and new ways of doing things. Even if the results are correct, it will take trust and confidence to use them to drive the business. MITCHELL: Many consumer packaged goods companies trying to monetize data are starting to cultivate the analytics culture at the same time. Developing a strong business analytics practice requires stitching together the data you have today while developing new data sets to better understand cross-channel demand and local customer needs. Often, the responsibility for data is diffused across departments and budgets. By 2021, in 75% of large enterprises, the office of the “Chief Data Officer” will be seen as a mission-critical function comparable to IT, business operations, HR and finance. Despite recent advancements in data management technology and tools, many teams are overwhelmed by today’s massive volumes and the variety of fast-moving data. By providing access to all as a shared service, seamless data access, integra-


Equip your team with AI to answer your “why” questions. In seconds.

The AI platform for consumer goods leaders. Get started at answerrocket.com/cgt.


Tech Solutions Guide

tion, quality governance and data federation companies can greatly accelerate analytics adoption.

It’s also often Q suggested that analytics can be the

fuel that drives greater alignment across the enterprise. How might this take place?

FINLEY: If corporate strategy from the top is one bookend, data is the other. Without data, departments are free to interpret the corporate strategy and take it in the direction that best suits their objectives. But data is the one source of truth that all departments can use to realitycheck results and fine-tune their contribution to the strategy. When universally accessible and up-to-date, data can provide the guardrails that allow a business to move quickly, even while adjusting the many levers needed to compete in real time. However, data requires governance. Otherwise, teams will pull data from convenient sources or interpret it differently, with the purpose of promoting a certain point of view. So it’s key

“Data is the one source of truth that all departments can use to reality-check results and fine-tune their contribution to the strategy.” MIKE FINLEY, ANSWERROCKET

to get agreement on key metrics and originating sources. MITCHELL: Although organizations have used analytics for decades, it has been mostly limited to specialists trained in math, statistics, econometrics, etc. That’s no longer the case. As data exploded, so did technologies that enabled a wide range of users to access, analyze and find value within it. Fueled even further by advances in connectivity, the cloud and computing power, analytics now feeds on huge amounts of data to produce insights. These advancements are creating an economy where data, people and machines must work together to stay competitive and accelerate customer experience innovation. This really starts at the individual level by enabling anyone who is curious about

“By 2021, in 75% of large enterprises, the office of the ‘Chief Data Officer’ will be seen as a mission-critical function comparable to IT, business operations, HR and finance.” DAN MITCHELL, SAS

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CGT | OCTOBER 2018 | CONSUMERGOODS.COM

data to quickly and easily explore and share gained insights, driving new experiences and operating models — truly democratizing analytics for all.

What role will Q artificial intelligence play in the

pursuit of analytics excellence? How long before the consumer goods industry is largely “powered by AI”?

FINLEY: In order to power the consumer goods industry, machines have to recognize patterns in CG data. These patterns will come in many shapes and sizes, such as market conditions where pricing can be optimized or weather conditions that will lead to out-of-stocks. Brand experts and category managers make hundreds of nuanced decisions based on patterns, so AI has a lot of catching up to do. But before 2020, the consumer goods industry will see automation for key drivers like pricing and promotion, at least in the simplest cases. Similarly, legacy concepts like elasticity will be replaced with


Tech Solutions Guide

predictive real-time models that juggle time, location, competition, and many other factors simultaneously. Within 10 years, CG experts will be guiding and confirming the recommendations made by AI solutions in a majority of cases. MITCHELL: Advances in AI over the past decade have been supported by supervised deep learning by training machine learning algorithms to perform narrow, single-domain

tasks. We’re now seeing more unsupervised learning systems that learn faster, require less data and tackle broader, more complex problems. These supervised and unsupervised learning systems can be used for intelligent automation that can help retool existing business processes. With more data and application integration, the variety of business challenges to which AI can be applied is expanding and letting non-specialists

2018 intelligent Revenue Growth (iRG)

• Bepensa S.A.

iRG helps CPGs achieve revenue growth by leveraging AI, data automation and advanced UX. This is achieved by optimizing key commercial levers that underpin revenue management (such as price, promotion, mix assortment and trade terms).

AI-Powered Analytics for Business Users

• Unilever

AnswerRocket supports brands with AI-powered analytics. Its platform is designed for business leaders seeking immediate insights that fuel bottom-line growth.

Bedrock Core

• Harmless Harvest • Mary’s Gone Crackers • Once Upon a Farm

AI is leveraged to convert syndicated and retail data into selling stories for CPGs. Customers on the platform see significant ROI improvement within four months.

Binah.Now

Did not provide

Binah.Now makes data science accessible with out-ofthe-box use cases combining signal processing and AI to deliver accuracy, stability and performance while solving business-critical challenges.

Accenture

AnswerRocket

Bedrock Analytics www.bedrock analytics.com

Binah.ai

www.binah.ai

SOLUTIONS CHART

UNIQUE FEATUR ES /B ENEFITS

P RODUCT

www.answerrocket.com SEE AD ON PG 21

DATA & ANALYTICS

KEY CO NS UMER GOOD S CLI ENTS

C O MPANY /WE BSIT E

www.accenture.com

automate repetitive day-today work activities with more accurate, real-time decisions. Many CPG leaders are still struggling to recognize the value that AI can deliver and how it can create tangible ROI. However, they are very open to creative ways AI can generate value. It is expected that companies will continue to seek opportunities to adopt and implement AI technologies by extending the value to predictive and prescriptive modeling. CGT

CONSUMERGOODS.COM |

OCTOBER 2018 |

CGT

23


Tech Solutions Guide

2018

SOLUTIONS CHART

C O MPA N Y /WE B S IT E

P RODUCT

KEY CG CLI EN TS

UNIQUE FEATUR ES /B ENEFITS

Capgemini

Insight-Driven Business

• Coca-Cola Co. • Jarden Corp.

Capgemini helps CG companies become insightdriven enterprises with an accelerated yet iterative approach, leveraging analytical tools and technology platforms to sync actionable data with business operations.

CenturyLink

Big Dataas-a-Service

Did not provide

Big Data-as-a-Service provides resources in a high-performance computing cluster and simplifies management with the assistance of a dedicated team of data science experts and managed Cloudera Hadoop.

Retail Essentials

• Coca-Cola Co. • Kellogg Co. • L’Oréal

With experience using data and science to engage customers, the Retail Essentials tool delivers significant annualized like-for-like sales uplift in developing markets and substantial improvement in mature markets.

Demand Sensing

• General Mills • Mondelēz Intl. • Procter & Gamble

Fully-automated pattern recognition technology uses machine learning algorithms to analyze demand signals in real time, determine what is predictive and improve forecast accuracy without human interaction.

Exceedra

Integrated Business Planning Solution

• ACH Food • Bayer • Reynolds Consumer Products

The end-to-end solution delivers capabilities for clients to simplify sales, financial and demand planning processes and achieve greater performance, empowering functional teams to maximize revenue and margin opportunities while avoiding risks.

Hybrid Intelligence

Hybrid Planning/ Forecasting, Reporting, Analysis

Did not provide

The solutions are focused on value creation and automation, are deployed on time and on budget, and are custom-tailored.

www.incontext solutions.com

ShopperMX

• Johnson & Johnson • Kellogg Co. • Kraft Heinz Co.

ShopperMX is mixed-reality software used by brands and retailers to visualize, test and deploy retail concepts in virtual reality to better understand what resonates with shoppers.

Infosys Ltd.

Data and Analytics Solution Suite

Did not provide

The integrated platform accelerates digitization of the enterprise data ecosystem by enabling the construct of a “digital brain” to enhance customer experience, optimize operations and uncover new possibilities.

XP3 Suite

• Hormel Foods • Nestlé Purina PetCare • Schwan’s Food

XP3 reduces the time needed to prep and clean syndicated, POS, panel, shopper, EDI and shipment data, then automates the process of generating retailer-specific, data-driven PowerPoint and Excel output.

www.capgemini.com

www.centurylink.com

dunnhumby

www.dunnhumby.com

E2open

www.e2open.com

www.exceedra.com

www.hybrid intelligence.com

InContext Solutions

www.infosys.com

Interactive Edge www.interactive edge.com

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DATA & ANALYTICS

CGT | OCTOBER 2018 | CONSUMERGOODS.COM


Tech Solutions Guide P RODUCT

KEY CG CLI ENTS

UNIQUE FEATUR ES /B ENEFITS

IRI Liquid Data

• BevMo! • Hormel Foods • Starbucks

The IRI Liquid Data platform is augmented with AI and machine learning algorithms. It maximizes the ROI of big data-driven business applications for insights, analytics, targeting and activation.

Ivy Sales Insights

• Diageo • L’Oréal • Procter & Gamble

Ivy helps empower CG organizations to offer personalized recommendations and solve problems faster and more accurately using big data, machine learning and AI, which helps track promotion patterns, assortment planning and sales performance.

LumiData

SOLYS Demand Analytics

• Clorox Co. • Pfizer • Unilever

SOLYS transforms POS, forecast and order data into one integrated reporting solution that delivers revenue-generating insights. It aligns retailer-specific business requirements with the unique KPIs of both corporate and field sales teams.

Mareana Inc.

qSuite (qFind, qSync, qArt, qSci)

Did not provide

qSuite’s open source ecosystem allows organizations to search, extract and merge data in different formats from multiple sources. It conducts diagnostic and predictive analysis on high volumes of data.

Did not provide

POSmart is a demand signal repository that simplifies gathering, cleansing and harmonization of POS data with internal master data for insights into sales and consumer behavior. The solution provides an overview of sales activity to support category managers, account teams, marketing and supply chain teams.

Suite of Everyday Analytic Tools

Did not provide

Everyday Analytics is designed to help decision makers respond quickly by reducing the time, cost and resource demands of traditional analytics. Users are able to simulate the impact of changes specific to local stores and markets.

Oracle Retail Insights

• Cato Corp. • The GAP/Intermix • Groupe Dynamite

Oracle Retail Insights is a suite of science-enabled, actionable analytic solutions that empowers users to anticipate informed actions and inspires engagement across the retail/CG enterprise.

Profitero Digital Shelf 360

• Beiersdorf • General Mills • Heineken

Profitero is an e-commerce solution that integrates Amazon sales, share data and digital shelf analytics in one platform, helping to pinpoint the root factors causing share gains and losses.

Compass

• Crossmark • Kimberly-Clark • Weetabix

Compass is used to improve on-shelf availability, monitor promotional compliance and increase distribution for CPG clients by delivering guided insights.

C O MPANY /WE BSIT E

IRI

www.IRIworldwide.com

Ivy Mobility

www.ivymobility.com

www.lumidata.com

www.mareana.com

Mindtree

www.mindtree.com

Nielsen

www.nielsen.com

Oracle Retail

www.oracle.com/ industries/retail

Profitero

www.profitero.com

Retail Insight

www.ri-team.com

Retail Solutions, Inc. www.retailsolutions.com

Retail Velocity

www.retailvelocity.com

POSmart

• Keurig Dr Pepper IRIS: On-Shelf Availability Platform • Kimberly-Clark • L’Oréal

The New Retail Data Platform for Suppliers

• Abbott Nutrition • Hanesbrands • Revlon

IRIS enables CPGs and retailers to measure current out-of-stock status, correct existing issues and prevent future OSA issues, empowering them to grow sales and revenues, drive profits and “Rule the Shelf.”

The data platform connects, cleans and harmonizes retailer data across the enterprise, allowing clients to stream to a lake or other platform.

CONSUMERGOODS.COM |

OCTOBER 2018 |

CGT

25


Tech Solutions Guide

2018

SOLUTIONS CHART

C O MPA N Y /WE B S IT E

P RODUCT

K EY CG C LI EN TS

UNIQUE FEATUR ES /B ENEFITS

Salient Management Co.

Margin Minder

• Keurig Dr Pepper • Pabst Brewing • Unilever

Salient marries technology with consultative practice, providing a custom solution to clients that ensures the replication of the enterprise for maximum analytical impact.

SAP Analytics Cloud

• Asahi Beverages • Skylark Holdings

The SAP Analytics Cloud helps businesses run an intelligent enterprise, enabling an integrated experience with access to accurate, consistent data that provides real-time insights into key processes.

Did not provide

The software is engineered to generate insights from data in any computing environment. It uses analytical insights to drive business actions and supports every phase of the analytics lifecycle – from data, to discovery, to deployment.

ShilohNEXT

Did not provide

The visualization engine is AI-driven technology through which results from data science models are converted into visualizations for consumption by the business teams without the complexity and time required to build them in other BI tools.

Stratum Business Intelligence for Manufacturers & Distributors

• Red Gold • Scholastic • Tony’s Fine Foods

Stratum is an end-to-end business intelligence solution with built-in data management, packaged analytics and planning/forecasting functionality and multiple options for distributing business insights to decision makers.

Strategy&

Performance Analyzer, Revenue Management Platform

• Conagra Brands • Del Monte Foods • Tyson Foods

Strategy&’s Performance Analyzer is a revenue management application covering all aspects of spending. It uses powerful engines to support a broad range of analytics, from post-event analysis to profitability and pricing.

T-Pro Solutions

T-Pro Optimum Trade Promotion Optimization

• Kellogg Co. • Sabra • Snyder’s-Lance

CPG companies use autonomously harmonized data to calculate accurate baselines and lift coefficients that power post-event analytics and predictive, optimized planning capabilities in T-Pro’s centralized intelligence hub, thereby driving optimal results from trade investment.

TABS Total Insights

• High Ridge Brands • Hyland’s • Mizkan

TABS Total Insights is an analytics software that integrates and harmonizes all data into one platform. Whether it’s syndicated, trade promotion, consumer, POS or shipment data, TABS provides a single destination for custom analytics.

Did not provide

The integrated platform captures and manages data to generate actionable insights through advanced analytics offering price, performance, and time benefits. It accelerates the “Time to Insight,” enabling faster decision-making aided by advanced visualization.

www.marginminder.com

SAP

www.sap.com

SAS

www.sas.com/retail SEE AD ON PG 28

Shiloh Technologies www.shilohnext.com

Silvon Software www.silvon.com

www.strategyand. pwc.com

www.t-prosolutions.com

TABS Analytics

www.tabsanalytics.com

Wipro Ltd.

www.wipro.com

26

DATA & ANALYTICS

SAS Platform, SAS Visual Data Mining and Machine Learning

Data Discovery Platform

CGT | OCTOBER 2018 | CONSUMERGOODS.COM


Industry Insight

Addressing the Technology Imperative SRINIVASAN RAJAMANI Wipro

“It’s critical to drive seamless integration and visibility across both online and offline channels”

Wipro’s Srinivasan Rajamani recently sat down with CGT to discuss key trends in technology transformation. 1. Which areas of the traditional consumer goods enterprise must undergo the greatest transformation to address the new omnichannel marketplace in which we’re operating? For a traditional consumer goods enterprise, the key to delivering an effective, omnichannel experience is taking a truly consumer-centric service design approach that transforms the still-siloed operations across the value chain, including R&D, sales & marketing, channels, supply chain and finance. An effective omnichannel strategy should address the following aspects: Alignment with consumer behavior: R&D, sales and marketing should focus on deriving insights from large pools of data, driving direct interaction/dialogue, and curating the product mix to drive brand-specific personalization. Crowdsourcing can be leveraged to tap into changing demographic and lifestyle needs. Cross-channel integration: It’s critical to drive seamless integration and visibility across both online and offline channels. Operational agility: Supply chain and finance should focus on redesigning fulfillment for digital orders and developing creative/dynamic product pricing models.

Srinivansan Rajamani is vice president & global head of CPG at Wipro with end-to-end responsibility, including delivery sales, solutions, and new markets, across all service lines.

2.What are the primary obstacles to the adoption of the new tools and technologies that can make this happen? For a number of businesses, getting buy-in for new technology by shifting the spending mix from traditional back-office needs to tools delivering consumer-centric experiences — and just keeping up with the pace of change in the operating models and technology — presents significant challenges.

Some of the key challenges include right-fitting people in key technology and strategic roles (companies often lack employees with the required skills in new-age technologies); sustaining the investment necessary to succeed (for both process upgrades and tech modernization); governance of IT portfolio value realization (prioritizing value-driven projects and providing visibility into the business value generated by IT engagements); breaking down siloed organizational structures (cross-functional leadership alignment is needed, because siloed data is a big obstacle), and the need for rapid design and execution of proof of concepts (companies should explore partnerships with startups).

3. What emerging technologies do you think will be most critical for future success? Consumer goods companies should first lay down high-impact business imperatives that can be enabled through emerging technologies, develop a fit-for-purpose operating model and then push through wide-ranging transformation. Emerging technologies critical for future success include artificial intelligence and machine learning (hyper-automation in IT operations; robotic process automation); the Internet of Things (entirely new ways of collaborating with business partners and consumers through connected devices; processing of device data at scale for operational insights); blockchain (trusted supply chain through authenticity and anti-counterfeiting/ fraud; exchange-to-exchange traceability); big data predictive analytics tools (insights into consumers/channels/pricing; smart demand prediction); cybersecurity (real-time risk profile monitoring and attack surface analysis; rapid, accurate intelligence and incident mitigation); augmented reality/virtual reality (enhanced shopping experiences); and 3D printing (customization/personalization; quick manufacturing). CGT

CONSUMERGOODS.COM | OCTOBER 2018 | CGT

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