Accenture CAS helps a major consumer goods company transform its trade promotion processes Within a saturated and highly competitive international consumer goods market, companies increasingly rely on successful trade promotions to meet demanding revenue and performance metrics. More importantly, these companies also depend on trade promotions to differentiate and empower their brands at multiple touch points with the customer. Trade promotion management is a highly complicated, variable process that requires professional insights and tools to ensure successful return on investment (ROI). Accenture CAS Trade Promotion Management enables a company to measure and optimize investments in trade promotions. Accenture CAS can provide significant insights into the estimated benefits of a planned promotional campaign before work even commences. Summary This case study illustrates the Trade Promotion Management Value Calculator’s effects and benefits and how Accenture CAS Trade Promotion Management has helped a global consumer goods company improve trade spending return on investment, design consistent processes and policies to improve control and visibility, and reduce the level of effort required to manage the process. It also shows how Accenture helped this client turn trade promotions profitable again by saving it ineffective promotion costs. Business challenge Facing steep global competition and the industry’s renowned razor thin margins, this major consumer goods company realized it was actually generating a negative ROI on its trade promotions. The first red flag was raised when an analysis of trade promotion spending revealed that costs associated with promotions were growing faster than revenues. The company’s leaders quickly realized that each account team had defined its own tools and process for planning trade spending. Using siloed spreadsheets tailored to their customer’s unique needs had proved to be an arduous and time-consuming process to combine the individual plans to determine overall spending levels accurately—and to pinpoint where spending was taking place. As a result, the company’s ability to supply product to meet promotional demand severely hampered its ability to supply timely and accurate accounting information, which ultimately led to distrust between the company and its field representatives. In fact, the problem ran so deep it was difficult to establish a baseline of factual financials from which to implement a solution. How Accenture helped As the Accenture team worked with the client to define the project’s scope, they balanced the need for rapid change with the organization’s capacity for change. Client team members included field sales, sales operations, sales finance, corporate finance and IT. A project steering committee included the heads of Sales, Finance, Marketing and Supply Chain to ensure the solution reflected each function’s requirements. The key project goals focused on: • Improving trade spending return on investment • Designing consistent processes and poli- cies to improve control and visibility • Reducing the level of effort required to manage the process Together, the teams established a set of achievable end-state capabilities the company hoped to achieve, with enough flexibility in its foundation to build and achieve capabilities that are more advanced. The result was a three-phased implementation approach. 1. Building the foundation The consumer goods company’s trade promotion transformation program was pursued based on facts. To accomplish this, the work began with a deep dive into promotion performance. In parallel, the team documented current processes and time spent planning, managing and analyzing trade promotion plans. This initial work confirmed that each account team had developed an individual approach to planning, and it provided a critical benchmark necessary to measure redesigned processes. 2. Creating process transformation The team focused on creating a consistent, sustainable trade promotion process that would address three key areas: 1) Fund allocation 2) Account planning 3) Settlement As the processes were defined, detailed functional and data requirements were determined. In parallel, use cases were developed to cover the range of options the client might require, both now and in the future. Similarly, various settlement options were designed, including off-invoice, credit memo and bill back/check, to provide a range of settlement options. Finally, the team documented requirements from adjacent processes, such as sales and service operation (S&OP) and finance, to ensure data requirements could be addressed through the new trade promotion processes and metrics. 3. Implementing trade promotion transformation During the initial phases, the team had spent considerable time defining the functional requirements for the third phase and the ultimate objectives of the trade promotion transformation. Desired future-state capabilities implemented included: • Automated post-event ROI analysis • Enhanced tracking metrics for measuring event and overall plan efficiency • Specific processes for planning new and special pack item • Event and plan optimization capabilities (best results with a given investment) The initial ROI analysis demonstrated the power and potential of predictive analytics to improve future promotion event profitability. The new approach represented a significant change and required retraining. Consistent with the focus on building only foundational capabilities, the team designed a promotion-modeling tool for use with those accounts where syndicated data is available. The tool models anticipated consumer demand based on a set of promotion inputs using a set of proprietary algorithms. A tighter control on funding levels across accounts has limited incentives for retailers to divert products. As a result, diversion was cut in half. By allocating those funds that had been wasted and diverted in the past to an average account, the benefit equates to an 8 to 12 percent increase in promotional spending. High performance delivered The manufacturer also noted other significant benefits resulting from the transformation project, including: The Accenture CAS platform was the ideal choice for meeting software requirements that needed to be highly configurable and fiscally reasonable. Moreover, Accenture CAS brought added value no other vendor could offer by: • Providing a unique level of understanding regarding trade promotion management, with a real-world, practical approach • Proving its success through similar deployments and a clear development roadmap • Being highly configurable versus requiring custom code Following the implementation, the consumer goods company improved trade promotion spending by roughly 22 percent. In addition, two other KPIs produced strong results: reduction in retailer diversion and more efficient processes at the retail execution level. Copyright © 2012 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. Now that processes are more efficient, the client has freed up a substantial amount in additional sales labor, which can be redeployed to higher-value activities. • Reduced back-office time spent on pay- ments and post-audit deductions • Reduced post-audit claims • Fewer unauthorized deductions • Improved forecast accuracy, resulting in reduced working capital in safety stock • More accurate promotion production plans, particularly for custom displays For further information, please contact: Adrian Goodliffe Senior Executive adrian.goodliffe@accenture.com +44 7736 667995 Or visit www.accenture.com/accenturecas About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 246,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com. www.accenture.com.