BI in FMCG Industry - Raj Basu

Company confidential

Major changes in FMCG industry

Indian Consumer changes Larger disposable income
Middle class segment bulging Greater global exposure Greater appetite & demand for global products Differentiated product & service requirements

FMCG space dynamics Explosion of products

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

Impact on FMCG strategy & operations Increasing Flexibility

Outsourced Contract Manufacturing Demand driven supply chain Improving Customer service Retail outlet segmentation Customized Retail service Supply Chain segmentation Greater Organizational Alignment EPM, Divisional Scorecards Integrated Sales & operations planning Greater Customer focus Demand analysis Product charateristics Company confidential

EPM/BI needs of the FMCG Industry

Rapid EPM adoption for Org Alignment & strategy management Balanced Scorecards (Strategy Maps, Business Scorecards)
Budgeting, Planning & Consolidation systems Operational performance management

Financial Analytics for greater ROCE Working Capital Optimization (C2C Cycle)
Debtor Analytics Payables Analytics Inventory Optimization Treasury Cash Analysis

Operations Analytics Plant Performance Management

MES Analytics

Customer Analytics Trade Promotion Analytics

WD Profitability Outlet performance Channel Analysis Integrated Consumer Demand & market performance visibility

Supply Chain Analytics Supply Chain Performance Management

Product Cost & profitability analysis Operational Planning efficiency Inventory visibility & optimization Supply Network efficiency Spend Analytics

Company confidential

Key BI Trends in the FMCG industry

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

Most of the large FMCG companies are centralizing BI as a shared service on a common platform across its businesses and brands with a razor like focus on getting Best-In-Class service

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

Global players are even further ahead Trade Promotion Analytics, Segmentation based promos, supply chain bottleneck alerts, route optimization and advanced forecasting and predictive demand models
Company confidential

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

Sustained Profitable growth Accelerate Organic Growth Improve Productivity

Effective Model To Identify Capability Measure Performance Development Needs

HR Effectiveness Process Efficiency Customer Satisfaction Financial Performance Objective Measures Initiatives

Key Business Benefits

Organizational Alignment Strategy Communication

Business Performance

Vision

Level 0 : Corporate

Closed Loop - Feedback

Functional Objectives Unit Objectives

Level 1 : Business Functions

Individual Objectives

Level 2 : Units

Strategy Communication

Strategic Objective

Adopt New Technology For Develop Superior Manufacturing Flexibility Consumer Insight

Company confidential

Classic Balanced Scorecard Framework

Perspective
Vision & Strategy Effect Financial Results Profitability Return on Capital Employed
To Satisfy our shareholder, what financial objectives must we accomplish

Key Imperatives

Key Questions

Customer

Consumer Satisfaction Market Share

To achieve our financial goals, what customer needs, must we satisfy

Internal Process

Efficiency

To satisfy our customers, what internal business processes, must we excel in

Cause Learning & Growth

Action Knowledge Innovation

To achieve & maintain our competitive position, how must the organization the Organization learn & improve

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

Company confidential

Decision-making challenges at ITC Businesses

Organizational Alignment
Business Performance Mgmt Executive, Functional, Unit Level Scorecards Employee Performance Mgmt Personal Scorecards

Fact Based Decision-Making / Actionable Intelligence

Tactical
Targeted Promotions & variable pricing Outlet Segment specific service packages Profitability based supply routes Demand driven inventory management

Operational
Exception based operations at the Factories Stock optimization across supply chain nodes Fast tracking complaints from High Value Cust Personnel workload mgmt across stores

Performance Visibility
Promotion & marketing impact tracking Supply Chain bottlenecks SKU velocity Logistics impact on operating margins Store Allocation efficiency Reservation Pipeline vs Forecast 360 deg Customer Views 360 deg Supplier views Cost variance tracking Order-To-Fulfillment, Cash To-Cash, Procure-To-Pay cycle times

Analytical Capability
Outlet Service Route Optimization Outlet Segmentation Analytical Forecasting Six Sigma Analytics Price Elasticity Analysis BCG Portfolio Analysis Human Productivity Analysis Loyalty Analytics

Integrated Analysis across value chains

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

EPM driven BI at a US Food Distribution Major

Strategic Goals Strategic Metrics/Scorecards

Demand Initiatives

Sourcing Initiatives

Supply Chain Initiatives

Customer Initiatives

Some Analysis Areas

General Analysis Sales Force Effectiveness Trade Promotion Effectiveness Marketing Effectiveness Market Analysis

Some Analysis Areas

Spend Analysis Supplier Performance Analysis Item & Brand Analysis Bid Analysis Competitive Analysis

Some Analysis Areas

Delivery Effectiveness SKU rationalization Effectiveness Backhaul Effectiveness Carrier Performance Analysis

Some Analysis Areas

General Analysis Segmentation Analysis Contract Compliance Business Review Analysis Customer Profitability Analysis

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

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

Company confidential

A single BI System should support the EPM Model

Performance Management Model
Corp

TM&D HR Perf

CBSC, Food, PCB Brand Perf Mgmt Mkt Research Perf Network Eff Logistics Perf Scheduling Eff Carrier Eff Emp Eff NPD Perf Operations Perf R&D Perf

Emp Perf

Sales

Finance Planning Perf

Distribution

Finance

HR Perf

Category Perf Dist Perf Branch Perf WD Perf AM Perf AE Perf

Promo Perf

Portfolio Perf

Procurement Perf

A common data set populates the entire model enabling : Scalability EPM, Data, BI Model System Performance Integration data linkages business rules

Warehouse Perf Outlet Svc Eff Route Eff

Channel Perf

Plant Perf

Workforce Eff

WSD Perf

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

Outlet Sales, Invoices, Purchase Orders Inventory, Transport Orders, Stock Tr Orders, Salary Advice, re-distribution Costs

Data Warehouse
(Data Storage)

Business Plan, Forecast, A/R, A/P, Visual Merch Audit, Production Plans, Market Research, Production Jobs

Data Extraction, Cleansing, Staging, Transformation & Loading

ETL Layer Source Systems

SAP

Visual Audits

Sales Force & CRM

WD System

Excels

PLM

HRMS

Company confidential

Some benefits of integrated modeling for FMCG

Impact of raw material shortage on retail offtake Analysis of a request for a short runner on Factory productivity vis--vis customer service Correlate/factor-in market demand (IMRB) into AE performance Decision on extending Promotions based on raw material availability Analyze impact of sales strategies/norms on Market standing Analyze synergy opportunities like sharing warehouses, transportation sharing and backhauling, reverse logistics etc across categories

Company confidential

10

Typical BI Transformation Roadmap

Major Organization Transformations..
Brand Management Transformation

Process Improvement Transformation

Supply Chain Transformation

Need a Performance Mgmt & BI Transformation to empower & measure effect of transformation !!
BI Transformation Roadmap EPM & BI Workshops Define Performance Mgmt Model
Framework Metrics Models Scorecards Alerts Linkages/Alignments Analysis Flows Dashboard Designs Biz Case/ Info Needs Get Mgmt Buy-In

Define BI Strategy

Create BI Governance Model

Identify Sponsor Create Steering Comm Create Execution Comm Comm to all stakeholders Set expectations/Time Create Project Plan

BI Implementation

BI Change Mgmt

BI Value Mgmt

Awareness Creation Appreciation of Best Practices Intent Generation

Technology Drivers App Architecture Data Architecture Platform Selection Vendor Selection Initiatives Roadmap Effort Estimation

Business Requirements System Requirements Design Development Testing Deployment

Training Communication Biz Process Changes Expectation Mgmt Usage Monitoring BI Support Processes Risk mgmt

KPO Customer Service Business Impact BI Perf Mgmt BI RoI BI Enhancements

Company confidential

11

BI Program Change Mgmt Challenges & Strategy

An effective Change Management strategy for BI Program starts at the Kickoff and ends at satisfactory system adoption and positive customer feedback. However, Change Management is an ongoing process and is part and parcel of an effective BI Governance Model. bringing people on board, convincing them of the value, goading them to use it the right way, measuring business improvements. BI, being a non-critical business application needs cultural process changes to leverage the investment, which makes it even more challenging and critical aspect of achieving success Key Questions for Change Mgmt Planning What will change ? Why will it change ? Change How will it change ? Who will change it ? Change is enabled through 4 key change perspectives

People Participation

Processes

Systems

Culture
Business Driven Program Showcase Business Benefits Keep business in loop during change in scope Embed in biz processes like sales review etc Pre-empt business needs Communicate effectively Repeated Multi-media training Measure adoption, usage and publish figures Publish success stories

Business Sponsorship Business Buy-In, Ownership Identify Business Change Agents Remove Business IT gaps Remove fear of Retrenchment Create Senior Mgmt Champions to spread the message

Identify and Plan for process changes early on Create effective communication channels and joint project plans with other process owners Cultural and governance change needs to go along with process changes

Identify & Plan all system changes early on (Frontline systems may need to have more checks and measure to improve data quality) Create effective communication channels and joint project plans with other System owners Communicate all system changes to the Organization

Company confidential

12

Enterprise BI Strategy for ITC

Business Intelligence Mission (SYSCO): Strategy BI Provide a single view of timely,Needs/ BI accurate, BI Business Case BI Vision consistent & actionablePainpoints across information the enterprise through a common user interface accessible anytime, anywhere toPlan Execution authorized users, thereby enabling fact Execution Model Implementation based decision making.
Scope Definition Roadmap & Project Plan (Inhouse/Outsource) Vendor Selection BI Budget

Architecture (Data, System) Tool Selection

BI Business Case
Service & Maintenance
Service Model (Outsource, Managed BI Svc)

Customer Focus

Unique Sales & Customer view Service Service Quality Unique Spend Improvement & vendor view Management Supply chain wastes Asset utilization gaps Higher employee productivity Governance Model Greater IT ROI Organization Risk Value Single Analysis Platform across biz Alignment Management Assessment areas Excel intelligence democratization !
Service Vendor Selection 13

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