Business Analysis FMCG

7/30/2019 Business Analysis FMCG

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The Role of Business Analytics inOptimising the Fast Moving ConsumerGoods Value Chain


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THE ROLE OF BUSINESS ANALYTICS IN OPTIMISING THE FMCG VALUE CHAIN

Table o Contents

Introduction ................................................................................................. 1

The Benefts o Business Analytics............................................................

2The FMCG Value Chain ................................................................................ 3

Consumers .............................................................................................. 3

R&D ........................................................................................................ 4

Marketing................................................................................................ 5

Sales ....................................................................................................... 6

Production............................................................................................... 7

Logistics .................................................................................................. 8

SAS Business Analytics Framework.......................................................... 9

Data Integration....................................................................................... 9

Analytics................................................................................................ 10

Reporting............................................................................................... 10

Summary.................................................................................................... 10

About SAS .................................................................................................. 11



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Introduction

Since the early 1990s the Fast Moving Consumer Goods (FMCG) industry has

been moving rom a manuacturing push to a consumer pull strategy. In thepast, companies would make the products they thought consumers wanted and

needed to purchase, and would push those into the marketplace. I the products

didnt sell they would discount them until they sold, which reduced margins and

lowered profts. Today, FMCG manuacturers rely on consumers pulling products

through the supply chain, which requires a better understanding o consumer

behaviours and choice selections.

Most manuacturers agree that integrated supply chain management initiatives

are driving these changes in the supply chain. The accurate prediction o

consumer demand has been cited as the most critical actor in the improvement

o replenishment orecasts, which directly impact supply chain efciencies.

Furthermore, most companies are struggling with how to model and predict

consumer behaviour along with short-term volume lits associated with sales

promotions, marketing events, economic actors and other related activities.

Todays consumer is well-inormed through instant access to product inormation,

in particular promotions and price comparisons through the Web. This makes

the task o predicting such behaviour ever more complex. The end result is

potentially lower margins or the manuacturer and lower volume or the retailer

when selling products at regular prices, as consumers have been trained to buy

rom promotion-to-promotion, stockpiling products or uture consumption.

Armed with deeper insights into consumer behaviour FMCG manuacturers willbe able to direct R&D investment, improve the eectiveness o marketing and

maximise supply chain efciencies. Where will this insight come rom? Within

this paper we have considered the FMCG value chain and have identifed where

business analytics can impact and drive proft within this process.

The accurate prediction of consumerdemand has been cited as the most

critical factor in the improvement

of replenishment forecasts, which

directly impact supply chain

efficiencies.

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The Benefts o Business Analytics

Business analytics allows organisations to derive predictive insights to enable

competitive act based decisions. It benefts all aspects o the value chain.

2

Kimberly-Clark, the FMCG giant, embraced business analytics

with ar reaching benefts

Renee Nocker, ormer IT Director at Kimberly-Clark, needed more than the

power o her conviction to make the business case or piloting what could

become signifcant changes to Kimberly-Clarks business processes.

She needed quantifable business impact to get the attention o her stakeholders.

But how do you anticipate the return on investment o process improvement?

We asked the business leaders to quantiy what the new capabilities would

mean or them, says Nocker. For example, it will generate x million in new

sales, reduce inventory by x amount. Based on that, I put a stake in the ground

and said I would deliver $5 million in business beneft in this endeavor. At the end

o year one, we actually delivered about $23 million worth o business beneft.

For more information:www.sas.com/news/feature/challengeofchange.html

Figure 1: The Fast Moving Consumer Goods Value Chain

An analytical approach will help usmake better decisions using more

finely tuned, information-driven

facts in a more efficient way. It

will drive consistency and speed

in how we manage the levers that

impact all of our business process

outcomes. We need to get people

focused on seeking the most

optimal outcome for every decision

and that can only be done withthe right software capabilities and

the right skills.

Kimberly-Clark
http://www.sas.com/news/feature/challengeofchange.htmlhttp://www.sas.com/news/feature/challengeofchange.html


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The FMCG Value Chain

Many leading FMCG manuacturers have embraced business analytics just as

Kimberly-Clark has done. SAS customers are answering many business questionsand, as such, tackling many business issues with business analytics, some o which

are highlighted on the ollowing pages:

Consumers

Business questions:

Whereareyourconsumers?

Canyouidentifythecharacteristicsthatbondyourconsumerstothebrandsthey

buy? Can you segment your consumers using those characteristics and create a

consumer purchase decision tree?

Canyouaccessandtranslatethesentimentthatyourcustomersaresaying

about your company, your products and your customer service?

Canyousharedatawithyourretailandconveniencestorecustomersona

regular basis?

With SAS you can:

Integratestructureddatafromoperationalsystemswithunstructureddatafrom

the web, social media sites, call centres and web sites to understand what is

important to consumers.

Segmentconsumerstoidentifynewmarkets,deepenunderstandingofcategoryperormance and how the consumer shops it.

Usethisinsighttooptimisepacksizes,developavours,varietiesandinform

above the line marketing.

3

The Wine House know the power o SAS

To survive the recession and move the business orward, The Wine House

needed to track the productivity o its extensive inventory and access current

accurate customer data to better service and market to its best customers.

For more information:www.sas.com/success/winehouse.html

Ive got less money tied upin inventory, I know where our

customers are coming from, how to

market to them and can monitor the

effectiveness of our marketing. Our

ROI with SAS has been well over

100%.

The Wine House
http://www.sas.com/success/winehouse.htmlhttp://www.sas.com/success/winehouse.html


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R & D

Business questions:

Howdoyouensureanewproductmeetsourstandardsforsafety,packagingor

transportation?

Areyouabletobringtogetherallthedatafromyourexperimentaltestsand

evaluate the results?

Howcanyouquicklyunderstandifaconcepthasalreadybeenpatentedandhow

will that impact our potential patents?

With SAS you can:

Ensurequalitytoimprovecustomersatisfaction.

Leverageconsumerdatatodrivenewproductinnovation.

Ensurenewproductsaredesignedtorequiredstandards.

Assessthelikelyrangeofuncertaintyinnewproductlaunches,andplanmore

eectively taking account o the risks.

4

Krat Foods knows the power o analytics

KraftFoodswerelookingtoensureconsistentavourandappearanceofsnack

oods by regulating production processes. In order to do this they wanted to

assignnumericalmeasurementstoquantifytheavour,colour,aromaandother

attributesofeachproduct.UsingSAStheyevaluaterecipereformulations,

product improvements and market trends, by measuring and determining the

appropriate levels o chewiness, sweetness, crunchiness and creaminess.

For more information: www.sas.com/success/kraft.html

Our SAS applications encompassthe full project life-cycle of

product and sensory testing.

From ingredient selection to

questionnaire development,

experimental design and top-line

reporting, SAS software cranks

through all of the collected data

and reports summary results.

Kraft Foods
http://www.sas.com/success/kraft.htmlhttp://www.sas.com/success/kraft.html


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Marketing

Business questions:

Canyouanalysetheeffectivenessofeachproduct?

Howdoyouevaluateconsumerresearchtotrulyunderstandtheimpactofanew

product? Can you predict where your marketing spend will provide the best return

on investment?

Canyoupredictfutureperformanceoverthelife-cycleofyourbrands?

Howprice-sensitiveareyourconsumers?Howpricesensitiveareyourproducts?

Howloyalareyourconsumers?Whatwillmakethemswitchtoanotherbrandand

what is the threshold or switching?

Whatarethepurchaseattractorsforyourbrands?Howarethesechanging

over time and how will they map against the changing demographics o your

consumers?

Doyouunderstandwhichmarketingstrategiesyourconsumersrespondtobest?

Canyouoptimiseyourmarketingspendacrossthemarketingmixtodrive

proftable volume growth and revenue?

With SAS you can:

Decomposemarketdatatounderstandthetrueeffectsofproductlaunches,price

changes and promotions.

Segmentconsumersbytypeandtheirresponsivenesstodifferentmarketing

activity.

Analysetheeffectivenessofyourmarketingspendbychannelandmechanic.

Decompose layered marketing activity into its component parts to understand

which combinations o media and mechanics work together.

Forecastdemandbychanneltosupportindividualbrandstrategies.

Understandtheeffectsonyourbrandsofcompetitivepricingandpromotional

strategies.

Performpricesensitivityanalysistopredictbrandswitchingthresholds.

5

Williams-Sonoma knows the power o analytics

Williams-Sonoma needed a way to target customers, manage cost and increasepersonalisation. Founded in 1947 as a small cookware shop, Williams-Sonoma

now boasts more than 2 billion dollars in sales annually. The companys strong

commitment to quality and service is evident in its product mix and customer

relationship management programs.

For more information:www.sas.com/success/williamssonoma.html

As a solution for predicting andtargeting marketing returns, SAS

is pretty easy to justify. Every

tenth of a percent that we improve

our targeted marketing effortstranslates into millions of dollars in

savings.

Williams-Sonoma
http://www.sas.com/success/williamssonoma.htmlhttp://www.sas.com/success/williamssonoma.html


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Sales

Business questions:

Canyouoptimiseyourtradeplaninordertomeetyourbusinessobjectives?

Howaccurateareyourdemandforecastsandhoweasyaretheytomanage?

Howmuchtimedoyouspendforecasting?

Areyouconstantlytryingtoresolveinternalforecastingconicts?Arepersonal

agendas contaminating what should be an unbiased best guess at what is really

going to happen?

Doyouknowwhatinuencesdemand?

Canyougaugetheimpactofpricechangesandpromotionsandnewproduct

launches on demand?

Canyousensedemandsignalsotherthantrendandseasonality(eg.price,sales

promotions, marketing events, advertising, in-store merchandising), and then

shape demand using what-i analysis?

Howdoyoudecidewhatthepromotionsshouldlooklike?

Canyouunderstandtheoverallcosttoserveforeachcustomer?

IfacustomerstartsaSKUrationalisationprogramme,wouldyouknowwhich

products could be sacrifced without aecting proftablity?

Doyouknowhowmuchspaceshouldbeallocatedtoeachproductatthepoint

o sale and where they should be positioned on the fxture?

With SAS you can:

Performwhat-ifanalysistounderstandtheimpactofexternalfactorsonthe

orecast and shape demand.

Understandtheimpactoftradepromotionstonegotiatebettercustomerdeals

and drive sales value.

Largelyautomatethegenerationofstatisticalforecasts,allowingyoutofocustheir

eorts on the most important or most problematic orecasts.

ApplyanalyticalmethodslikeForecastValueAdded(FVA)analysistoidentify

waste and inefciency in your orecasting process. By eliminating those activities

that make the orecast worse, you can improve the orecast reducing inventory

and out-o-stocks, releasing working capital and driving availability to customers.

Understandtheprotabilityofyourproducts,theircontributiontothecategory

and predict the eects o changes to distribition, switching and brand loyalty asyou implement price changes, launch new products and run promotions.

Analysexturestoensurethecorrectamountofspaceisallocatedtoeach

product, visualise the product at the point o sale and collaborate on-line with a

customer in real-time.

6

A large conectionery company knows the powers o analytics

A North American conectionery company had heavily manual processes and

required an automated baseline orecast at our levels every week and on the

frst o every month or the entire company.

SAS improved forecast accuracy

by 6%.

North American confectionery

company


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Production

Business questions:

Whatmeasuresaretheretoensurequalityassurancethroughoutproduction?

Isyourproductionprocessoptimisedtodeliveragainstdemand?Isitintegrated

with the orecasting process to avoid over- / under-production?

Canyouidentifyproductionprocesscoststhroughout?

Howdoyoumanageandpredictassetmaintenancetoensureminimal

production downtime?

Howdoyouoptimisehumancapitalagainstproductiondemands?

Canyouaccuratelyplanproductiontoavoidover-/under-production?

With SAS you can:

Analyseprocessmanufacturingdatatoimproveyields,detectproblemsquicklyand optimise perormance.

Identifyqualityproblemswithinthemanufacturingprocessandtakeimmediate

remedial action.

Understand,modelandpredictcomplexqualityissues.

Understandtrueproductprotabilityandtheimpactofchangesinrawmaterials.

Scenarioplanningtooptimisethemanufacturingprocess.

Increaserevenuesbyreducingassetandplantdowntime,bypredictingevents

that can cause outages. As a consequence, maximise the use o maintenance

resources to meet operational goals or proftability, saety and environmental

compliance.

IBM knows the power o analytics

IBM has constructed one o the most advanced, error-ree chip abrication

actories, in the world. The ability to quickly detect and address quality and

production problems is crucial to the ongoing success o this operation. Data

rom all aspects o the manuacturing process including logistics, process,

electrical test and deect data are collected rom each production and test

location. IBM engineers throughout the world use SAS to continuously access

and analyse the terabytes o data as part o their quality assurance programme.

For more information:www.sas.com/success/ibm_dataview.html

SAS has been a key component ofour yield learning and engineering

analysis program for many years.

IBM
http://www.sas.com/success/ibm_dataview.htmlhttp://www.sas.com/success/ibm_dataview.html


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Logistics

Business questions:

Howdoyouoptimisedistributionchannels,casesize,packingandtruckloading?

Areshortcomingsinyourforecastingcapabilitiesimpactingwarehousespaceand

workorce planning?

Canyouidentifyexcesscostswithintheprocess?

CanyouoptimiseroutesandtransportmethodstomeetcustomerSLAs?

Areyouadheringtoyourcorporatesustainabilityprogramme?

Howdoyouminimisethecosttoserveacustomer?

With SAS you can:

Reducesupplychaincoststhroughoptimisationoftransportationroutes.

EnsurethatyoumeetyourcustomersSLAswhilstnotincreasingyourcosts. Measure,manageandreportonthekeysustainabilityareasenvironmental,

social and economic indicators and determine business strategies that reduce

risk and increase shareholder value and reduce costs.

Bunge knows the powers o analytics

Bunge Alimentos, one o the worlds largest agribusiness and ood companies,

with a wide product distribution network, needed a solution to improve their

logistic process analysis and to reduce costs.

For more information: www.sas.com/news/preleases/041707/news6BungeOR.html

Logistical costs in commoditiesare one of the leading factors

determining competitiveness. We

needed to anticipate problems

more quickly and take correctivesteps before problems arose. Using

SAS, it became easier to reduce

the companys costs.

Bunge
http://www.sas.com/news/preleases/041707/news6BungeOR.htmlhttp://www.sas.com/news/preleases/041707/news6BungeOR.html


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SAS

Business Analytics Framework

Only SAS provides data integration, analytics and reporting as part o one business

analytics ramework. SAS can incorporate and integrate all data required or analysisand reporting, regardless o data source or ormat.

Data Integration

SASDataIntegrationprovidesafullandexiblesolutiontothedataintegrationand

managementchallengesfacedbyFMCGorganisationsofallsizes,suchas:

Distributedandrapidlyincreasingdatavolumes.

InconsistentlydenedandpoorqualitydataacrossdisparateITsystems.

Highexpectationsofuserswhodependonthedata.

SAS Data Integration addresses these challenges in a timely, cost-eective manner,

and supports enterprise scale projects. SAS Data Integration can:

Accessallyourdatasources.

Extract,cleanse,transform,conform,aggregate,loadandmanageyourdata.

Supportdatawarehousing,migration,synchronisation,federationand

provisioning initiatives.

SupportMasterDataManagement(MDM)solutions.

Createrealtime,reusabledataintegrationservicesinsupportofserviceoriented

architectures and data governance.

Figure 2: Integrated Business Analytics Framework


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Analytics

SAS defnes analytics as act based predictive insight that enables more accurate

decisions. Analytics rom SAS goes beyond just historical reporting.

SAS Analytics provides insights and reveals patterns, anomalies, key variables and

relationships that provide competitive advantage regardless o an organisations

sizeoritslevelofanalyticsexpertise.Ourunmatchedsuiteofanalyticscapabilities,

services, solutions and delivery options can be quickly deployed to help organisations

move orward with confdence.

SAS competitive dierentiation is built on predictive analytics that allow organisations

to be more proactive in their decision making analytics that answer:

Whatwillhappen?

Whatisthebestthatcouldhappen?

Whatisthebestnextaction?

Reporting

SAS expands inormation use to a wide community o decision makers within an

organisation. Role-based interaces make users more sel-sufcient by providing the

right inormation at the right time. This also helps reduce administrative overhead

and reliance on IT and other support organisations.

SAS Business Intelligence enables alerts and embedded analytics to be suraced to

key decision makers in the organisation when its needed most.

Summary

Over the past 30 years SAS has been helping organisations within the FMCG sector

to understand consumer behaviour, innovate new products, orecast and shape

demand whilst managing costs and improving proft margins.

By leveraging the SAS Business Analytics ramework, analytics can impact all

elements o the FMCG value chain.


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About SAS

SAS is the largest independent sotware company in the world. With consistent

revenue growth and proftability since 1976, SAS has the depth o resources tosustain excellence in product development and customer support. While many

competitors have merged, changed ownership or simply vanished, privately held

SAS has remained ocused on our primary mission delivering superior sotware

and enhancing customer relationships.

Global reach, local presence

SAS solutions are used at more than 45,000 sites in over 100 countries including

92ofthetop100companiesonthe2009FORTUNEGlobal500 list to develop

more proftable relationships with customers and suppliers; to enable better

decisions; and to move orward with confdence and clarity. More than 11,000 SASemployees in more than 50 countries and 400 SAS ofces provide local support

or global implementations.

Financial strength

SAS record o revenue growth in every year o our existence makes us a stable

business partner. It also enables us to reinvest a substantial percentage o revenues

in R&D each year so we can continually improve our products. This commitment

to innovation is one reason why the overwhelming majority o our customers renew

their sotware licenses with SAS every year.

Sustainability

More than being green, sustainability means that SAS takes a long-term view when

making business decisions, whether they involve attracting, retaining and motivating

the best employees; serving customers; or caring or the physical environment. From

LEED-certiedbuildingstoasolarfarmgeneratingenergyfortheregion,SASstrives

to meet the sustainable demands o doing business.

Theres garden-variety analytics,

and then theres the stuff that

matters. And what we have chosen

to do is to put our focus on the

predictive analytics, because we

think thats where the value is. And

the de facto, standard, best guys

on the planet have been, are today,

and always will be SAS. And thats

why our alliance with them is so

distinctive and important.Bill Green

CEO, Accenture


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Business Analysis FMCG

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