The Premier Foods Journey · Why Deploy SAP TPM At Hovis • Key Benefits Replacement of manual...
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The Premier Foods Journey “TPM To TPO” ! Speaker: Trevor Barrett Manager – Premier Foods UK
Transcript of The Premier Foods Journey · Why Deploy SAP TPM At Hovis • Key Benefits Replacement of manual...
The Premier Foods Journey
“TPM To TPO” !
Speaker: Trevor Barrett
Manager – Premier Foods UK
In This Session …
• Following the implementation of Trade Promotion
Management (TPM) within Premier Foods, this
session provides an insight into:
– Our SAP Trade Promotion Management Implementation
– SAP Funds and Trade Claims Management (Phase 2)
– Our Approach to Trade Promotion Optimization
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What We’ll Cover …
• Premier Foods – Our History
• Initial SAP TPM Implementation
• Phase 2 with Funds/Claims Management
• SAP Trade Promotion Optimization (TPO)
• Wrap-up
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Premier Foods
• Our History
• http://www.youtube.com/watch?v=Dgtw
M5pQXtY
Premier Foods – Our History • With origins in the canned food industry, Premier Foods has continually expanded
and acquired new brands to become the UK’s largest food producer
• In 2002 the acquisition of Nestlé's UK ambient food business brought favourites
like Branston, Crosse & Blackwell, Sarson's and Sun Pat into the fold
• In 2004 Premier was successfully floated on the London Stock Exchange, with an
initial market capitalisation of £526 million.
• In the same year, we became leader in the meat-free market following the
acquisition of the meat alternatives Quorn and Cauldron
• In August 2006, we completed the £460 million acquisition of Campbell’s UK &
Irish business adding OXO, Batchelors, Homepride and Fray Bentos to our range
• In March 2007 Premier Foods completed the £1.2 billion acquisition of RHM along
with many of the UK’s best known food brands including Hovis, Sharwoods,
Cadbury cakes, Bisto and Mr Kipling
Our Top Ten Brands Have Retail
Sales Of £1.25bn We have a portfolio of brands with significant scale to drive innovation and growth
Soup’s
Sauce’s
Bread
Cake Deserts
Sauce’s
Gravy/Stock
Top 5 Customers – Tesco/Sainsbury/Morrisons/Asda/Co-Op
Premier Foods – Our History • SAP & Premier?
– Premier Foods has been using core SAP in parts of it’s business since 2008
– The Hovis Division had no SAP platform
– Hovis – a perfect test bed for SAP TPM integrated with the SAP Orders to Cash implementation
• Hovis & Trade Promotions – Hovis (Bread) accounts for c £500m of Premier’s total turnover
– Fresh products delivered daily (Product range is bread and other bakery e.g muffins)
– Mainland GB and Northern Ireland operation
– 20+ manufacturing/ distribution sites across the UK
– The Supply Chain operates 24x7 – most deliveries occurring overnight before 11am
– 8500 deliveries per day = 8500 invoices
– Order cycles are short, typically within 24/48hrs of order receipt.
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Approximately 60% of Hovis volume is sold “on promotion”, therefore
including SAP TPM integrated with SAP Order To Cash solution was key...
Premier – Our Business Unit Structure
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Premier Foods
Cake Deserts
Grocery Desert/Source/Meal
Hovis Bread
Ambient Business
TPM Live
What We’ll Cover …
• Premier Foods – Our History
• Initial TPM Implementation
• Funds/Claims Management (Phase 2)
• Trade Promotion Optimization (TPO)
• Wrap-up
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Why Deploy SAP TPM At Hovis
• Key Benefits
Replacement of manual processes for managing £80m
commercial spend
Provides internal control processes to manage promotions,
schemes and claims
Integrated planning, ensuring planning is based on common
shared data
Enhanced business reporting and visibility to aid decision
making by marketing/Sales & Supply chain Functions
What methodology was used
• Phased approach
– enabled benefits to be delivered earlier than waiting for a big bang
solution
• Agile approach
– to ensure rapid development and frequent review with business to
reduce likelihood of large re-works at later stages in the project
– End to end project took 18 months to deliver and exit early life
support
• Collaborative
– to provide early visibility of the solution to the business and develop
a joint agreeable end solution
– Cross functional teams across sales , supply chain , commercial
finance and credit control
– Super Users “championed” the solution and undertook end user
training
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Claims Management
Promotion
Approvals
ROI
Planning Discounts
Phase 2
Our TPM Phasing
Phase 1
A Real Life Scenario Imagine the following scenario:
You are a Sales Manager and you need to increase your sales of Hovis Granary
bread with one of your key accounts
You have decided to implement an event, a short term promotion, in effect,
providing an off invoice discount to the retailer for every loaf of bread purchased
during the month of December
Thoughts in your mind: How much is the retailer currently paying us for that loaf of bread?
How many units are they currently ordering on a weekly basis i.e. what is the baseline forecast?
How much can I afford to discount the product to the retailer?
What is the retailer charging the customer i.e. the on-shelf price?
What will my return on investment be for this promotion, assuming an certain increase / uplift in
number of units sold during the promotional period?
So, where do I start today? 14
ROI Planning: Overview of Totals & KPI’s
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Summary of base,
incremental and total volume
across featured products
Summary of incremental
financial metrics across
featured products
Summary of spend
associated to promotion
across featured products
When the user is happy he/she will send for approval………………
Promotion Approval: Workflow email prompts
• When activity requires your approval, you will receive an auto-generated
workflow email requesting your review / approve the proposal – Clicking the link will take your straight to the document in the TPM portal via TPM log-in page
– Reminder documents will be issued until the document is actioned
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Discount Prices created and transferred...
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Discounts are created off the back of the promotion once approval complete
Post Implementation status…
• Reliance on multiple spreadsheets is a thing of the past
• Integrated demand planning now supports decision
making at point of promotion creation
• Approval process ensures audit & control of all
promotions
• Integrated pricing ensures discounts created in TPM
auto sync to SAP ERP
• Capturing ‘actuals’ data enable’s post promotion analysis
and will enhance future business decision making
• SAP Quality Award achieved (Silver)
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What We’ll Cover …
• Premier Foods – Our History
• Initial TPM Implementation
• Funds/Claims Management (Phase 2)
• Trade Promotion Optimization (TPO)
• Wrap-up
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Claims Management
• Commercial Claims Scope
Creation of Commercial
Claims in FSCM – Dispute
Management
Integration into Trade Claims
Management
Approval Workflow
Claims validation
Claims settlement /
Integration into Finance
• Benefits Better Control and enhanced reporting
Improved Visibility and Process Control
(visibility and accountability throughout
the Claims lifecycle)
Reduced Processing time via reduction
of Workflow Approval path whilst
maintaining integrity and control with
new Overspend Process
Inclusion of Credit Control in Claims
Process
Fully integrated to Accruals Process
including 'real time view of Accrual'
within TPM.
Includes some future-proofing with
Flexible Workflow to allow transition of
Admin tasks from Sales team to PBS
Funds Management
• Current Scope Limited Fund Management set up for the purpose of processing and settling
Claims
Default Funds assigned to Promotions based on currency and promotion
type
• Improvements and Benefits Full Funds Management to provide enhanced budgetary control of
promotional spend
Accurately manage trade expenses to planned fund amounts
Centrally manage and monitor all trade funds, budget tracking and
utilisation
Close the loop on funding and settlement processes by integrating trade
funds to trade claims.
Reduce the length of the promotion approval chain by using pre-authorized
funds
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What We’ll Cover …
• Premier Foods – Our History
• Initial TPM Implementation
• Funds/Claims Management
• Trade Promotion Optimization (TPO)
• Wrap-up
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Trade Promotion Optimisation
• Premier Proof of Value Approach
– Validate Customer analysis
– Validate Product Analysis
– Understand Collaborative Opportunity
TPM Evolution at Premier
Foods
• Emerging business needs: – Shopper/consumer focus in planning
– Understanding of volume drivers
– Plan accuracy: Plan vs actual
– PEA for all trade promotion activities
– Retailer P&L Planning and Forecasting
• Logical next step for us - Validate SAP
TPO given our experience with SAP TPM
Proof of Value as the next
Step of the Journey
• Proof of Value objectives – Focus on model/forecast accuracy
– Understand optimization capabilities
– Pricing and promotion insights
• Usability assessment based on – Experience with SAP TPM
– Various demonstrations
– Gartner/POI checklist from last year‘s event
Proof of Value Set-up
• Using IRI data for demand modeling – Tesco and Asda
– Sharwoods & Loyd Grossman brands
– Data range from July 2010 to June 2012
• SAP TPO to optimize according to – Maximize retailer / Premier Foods profit during
promotion period
– 3 weeks between Aug, 13th - Nov 15th, 2012
IRI data facts as input
ASDA – Sales History Tesco – Sales History
0 20 40 60 80 100 120 1400
5
10
15
20
25
30
35
40
45Number of Sales Records per Product-Location
Number of Sales Records
Num
ber
of
Pro
d-L
ocs
0 20 40 60 80 100 120 1400
5
10
15
20
25
30
35
40
45Number of Sales Records per Product-Location
Number of Sales Records
Num
ber
of
Pro
d-L
ocs
Distinct tactics in data:
On Shelf Only
Off Shelf
Multi Buy
TPR
Proof of Value Results:
Model Accuracy • Accuracy >85% outperforms current status
• Further improvement potential by data enrichment (e.g. display
location)
• MAPE assessment as one of the standard modeling metrics
– MAPE = Mean Absolute Percent Error
– Excellent results
Proof of Value Results: MAPE in Relation to Average Unit Sales/Week
0 10 20 30 40 50 60 70 80 90 1000
5000
10000
15000
20000
25000
30000
35000
40000
45000 Scatter plot of MAPE vs. Avg US/week
MAPE (%)
Avg U
S/w
eek
Low forecast error identified during high volume weeks, higher error during low volume weeks
• Forecast results confirm accuracy of the forecasting model
• Average forecast accuracy improved to >85%
Model Accuracy:
Time Series (ASDA)
Proof of Value Results:
Price sensitivity analysis • Insights of price sensitivity analysis by customer and product
• Average response of price change (weighted by statistical confidence)
-50
0
50
100
150
200
250
300
-50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20
Retailer 1
Retailer 2
Average Reference Price: Overall: £1,69 Retailer 1: £1,50 Retailer 2: £1,85
Scope: Tesco and Wet Sauces Indian category
Objective: Maximize retailer and Premier Foods
profit during promotion period
Period: 3 weeks between August 13th to
November 15th, 2012
Promotion Parameters
Optimization Scenario:
Maximize Profit
Tactic ACV% Spend
On-Shelf 70,00
Off-Shelf 27,00 £ 50.000
TPR (between £0,90 and £1,75) 70,00 Keep retailer margin
Compare 10 best scenarios for Tesco
(RTL) vs 10 best for Premier Foods (PF)
‚Our‘ Checklist for User
Experience from LY POI event
Maintaining Focus-TPO Plan Through
Implementation - Dale Hagemeyer , Gartner
What We’ll Cover …
• Premier Foods – Our History
• Initial TPM Implementation
• Funds/Claims Management
• Trade Promotion Optimization (TPO)
• Wrap-up
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Lessons Learned
• Clarify what and why you “want” or “need” TPM and TPO
• Validate that your plan is “doable” — Not over aspirational
• Determine your technical environment structure and data
availability
• Consider your phases of functionality release
• Prioritization by business team’s availability, business
urgency and business impact
• Proof of Value verified SAP TPO’s accuracy and ability to
deliver business insights
• We are ready to focus on the next step of the journey
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Where to Find More Information
• http://www.sap.com/uk/solutions/business-
suite/crm/brochures/index.epx
• http://www.sap.com/uk/solutions/rapid-
deployment/crm/index.epx
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