Consumer Goods

Overview

Nineteen of the top 20 consumer packaged goods companies in the world have invested their trust in Cognos.

These companies use Cognos to: 

• Improve efficiency with a consistent, accessible financial and operational view across the organization.  
• Maximize overall profitability with better insight into your company’s performance. With real-time, accurate data you can better understand actual costs and revenues, improve decision making, and discover new sources of revenue.  
• Control costs by dissecting information to identify redundancies, analyze profitable growth opportunities, and rank initiatives.  
• Improve forecasting and decision-making with dynamic modeling and testing of business and product scenarios.  
• Leverage, integrate, and analyze multiple data sources including shipments, inventory, production plans, costs and cost variances, and third-party share data for a complete picture of business performance.    

Benefits and Value

Cognos integrated performance management software and services deliver value to the world’s leading consumer goods companies.

Reporting, analysis, and business intelligence

Cognos offers the most comprehensive reporting coverage in the industry. Identify important business issues, manage performance, and improve decision making.

You can use BI software to:

•  Determine profitable trading partners and enable collaborative process improvement
•  Integrate management and financial reporting to improve performance
•  Reduce and control sales and marketing costs through improved analysis
•  Manage assets and improve capital utilization through accurate forecasting and analysis
•  Efficiently service customers over the Internet
• Share information with key partners and contract manufacturers through a BI extranet.

Planning, forecasting, and consolidation

 You can use planning and consolidation software to:

• Augment or replace cumbersome spreadsheet-based systems.
• Enable driver-based planning to streamline and focus efforts around HR plans, manufacturing requirements, or Sales resources.
• Use rolling forecasts to increase forward visibility into financial performance.
• Reduce consolidation, close, and reporting cycles by days or weeks.
• Manage multiple reporting and consolidation standards such as IAS and U.S.-based GAAP; intercompany elimination and reconciliation; multicurrency translation; complex ownership calculations and financial consolidation rules.
• Conduct what-if scenarios for different revenue projections or changes in business lines.

KPI can help you with Cognos planning and consolidation software.

Scorecarding

Track your key corporate performance indicators from your desktop.

With Cognos scorecarding software, you can:

• Decide whether to launch, continue, or terminate a brand, a product or a promotion.
• Identify top performing products, brand managers, and sales people.
• Track the effectiveness of trade promotions, ad campaigns, and other marketing elements.
• Link all performance indicators to model your annual business strategies.

Learn more about Cognos scorecarding software.

Improving Performance in the Consumer Product Goods Industry

KPI provides a comprehensive set of business intelligence solutions to improve performance in the consumer product goods (CPG) industry. Our CPG customers include leading apparel makers; makers of personal and household care products; food and beverage manufacturers; paper and business forms makers; and pet products companies. Our business intelligence solutions enable CPG companies to:

• Determine profitable trading partners and enable collaborative process improvement
• Integrate management and financial reporting to improve performance
• Reduce and control sales and marketing costs through improved analysis
• Manage assets and improve capital utilization through accurate forecasting and analysis
• Efficiently service customers over the Internet

Solution Portfolio

• Sales & Marketing Effectiveness
  Improve your shareholder value by improving marketing, sales, and promotions.
• Trade Promotions Management
  Control trade funds offerings to retailers, minimize invoice discrepancies, and streamline the process of managing deductions.
• Supply Chain Optimization
  Optimize inventories while meeting targeted customer service levels.
• Performance Management (PM)
  Improve your total enterprise performance with the right tools.
• Collaborative Planning & Forecasting
  Consider collaborative planning for mutual advantage.
• Category Management Services for Customers
  Streamlined approaches to category management deliver competitive advantages at lower cost.

 Sales and Marketing effectivenessGrowing the Top Line
Improve your shareholder value by improving marketing, sales, and promotions

Very few organizations can save their way to market dominance. In fact, the highest returns on investment (ROI) usually come from increasing sales rather than slashing costs. That's why giving brand, marketing, and sales managers the knowledge they need to strongly impact the top line will have the greatest effect on the bottom line. Business intelligence (BI) is a great means to achieving gains in brand, sales, and promotion/marketing management.

Brand and Marketing Performance Improvement
Brand and marketing managers have long been hampered by the difficulties of getting accurate sales, lift, and profit information quickly. With BI, they can get near-real time measures by account, channel/channel segment, promotion, and campaign-which they can then use to improve the effectiveness of other cycles.

Business intelligence delivers the full range of brand, portfolio, and product analyses along with the ability to ask random, ad hoc questions. With BI, you can:

• Plan the introduction of new products-while reducing inventories of the products being replaced
• Track the effectiveness of trade promotions, ad campaigns, and other marketing elements
• Use the knowledge gained to plan more effectively

And BI systems alert them whenever actual performance varies substantially from plan. So your managers can spend their time learning and improving rather than searching for data and performance variances.

Sales Performance Improvement
Business intelligence delivers a full range of sales management analyses. Some executives, after using BI, have been stunned to learn of the wide variations in profitability for different retail accounts-discovering they'd been losing money regularly on some very large accounts:

• Sales representatives can learn about customer issues before meeting with those customers, as well as know the full volume and profitability of a customer's business accounts throughout their territories. They are also alerted sales performance issues as they emerge. This way, the reps can take proactive steps to keep their best customers happy.
• Sales managers can measure the long-term value and profitability by account, account executive, channel, and a myriad of other criteria. They can easily re-apportion accounts and regions as personnel and business situations change. Additionally, managers can use BI to control customer presentations, as well as the offers made by account executives, brokers, and customer-accessed websites. BI also alerts them to performance variances before the close of the month or quarter in order to make appropriate plans.

Promotion and Campaign Performance Improvement
When selling a promotion to a retailer, sales executives fare better when they show the buyer what the full category impact of the promotion will be. Business intelligence lets them do this.

When devising promotions, many marketing and brand managers do not understand the full impact that a proposed promotion will have on other products due to cannibalization or affinity lifts. In other words, the likelihood of other products selling along with the specifically promoted product. Many also don't understand the impact in the next time period because of pantry loading-which, in this case, relates to consumers, based on erratic purchasing behavior, affecting the forecasts of promotional products in future ads and promotions.

Using BI, however, these managers can understand the facts, assess trends, and forecast the future much more accurately, continuously improving the financial performance of promotions over time.

And they can start improving the performance of groups of promotions-or entire campaigns. Top brand managers can measure how an entire marketing mix delivers the best results. By getting fast and accurate feedback on evolving marketing plans, they can optimize the mix of lower prices, including affects on other products and time periods, and higher sales for optimized total business performance.

Trade funds are among the fastest growing-as well as least controlled and least effective-costs to consumer product goods (CPG) firms. But that's all changing now.

For many organizations, trade funds remain an addiction, but a few CPG organizations have managed to avoid the multi-billion-dollar costs. What's more, the Sarbanes-Oxley Act (SOA) now requires CEOs, CFOs, and auditors to sign off on the accuracy and internal controls, enforcement, and verification of costs-including those of trade funds spending.

Fortunately, we have the tools you need to improve trade fund management. Now, you can:

• Reduce losses with effective measuring and planning
• Institute real-time controls on spending for accounting accuracy
• Lower costs with automated administration
• Effectively promote trade funds and realize a return on investment (ROI)

Improve Planning and Effectiveness
The key to trade fund effectiveness is to plan and measure your trade fund spending by brand, channel, line, key account, broker, and individual promotion. A majority of organizations have failed to measure results from each of these promotion types. Not surprisingly, when CPG organizations start measuring promotion effectiveness, most are stunned to find how unprofitable most promotions are. In fact, two of the largest CPG firms found that over 40% of their promotions had actually reduced net profits.

These two firms along with many others have now instituted best practices in trade promotions through the use of BI. This entails measuring the results of your trade fund spending in full detail, using measures to improve promotion forecasting, using accurate forecasts to plan and control offers for the next period, and comparing your results with plans.

Over time, you can continuously improve results by reapportioning trade funds for maximum sales and net profit effectiveness. By linking trade funds management with superior account-based sales and inventory forecasts, you can also improve your in-stock customer service rates while minimizing inventories and maximizing operating profits.

In a nutshell, BI helps you save big.

Gain Control Over Spending
Meeting the trade fund demands of retailers while keeping spending within budget is a real challenge for sales. That's why a trade funds BI system is key for your sales managers and brokers. With remote, real-time access to this system, they can more easily monitor and control spending.

The value of creating a trade funds BI system increases even more as more retailers demand and get online access to CPG systems for ordering, status checking, and collaboration. Sales representatives can also use it to measure retailer execution of promotions at the store level and give feedback to account and brand managers.

Reduce Administrative Costs
One of the largest and most wasteful administrative costs at GPG organizations involve invoice discrepancy management. With real-time, web-accessible BI, you can cost-effectively control invoice deductions.

You can also streamline the process of managing deductions for reducing administrative costs while delivering superior customer service. This best practice starts with using web-accessed BI to control offers, help manage orders, and move ever closer toward achieving the perfect order. It continues with automated invoice, payment, and discrepancy adjudication processes.

By reducing administrative costs, you can also reduce sales/customer service costs. And by giving smaller retail accounts secure web access to channel or channel-segment deals, you can increase their market share in channels that have smaller accounts without incurring additional selling costs.

 Supply Chain Optimization

Improving Customer Service with Less Inventory
Optimize inventories while meeting targeted customer service levels.

With supply chain business intelligence (BI), you can:

• Gain visibility into orders
• Forecast more accurately
• Minimize inventories at each point along the supply/demand chain
• Reduce total inventories while providing optimal customer service.

Though substantial improvements in supply/demand chain management have been made over the years, many opportunities for additional gains still remain. Advances in real-time alerts and supply chain portals/extranets are delivering the next generation of supply chain excellence and fast-payback return on investment (ROI).

By using the web and electronic forms with customers, sales people, and brokers, you will increase the accuracy of orders. This not only improves your overall forecasts so that inventory can be reduced, but also improves invoicing and deduction management to further reduce your costs while increasing your customer satisfaction.

Additionally, the use of a BI extranet (web portal) enables customers to order and track order status with real-time alerts about performance exceptions. It also helps you cut costs for customer service inquiries and enhance the perception of superior customer service.

Put simply, BI helps your supply chain work smarter.

Portals for Suppliers
Do you get better performance from your key suppliers than your competitors do? Generally, firms that do are very good at measuring supplier performance on order fill, on-time delivery, quality, new product development support, and other metrics

With such performance measures, suppliers can see how and where to improve performance. And by giving suppliers knowledge of where they stand compared to other suppliers, and periodically reapportioning orders according to performance, everyone can enhance performance.

The use of portals also reduces procurement costs. How? By enabling streamlining of procurement processes and ensuring accurate communication of orders and shipping requirements.

And by requiring suppliers to input order and shipment status, you can give your organization visibility to orders in process and shipments en route, thus enabling a reduction in safety stock on raw materials and components.

Portals to Customers
Just as you want your suppliers to link to you via the web to improve performance and visibility, sophisticated retail customers want you to link to them. They also want:

• Web-based online ordering and electronic sales catalogs
• Automation of order status inquiry and alerts
• Collaborative planning in some product categories

With BI, you can give them everything they want. BI enables efficient creation and maintenance of electronic online ordering, status inventory, alerts, and collaborative planning-and connects everything over a portal.

Transportation Cost Reduction
A majority of supply chain costs comes from transportation costs. With BI, you can create a smarter supply chain and reduce these costs.

BI enables savings through transportation route analyses, transportation optimization, and collaborative transportation management. You can identify more opportunities to consolidate shipments and increase carrier competition for routes by negotiating with carriers from a position of knowledge, reducing deadheading, and changing less than truckload (LTL) into more efficient, full-truckload shipments.

In addition, by modeling the network of suppliers, production plants, warehouses, and customer locations, you can identify shipment consolidation points and transportation routes that generate further savings. And as customer needs evolve, you can better identify locations for warehouses and plants. 

Performance Management (PM)

Improving Total Enterprise Performance
Improve your performance with the right tools.

What if every account manager were alerted to account problems as they started to occur? What if each brand and marketing manager were alerted whenever a product wasn't selling well-or as well as it could be? What if they could be alerted to performance issues and could address them immediately?

Some of the word's most renowned consumer goods executives provide their managers with accurate information about problems as they arise. With accountability, there tends to come steady improvements in business performance.

If you measure performance and give immediate feedback, performance tends to improve. Such accountability initiatives (also called total enterprise performance management or PM initiatives) are one of today's strongest motivators. Of course, these initiatives only work provided that the staff gets the tools they need to see, in near-real time, where performance is lagging. When employees perceive that they are succeeding and being appreciated for it, they work harder and like their jobs more. Turnover shrinks. More satisfied employees yield more satisfied customers. And happier customers improve your competitiveness.

Personalized KPI Dashboards
With PM, you receive a dashboard personalized to the key performance indicators (KPIs) in your area of responsibility (e.g., a customer region or district, specific products, promotions, sales, cash flow, etc.). In the past, it would take days, weeks, or months to get this kind of information to managers. Now, it takes minutes or, even seconds.

Whenever actual performance varies by more than a pre-set level, the dashboard automatically alerts you with either a red light on the computer screen, an email, or a phone call. You can then click on a series of links to get details about the performance aberration, diagnose the problem in minutes, and take corrective action immediately.

Your supervisor also receives reports and alerts according to predetermined triggers or thresholds. Executives can use PM to simplify the task of gradually changing anyone's performance measures for continuous improvement to financial results each year.

KPI works with numerous leading consumer product goods companies on PM initiatives to develop a basic set of dashboards for many types of key account managers. These are quickly configured to meet organizations' individual goals, roles, measures, merchandise, and manager preferences.

Analyze Changes in Advance
The PM approach creates a top-down/bottom-up collaborative framework for:

• Aligning strategy and plans
• Aligning plans and execution
• Improving goals and plans over time and based on execution

What if executives could know in advance the calculated effects of potential changes in strategy or policies before committing to them? The PM system can be used to pretest or model new strategies and policies to identify and solve potential shortfalls. Senior management can calculate the sales, gross margin, and expense results in advance of instituting any change.

In fact, numerous senior managers use PM systems to streamline the entire budgeting and business planning processes. Why? Because every manager is working from the same single version of the truth. As a manager in one department makes changes, the cross-functional effects of those changes can be reflected in other managers' plans. It's all about getting actual results and highlighting the opportunities and priorities for improving those results. 

Collaborative Planning & Forecasting

Collaboration with Retailers
Consider collaborative planning for mutual advantage.

Collaboration is the next great leap in supply chain performance. With customer/supplier collaboration, you can deliver higher order fill rates that yield increased sales while maintaining lower inventory. The key is communicating with retailers over the Internet. Go online to learn about their promotion plans and new store openings far enough in advance to plan production and inventory to meet their needs cost effectively.

Most of the larger key retail accounts plan to engage in collaborative planning, forecasting, and replenishment (CPFR) based on guidelines from the Voluntary Interindustry Standards Committee (VICS). Efficient collaborative service will bring you superior performance-and the opportunity to increase your market share. And because most collaborative planning and CPFR tasks are business intelligence (BI) functions, they can be run on an automated exception/alert basis using a configured BI tool with real-time portal capabilities.

Enabling Collaborative Processes
Collaborative planning allows you to use BI to team up with accounts over the web. After laying the groundwork, you typically:

• Share promotion calendars and forecasts for demand
• Compare demand and orders
• Discuss any important discrepancies
• Derive single shared forecasts extending far enough in advance to enable economical inventory/production planning

Then, as your shipments are planned and delivered, systems automatically compare planned to actual and alert managers to variances.

Collaborate to Reduce Inventories
Collaborative planning lets you have items in stock with less inventory, particularly for key accounts. By considering key accounts' planned orders, you can increase the accuracy of your overall forecast. By using the collaboratively developed planned orders to automatically plan production and procurement, you can provide key accounts with superior fill rates, provide them with less end-of-month and end-of-quarter overtime operations, and help reduce total cost.

Manage via Real-Time Alerts
BI for collaborative planning creates real-time or near real-time alerts so that your managers can avoid pouring over mountains of reports. With these real-time capabilities, they can learn about emerging problems as they occur-rather than merely hearing about issues after it's too late to do anything.  

Category Management Services for Customers

Automating Category Management
Streamlined approaches to category management deliver competitive advantages at lower cost.

Providing category management analyses is a powerful value-added service. According to a 1999 survey of consumer goods and retail executives, organizations that provide category management analyses for key accounts average 17%-26% higher sales and 9%-17% higher margin dollars, year to year with those accounts. The value these organizations obtain from category management more than exceeds the cost of the systems that deliver it.

Using category management analyses, retailers typically achieve similar gains in sales and margin points, according to a 2002 survey of retail executives. Not surprisingly, category management is catching on among more and more retailers. It is widely practiced in grocery and now being applied by general merchandise retailers that range from mass merchants to boutiques to convenience stores.

Slashing the High Cost of Category Management
Historically, a key drawback to category management has been its cost. On average, it would take retailers over 400 hours to prepare a set of analyses for one large retail account. As expected, it was traditionally only the largest accounts that would receive category management analyses due to the high labor cost and a shortage of skilled workers to prepare the analyses.

Today, however, there is a new way to streamline and automate most of category management so that retailers can cost-effectively deliver superior customer service-and superior sales and margin results-to many more accounts. Business intelligence (BI) systems can now automatically prepare category management analyses. And it's estimated that more than 80% of the value of category management analyses comes from automated analyses-which are prepared for a mere 10%-20% of the traditional costs. This way, retailers can leverage their BI investment for other purposes.

Adding Value for More Retailers
It is even possible for consumer goods organizations to offer category management support for much smaller retail accounts at virtually no incremental sales cost. This approach uses retail self-service access to category management BI over a secure internet link. This could vastly expand value-added service to smaller accounts at little cost, creating a competitive advantage while competitors try to catch up.

To make automated category management work, retailers must provide point of sale (POS) and other business data to the consumer goods organization. They must configure the system to fit the individual account's business situation. Retail merchandise managers can do all of this with secure self-service access. Then the retailers can download the results in a neatly prepared report.

Additionally, account managers visiting merchants can download up-to-date category management presentations for face-to-face discussions with retail buyers, merchandise managers, category managers, etc.

Taking a business intelligence approach to category management has an additional benefit: consistency. Automation of the process for developing category management analyses increases the consistency and completeness of those analyses. Knowledge by top category management analysts becomes transferred to more employees, brokers, and other account team members with customer-facing responsibilities.