DemandTec Customer Case Study: Tyson Foods


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DemandTec Customer Case Study: Tyson Foods

  1. 1. A DemAnDTeC CusTomer suCCess sTory Tyson Foods Optimizes Trade Effectiveness with DemandTecCusTomer oVerVIeW Challenge Tyson Foods, the world’s largest processor and marketer of chicken, beef and pork, knew itChallenge needed to drive better trade marketing effectiveness as a category leader. Promotion planningRetailer gains were inconsistent on was inconsistent, retailer demands were escalating, and trade dollar spending was events. With little post-eventanalysis or predictive modeling, Tyson reassessed its entire approach – process, systems and people. It was a first majorTyson drew fewer bites on future step to improve trade promotions through superior planning, execution and analysis. Tysonpromotions. reasoned that if retailers could readily see how trade events benefited them, and could be part of a collaborative process that made events “more theirs,” they’d buy in more regularly.Solution The company’s self-scrutiny turned up some key gaps in trade promotions. Michael Shinstine,Powerful Software-as-a-Service Tyson’s Senior Director of Sales Planning, highlighted these gaps at the Consumer Goodsapplication aligned new business Technology 4th Annual Sales & Marketing Summit:processes with retailers. Consistentsuccesses sprang from a newly n Rising costs. Trade spend and execution costs were rising, as were retailer demands, and costs of goods and fuel, which pressured performance. Offering little relief, Tyson wasshared clarity, better sales plans and inconsistent in its approach to events, and did not involve its customers in planning.event analysis n Insufficient data. Real-time spending updates were impossible with spreadsheet data.Key Benefit Syndicated data was hardly used. The absence of post-promotion analysis meant fewTyson soars with DemandTec’s Trade valuable insights followed events.Planning & Optimization service anddramatically raises case volumes, n No view of the future. Because Tyson couldn’t predictively model future promotions, it was more reactive than ROI, margins and retailer profit. n Rigid technology. Tyson’s inflexible systems limited promotion planning to its own fiscal year, rather than more appropriate customer timelines. n No empowerment. Tyson teams often lacked the authority, selling experience and sales planning abilities to ensure powerful programs. solutionComPAny snAPsHoT Tyson undertook a one-year plan to dramatically improve its approach. A broad self-n Revenue assessment began in September 2005. By December, the company was accurately sizing how US$26B much more effective trade spend would deliver, through its tighter grasp of total ROI across the business, and performance by account, by event and by promoted group and SKU.n Market Sector Food production and distribution Tyson uncovered several key findings, said Mr. Shinstine:n Geography n Significant opportunity existed. Since it varied by customer and product, a tailored approach was necessary. Global n Most promotions were positive for customers but negative for Tyson. This would soon improve with knowledge of which products to promote together rather than separately, and with Tyson’s new capabilities for pre- and post-analysis and predictive planning – all enabled by the Trade Planning & Optimization software
  2. 2. CusTomer suCCess sTory Another plus was vendor-retailer collaboration based on a shared understanding of consumer demand. Putting the consumer at the center of the trade planning equation helped Tyson focus on what mattered most – driving the right consumer behaviors to maximize total category objectives, not just total Tyson portfolio metrics. Tyson soon attained a leadership position in trade promotions, with tailored strategies and events that grew retailer categories and Tyson brands. To achieve this, Mr. Shinstine said he sought a best-in-class technology partner that was: n Easy to use. The interface needed to follow current work flow. Sales planners had to be “Tyson benefited immediately able to use the system intuitively. The system needed to build events the way Tyson plans. It had to develop a predictive category plan vs. a brand plan, and quickly build proposals. from more powerful, predictive n Based on superior insights into consumer demand, with higher forecast accuracy. and analytical trade events. Optimal planning yielded n Scalable, and able to model all categories. 38.7% greater contribution n Lower risk. Software-as-a-Service delivery minimized Tyson’s IT burden. and 13.7% higher trade ROI. n Enhances collaboration opportunities with retailers. Trade spend became 5.2% DemandTec’s Trade Planning & Optimization software service met these criteria. This, along more efficient, and case with reconfigured business processes and better-trained teams, had Tyson ready to fly. volume rose by 3.4%.” Benefit By upgrading its trade promotion planning process, Tyson achieved significant brand and Michael Shinstine Senior Director of Sales Planning category improvements and developed a more meaningful way to engage with key customers. Tyson Foods Inc. In a case study presented by Mr. Shinstine at the Consumer Goods Summit, Tyson found that promoting its Boxed Wing product at one retailer yielded unfavorable results for the brand. The DemandTec software guided Tyson to shift ad dollars from the boxed product to the bagged line, and buy a two-week display instead. Performance improved in many ways (see table): PREDICTIVE ANALYTICS LIFT PLAN PERFORMANCE Metric % improvement vs. initial plan Case volume 0.6% Flat volume Trade spend 0.3% Flat spending Increased contribution margin 16.1% Significant profit gain Manufacturer trade ROI 16.4% Better ROI Retailer profit 1.9% Retail profit increase Source: Tyson Foods, 2007 Proactive leadership like this earned Tyson the prestigious 2007 Category Captain Award from Progressive Grocer. Mr. Shinstine said upon receiving it, “This software has allowed us a much more consumer-centric approach to promotions, creating wins for Tyson, retailers and consumers.” Optimized trade promotions have produced differentiating gains and a stronger platform of trust and credibility with retailers. Learn more For more information, call 1-888-221-6128 or visit DemandTec, Inc 1 Circle Star Way, Suite 200 n San Carlos, CA 94070 tel 650.226.4600 n fax 650.556.1190Copyright © 2008, DemandTec, Inc. All rights reserved. Printed in the USA. DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. DemandTecTrade Effectiveness, DemandTec TradePoint Network and the DemandTec Platform are trademarks of DemandTec, Inc. All other trademarks mentioned in this document are the www.demandtec.comproperty of their respective owners. 09/08