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Moving from Insights to Action
Building a Competitive Advantage with Commercial Analytics in CPG
2
Consumer packaged goods (CPG) companies        level means that analytic solutions or          1.	 Developing a cross-functional,
are under pressure from all sides,             capabilities reside in pockets across the           integrated analytics vision: CPG
struggling to achieve sustainable growth       organization with no strategic framework            manufacturers need an integrated
during significant market and economic         or principles to coordinate and prioritize          commercial analytics vision and
uncertainty (Figure 1). Mobile, value-driven   them. This whack-a-mole approach allows             processes aligned around the shopper
consumers are more demanding than ever,        point solutions and data sets to proliferate        to enable consistent decisions through
and their tastes and paths to purchase         as potential synergies are ignored. The lack        the company to maximize results.
shift more rapidly, making it challenging      of integration leads to incremental gains           Cross-functional analytics enable the
for consumer goods manufacturers to stay       but not leaps in performance or insight.            organization to balance competing
relevant to the shopper. CPG manufacturers     Finally, insufficient analytic talent, a lack       objectives and priorities to increase
also feel increased pressure from retailers    of rigorous value realization processes, and        overall impact for the company.
that push private label products and look      subpar technology enablers also undercut
to control the consumer relationship;          the impact of analytics.                        2.	 Prioritizing analytics to create value:
witness Wal-Mart’s “Get-on-the-Shelf”                                                              Focusing analytics on high-value
crowdsourcing initiative to put new,           Continuing on this path is far too expensive        commercial processes, specifically
consumer-requested products in its stores.     and time consuming for companies                    those related to sensing and satisfying
Additionally, “big data” has left many         that need new avenues of growth and                 demand, will support market share
marketing and sales organizations with a       higher efficiency in their enterprise and           growth. Using consistent criteria and
bad case of information overload but too       commercial functions. Consequently, CPG             lenses to prioritize market-relevant
little insight about how to win consumers’     companies that Accenture serves are                 analytic investments will allow
loyalty.                                       increasingly concerned about how to make            companies to move the needle on sales.
                                               the most of their investments in analytics
This uncertain environment requires            and build analytic capabilities. That concern   3.	 “Operationalizing” analytics
companies to make faster, better-informed      is well placed: Our research into high              throughout the enterprise: Executives
commercial decisions and take concrete         performance in the CPG industry revealed            need to embed analytics throughout
action to improve market performance.          that having analytical capability that drives       the enterprise and improve timeliness
Employing analytics solutions can make         actionable insight is a differentiating,            of insights and accessibility to them
such decisions and actions easier, yet         distinctive capability of high performers           by decision makers. Analytics by
many CPG companies struggle with how           in the sector.1 More importantly, our               themselves don’t generate value. It
to execute an analytics strategy that          recent survey of executives responsible             takes a governance structure, processes,
clearly generates value. Our recent survey     for analytics in CPG companies revealed             metrics and technology support to
of how CPG leaders use analytics found         that the majority of companies are not              facilitate wider use of analytics and to
that while the majority of respondents         prioritizing analytic capabilities consistent       expedite movement from analysis and
thought they were analytic “leaders,” only     with where Accenture typically sees the             insights to actions that connect with
12 percent rated their ability to execute      most value (price, promotion, assortment,           shoppers and result in growth.
as “exceptional” (see sidebar). The issue      retail execution).
                                                                                               Given all the challenges CPG companies
is figuring out why that gap between
                                               Clearly executives are invested in and          are facing the timing could not be
intention and execution exists, and then
                                               motivated to use analytic solutions, but        better for them to proceed on all three
finding ways to close it.
                                               need to refine their execution to derive        of these fronts.
Internal impediments frequently prevent        maximum impact. This report details three
                                                                                               Executing an analytics strategy that
companies from reaping the full benefits       actions companies should consider to
                                                                                               integrates and prioritizes analytic
of analytics. A lack of sponsorship and        improve analytic capability and impact.
                                                                                               efforts across the enterprise, and builds
governance of analytics at the enterprise
                                                                                               the capabilities and infrastructure to
                                                                                               operationalize analytics, will allow CPG
                                                                                               companies to extract more value from
                                                                                               investment in analytics, and become more
                                                                                               responsive and relevant to consumers.




                                                                                               1 	 Shaping High Performance in Consumer Goods,
                                                                                                   http://www.accenture.com/us-en/Pages/
                                                                                                   insightachieving-high-performance-food-non-
                                                                                                   alcoholic-beverage-industry.aspx.

                                                                                                                                                 3
Figure 1. A Tough Environment for CPG: Decisions and Actions Requiring Integrated Analytics



    Strategic Commercial Planning                     Digital Consumer Interaction                   Sales Force Effectiveness
    •	 How do we focus on the variance between        •	 How can we effectively interact with the    •	 Why is our sales volume and
       plan vs. actual and take specific actions?        new digital consumer across different          profitability down?
    •	 How does taking actions in the field and          digital channels?                           •	 How do I achieve my sales targets in
       corporate change our financial forecast?       •	 How can we achieve relevance and               emerging markets?
    •	 How can strategic commercial planning             increase conversion rates in our digital    •	 How do we collaborate between
       improve profitability?                            marketing activities?                          corporate and field on actions such as
                                                      •	 What is the role we need to play in the        contracting deals, monitoring metrics,
                                                         social media environment?                      promotional programs, pricing, etc.?
                                                      •	 What is the business case to start direct   •	 What actions must we take to improve
                                                         channel (eCommerce) operations?                volume and profitability?


     Marketing & Trade Spend
     •	 What marketing/promotional mix do
        we have to choose from?
     •	 In what way can we prioritize our                                                            Shelf to Cash
        trade spend allocation?                                                                      •	 How do we manage product supply
     •	 How do we optimize our spend across                                                             issues on an exception basis?
        current and new brands/products and/                                                         •	 What actions must we take strategically
        or geographies to maximize the ROI?         Executive Management                                and in the field to improve on-shelf
                                                                                                        availability?
                                                    •	 What performance metrics should               •	 How do we use the historical data to
                                                       we focus on?                                     get a better demand and supply chain
                                                                                                        planning process?
     Trade Promotion
                                                    •	 How do we understand causes of
     Effectiveness
                                                       performance issues?
     •	 What are our top- and bottom-performing
        brands and promotional product groups?
                                                    •	 How do we become more agile                   Retail Partner Driven
     •	 What are the causes of poor promotional
                                                       in adapting faster to changes in
        performance?                                                                                 •	 How can we manage periodic
                                                       consumer and shopper behavior?                   changes in the terms of the deals?
     •	 What actions can we take to make
        changes to promotional strategies like                                                       •	 Are traders satisfied with timeliness
                                                    •	 What actions should we take to
        pricing, display, etc. to get sales lift?                                                       of payment?
                                                       improve performance?
                                                                                                     •	 Is it possible to reduce claims for
                                                                                                        customer dissatisfaction?
                                                    •	 How can we rate the effectiveness
                                                       of our:
                                                      -	Marketing
                                                      - 	 ales force
                                                        S
                                                      - 	 rade programs
                                                        T
                                                      - 	 upply chain
                                                        S



©2012 Accenture
All rights reserved.




4
Accenture’s Research in
What Makes Analytics
Work
Accenture recently completed a global
research effort to understand how CPG
companies are using analytics, where
they are in their journey to make their
organizations more analytic-driven, what
results they have seen to date and the
focus of future investments. We surveyed
over 75 CPG executives with responsibility
or oversight of analytics in organizations
with revenues of more than $2 billion. The
results of this survey were published in the
summer of 2012 in the report Commercial
Analytics: Using Insights to Take Action.




Figure 2. Analytics Maturity Curve: The Analytics Evolution
High performers change the game by understanding what has happened and what will happen.


                       Migrating fom What Happened to What’s the Best Possible Outcome


                                               What’s the best that can happen?                             Optimization

                                                                                                                                Predictive Analytics
                                               What will happen next?                          Predictive                  (the “so what”…and the “now what”)
                                                                                               Modeling


                                What if these trends continue?                   Forecasting                                 Future orientated and source
                                                                                                                              of competitive advantage
Competitive                                                        Statistical
                             Why is this happening?                 Analysis
Advantage
                                                          Alerts          What actions are needed?

                                                                                                                               Descriptive Analytics
                                               Query
                                              Drilldown            Where exactly is the problem?                                      (the “what”)


                                    Ad Hoc
                                    Reports           How many, how often, where?
                                                                                                                                  “Rearview mirror” –
                                                                                                                            provides foundation and insight
                           Std.
                          Reports             What happened?



                                                      Degree of Intelligence
©2012 Accenture
All rights reserved.
                                                                                                                                                                5
1. Developing a Cross-Functional,
Integrated Analytics Vision
The Costs of Taming the “You’ve got to think                                                      Yet CPG companies do not have the
                                                                                                  resources to undertake all possible
Data Monster                              about big things while                                  analytics; they have to focus efforts on the

Feel like too much time and money are     you’re doing small                                      right type of analytics. Most CPG companies
                                                                                                  already have significant descriptive analytic
spent looking at or searching for data to
better manage your business? You are not
                                          things, so that all the                                 capabilities—analysis that accurately
                                                                                                  depicts what happened in a specific market,
alone—not by a long shot. Consider that:  small things go in the                                  channel or consumer group. Far fewer have
• Information workers waste 3.5 hours per right direction.”                                       advanced analytics that detect or predict
                                                                                                  an unmet consumer need (Figure 2). One
week on searches that don’t yield useful
                                                   - Alvin Toffler, author and scientist          objective for CPG companies is to be more
information. Assuming an average salary
                                                                                                  strategic and make conscious decisions to
of $60,000, the cost of ineffective search         It’s easy for companies to lose sight of the
                                                                                                  use analytics that align to their strategy
is $5,251 per worker per year. For 1,000           forest for the trees when developing and
                                                                                                  and support the known drivers of actual
workers the cost is $5.25 million.2                executing an analytics strategy. Toffler’s
                                                                                                  business value.
                                                   advice remains relevant; CPG companies
• The big data market is expected to grow
                                                   need to keep the end goal—generating           Companies are clearly struggling with
from $3.2 billion in 2010 to $16.9 billion in
                                                   business value—in mind when making             coordinating various analytic efforts,
2015 according to one firm. This represents
                                                   choices and decisions about the types and      and few have an integrated analytics
a compound annual growth rate (CAGR) of
                                                   volume of analytical efforts they undertake.   vision grounded in business value.
40 percent or about seven times that of the
                                                                                                  While proliferation of analytics efforts
overall information and communications             It is easy to get distracted from that end
                                                                                                  is expensive, the conundrum is that
technology (ICT) market.3                          goal because the demand for analytics is
                                                                                                  companies are seeing some incremental
                                                   increasing from within and outside the
• Fifty-three percent of large retailers                                                          value in one-off analytic efforts, so they
                                                   company walls. Amazon and Google use
indicate that customer analysis is difficult                                                      question if integrating analytics is actually
                                                   predictive analytic capabilities to serve
due to enormity of data from different                                                            needed.
                                                   consumers every day, and consumers
channels.4
                                                   expect the same customer-centricity            We believe that it is worth the effort. From
                                                   from CPG manufacturers. There is also          an organizational perspective, the lack of
                                                   increasing internal demand for analytics       integration and prioritization of analytics
                                                   due to growing financial oversight and risk    efforts weakens the ability to make
                                                   management requirements. In short, the         consistent decisions that maximize results
                                                   demand and potential to use analytics are      and resonate with the needs of shoppers
                                                   expanding, driven by the rapid explosion of    and consumers. There are also funding and
                                                   data, cheaper processing power available       sponsorship issues: Who is driving the
                                                   through the cloud and the desire to not fall   integrated vision—the supply side, demand
                                                   behind competitors.                            side, finance? And where does the funding
                                                                                                  come from?

                                                                                                  To address the cost and organizational
                                                                                                  issues, we believe that developing an
2 	 © Copyright IDC. Source: The Hidden Costs
    of Information Work dated March 2005.
                                                                                                  integrated analytics vision will multiply the
                                                                                                  value generated from analytics investments,
3 	 © Copyright IDC. Source: Worldwide Big Data                                                   as well as streamline analytic operations.
    Technology and Services 2012-2015 Forecast.

4 	 Sahir Anand, VP & Principal Analyst Aberdeen
    Research, Key Technologies Will Help Develop
    Success Through Customer-Centricity, 2011.

6
A Lot of Analytic Activity, in Too                      Needed: An Integrated Analytics
Many Places                                             Vision to Generate Value
A lot of analytic activity is driven by the             So the good news is that companies are
desire, or even need, to keep up with “big              using analytics more and more, but efforts
data.” Companies have more data than ever,              remain fragmented and largely independent.
in all kinds of structured and unstructured             In such an environment the potential
forms. The combination of traditional                   business impact of analytics is diminished—
channels and sales data, syndicated data from           any insights are viewed through a small lens
external providers, and a tsunami of social             rather than one that would capture a wide-
media metrics and data streams has resulted             angle, panoramic view.
in an abundance of data, perhaps more than
companies even need.                                    What’s needed is an integrated vision
                                                        for analytics so that priorities can be
Managing so many data streams is difficult,             set and investments made taking into
and made harder still when data and the                 account and balancing various functions’
analytics applied to them are fragmented                objectives to optimize business results.
across different functions and not readily              The same holds true for data collection,
visible or usable by others. It is not                  harmonization and management. The whole
uncommon for teams in the same company—                 of commercial analytics requires a shift
or even brand teams working from the same               in mindset from internal to the use and
office—to purchase similar data sets from the           integration of internal and external data.
same provider and not realize it. Different             Integrated, accessible data will provide
teams might ask for similar data in slightly            a uniform foundation for analysis—one
different formats. The results are higher costs         version of the truth—thus avoiding the
and a lot of effort put into data compilation           “apples and oranges” problem when two
and harmonization, not analysis (see sidebar).          teams use different data sets and different
                                                        analytic applications. Figure 3 identifies
A similar challenge exists with uncoordinated           the components of an integrated analytics
analytic initiatives. At any given moment               model that can be leveraged by commercial
most CPG companies have several analytic                functions.
efforts underway. Some are focused on
data management, others are focused on
commercial reporting and still others are
focused on more advanced analytic areas
such as pricing. There are operational analytic
efforts as well, documenting the efficiency of
manufacturing and supply chain processes.
What usually doesn’t exist is synergy among
them. A recent report found that only 30
percent of marketers feel they integrate data
from sales, service and marketing into a single
management framework. 5




5 	 Forrester Research Inc., Global Marketing
    Leadership Online Study: Four Steps to Tackle the
    Shift to the Customer Life Cycle, (June 2011).

                                                                                                       7
Figure 3. High Performance CPG Analytics Blueprint


                                                                                                           Operational Excellence
                               Integrated Analytics Platform
                                         Shopper Analytics                                                     Sell to Shopper
                                                                                                           Shopper Experience & Service
       Brand                            Portfolio,        Price &       Channel        Retail
                         Digital       Assortment
      Marketing                                         Promotion      Management    Execution             Merchandise & Sales Execution
                        Analytics       & Space
      Analytics                                          Analytics      Analytics    Analytics
                                        Analytics
                                                                                                              Marketing & Advertising
                                                                                                                     Execution
                                      Commercial Reporting
                                                                                                                Web & eCommerce
                                     Next Generation Demand
                                         Data Repository
                                                                                                               Loyalty Management
                                                                                                                                              Evaluation
                                     Integrated Demand Data
                              Data Integration & Harmonization                                               Supply to Shopper
        Consumer                      Retailer Data                  ERP Data        Trade Data            Forecasting & Replenishment
          Data
      Mfg. + Retailer                 Point of Sale
       Loyalty Data                                                                   Deals/
                                                                     Shipments       Contracts             Store Brand & Item Innovation
                                    Transactional Log
        Shopper
      Segmentation                      Inventory
                                                                                    Deductions/                Facilities Management
                                    Syndicated Data                   Invoice        Payments
        Social Data
                                    DSR Provider Data

                          External Data                                    Internal Data


©2012 Accenture
All rights reserved.




An overriding goal is for company leaders                      1.	 What is the business need for the               With an integrated vision of data
to develop an integrated commercial vision                         analytics proposed? How does it enhance         management and analytics, efforts can
for analytics, one that coordinates analytics                      or complement what we are doing                 be rescaled appropriately, saving time and
across the enterprise and with external                            already?                                        effort. Articulating a clear strategic focus
channels and data providers. This exercise                                                                         for analytics, as well as adopting a common
not only yields cost efficiencies by revealing                 2.	 How would investing in data or analytics        approach to evaluating and shaping
and eliminating duplicative efforts, it has                        solutions lead to a better understanding        analytic activity, can impose order on the
the added benefit of forcing managers to                           of consumers?                                   chaos that exists in many companies.
focus on goals and results of analytics,                       3.	 Are there interdependencies across
not data compilation. Further, companies                           functions, providing the potential to
can better balance their use of descriptive                        leverage analytics broadly?
analytics of historic business results with
more predictive analytic insights that                         4.	 What alternative data sources exist, and
uncover future market opportunities.                               what are the pros and cons of each?

Developing an integrated analytic vision                       5.	 Have we investigated whether the data
that is grounded in value-generating                               exists in-house already?
solutions requires leadership to answer
questions such as:




8
2. Prioritizing Analytics to Create Value
“The right information                                   consumers’ purchase aspirations. To do so
                                                         CPG companies need to focus analytics
                                                                                                                   The largest opportunity may be in applying
                                                                                                                   analytics to sales and customer processes
 at the right time can                                   squarely on data and processes tied to                    that have traditionally relied more on art
 change your life.”                                      demand generation and fulfillment.                        and instinct than science. Today, we can
                                                                                                                   build on the experience of executives with
                                                         Prioritizing Analytics to Respond to                      greater and more consistent application of
–	Stewart Brand,
                                                         Demand Signals and Increase Sales                         analytics throughout marketing and sales
  technology innovator and futurist
                                                         So what to focus on first? In our experience              decisions to improve results. For example,
With so much data and so many analytic                                                                             brand teams should use analytics to optimize
                                                         investments in analytics should be prioritized
solutions available it can be difficult to                                                                         the marketing mix, as well as assess in-
                                                         based upon value creation potential, with
cut through the noise and figure out what                                                                          store execution, digital strategies and sales
                                                         analytics shown to increase sales and/or profit
data and analytics really generate value                                                                           performance. Putting processes in place to
                                                         margins getting top billing. The value tree in
and grow share. Ideally, companies would                                                                           ensure the flow of information and insight
                                                         Figure 4 reveals the potential performance
focus on analytics that are shown to                                                                               across and within commercial capabilities
                                                         improvement that analytics can deliver when
identify products that consumers want, the                                                                         such as those detailed in Figure 5 will
                                                         focused on commercial activities.
marketing that works best to engage them,                                                                          expedite decisions and actions to deliver
and the most productive channel to satisfy                                                                         significant business benefits.

Figure 4. Analytic Capabilities and Benefit Ranges

  Financial            CPG Value                                                  Analytic                                              Potential
  Lever                Drivers                                                    Capabilities                                          Benefit (%M)*

                       Price                        Pricing                       • Pricing & Profit Analytics
                                                    Marketing Effectiveness       • Marketing Return on Investment
  Sales                                             Media Effectiveness           • Media Mix Optimization

                                                    Campaign Effectiveness        • Campaign Investment &
                                                                                    Tactics Optimization
                       Volume                                                     • Consumer Segmentation & Profiling                   $200 - $700M (2-7%)
                                                    Portfolio & Mix
                                                                                  • Assortment Optimization

                                                    Space & Adjacency             • Demand Forecasting & Replenishment Analytics
                                                                                  • Commercial Intelligence

                                                    Channel Partner Performance   • Broker Performance Management
                                                                                  • Distributor Performance Management
                                                    Promotional Execution and     • Sales Force Optimization Analytics
                                                    Program Compliance            • Commercial Intelligence
                                                    Discounts and Allowances      • Assortment Optimization
                        Discounts &
                        Allowances                  Supplier Performance          • Supply Chain Optimization Analytics
Cost of Sales                                                                                                                            $18 - $180M (0.1-1%)
                        Material Costs              Raw Materials                 • Commodity Pricing Analytics
                        Conversion Costs            Manufacturing                 • Manufacturing Excellence Analytics

                        Distribution                Transportation                • Assortment Optimization
                                                    Warehousing                   • Cost to Serve Analytics

Operating Costs                                                                   • Sales Force Optimization Analytics
                        Sales Force                 Sales Force                   • Employee Performance Analytics
                                                                                  • Trade Promotion Analytics                            $5 - $25M (1-5%)
                                                    Trade Spend Efficiency
                        Promotion
                                                    Consumer Promotion            • Marketing Analytics
                                                                                  • Digital Analytics
                        IT                          IT Cost Avoidance             • Reduced Redundancy in Data/Tools, Managed Service

                                                    R&D Effectiveness             • R&D Discovery Analytics
                        R&D
                                                                                  • Innovation Diagnosis & Optimization
                                                                                  • Lean Six Sigma Process Improvement

Working Capital         Inventory                   Inventory                     • Forecasting & Replenishment Analytics                $12 - $18M (2-3%)

©2012 Accenture         * Based on a representative consumer goods products
All rights reserved.      manufacturing enterprise with an annual T/O of $10BN                                                                                  9
Consistently applying analytics to
sales and customer processes and
decisions across the company—from the
boardroom to sales force—represents the
largest opportunity to improve market
performance, and investments in these
analytics should be prioritized accordingly.
10
Value Creation from                                    We believe analytics could quickly benefit
                                                       CPG manufacturers in each of these areas.
                                                                                                           7.	 Retail Execution Analytics. Analytics
                                                                                                               can help identify and drive consistent
Demand Side Analytics                                  1.	 Shopper Analytics. Analytics can help
                                                                                                               execution of the highest value in-store
                                                                                                               activities, and also promote efficient and
Demand signal repository (DSR) solutions                   manufacturers gain deeper shopper                   reliable collection of retail performance
and demand signal analytics use rich item/                 insight, identifying what high value                data. A flexible toolset of analytics can
day/store-level data and distributor data to               consumers buy, their intent and how to              enable manufacturers and retailers to
guide and direct manufacturers, suppliers                  increase share of basket. These insights in         optimize merchandising activity.
and channel partners with precision alerts                 turn can guide both product development
and exception flags. Robust inventory and                  and promotional allocation mix.                 In addition to sales processes, applying
supply chain analytics that generate real-                                                                 analytics to supply chain activities
time insights and reporting can help CPG               2.	 Brand Marketing Analytics.                      can improve shopper relevance
companies avoid the waste and inefficiency                 Brand marketing analytics can help              and performance. While many CPG
that result from excess inventory,                         organizations understand which products         manufacturers have developed DSRs
inaccurate forecasting and irrelevant                      are most relevant to the consumers,             of some sort, the analytics used in
assortment. Several large CPG companies                    become more efficient in managing               conjunction with DSRs may not be as
have quantified the benefits of having                     spend, focus campaigns, manage brand            robust as those applied elsewhere in
advanced DSR solutions:                                    equity, and ultimately increase consumer        the organization. That’s unfortunate,
                                                           awareness and drive trial and continued         because superb demand-side analytics of
• Unilever saw a 40 percent improvement                    consumption.                                    replenishment and inventory optimization,
in 7-day forecasts.6                                                                                       or commodity price forecasting, can have a
                                                       3.	 Digital Analytics. Just as with traditional
• Del Monte reduced inventory rates by                     campaigns, analysis of digital marketing        significant flow-through effect on overall
27 percent in two years, decreasing pallet                 and sales initiatives as well as consumer-      performance. Companies that have focused
space requirements in retailer distribution                generated content can help companies            their analytics investments on demand are
centers by up to 65 percent.7                              find the right mix of promotional and           reaping substantial rewards (see sidebar).
                                                           informative content to engage consumers
                                                           with relevant messages and offers.              To standardize and
                                                       4.	 Portfolio, Assortment and Space                 optimize use of
                                                           Analytics. Offering the optimal portfolio       analytics across
                                                           depends upon deep understanding of
                                                           shopper needs and analyzing in-store            the value chain,
                                                           activity. This optimization includes retiring
                                                           products that don’t meet needs and
                                                                                                           companies should
                                                           developing products that address gaps.          consider centralizing
                                                       5.	 Price and Promotion Analytics.                  the management
                                                           Analytics can help manufacturers become         of analytics, just as
                                                           much more sophisticated in managing
                                                           pricing across the value chain. This would      they do with other
                                                           include shelf-based pricing, price to
                                                           distributor and price to retailer as well
                                                                                                           shared services. This
                                                           as optimization of promotional spend—a          would make premium
                                                           massive expenditure for CPG companies.
                                                                                                           analytics services both
                                                       6.	 Channel Management Analytics.                   cost effective and
                                                           Analytics can help identify which channel
                                                           partners actually provide the best return       more accessible.
                                                           on manufacturer investment. While a
                                                           strong personal relationship with channel
                                                           partners is always positive, it may not
                                                           always translate to added sales. Analytics
6 	 See Demand sensing software helps Unilever,            can provide the evidence to recalibrate
    www.ft.com, March 18, 2011.
                                                           customer strategy.
7 	 See Gaining ground, http://www.inboundlogistics.
    com/cms/article/gaining-ground/ January 2011.

                                                                                                                                                       11
Figure 5. CPG Analytic Framework: High Performers Prioritize and Sequence High Value Analytics Opportunities



  Brand                 Digital           Portfolio,         Price &         Channel         Retail
  Marketing             Analytics         Assortment         Promotion       Management      Execution
  Analytics                               & Space            Analytics       Analytics       Analytics
                                          Analytics


     Brand             Clickstream         Portfolio         Cost to Serve   Customer        Broker
     Strength &        Analyses            Optimization      & Margin        Profitability   Performance
     Awareness                                               Leakage                         Management



  Marketing            Visitor Tracking   Assortment         Base Volume     Retailer        Distributor
  Return on            & Segmentation     Optimization       & Price         Segmentation    Performance
  Investment                                                 Elasticity                      Management




  Media Mix            Closed-Loop        Space              Shelf Price     Distributor     Predictive
  Optimization         Marketing          Optimization       Threshold       Segmentation    Demand
  (Traditional         Analyses                              & Gap                           Sensing
  + Digital)                                                 Optimization                    at Shelf


  Media                Cross-Channel/     Adjacency/         Retailer        Sales Channel   Route
  Audit and            Multi-Format                          Bracket         Resource        Optimization
                                          Secondary
  Performance          Analytics                             Pricing         Allocation
                                          Placement                          (Direct/
                                                                             Broker/Dist.)


  Campaign             Lifetime           Demand-Based       Promotion       Sales Force     In-Store
  Investment           Value              Store Clustering   Allocation      Size &          Activity
  & Tactics            Analysis                              Optimization    Structure       Optimization
  Optimization


                        Consumer                             Promotion       Trading         Retailer
                        Sentiment                            Event &         Partner         Compliance
                                                             Calendar        Collaboration   Monitoring
                                                             Optimization


©2012 Accenture
All rights reserved.




12
3.	 Operationalizing Analytics Throughout
the Enterprise
“If you cannot                                                                                                   What’s needed to make the integrated
                                                                                                                 vision a reality and capture the highest
                                                                                                                                                                       Fragmented pockets of initiatives also make
                                                                                                                                                                       it challenging to build an industrialized
 measure it, you                                                                                                 return on analytic investments? A large               capability. Yet, timely access to such

 cannot improve it.”                                                                                             part of the answer lies in building processes
                                                                                                                 and enablers that operationalize analytics
                                                                                                                                                                       analytic capability and insights is necessary
                                                                                                                                                                       to develop strategies for growth and
–	Lord Kelvin William Thompson,                                                                                  effectively. Most companies we serve have             achieve operating excellence.
  mathematical physicist and engineer                                                                            a range of analytic skill and will, yet it’s fair
                                                                                                                 to say that analytics are not truly embedded          To ensure that timely access, companies
                                                                                                                 in their organizations nor is the use of              need an end-to-end operating model
                                                                                                                 analytics promoted, measured or rewarded              that embeds analytics throughout the
                                                                                                                 consistently. The consequence is that                 enterprise. New structures, processes and
                                                                                                                 some areas have deep analytic capability              enablers such as those identified in Figure
                                                                                                                 (finance, obviously, or R&D) while others             6 can help a company operationalize
                                                                                                                 do not, creating an internal dissonance.              analytics and ingrain analytics as part of a
                                                                                                                                                                       company’s culture.

Figure 6. Core Capabilities to Bring Insight to Action


              From Inputs...                                                                                           Enablers                                              ...To Outcomes
                                                                                                                  Sponsorship & Leadership
                                                                                                           The process to obtain executive sponsorship and
                                                                                                         senior leadership commitment to the analytics vision


                                                                                                           Organization & Talent Management
                                                                                                      The people, their skill sets and the organizational structure
                                       The rules and procedures to manage, gather, integrate
                                        and extract data from internal and external sources




                                                                                                             needed to support analytic transformation                                        Process to assess the value of the analytic insights
                                                                                                                                                                                                as well as track the benefits realized over time
                  Data Management & Analytics




                                                                                                                                     Process Management
                                                                                                                                  Process by which business leaders
                                                                                                                                     leverage insights to execute
                                                                                                                                                                                 Value Realization




                                                                                                                                         treatment strategies


                                                                                                        Insight Management
                                                                                                       Statistical process by which
                                                                                                      management scientists analyze
                                                                                                        data and uncover insights


                                                                                                            Service & Technology Management
                                                                                               The tech environments needed to enable analytic execution as well as the
                                                                                                service levels and service contracts needed to support the organization


                                                                                                                    Capability Development
                                                                                                        The industrialization of individual analytic capabilities
                                                                                                        as Company XYZ moves up the analytics maturity scale


    Data to Insights                                                                                            Insights to Actions                                   Actions to Results

©2012 Accenture
All rights reserved.
                                                                                                                                                                                                                                                     13
Analytics as a Managed                           issues or variances may crop up so it’s
                                                 easier to spot them, but a large part of
                                                                                                  •	 New processes such as insight
                                                                                                     management could focus investment on
Service: One Path to                             moving from insight to action is more               building a small group of statisticians

Increase Speed-to-Value                          structured communication of and clear
                                                 accountability to use findings.
                                                                                                     and scientists skilled in interpreting
                                                                                                     analyses to generate insights. This group
The consumer division of a global life                                                               could also capture and prioritize insight
                                                 To make accountability clear and action             requests (and ensure elimination of
sciences leader realized it needed to
                                                 more certain, companies could consider              duplicative requests). Equipped with the
improve its analytics capabilities to
                                                 centralizing the management of analytics,           right tools and capabilities the team
capture “a single version of the truth”
                                                 just as they do with other services. Local          should be able to analyze data to detect
to develop more relevant marketing
                                                 variants in the type and volume of analytics        and/or predict marketplace trends.
and sales campaigns. Accenture helped
                                                 will continue to exist, and are needed to
refine the company’s data strategy and
                                                 ensure market relevance. However, if the         •	 Enhanced process management
proposed improvements to how the data
                                                 overall intensity and maturity of analytic          capabilities are critical to ensuring that
and insights were communicated to
                                                 needs are great, a centrally managed,               insights are acted upon. The process
increase the probability that the insights
                                                 shared service model could standardize and          management team collaborates with
would be acted on. The solution, supplied
                                                 optimize use of analytics while reducing            the business to develop and execute a
under a managed services arrangement,
                                                 costs and duplication across geographies.           plan that turns insights to action and
includes a new interactive portal serving
                                                 Gartner expects the convergence of                  market impact. Process managers also
2,400 users across Europe, a report service
                                                 services with software and infrastructure           play an important communication role,
bureau that generates more than 100
                                                 to cause significant changes in sourcing            syndicating insights to relevant parties
reports, and a hosted client data center to
                                                 strategies, driven by new offerings delivered       and functions to ensure a higher level of
ensure accurate, standardized data. The
                                                 “as a service.” 8 Our direct experience is          cross-functional use and consistency.
subscription-based analytics service delivers
                                                 that an analytics service model is already
insights on sales related to more than                                                               Some processes such as Customer
                                                 being used and frequently leverages the
500,000 customers, 30,000 SKUs and 150                                                               Relationship Management (CRM) are
                                                 capabilities of external service providers
brands. The new capabilities integrate data                                                          already very analytic-driven. Yet an
                                                 (see sidebar).
from noncompatible sources to provide a                                                              enhanced toolset and access to more
single source of information used by the         Embedding Analytics in Core and                     resources could provide more support for
entire business. Managers can now extract        Enabling Processes                                  the day-to-day decisions the CRM team
better insights faster, collaborate more                                                             makes. What’s more, teams that use
easily, and leverage advanced reporting and      Operationalizing analytics also depends upon        resources like Insight Managers could
predictive analytics to serve markets better.    embedding analytics in a range of processes         strengthen ties to and synergies with
                                                 and functions. The goal would be to provide         other parts of the organization such as
Leadership, Sponsorship and                      employees with reliable analytic resources          R&D or Channel Management, helping
Organization of Analytics                        and tools with which to complete their              build enterprise-wide, industrialized
                                                 work, and facilitate the evolution to a more        analytic capability.
Currently few companies have one point           analytic organization.
of accountability to make decisions
regarding investments in data or analytics       •	 Traditional HR processes such as
or manage analytic initiatives, hence               talent management and capability
the duplication and lack of integration             development will need to be refined
discussed earlier. Leadership and clarity           to reflect the stronger emphasis placed
are needed to formalize accountability              on analytics use and competency.
for moving from insights to action, while           Job descriptions, hiring policies, skills
also supporting local markets’ need for             development curricula, and career
discreet analytic efforts at times. Clarifying      paths and levels can support analytics
who should receive insights from analysis,          transformation. Workforce planning
how frequently and in what format                   and scheduling as well as employee
sounds obvious. Yet often great analysis            engagement and performance feedback
is performed and then left to die on the            processes are crucial to developing and       8 	 Source: Gartner, Predicts 2012: IT Services Sourcing
vine because ultimate responsibility to             retaining analytic talent given the current       Strategies and Execution Demand Proactive Diligence,
                                                    shortage of candidates with relevant              1st Dec 2011
act on analytic insights—both negative
and positive exceptions and unexpected              analytics capability.9 Accenture’s experts    9 	See Harris, et al. How to Organize Analytic Talent,
patterns—is not clear. Some of the                  in building analytic-driven organizations        (November 2009), http://www.accenture.com/
                                                    have offered strategies to close the             SiteCollectionDocuments/PDF/Accenture_Organize_
challenge is simply anticipating where
                                                                                                     Analytical_Talent.pdf.
                                                    analytics gap (see sidebar).
14
Service and Technology                                   drivers and key assumptions, and measure
Management                                               and report on value realization over time.        Implementing a formal
Technology is a key enabler of becoming
                                                         Members of the value realization team
                                                         would necessarily collaborate with business
                                                                                                           value realization
an analytic-driven company. CPG firms                    leaders and the insight management group          process is key to
need world-class data integration,
harmonization and management to harness
                                                         to agree on performance baselines and
                                                         develop the business case for analytics.
                                                                                                           moving from insights
“big data,” yet many are struggling with                                                                   to performance-
how to synthesize and store the volumes                  Fortunately, CPG companies do not need to
of data they already have so that it is                  go it alone when attempting to operationalize     enhancing action. A
accessible, useful, flexible and secure.                 analytics. Third-party options exist to support
                                                         development or management of most of these
                                                                                                           value realization team
CPG companies understandably want to                     capabilities. The key for CPG companies is        can assess benefits
leverage their legacy systems while also
taking advantage of new capabilities and
                                                         to identify providers who have the industry,
                                                         functional and technology expertise needed
                                                                                                           and costs of analytics,
solutions. In many cases the best answer                 to help them manage data and quickly              identify value drivers
is to adopt a hybrid technology approach
that blends legacy systems and new
                                                         expand analytics capability. Taking advantage
                                                         of hosted, outsourced or managed service
                                                                                                           and key assumptions,
enabling technologies such as in memory                  options can be the quickest route to becoming     and measure and report
computing, cloud services and mobility
solutions. Flexible, open platforms and
                                                         a more analytic company and capturing the
                                                         full value of investments in analytics.
                                                                                                           on value realization
technologies are better able to apply
                                                         Conclusion
                                                                                                           over time to ensure that
analytic applications to “big data” stores
and generate predictive insights about                                                                     returns on analytics are
                                                         CPG companies face many challenges in
consumers, growth opportunities and
market dynamics.10 P&G reported that new
                                                         today’s uncertain economic environment,           positive.
                                                         including how to cost effectively develop
data warehouses allowed one user to trim
                                                         deeper analytic capability that improves
the time it took to perform some analytic
                                                         market performance. While many
tasks from 20 hours to a few minutes.11
                                                         companies use analytics, most struggle to         The Quest to Build
Industrialization and Value                              execute an analytics strategy that results
Realization                                              in effective and efficient decisions and          Analytical Capability
                                                         clear action because they are immersed in         Talent-powered analytical organizations
As analytics become more integrated                      compiling data and conducting fragmented          aren’t just distinguished by the quality of
and embedded, companies will have a                      analysis. Getting out of the “analysis            their analytical talent: it’s their ability to
foundation on which to build a deeper                    paralysis” trap and turning insights              unleash their analysts’ talents to maximize
and broader analytics competency. Yet                    to action requires a more integrated,             and continually expand the company’s
ensuring that the investments in analytics               streamlined approach to managing                  analytical capabilities. To create a talent-
generate positive returns requires an                    and consistently extracting value from            powered analytical organization executive
ongoing obsession with value capture. In                 investments in analytics. Adopting a fully        sponsors need to do the following:
operational terms, that obsession can be                 integrated analytics operating model would
satisfied by implementing an objective                   help companies focus analytic resources           1. 	Define specific analytical talent needs that
value realization process. This process                  on high-value processes and activities—               are clearly tied to the organization strategy.
would assess the benefits and costs of                   those that grow market share and sustain
investments in analytics, identify value                 profit margins. Accenture’s work with CPG         2. 	Remain on the lookout to discover top
                                                         companies in developing and implementing              sources of analytical talent within and
10 	See Accenture’s POV on CPG technology                data strategies and analytics solutions               outside the firm.
    enablers, http://www.accenture.com/
                                                         convinced us that the future and market
    SiteCollectionDocuments/PDF/Accenture-                                                                 3. 	Develop analytical talent continuously,
    Technology-Investments-Boost-Consumer-               advantage belong to companies who
                                                                                                               in junior to senior team members to
    Packaged-Goods-Performance.pdf#zoom=50.              harness the power of both.
                                                                                                               deepen “bench strength.”
11	 “Time to Rebuild: P&G Gains POS Insights with
    New Data Warehouse Solution” (April 2012), http://                                                     4. 	Deploy analytical talent wisely by
    www.consumergoods-digital.com/consumergoodste                                                              creating the best possible match
    chnology/201204#pg17.
                                                                                                               between analysts’ skills and business
12	 Accenture Institute for High Performance, Counting                                                         demands.12
    on Analytical Talent, 2010.

                                                                                                                                                          15
About Accenture                                 Shaping the Future of High                    Authors
                                                Performance in Consumer Goods
Accenture is a global management                                                              Robert Berkey
consulting, technology services and             Our Consumer Goods & Services industry        Director—Consumer Goods & Services,
outsourcing company, with more than             professionals around the world work           Commercial Analytics
249,000 people serving clients in more than     with companies in the food, beverages,        robert.e.berkey@accenture.com
120 countries. Combining unparalleled           agribusiness, home and personal care,         +1 917 817 5923
experience, comprehensive capabilities          consumer health, fashion and luxury,
across all industries and business functions,                                                 Kenneth Dickman
                                                and tobacco segments. With decades of
and extensive research on the world’s                                                         Executive Director, Marketing & Sales
                                                experience working with the world’s most
most successful companies, Accenture                                                          Transformation, Accenture CRM
                                                successful companies, we help clients
collaborates with clients to help them                                                        kenneth.dickman@accenture.com
                                                manage scale and complexity, transform
become high-performance businesses and                                                        +1 312 961 1930
                                                global operating models to effectively
governments. The company generated net          serve emerging and mature markets, and        Massimo Casiraghi
revenues of US$25.5 billion for the fiscal      drive growth through evolving market          Executive Director—Accenture Analytics
year ended Aug. 31, 2011. Its home page         conditions. We provide end-to-end             massimo.casiraghi@accenture.com
is www.accenture.com.                           services as well as individual consulting,    +39 335 6327699
                                                technology and outsourcing offerings in
                                                the areas of Commercial Services, Speed       Julio Hernandez
                                                to Customer, ERP Transformation and           Executive Director—Accenture Analytics
                                                Integrated Business Solutions. To read our    julio.j.hernandez@accenture.com
                                                proprietary industry research and insights,   +1 404 307 5363
                                                visit www.accenture.com/ConsumerGoods.




Copyright © 2012 Accenture
All rights reserved.

Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.

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Accenture: Commercial analytics insights CPG Companies 27-7-12

  • 1. Moving from Insights to Action Building a Competitive Advantage with Commercial Analytics in CPG
  • 2. 2
  • 3. Consumer packaged goods (CPG) companies level means that analytic solutions or 1. Developing a cross-functional, are under pressure from all sides, capabilities reside in pockets across the integrated analytics vision: CPG struggling to achieve sustainable growth organization with no strategic framework manufacturers need an integrated during significant market and economic or principles to coordinate and prioritize commercial analytics vision and uncertainty (Figure 1). Mobile, value-driven them. This whack-a-mole approach allows processes aligned around the shopper consumers are more demanding than ever, point solutions and data sets to proliferate to enable consistent decisions through and their tastes and paths to purchase as potential synergies are ignored. The lack the company to maximize results. shift more rapidly, making it challenging of integration leads to incremental gains Cross-functional analytics enable the for consumer goods manufacturers to stay but not leaps in performance or insight. organization to balance competing relevant to the shopper. CPG manufacturers Finally, insufficient analytic talent, a lack objectives and priorities to increase also feel increased pressure from retailers of rigorous value realization processes, and overall impact for the company. that push private label products and look subpar technology enablers also undercut to control the consumer relationship; the impact of analytics. 2. Prioritizing analytics to create value: witness Wal-Mart’s “Get-on-the-Shelf” Focusing analytics on high-value crowdsourcing initiative to put new, Continuing on this path is far too expensive commercial processes, specifically consumer-requested products in its stores. and time consuming for companies those related to sensing and satisfying Additionally, “big data” has left many that need new avenues of growth and demand, will support market share marketing and sales organizations with a higher efficiency in their enterprise and growth. Using consistent criteria and bad case of information overload but too commercial functions. Consequently, CPG lenses to prioritize market-relevant little insight about how to win consumers’ companies that Accenture serves are analytic investments will allow loyalty. increasingly concerned about how to make companies to move the needle on sales. the most of their investments in analytics This uncertain environment requires and build analytic capabilities. That concern 3. “Operationalizing” analytics companies to make faster, better-informed is well placed: Our research into high throughout the enterprise: Executives commercial decisions and take concrete performance in the CPG industry revealed need to embed analytics throughout action to improve market performance. that having analytical capability that drives the enterprise and improve timeliness Employing analytics solutions can make actionable insight is a differentiating, of insights and accessibility to them such decisions and actions easier, yet distinctive capability of high performers by decision makers. Analytics by many CPG companies struggle with how in the sector.1 More importantly, our themselves don’t generate value. It to execute an analytics strategy that recent survey of executives responsible takes a governance structure, processes, clearly generates value. Our recent survey for analytics in CPG companies revealed metrics and technology support to of how CPG leaders use analytics found that the majority of companies are not facilitate wider use of analytics and to that while the majority of respondents prioritizing analytic capabilities consistent expedite movement from analysis and thought they were analytic “leaders,” only with where Accenture typically sees the insights to actions that connect with 12 percent rated their ability to execute most value (price, promotion, assortment, shoppers and result in growth. as “exceptional” (see sidebar). The issue retail execution). Given all the challenges CPG companies is figuring out why that gap between Clearly executives are invested in and are facing the timing could not be intention and execution exists, and then motivated to use analytic solutions, but better for them to proceed on all three finding ways to close it. need to refine their execution to derive of these fronts. Internal impediments frequently prevent maximum impact. This report details three Executing an analytics strategy that companies from reaping the full benefits actions companies should consider to integrates and prioritizes analytic of analytics. A lack of sponsorship and improve analytic capability and impact. efforts across the enterprise, and builds governance of analytics at the enterprise the capabilities and infrastructure to operationalize analytics, will allow CPG companies to extract more value from investment in analytics, and become more responsive and relevant to consumers. 1 Shaping High Performance in Consumer Goods, http://www.accenture.com/us-en/Pages/ insightachieving-high-performance-food-non- alcoholic-beverage-industry.aspx. 3
  • 4. Figure 1. A Tough Environment for CPG: Decisions and Actions Requiring Integrated Analytics Strategic Commercial Planning Digital Consumer Interaction Sales Force Effectiveness • How do we focus on the variance between • How can we effectively interact with the • Why is our sales volume and plan vs. actual and take specific actions? new digital consumer across different profitability down? • How does taking actions in the field and digital channels? • How do I achieve my sales targets in corporate change our financial forecast? • How can we achieve relevance and emerging markets? • How can strategic commercial planning increase conversion rates in our digital • How do we collaborate between improve profitability? marketing activities? corporate and field on actions such as • What is the role we need to play in the contracting deals, monitoring metrics, social media environment? promotional programs, pricing, etc.? • What is the business case to start direct • What actions must we take to improve channel (eCommerce) operations? volume and profitability? Marketing & Trade Spend • What marketing/promotional mix do we have to choose from? • In what way can we prioritize our Shelf to Cash trade spend allocation? • How do we manage product supply • How do we optimize our spend across issues on an exception basis? current and new brands/products and/ • What actions must we take strategically or geographies to maximize the ROI? Executive Management and in the field to improve on-shelf availability? • What performance metrics should • How do we use the historical data to we focus on? get a better demand and supply chain planning process? Trade Promotion • How do we understand causes of Effectiveness performance issues? • What are our top- and bottom-performing brands and promotional product groups? • How do we become more agile Retail Partner Driven • What are the causes of poor promotional in adapting faster to changes in performance? • How can we manage periodic consumer and shopper behavior? changes in the terms of the deals? • What actions can we take to make changes to promotional strategies like • Are traders satisfied with timeliness • What actions should we take to pricing, display, etc. to get sales lift? of payment? improve performance? • Is it possible to reduce claims for customer dissatisfaction? • How can we rate the effectiveness of our: - Marketing - ales force S - rade programs T - upply chain S ©2012 Accenture All rights reserved. 4
  • 5. Accenture’s Research in What Makes Analytics Work Accenture recently completed a global research effort to understand how CPG companies are using analytics, where they are in their journey to make their organizations more analytic-driven, what results they have seen to date and the focus of future investments. We surveyed over 75 CPG executives with responsibility or oversight of analytics in organizations with revenues of more than $2 billion. The results of this survey were published in the summer of 2012 in the report Commercial Analytics: Using Insights to Take Action. Figure 2. Analytics Maturity Curve: The Analytics Evolution High performers change the game by understanding what has happened and what will happen. Migrating fom What Happened to What’s the Best Possible Outcome What’s the best that can happen? Optimization Predictive Analytics What will happen next? Predictive (the “so what”…and the “now what”) Modeling What if these trends continue? Forecasting Future orientated and source of competitive advantage Competitive Statistical Why is this happening? Analysis Advantage Alerts What actions are needed? Descriptive Analytics Query Drilldown Where exactly is the problem? (the “what”) Ad Hoc Reports How many, how often, where? “Rearview mirror” – provides foundation and insight Std. Reports What happened? Degree of Intelligence ©2012 Accenture All rights reserved. 5
  • 6. 1. Developing a Cross-Functional, Integrated Analytics Vision The Costs of Taming the “You’ve got to think Yet CPG companies do not have the resources to undertake all possible Data Monster about big things while analytics; they have to focus efforts on the Feel like too much time and money are you’re doing small right type of analytics. Most CPG companies already have significant descriptive analytic spent looking at or searching for data to better manage your business? You are not things, so that all the capabilities—analysis that accurately depicts what happened in a specific market, alone—not by a long shot. Consider that: small things go in the channel or consumer group. Far fewer have • Information workers waste 3.5 hours per right direction.” advanced analytics that detect or predict an unmet consumer need (Figure 2). One week on searches that don’t yield useful - Alvin Toffler, author and scientist objective for CPG companies is to be more information. Assuming an average salary strategic and make conscious decisions to of $60,000, the cost of ineffective search It’s easy for companies to lose sight of the use analytics that align to their strategy is $5,251 per worker per year. For 1,000 forest for the trees when developing and and support the known drivers of actual workers the cost is $5.25 million.2 executing an analytics strategy. Toffler’s business value. advice remains relevant; CPG companies • The big data market is expected to grow need to keep the end goal—generating Companies are clearly struggling with from $3.2 billion in 2010 to $16.9 billion in business value—in mind when making coordinating various analytic efforts, 2015 according to one firm. This represents choices and decisions about the types and and few have an integrated analytics a compound annual growth rate (CAGR) of volume of analytical efforts they undertake. vision grounded in business value. 40 percent or about seven times that of the While proliferation of analytics efforts overall information and communications It is easy to get distracted from that end is expensive, the conundrum is that technology (ICT) market.3 goal because the demand for analytics is companies are seeing some incremental increasing from within and outside the • Fifty-three percent of large retailers value in one-off analytic efforts, so they company walls. Amazon and Google use indicate that customer analysis is difficult question if integrating analytics is actually predictive analytic capabilities to serve due to enormity of data from different needed. consumers every day, and consumers channels.4 expect the same customer-centricity We believe that it is worth the effort. From from CPG manufacturers. There is also an organizational perspective, the lack of increasing internal demand for analytics integration and prioritization of analytics due to growing financial oversight and risk efforts weakens the ability to make management requirements. In short, the consistent decisions that maximize results demand and potential to use analytics are and resonate with the needs of shoppers expanding, driven by the rapid explosion of and consumers. There are also funding and data, cheaper processing power available sponsorship issues: Who is driving the through the cloud and the desire to not fall integrated vision—the supply side, demand behind competitors. side, finance? And where does the funding come from? To address the cost and organizational issues, we believe that developing an 2 © Copyright IDC. Source: The Hidden Costs of Information Work dated March 2005. integrated analytics vision will multiply the value generated from analytics investments, 3 © Copyright IDC. Source: Worldwide Big Data as well as streamline analytic operations. Technology and Services 2012-2015 Forecast. 4 Sahir Anand, VP & Principal Analyst Aberdeen Research, Key Technologies Will Help Develop Success Through Customer-Centricity, 2011. 6
  • 7. A Lot of Analytic Activity, in Too Needed: An Integrated Analytics Many Places Vision to Generate Value A lot of analytic activity is driven by the So the good news is that companies are desire, or even need, to keep up with “big using analytics more and more, but efforts data.” Companies have more data than ever, remain fragmented and largely independent. in all kinds of structured and unstructured In such an environment the potential forms. The combination of traditional business impact of analytics is diminished— channels and sales data, syndicated data from any insights are viewed through a small lens external providers, and a tsunami of social rather than one that would capture a wide- media metrics and data streams has resulted angle, panoramic view. in an abundance of data, perhaps more than companies even need. What’s needed is an integrated vision for analytics so that priorities can be Managing so many data streams is difficult, set and investments made taking into and made harder still when data and the account and balancing various functions’ analytics applied to them are fragmented objectives to optimize business results. across different functions and not readily The same holds true for data collection, visible or usable by others. It is not harmonization and management. The whole uncommon for teams in the same company— of commercial analytics requires a shift or even brand teams working from the same in mindset from internal to the use and office—to purchase similar data sets from the integration of internal and external data. same provider and not realize it. Different Integrated, accessible data will provide teams might ask for similar data in slightly a uniform foundation for analysis—one different formats. The results are higher costs version of the truth—thus avoiding the and a lot of effort put into data compilation “apples and oranges” problem when two and harmonization, not analysis (see sidebar). teams use different data sets and different analytic applications. Figure 3 identifies A similar challenge exists with uncoordinated the components of an integrated analytics analytic initiatives. At any given moment model that can be leveraged by commercial most CPG companies have several analytic functions. efforts underway. Some are focused on data management, others are focused on commercial reporting and still others are focused on more advanced analytic areas such as pricing. There are operational analytic efforts as well, documenting the efficiency of manufacturing and supply chain processes. What usually doesn’t exist is synergy among them. A recent report found that only 30 percent of marketers feel they integrate data from sales, service and marketing into a single management framework. 5 5 Forrester Research Inc., Global Marketing Leadership Online Study: Four Steps to Tackle the Shift to the Customer Life Cycle, (June 2011). 7
  • 8. Figure 3. High Performance CPG Analytics Blueprint Operational Excellence Integrated Analytics Platform Shopper Analytics Sell to Shopper Shopper Experience & Service Brand Portfolio, Price & Channel Retail Digital Assortment Marketing Promotion Management Execution Merchandise & Sales Execution Analytics & Space Analytics Analytics Analytics Analytics Analytics Marketing & Advertising Execution Commercial Reporting Web & eCommerce Next Generation Demand Data Repository Loyalty Management Evaluation Integrated Demand Data Data Integration & Harmonization Supply to Shopper Consumer Retailer Data ERP Data Trade Data Forecasting & Replenishment Data Mfg. + Retailer Point of Sale Loyalty Data Deals/ Shipments Contracts Store Brand & Item Innovation Transactional Log Shopper Segmentation Inventory Deductions/ Facilities Management Syndicated Data Invoice Payments Social Data DSR Provider Data External Data Internal Data ©2012 Accenture All rights reserved. An overriding goal is for company leaders 1. What is the business need for the With an integrated vision of data to develop an integrated commercial vision analytics proposed? How does it enhance management and analytics, efforts can for analytics, one that coordinates analytics or complement what we are doing be rescaled appropriately, saving time and across the enterprise and with external already? effort. Articulating a clear strategic focus channels and data providers. This exercise for analytics, as well as adopting a common not only yields cost efficiencies by revealing 2. How would investing in data or analytics approach to evaluating and shaping and eliminating duplicative efforts, it has solutions lead to a better understanding analytic activity, can impose order on the the added benefit of forcing managers to of consumers? chaos that exists in many companies. focus on goals and results of analytics, 3. Are there interdependencies across not data compilation. Further, companies functions, providing the potential to can better balance their use of descriptive leverage analytics broadly? analytics of historic business results with more predictive analytic insights that 4. What alternative data sources exist, and uncover future market opportunities. what are the pros and cons of each? Developing an integrated analytic vision 5. Have we investigated whether the data that is grounded in value-generating exists in-house already? solutions requires leadership to answer questions such as: 8
  • 9. 2. Prioritizing Analytics to Create Value “The right information consumers’ purchase aspirations. To do so CPG companies need to focus analytics The largest opportunity may be in applying analytics to sales and customer processes at the right time can squarely on data and processes tied to that have traditionally relied more on art change your life.” demand generation and fulfillment. and instinct than science. Today, we can build on the experience of executives with Prioritizing Analytics to Respond to greater and more consistent application of – Stewart Brand, Demand Signals and Increase Sales analytics throughout marketing and sales technology innovator and futurist So what to focus on first? In our experience decisions to improve results. For example, With so much data and so many analytic brand teams should use analytics to optimize investments in analytics should be prioritized solutions available it can be difficult to the marketing mix, as well as assess in- based upon value creation potential, with cut through the noise and figure out what store execution, digital strategies and sales analytics shown to increase sales and/or profit data and analytics really generate value performance. Putting processes in place to margins getting top billing. The value tree in and grow share. Ideally, companies would ensure the flow of information and insight Figure 4 reveals the potential performance focus on analytics that are shown to across and within commercial capabilities improvement that analytics can deliver when identify products that consumers want, the such as those detailed in Figure 5 will focused on commercial activities. marketing that works best to engage them, expedite decisions and actions to deliver and the most productive channel to satisfy significant business benefits. Figure 4. Analytic Capabilities and Benefit Ranges Financial CPG Value Analytic Potential Lever Drivers Capabilities Benefit (%M)* Price Pricing • Pricing & Profit Analytics Marketing Effectiveness • Marketing Return on Investment Sales Media Effectiveness • Media Mix Optimization Campaign Effectiveness • Campaign Investment & Tactics Optimization Volume • Consumer Segmentation & Profiling $200 - $700M (2-7%) Portfolio & Mix • Assortment Optimization Space & Adjacency • Demand Forecasting & Replenishment Analytics • Commercial Intelligence Channel Partner Performance • Broker Performance Management • Distributor Performance Management Promotional Execution and • Sales Force Optimization Analytics Program Compliance • Commercial Intelligence Discounts and Allowances • Assortment Optimization Discounts & Allowances Supplier Performance • Supply Chain Optimization Analytics Cost of Sales $18 - $180M (0.1-1%) Material Costs Raw Materials • Commodity Pricing Analytics Conversion Costs Manufacturing • Manufacturing Excellence Analytics Distribution Transportation • Assortment Optimization Warehousing • Cost to Serve Analytics Operating Costs • Sales Force Optimization Analytics Sales Force Sales Force • Employee Performance Analytics • Trade Promotion Analytics $5 - $25M (1-5%) Trade Spend Efficiency Promotion Consumer Promotion • Marketing Analytics • Digital Analytics IT IT Cost Avoidance • Reduced Redundancy in Data/Tools, Managed Service R&D Effectiveness • R&D Discovery Analytics R&D • Innovation Diagnosis & Optimization • Lean Six Sigma Process Improvement Working Capital Inventory Inventory • Forecasting & Replenishment Analytics $12 - $18M (2-3%) ©2012 Accenture * Based on a representative consumer goods products All rights reserved. manufacturing enterprise with an annual T/O of $10BN 9
  • 10. Consistently applying analytics to sales and customer processes and decisions across the company—from the boardroom to sales force—represents the largest opportunity to improve market performance, and investments in these analytics should be prioritized accordingly. 10
  • 11. Value Creation from We believe analytics could quickly benefit CPG manufacturers in each of these areas. 7. Retail Execution Analytics. Analytics can help identify and drive consistent Demand Side Analytics 1. Shopper Analytics. Analytics can help execution of the highest value in-store activities, and also promote efficient and Demand signal repository (DSR) solutions manufacturers gain deeper shopper reliable collection of retail performance and demand signal analytics use rich item/ insight, identifying what high value data. A flexible toolset of analytics can day/store-level data and distributor data to consumers buy, their intent and how to enable manufacturers and retailers to guide and direct manufacturers, suppliers increase share of basket. These insights in optimize merchandising activity. and channel partners with precision alerts turn can guide both product development and exception flags. Robust inventory and and promotional allocation mix. In addition to sales processes, applying supply chain analytics that generate real- analytics to supply chain activities time insights and reporting can help CPG 2. Brand Marketing Analytics. can improve shopper relevance companies avoid the waste and inefficiency Brand marketing analytics can help and performance. While many CPG that result from excess inventory, organizations understand which products manufacturers have developed DSRs inaccurate forecasting and irrelevant are most relevant to the consumers, of some sort, the analytics used in assortment. Several large CPG companies become more efficient in managing conjunction with DSRs may not be as have quantified the benefits of having spend, focus campaigns, manage brand robust as those applied elsewhere in advanced DSR solutions: equity, and ultimately increase consumer the organization. That’s unfortunate, awareness and drive trial and continued because superb demand-side analytics of • Unilever saw a 40 percent improvement consumption. replenishment and inventory optimization, in 7-day forecasts.6 or commodity price forecasting, can have a 3. Digital Analytics. Just as with traditional • Del Monte reduced inventory rates by campaigns, analysis of digital marketing significant flow-through effect on overall 27 percent in two years, decreasing pallet and sales initiatives as well as consumer- performance. Companies that have focused space requirements in retailer distribution generated content can help companies their analytics investments on demand are centers by up to 65 percent.7 find the right mix of promotional and reaping substantial rewards (see sidebar). informative content to engage consumers with relevant messages and offers. To standardize and 4. Portfolio, Assortment and Space optimize use of Analytics. Offering the optimal portfolio analytics across depends upon deep understanding of shopper needs and analyzing in-store the value chain, activity. This optimization includes retiring products that don’t meet needs and companies should developing products that address gaps. consider centralizing 5. Price and Promotion Analytics. the management Analytics can help manufacturers become of analytics, just as much more sophisticated in managing pricing across the value chain. This would they do with other include shelf-based pricing, price to distributor and price to retailer as well shared services. This as optimization of promotional spend—a would make premium massive expenditure for CPG companies. analytics services both 6. Channel Management Analytics. cost effective and Analytics can help identify which channel partners actually provide the best return more accessible. on manufacturer investment. While a strong personal relationship with channel partners is always positive, it may not always translate to added sales. Analytics 6 See Demand sensing software helps Unilever, can provide the evidence to recalibrate www.ft.com, March 18, 2011. customer strategy. 7 See Gaining ground, http://www.inboundlogistics. com/cms/article/gaining-ground/ January 2011. 11
  • 12. Figure 5. CPG Analytic Framework: High Performers Prioritize and Sequence High Value Analytics Opportunities Brand Digital Portfolio, Price & Channel Retail Marketing Analytics Assortment Promotion Management Execution Analytics & Space Analytics Analytics Analytics Analytics Brand Clickstream Portfolio Cost to Serve Customer Broker Strength & Analyses Optimization & Margin Profitability Performance Awareness Leakage Management Marketing Visitor Tracking Assortment Base Volume Retailer Distributor Return on & Segmentation Optimization & Price Segmentation Performance Investment Elasticity Management Media Mix Closed-Loop Space Shelf Price Distributor Predictive Optimization Marketing Optimization Threshold Segmentation Demand (Traditional Analyses & Gap Sensing + Digital) Optimization at Shelf Media Cross-Channel/ Adjacency/ Retailer Sales Channel Route Audit and Multi-Format Bracket Resource Optimization Secondary Performance Analytics Pricing Allocation Placement (Direct/ Broker/Dist.) Campaign Lifetime Demand-Based Promotion Sales Force In-Store Investment Value Store Clustering Allocation Size & Activity & Tactics Analysis Optimization Structure Optimization Optimization Consumer Promotion Trading Retailer Sentiment Event & Partner Compliance Calendar Collaboration Monitoring Optimization ©2012 Accenture All rights reserved. 12
  • 13. 3. Operationalizing Analytics Throughout the Enterprise “If you cannot What’s needed to make the integrated vision a reality and capture the highest Fragmented pockets of initiatives also make it challenging to build an industrialized measure it, you return on analytic investments? A large capability. Yet, timely access to such cannot improve it.” part of the answer lies in building processes and enablers that operationalize analytics analytic capability and insights is necessary to develop strategies for growth and – Lord Kelvin William Thompson, effectively. Most companies we serve have achieve operating excellence. mathematical physicist and engineer a range of analytic skill and will, yet it’s fair to say that analytics are not truly embedded To ensure that timely access, companies in their organizations nor is the use of need an end-to-end operating model analytics promoted, measured or rewarded that embeds analytics throughout the consistently. The consequence is that enterprise. New structures, processes and some areas have deep analytic capability enablers such as those identified in Figure (finance, obviously, or R&D) while others 6 can help a company operationalize do not, creating an internal dissonance. analytics and ingrain analytics as part of a company’s culture. Figure 6. Core Capabilities to Bring Insight to Action From Inputs... Enablers ...To Outcomes Sponsorship & Leadership The process to obtain executive sponsorship and senior leadership commitment to the analytics vision Organization & Talent Management The people, their skill sets and the organizational structure The rules and procedures to manage, gather, integrate and extract data from internal and external sources needed to support analytic transformation Process to assess the value of the analytic insights as well as track the benefits realized over time Data Management & Analytics Process Management Process by which business leaders leverage insights to execute Value Realization treatment strategies Insight Management Statistical process by which management scientists analyze data and uncover insights Service & Technology Management The tech environments needed to enable analytic execution as well as the service levels and service contracts needed to support the organization Capability Development The industrialization of individual analytic capabilities as Company XYZ moves up the analytics maturity scale Data to Insights Insights to Actions Actions to Results ©2012 Accenture All rights reserved. 13
  • 14. Analytics as a Managed issues or variances may crop up so it’s easier to spot them, but a large part of • New processes such as insight management could focus investment on Service: One Path to moving from insight to action is more building a small group of statisticians Increase Speed-to-Value structured communication of and clear accountability to use findings. and scientists skilled in interpreting analyses to generate insights. This group The consumer division of a global life could also capture and prioritize insight To make accountability clear and action requests (and ensure elimination of sciences leader realized it needed to more certain, companies could consider duplicative requests). Equipped with the improve its analytics capabilities to centralizing the management of analytics, right tools and capabilities the team capture “a single version of the truth” just as they do with other services. Local should be able to analyze data to detect to develop more relevant marketing variants in the type and volume of analytics and/or predict marketplace trends. and sales campaigns. Accenture helped will continue to exist, and are needed to refine the company’s data strategy and ensure market relevance. However, if the • Enhanced process management proposed improvements to how the data overall intensity and maturity of analytic capabilities are critical to ensuring that and insights were communicated to needs are great, a centrally managed, insights are acted upon. The process increase the probability that the insights shared service model could standardize and management team collaborates with would be acted on. The solution, supplied optimize use of analytics while reducing the business to develop and execute a under a managed services arrangement, costs and duplication across geographies. plan that turns insights to action and includes a new interactive portal serving Gartner expects the convergence of market impact. Process managers also 2,400 users across Europe, a report service services with software and infrastructure play an important communication role, bureau that generates more than 100 to cause significant changes in sourcing syndicating insights to relevant parties reports, and a hosted client data center to strategies, driven by new offerings delivered and functions to ensure a higher level of ensure accurate, standardized data. The “as a service.” 8 Our direct experience is cross-functional use and consistency. subscription-based analytics service delivers that an analytics service model is already insights on sales related to more than Some processes such as Customer being used and frequently leverages the 500,000 customers, 30,000 SKUs and 150 Relationship Management (CRM) are capabilities of external service providers brands. The new capabilities integrate data already very analytic-driven. Yet an (see sidebar). from noncompatible sources to provide a enhanced toolset and access to more single source of information used by the Embedding Analytics in Core and resources could provide more support for entire business. Managers can now extract Enabling Processes the day-to-day decisions the CRM team better insights faster, collaborate more makes. What’s more, teams that use easily, and leverage advanced reporting and Operationalizing analytics also depends upon resources like Insight Managers could predictive analytics to serve markets better. embedding analytics in a range of processes strengthen ties to and synergies with and functions. The goal would be to provide other parts of the organization such as Leadership, Sponsorship and employees with reliable analytic resources R&D or Channel Management, helping Organization of Analytics and tools with which to complete their build enterprise-wide, industrialized work, and facilitate the evolution to a more analytic capability. Currently few companies have one point analytic organization. of accountability to make decisions regarding investments in data or analytics • Traditional HR processes such as or manage analytic initiatives, hence talent management and capability the duplication and lack of integration development will need to be refined discussed earlier. Leadership and clarity to reflect the stronger emphasis placed are needed to formalize accountability on analytics use and competency. for moving from insights to action, while Job descriptions, hiring policies, skills also supporting local markets’ need for development curricula, and career discreet analytic efforts at times. Clarifying paths and levels can support analytics who should receive insights from analysis, transformation. Workforce planning how frequently and in what format and scheduling as well as employee sounds obvious. Yet often great analysis engagement and performance feedback is performed and then left to die on the processes are crucial to developing and 8 Source: Gartner, Predicts 2012: IT Services Sourcing vine because ultimate responsibility to retaining analytic talent given the current Strategies and Execution Demand Proactive Diligence, shortage of candidates with relevant 1st Dec 2011 act on analytic insights—both negative and positive exceptions and unexpected analytics capability.9 Accenture’s experts 9 See Harris, et al. How to Organize Analytic Talent, patterns—is not clear. Some of the in building analytic-driven organizations (November 2009), http://www.accenture.com/ have offered strategies to close the SiteCollectionDocuments/PDF/Accenture_Organize_ challenge is simply anticipating where Analytical_Talent.pdf. analytics gap (see sidebar). 14
  • 15. Service and Technology drivers and key assumptions, and measure Management and report on value realization over time. Implementing a formal Technology is a key enabler of becoming Members of the value realization team would necessarily collaborate with business value realization an analytic-driven company. CPG firms leaders and the insight management group process is key to need world-class data integration, harmonization and management to harness to agree on performance baselines and develop the business case for analytics. moving from insights “big data,” yet many are struggling with to performance- how to synthesize and store the volumes Fortunately, CPG companies do not need to of data they already have so that it is go it alone when attempting to operationalize enhancing action. A accessible, useful, flexible and secure. analytics. Third-party options exist to support development or management of most of these value realization team CPG companies understandably want to capabilities. The key for CPG companies is can assess benefits leverage their legacy systems while also taking advantage of new capabilities and to identify providers who have the industry, functional and technology expertise needed and costs of analytics, solutions. In many cases the best answer to help them manage data and quickly identify value drivers is to adopt a hybrid technology approach that blends legacy systems and new expand analytics capability. Taking advantage of hosted, outsourced or managed service and key assumptions, enabling technologies such as in memory options can be the quickest route to becoming and measure and report computing, cloud services and mobility solutions. Flexible, open platforms and a more analytic company and capturing the full value of investments in analytics. on value realization technologies are better able to apply Conclusion over time to ensure that analytic applications to “big data” stores and generate predictive insights about returns on analytics are CPG companies face many challenges in consumers, growth opportunities and market dynamics.10 P&G reported that new today’s uncertain economic environment, positive. including how to cost effectively develop data warehouses allowed one user to trim deeper analytic capability that improves the time it took to perform some analytic market performance. While many tasks from 20 hours to a few minutes.11 companies use analytics, most struggle to The Quest to Build Industrialization and Value execute an analytics strategy that results Realization in effective and efficient decisions and Analytical Capability clear action because they are immersed in Talent-powered analytical organizations As analytics become more integrated compiling data and conducting fragmented aren’t just distinguished by the quality of and embedded, companies will have a analysis. Getting out of the “analysis their analytical talent: it’s their ability to foundation on which to build a deeper paralysis” trap and turning insights unleash their analysts’ talents to maximize and broader analytics competency. Yet to action requires a more integrated, and continually expand the company’s ensuring that the investments in analytics streamlined approach to managing analytical capabilities. To create a talent- generate positive returns requires an and consistently extracting value from powered analytical organization executive ongoing obsession with value capture. In investments in analytics. Adopting a fully sponsors need to do the following: operational terms, that obsession can be integrated analytics operating model would satisfied by implementing an objective help companies focus analytic resources 1. Define specific analytical talent needs that value realization process. This process on high-value processes and activities— are clearly tied to the organization strategy. would assess the benefits and costs of those that grow market share and sustain investments in analytics, identify value profit margins. Accenture’s work with CPG 2. Remain on the lookout to discover top companies in developing and implementing sources of analytical talent within and 10 See Accenture’s POV on CPG technology data strategies and analytics solutions outside the firm. enablers, http://www.accenture.com/ convinced us that the future and market SiteCollectionDocuments/PDF/Accenture- 3. Develop analytical talent continuously, Technology-Investments-Boost-Consumer- advantage belong to companies who in junior to senior team members to Packaged-Goods-Performance.pdf#zoom=50. harness the power of both. deepen “bench strength.” 11 “Time to Rebuild: P&G Gains POS Insights with New Data Warehouse Solution” (April 2012), http:// 4. Deploy analytical talent wisely by www.consumergoods-digital.com/consumergoodste creating the best possible match chnology/201204#pg17. between analysts’ skills and business 12 Accenture Institute for High Performance, Counting demands.12 on Analytical Talent, 2010. 15
  • 16. About Accenture Shaping the Future of High Authors Performance in Consumer Goods Accenture is a global management Robert Berkey consulting, technology services and Our Consumer Goods & Services industry Director—Consumer Goods & Services, outsourcing company, with more than professionals around the world work Commercial Analytics 249,000 people serving clients in more than with companies in the food, beverages, robert.e.berkey@accenture.com 120 countries. Combining unparalleled agribusiness, home and personal care, +1 917 817 5923 experience, comprehensive capabilities consumer health, fashion and luxury, across all industries and business functions, Kenneth Dickman and tobacco segments. With decades of and extensive research on the world’s Executive Director, Marketing & Sales experience working with the world’s most most successful companies, Accenture Transformation, Accenture CRM successful companies, we help clients collaborates with clients to help them kenneth.dickman@accenture.com manage scale and complexity, transform become high-performance businesses and +1 312 961 1930 global operating models to effectively governments. The company generated net serve emerging and mature markets, and Massimo Casiraghi revenues of US$25.5 billion for the fiscal drive growth through evolving market Executive Director—Accenture Analytics year ended Aug. 31, 2011. Its home page conditions. We provide end-to-end massimo.casiraghi@accenture.com is www.accenture.com. services as well as individual consulting, +39 335 6327699 technology and outsourcing offerings in the areas of Commercial Services, Speed Julio Hernandez to Customer, ERP Transformation and Executive Director—Accenture Analytics Integrated Business Solutions. To read our julio.j.hernandez@accenture.com proprietary industry research and insights, +1 404 307 5363 visit www.accenture.com/ConsumerGoods. Copyright © 2012 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.