Promotions place high demands on commercial and operational processes and require the two to fit together seamlessly. Perfetti Van Melle experiences this like no other and therefore develops the Sales & Operations Planning process in order to achieve better results with promotions. What are they running into and what solutions have they found? This is what supply chain director Willemien Broeders tells us.
During the Solventure inspiration session on 25 April, Willemien Broeders will talk candidly about Perfetti's experiences, using two concrete cases: St Martin/Halloween and Albert Heijn's Hamster Weeks. Both campaigns have their own character and place different demands on the required dates, planning, coordination and execution.
Halloween already planning from April
Mix of Minis are collectible bags containing various mini candy packs such as Mentos, Fruittella and Chupa Chups lollipops. The product is sold throughout the year and lends itself especially well to handing out. 'St Martin (11 November) and Halloween (31 October) are of course ultimate hand-out parties,' says Willemien Broeders. 'That is why we run promotions at various retailers in Europe around that period, increasing sales by up to four times. That puts a lot of pressure on production. What makes it especially complex is that the different types of candy are made in different countries and factories, all with different production capacities. In Breda, everything comes together to be merged. We deliver to the trade in September, which means we adjust production from June/July and so we do forecasts now, as early as April.'
No unlimited capacity
Two factors largely determine the success of promotions: a good, composed demand forecast and optimal utilisation of the international production apparatus. Willemien: 'Until a year ago, each country made its own forecast in its own system, which could vary from an Excel template to a basic forecast tool. Combining these forecasts was time-consuming and complicated. Moreover, we could not properly assess the quality of those forecasts. Furthermore, we wanted to make optimal use of production capacity, i.e. not leave any capacity unused, but also not create bottlenecks. For this planning, we used an ERP system that, however, assumed unlimited production capacity. So we still had to manually check and adjust the planning for each production location.
To overcome both problems, Perfetti Van Melle now works internationally with a uniform S&OP methodology and associated tooling. The international forecast process is largely operational; the production planning module is now being set up and connected to the forecast part. In this way, the process is overseen throughout the chain. How does this work in practice, what are the problems encountered during implementation and what are the benefits of the new way of working? Willemien Broeders will tell us on 25 April.
Hamstering! (but not too much)
Hamster weeks are for consumers, not for retailers to hoard. That, in a nutshell, is the challenge with promotions by major retailers. 'Such promotions don't bring in much money,' says Willemien, 'but you don't want to miss them. That is why it is very important to plan tightly, make sure optimal promotion volumes are delivered and monitor the process well during the promotion. That used to be very difficult; we lacked good data analysis and had to do a lot by hand.'
Forecasting and monitoring
In such retailer promotions, two things are very important for Perfetti Van Melle, which were insufficiently possible with the old systems:
1. make a good demand forecast per retailer, which can be put next to the retailer's forecast in order to arrive together at a well-founded campaign volume. Willemien: 'As a supplier, you want to avoid delivering too much at the promotional conditions, but selling no during the promotional weeks is obviously not an option.'
2. monitor the retailer's order volumes during the promotion, so that timely discussions can be held if they are higher than agreed. Willemien: 'The question is: do we still supply at promotional conditions? You can only have this discussion properly if you identify this in good time and if you have good figures''.
In the new situation, how can Perfetti Van Melle make a good asset forecast per retailer, what is the role of historical data and how does the system learn from previous promotions?
Learn from the experiences of Perfetti Van Melle
Do you recognise these challenges and wonder what the solutions are? Then come to the inspiration session 'Road to S&OP Excellence 2018' in Hoevelaken on 25 April.
Willemien Broeders shares her insights, Michel van Buren discusses developments in the world of S&OP and integral collaboration, as well as demos and interactive sessions with peers. More information can be found here.
