Plan to Win, Measure for Success

Everyone creates a plan. That’s easy, or at least it should be. But if you don’t have a good way to measure execution against what was planned, then it is by sheer luck that the plan hits the target.

In the complex CPG industry, trade promotion management has evolved beyond planning promoted and non-promoted volume and even beyond just planning promotions with a base and incremental volume split. Profitability is the engine that drives successful companies. To embrace a true ROI mindset, the customer business plan needs to include the base volume forecast, the incremental volume driving promotions, as well as all other customer-related spending and activities. It is only from this total view of the customer business plan that you can truly understand profitability and the tradeoffs that different promotional strategies will have on that plan.

Trade promotion optimization delivers the visibility into predicted volume and profit impacts of different strategies. That provides the insights into which promotions will help drive better trade efficiency and effectiveness. However, there are often strategic tradeoffs that are made, such as participating in a retailer program that does not appear to have an acceptable ROI but enables other activities throughout the year, which makes that investment pay off when it is considered in the overall customer business plan.

Now that we have the planning figured out, we need to consider tracking and measurement because the “best laid plans often go awry.” Without the ability to quickly and accurately see where you stand against your plan, your ability to keep that plan on target is also diminished. As with any complex CPG planning and execution process, that requires pulling together the actual volume and spending at multiple levels and organizing the information into a simple scorecard that provides the year-to-date snapshot of the plan versus actuals. This is true for the customer business plan as well as the aggregated sales plan view.

In the sales & operations planning process, bringing the year-to-date view together with the year-to-go forecast provides the business outlook. With the right level of visibility and tools in place, understanding the tradeoffs and making adjustments to plans for the balance of the year becomes easy, which ensures that you stay on target.

So measure for success. Speed and agility in decision making is enabled first by having the right process in place, and then by having the systems to support the process. The ability to analyze what is working and what isn't working at the customer level lets you make improvements to the plan from the bottom up.

Source: Exceedra