From Retail Reporting to Retail Execution Management

Individual supplier ROI success stories exist in almost every process supported by retailer data — from reduced out-of-stocks to improved forecasting and from inventory management to category management. What each CPG company now has to understand is whether it has built industrialized business processes to go beyond the pilots, replicate these success stories and build them into resilient, business-as-usual best practices, often in collaboration with their retailer customers.
 

As we spend time with the many hundreds of customer-facing and headquarter teams we serve, we often ask them to evaluate their level of maturity in leveraging shared data to support each of the retailer-facing processes that matter to them. Depending on their response, we have found ways to help them understand the organization, tools, processes and support organization they need to become more effective. You may find it useful to perform the same evaluation across your organization. We typically get five types of responses from team leaders, in increasing order of success in leveraging retailer data:
 

There is little justification for that response any more: except for a few holdouts (mostly regional retailers), retailers in the Grocery, Drug and Mass sectors do share data by day, by store and by SKU with their suppliers in the United States (the situation may still be different in other geographies) — and in return expect their suppliers to leverage it to reduce out-of-stocks and inventory and improve promotion effectiveness.

In general, this response simply reflects a lack of awareness on the potential of downstream data.  We have found that the best education was exposure to other internal successes in their organization, to bridge knowledge gaps and overcome cultural holdouts.
 

This is still the most common answer from many teams, highlighting the prevalence of the “Walmart Monday morning report” mentality — you can replace this particular retailer name with many others. Most customer teams still view shared retailer data almost exclusively as the pulse check for their business at the retailer (“Retailer Reporting”) rather than as an opportunity to drive the business (“Retail Execution Management”).

The best approach to evolve from this stage to a higher level of maturity is to challenge the “So what?” of every report produced and change it to “So what do we do about it?” We have found that many teams ask analysts to simply build the same reports every week out of habit — without ever asking whether these reports are useful to drive actions beyond “OK. We are 3 percent up compared to last year.”
 

The most common periodic use of retailer data is in category reviews — maybe because retailers clearly state they expect thought leadership from their suppliers. Ad-hoc analyses appear for instance to justify a new promotional pricing proposal (using price elasticity data) or an improved planogram (analyzing product velocity by store type). Teams realize the value of this type of analysis but are often constrained by solution deficiencies – either because they only have Excel to manage masses of data (instead of a Demand Signal Repository or DSR) or because the solution they have at their disposal is mostly IT-driven (a database with a business intelligence interface) and not designed with business needs and specific retailers in mind.

To move to the next maturity stage, one where such analyses can be automated, organizations need to deploy the right solution: a user-friendly, use case-centric Retail Execution Management platform — a solution focused on best practice identification and dissemination rather than an IT-friendly database.
 

This stage is where we find most industry leaders today and interestingly, virtually every CPG company has a small part of their business operating at this level. These teams have found the right mix of technology (their Retail Execution Management platform), skillsets and customer responsiveness — effectively moving up the maturity ladder on their own. They tend to significantly outperform their peers, become a magnet for talent but also often operate under the radar.
 

The challenge for CPG companies is to identify these teams, understand what made them successful, and start replicating it at the enterprise level. Organizations that were successful in deploying these capabilities understood that technology (the Retail Execution Management platform) is the enabler rather than the end goal: the challenges and the opportunities lie in people, knowledge and processes.
 

This is the Holy Grail every CPG company is looking for. A few have found it, becoming privileged partners for their customers as well as trusted advisors. They not only have a higher share of mind than their competitors, they also are being sought after by retailers to pilot new ideas, concepts and processes, providing them with competitive advantage. 
 

At that level, the challenge becomes one of continuous innovation management, isolating the most beneficial experiments and rolling them out quickly across the organizations while weeding out the least productive ones. Technology innovation becomes a critical competency as well: there is only so much slicing and dicing retailer data can do. As CPG leaders identify new opportunities in leveraging shared data for forecasting, replenishment or promotion optimization (to name a few of the emerging processes where in-roads are being made), a critical success factor is to find the right solution partner — to power not only the traditional use cases but also moves along (or sometimes even lead) this continuous innovation process.

 

How advanced is your organization on the Retail Management Execution maturity curve? Let me know: I can be reached at [email protected].

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