From TPM To CRM

 

This all began about 15 years ago. Michael Greene, vice president, customer marketing for Kellogg Morning Foods, says the company began to think about how to become the most trusted source for trade and price understanding through simple powerful tools and insights, as well as influence change. He says the company also wanted to "delight our customers with creative, innovative, consumerfocused merchandising solutions and in-store marketing programs that drive demand."

 

"We clearly had a need to do these things, and we also had a big opportunity to significantly improve our P&L and the visibility into how we managed our programs. At the time, we had significant issues with inaccurate forecasting levels across all of our businesses, and the lack of visibility created unwelcome surprises," explains Greene.

 

As with all companies, Kellogg needed to understand its trade ROI efficiency and effectiveness, and be able to measure these activities by event, by week, by SKU and by customer. This would enable Kellogg and its retailers to make more profitable trade investment business decisions.

In thinking about this, it quickly became apparent however, that trade measurement was just one piece of the overall puzzle for success. Kellogg surmised that it's really all about the customer and how the company plans the business around the customer. Therefore, visibility into overall customer interaction was needed to drive the business to success. Fundamentally, the company needed a system to bring all key data together in a usable way for sales. Greene reveals, "What ultimately determines success is tying this data in with key category, consumer and customer insights to drive mutual Kellogg and customer demand."

 

This thinking was further validated as Kellogg became involved in deciding on a trade management tool. Greene talks about when Kellogg first selected a trade promotion excellence tool called TPE: "That was our first attempt to really get our hands around trade promotion per se. But the journey evolved from there because it wasn't just about a trade promotion; it was about all business planning."

What the company realized it needed was an understanding of how to holistically plan the business.Greene points out that this involved answering the following questions: How do you plan your base and your incremental business? How do you plan innovation? How do you do planning in general? Ultimately, this leads to figuring out how it all ties back to the investment level with customers. Once pulled together, it goes from not only internal business planning, but taking it to customers as well, Greene indicates.

 

SAP is the backbone of Kellogg's ERP, though over the years, there has been much customization. In keeping with this approach, the company decided against using an "off-the-shelf" solution. Greene explains, "We developed internal tools to understand and manage trade investment. These tools allowed Kellogg to manage spend backward and forward, as well as encouraging decision making that drives incremental value while staying within budgeted spend rates by quarter and the year."

 

The tool uses the SAP BW platform and is aligned with business needs, combining base/incremental volume and spend planning, shipments, consumption and payments through customized reporting on the Web. It provides:

Visibility into customer P&L's - (live) changes as plans change

Innovation planning and market pressure reporting

Pressure analysis on innovation and national programs

ROI by event, SKU, week, customer Kellogg also uses a SAS platform for developing models and data analytics.

 

EXECUTION
Now that the planning is in place, what about execution? "We have an integrated business planning process where the leadership of the sales organizations meets monthly to review the business. We look at what we said we were going to do versus what we did and our budget projections," Greene says. After an evaluation and gap analysis, a new call is made and submitted into the supply chain.

 

Ultimately, the differentiators in the deep understanding of Kellogg's planning and programs are the different teams that play a role in the process. They work cohesively together across business units to get results, share best practices and collaborate on opportunities to ensure integrated planning.

 

Sales Strategy and Planning team: Commercializes the marketing plan to be brand and customer focused. It drives the innovation platform with marketing and ensures sales alignment in the launch strategies. It functions as the single point of contact for all field sales communication.

 

Trade Strategy and Planning team: Develops pricing strategies and drives the business planning process (top down/bottoms up planning). It works closely with business managers to make intelligent decisions with trade dollars and understand ROI at the brand, event and customer levels. The group also works to ensure accurate sales and spend forecasts. This team works hand in hand with Sales Finance to ensure P&L alignment.

 

Business Modeling and Analytics team: Provides data integrity in all planning and pricing models; provides pricing tools and analytics to help drive the price strategy by equity and with key customers. This group provides predictability models by SKU, week and customer for incremental and base volume and spend planning.

 

E-Business team: Provides brand teams with the insight to better communicate the brand strategies online, and a process to do that effectively across multiple business units, vendor partners and IT. EBusiness also helps Kellogg's retailers and e-tailers take what is executed in a traditional store and apply it online. The company believes the Internet is one of the best media outlets for engaging adult users with information about new products and services. With the support of IT, the E-Business team developed a "buy now" feature within Kellogg'sWeb sites to help consumers locate hard to find Kellogg brands, ultimately meeting both shopper and customer needs.

 

UNIQUE ENTITIES
According to Greene, the last two teams -- Business Modeling and E-Business -- are particularly unique. The Business Modeling team not only works with Kellogg customers, but also works internally on strategy. It is charged with using syndicated data and validating the base and incremental models. Greene points out that incremental modeling is constant because that data is always being cleansed and refreshed. Forecasts are validated against this and so the model must be updated for accurate predictability.

 

Greene says, "The Business Modeling team has really helped us to understand cross elasticity and what impact our decisions have on our brands and on the categories. The team has the ability to take what we do and turn it into sales applications because they understand how we use the data. Thus, they are able to give us tools that we normally wouldn't have because of their knowledge of sales needs."

 

The E-Business team not only discovers how online consumers interact with Kellogg brands, but also figures out how to take this information to Kellogg retailers and e-tailers and teaches them how to communicate to the same consumers on their own Web sites. With tremendous online growth over the last few years, Greene believes there is great opportunity that retailers may not be leveraging. "It's our job to show our customers that there are real online opportunities to grow sales," he says.

 

CHANGES AND RESULTS
Obviously, things have changed a lot over the past 15 years, and Kellogg constantly revisits its strategy. "What's changed the most is the complexity of the business with more categories in which to plan and work," says Greene, "We want to continue to make our investments and the way we manage the business better from an ROI perspective. But, more importantly we're on a quest for simplicity."

 

With these tools and teams in place, Greene says sales people are better "business managers," who really understand the things that impact both sales and profits. The management team can now see any gaps in our plans and do contingency planning more effectively. "It also helps us manage our investments so there's visibility. Of course our ROI has also significantly improved," says Greene.

 

Greene also comments that the technology has accelerated in the last three years as IT has played an increasingly vital role in bringing it to the next level. To roll this out globally an integrated platform was required beyond the United States.

 

In regard to the teams mentioned earlier, Greene mentions that both the modeling group and the e-business group just became a part of Shared Services -- along with category management. "We have taken these groups and put them in the same circle along with market research so we can begin creating a center of excellence," he explains. "We knew that category management spanned across the business regardless of the category. The modeling and e-business groups developed into the same type of function, growing to the point of becoming a core competency that should be shared."

 

Essentially, what began as a TPM initiative has morphed into Kellogg's own "one version of the truth" in that the customer and the category and the product can be used beyond just sales, marketing and trade, by the entire organization. CG