Special promotional packs, or combo packs, are an effective way to encourage purchasers to shake up their buying habits. The consumer gets an assortment of products and is rewarded with attractive packaging and competitive pricing; being cheaper than buying the components separately. The packs lend themselves to being gifts too. Gifts are often risky purchases but can provide a great novelty, and if you are truly lucky a lasting relationship with a product you hadn’t previously appreciated can form. A growing example of such packs is the advent calendar which can provide not just chocolates but small taster bottles of perfume, moisturizing cream, lipstick etc behind each window. However, the majority of such packs are much less glamorous and cover small assortment packs of deodorant, crisps or shampoo throughout the year; albeit generally linked to a promotional event.
For the manufacturer, there are many things to consider including gaining agreement from a willing retailer who also has their own objectives. A core requirement is to understand the raw profitability of packaging combinations before indirect effects are considered. A key factor here is volume, which must be large enough to allow fixed costs to be covered. Equally, a practical requirement when planning is to know what SKUs are available to be included in the pack project from a supply perspective.
Before getting to those basic facts, we need to make judgments on pack contents which include quantities, categories, brands, sizes etc. which will provide benefits both in and beyond the single transaction. We want to align these with marketing objectives, retailer opportunities/plans, market circumstances which are often short term and inject some creativity. This is a significant challenge of coordination and planning, as I found out when helping a large packaged goods company recently.
My client manages hundreds of products in lots of categories across many geographic markets, so it’s already a huge job to plan and deliver efficiently. Layer on top of this the complexities of special packs, pack variants to handle local market trends and fast-changing demand estimates, and you can understand why it led to a large network of emails and spreadsheets to cope.
Although the desktop files had many differences, there were some common underlying truths and a broad process. These included: having clarity on and managing negotiations with the retailer, appropriate brand marketing input including recognizing when to invest in loss-making projects, and having appropriate disciplines from operations, supply and finance teams. All this needed to happen much faster, more efficiently, and continue to scale. We made this happen with better collaboration, formalization of process, and singular visibility of a central cloud application in Anaplan.
With a process incorporating lots of involved parties, driven by customer or brand responsibilities, and changes to pack plans being the standard, there was a need to manage the plan revisions as multiple iterations or versions – retaining them so people could see how we got there. The responsibilities were embedded in the application and used to request the appropriate persons’ attention at the right time, and provided them with a plan version they were confident was the right one. Meetings could now take place over the live application with everyone focused on solutions rather than wasting time finding the right information.
Being an experienced creator of Anaplan applications, it was clear to see that the collaboration capabilities of Anaplan were going to unlock a step change in productivity and indeed user satisfaction, simply from the drastic reduction in administration. Happy workers are also motivated, creative workers.
The key business drivers for the project were improving time to market, controlling profitability, and building a platform for continued improvement. Achieving these can be seen simply in some of the key steps and approaches that we took:
- Simplifying pack creation and Bill of Material build: Allowing sales, marketing and then planners to build first the high level then low level by picking products from a centrally sourced portfolio automatically loaded from the organization’s master data – a dynamic data set which was now always up to date.
- Streamlining financial hurdle calculations: Constructing a standard P/L suitable for all packs from standard NSV (Net Sales Value) through variable and fixed costs to net profit. With all costing and revenue information available, pack scenarios could be instantly costed.
- Controlling and making clear the process: We put in place a system to handle workflow by defining approval processes to manage not only the main planning process, but also rejection and the remedial steps to either get the project redesigned or abandoned. All parties could see therefore the status and history of the project and would be prompted for the things that needed them.
- Supporting variations: Our final step enabled design variations to the original BoM to support local market needs. We loaded in sales info while the promotion was in progress in order to respond to sales feedback, handling in-flight variants to keep the project on track.
It is very satisfying to see a solution fit a business problem so well. These challenges and need for efficient collaborative working are however very common but just have their own flavors from business to business.
Next steps? For more inspiration, look out for our webcast about semi-automatic supplier contract management to minimize cost through choosing optimal contract formats.