Preditive Analytics with Promax PX

Trade promotions Management is most commonly considered is the ability to plan and track promotional events to ensure that the payments that are made to the trade are within the contractual, budgetary and policy constraints of the business.  Trade funds (spend) is the bucket of money allocated by a business to fund discounts and cooperative activity with the trading partners (wholesalers and retailers) in the supply chain from the manufacturer to the consumer.

In assessing the effectiveness of the trade funds it is fundamental to understand two components of the demand signal;

1.       Baseline Sales Rate – this is the forecast sales rate when there is no promotional activity.

2.       Uplift – this is the sales rate over the baseline that occurs when a promotional event is implemented.

Trade Promotion efficiency and Trade Promotion effectiveness can only be assessed if data streams of these two measures are available.

To optimize the utilization of trade funds it is important to have reliable demand signal data available that is sourced from a point that is as close as possible to the consumer.  In most markets around the world this data is derived from Point Of Sale (POS) devices and is commonly referred to as “scan data”.  Unfortunately, this POS data is not available for every customer and product that is sold by a typical consumer products company.  This being the case, how does a CPG business tackle the optimization challenge if a large proportion of the data set is missing?

This paper will shed some light on how Promax PX can conquer this challenge and provide a stream of quality multi-causal demand signal data on which predictive analytics can be used to optimize trade promotions.

Read more about “Incorporating Predictive Analytics with the Demand Signals to and from Trade Promotions” by downloading the complete whitepaper

Don Nicol, CEO of Promax Applications Group is a Customer Management subject matter expert featured as a Roundtable Participant in the latest CGT Technology Solutions Guide – 2011 Customer Management Solutions (CMS).

This important publication offers Consumer Goods companies guidance for your sales and marketing initiatives in areas like nontraditional marketing, trade promotion optimization (TPO) and retailer collaboration.  View a snapshot of industry credentials in the 2011 CMS Chart.

Download the PDF:
CGT Technology Solutions Guide – Customer Management Solutions 2011

Promax PX Technical Architecture & Hardware

A typical consumer packaged goods manufacturer with sales of $1 billion is possibly investing in the vicinity of $200 million per annum in trade funds.  The better application of those trade funds can lead to an increase in market share at a higher rate of profitability which can impact the bottom line by 2% or 3% on a conservative estimate.  For a company with an EBIT of 10% that is an additional $2 or $3 million every year return from a dedicated and integrated Trade Promotion Management (TPM) and Trade Promotion Optimization (TPO) project – potentially a 20-30% increase in profit.

As with any new system, you need to do your homework and evaluate the associated costs and impacts on the business.  A step-by-step plan is vital to ensure you make the right selection and achieve a rapid return on investment.  You’ll also need to prepare a valid and robust business case to justify your recommendations for implementing this new tool.  So, what should you consider?

• Determine your goals – what are you trying to achieve? eg improved productivity, greater visibility of trade promotion effectiveness, more accurate accruals and payment systems, improved Strategy Planning and Budget development, more time for the sales force to concentrate on the job of signing the deals.
• What impact will a new system have on the business – implementation process, training, user acceptance?
• Cost – do you have a budget and what cost savings can you expect?
• What are the other IT considerations eg interfacing with your ERP, additional hardware requirements, on-premise or cloud computing?
• Software vendor experience, support and success rates – how quickly can they implement?

Along with all these considerations, you’re probably also facing the debate with your IT specialists as to whether a specialised out-of-the-box TPM/TPO solution is going to be a better option than utilizing a single solution provider who is also providing your ERP services.

This raises the old adage as to whether one solution provider can be “all things to everyone”.  At Promax, we have more than 20 years experience focusing purely on TPM and TPO.  Armed with the knowledge of the complex requirements of global CPG companies in various fields such as Food & Beverage, Pharmaceutical OTC, Personal Care and Household products, we appreciate that a dedicated solution designed to achieve best practice in a specific business process is the only way to go.  Obviously ensuring that this solution has been designed to rapidly and efficiently interface with other systems currently utilized or planned for implementation within the business.

The choice of development and operating environment for Promax PX was taken after an extensive analysis of the needs of the Promax user and the nature of the trade promotions management and optimization environment.

Some of the key considerations were………

Read more about “Promax PX Technical Architecture & Hardware” by downloading the complete whitepaper

Interfacing Promax PX with ERP system

Fundamental to the implementation of Promax PX is establishing communication of essential data between its database and that of the other systems in the business environment.  The efficient transfer of “back office” data makes the Promax PX a seamless part of the whole ERP system.  Developed within the Microsoft development environment Promax PX relies upon the technology of Microsoft Windows, Microsoft Office programs and Microsoft SQL Server 2005.  Master file data on products, customers, general ledger, trading terms and pricing can be exchanged between Promax PX and various ERPs using a range of industry standard document formats as well as simple text file transfers. Promax PX has the ability to import and export data using but not limited to stored procedures, XML, FTP & Flat file transfer.

Read more about “Interfacing Promax PX with ERP systems” by downloading the complete whitepaper

Making a prediction about the future is easy.  Making an accurate prediction about the future is very difficult and complex.

Activity Based Forecasting with Promax PX

A significant proportion of the average person’s day is spent attempting to predict the consequences or outcome of specific actions.  In the area of trade promotions this is particularly challenging as an Account Manager has to decide or determine the effect of spending trade funds on a choice of activities.  The soundness of that decision is influenced by the confidence in the tools available to enable him to predict the outcome of any scenario he may envisage.  If these predictions are inaccurate then problems occur with the supply chain, too much or too little inventory, over or under accruing trade funds could result in missed opportunities or an over commitment to promotions, depending on the bias of error.

Assessing the return on investment (ROI) of a promotion is very significantly influenced by the prediction of the uplift from baseline sales.  If this prediction is highly inaccurate then our perception around the merits of running the promotion could be flawed.  To understand how confident we can be about our predictions we need to measure the accuracy of our forecasts.  This accuracy can be interpreted into a measure of confidence.  The more accurate, the more confident.

Measures of forecast accuracy

There are many measures to forecast accuracy.  One of the most common is Mean Absolute Percentage Error (MAPE) which technically is a measurement of error not accuracy; the lower the MAPE the more accurate the prediction.  It is a measure of error in a fitted time series value in statistics, specifically trending and is defined by the formula……

Read more about “Activity Based Forecasting with Promax PX” by downloading the complete whitepaper

People/Process/Systems

The Promax solution is based on a philosophy founded on People, Process and Systems and we believe that the right solution is a combination of all three, not just software.

Delivering long-term high quality business outcomes for our customers is Promax’s fundamental goal. We believe in delivering and supporting a complete Trade Promotion Management, Trade Promotion Optimization and Volume Planning solution – a highly intelligent solution that solves real business problems. Our objective is to be the industry thought-leader, offering a world-class solution not limited by customer diversity or geographical boundaries.

Promax strives to enhance our client’s software investment to maintain their competitive advantage, through; Ongoing commitment to product development and innovation Research and exploration of industry trends Maintain software currency with the evolving business environment Listen and respond with real enhancements Continually improve product quality and stability

Content, process and collaboration management is a platform for organisational change. As with any organisational change, it must be managed wisely and carefully. It will affect the way your people work. And while these effects may not be revolutionary, the success of your project, and ultimately the return delivered to your organisation, is dependent on how well this change is managed.

Our implementation methodology has been proven to deliver projects in an effective and efficient manner. We have a highly experienced and qualified team of Consultants who will facilitate an efficient outcome at each stage of the project. Many of our consultants have extensive hands-on FMCG industry experience, so they understand and appreciate the complexities of TPM and the key stakeholders within your business that are impacted by these activities. From business analysis, to technical architecture, from project management to user training and customer support; our team of experts ensure your solution is embraced by your users and delivers your business outcomes.

It’s all about collaboration, our people working with your people.

Read more about the Promax approach to Implementation by downloading the complete White Paper “Promax Implementation Overview”.

Choosing between Promax® and SAP® CRM

This paper talks to the issues that are commonly raised in those businesses that have SAP as the core business system and addresses many of the key points that influence a decision to use the functionality of Promax PX versus an alternative of SAP CRM.

Trade promotion management is undergoing profound change and CPG manufacturers are looking for;

• a robust analytical foundation,
• integrated with transactional functionality,
• to design more profitable promotions and
• execute these promotions more intelligently with retail trading partners.

Promax PX Software

Promax PX is a specialist trade promotions planning and optimisation software application. It has been developed over 20 years through the interaction with a broad spectrum of companies in the Consumer Packaged Goods (CPG) sector and incorporates the requirements and learning of these companies for a comprehensive TPM solution.

Promax is most commonly implemented as a “best of breed” solution in conjunction with enterprise systems. Promax customers using SAP as their enterprise system represent the most common combination. Promax has extensive experience in configuring integration with SAP.

Promax PX is not a CRM package. The only commonality between CRM and Promax PX is the need to have customers and products, beyond this the fundamental design of the system is totally different.

Promax PX focuses on the need to TRACK, PREDICT and OPTIMISE the processes around deals offered by CPG companies when planning, negotiating and implementing trade promotions.

Read more about “Choosing between Promax and SAP CRM” by downloading the complete whitepaper

Product Inter-Relationships - Cannibalisation

OVERVIEW

This paper describes the methodology used by Promax to determine the reaction of baseline sales of one product caused by the promotion of other products and how the technology can aid the planner in developing a clearer understanding of the overall promotional plan. We deal with the concepts of historical analysis of promotion activity and the segmentation of the consumer response when there is no promotion (normal sales or baseline) and the lift in sales from the promotion.

Symptoms

Predicting what the effect will be of a promotion is a complex and involved task as there are many causal effects that need to be taken into consideration. An account manager who analyses the historical retail scan data will commonly observe that the promotion of one product can cause an effect on the baseline sales of another. A typical example is changing from the standard pack to a promoted pack when both packs remain on sale. The introduction of the promoted pack, which may contain 10% extra product, will inevitably cannibalise the base rate of sales of the standard pack. The extent to which this cannibalisation occurs is difficult to measure without sophisticated statistical analysis integrated into the promotion planning environment. Yet it is vital information for the account manager and should be easily interpreted at the time of planning the promotion.

Let’s look at the problem. We’ll use the familiar sample of baked beans to illustrate this effect. In our example, the standard pack of baked beans is a 375g can and its normal rate of sale through our sample retailer is 400 cases per week. Periodically we promote a 450g can for the same price as our 375g SKU. When we do this the sales of the 450g SKU is increased by 200% above the normal level and the 375g SKU’s sales dropped to 50% of the normal sales. If the normal retail price of the 375g unit uses $0.89 and the normal retail price for the 450g is $0.99, were we better off by promoting our 450g unit at $0.89 or should we choose another strategy?

Read more about “Product Inter-relationships – Cannibalisation” by downloading the complete whitepaper

Interfacing Promax PX with MOVEX (M3)

OVERVIEW

The Promax solution has been implemented to a variety of ERP solutions such as SAP, JDE, BPCS, MFPRo and Movex to name a few.

This document examines the interfacing to Movex M3. It should be noted that the information provided is relevant to other versions of Movex.

Fundemental to the implementation of Promax PX is establishing communication of essential data between its database and that of the other systems in the business environment. The efficient transfer of “back office” data makes the Promax PX a seamless part of the whole M3 business system. Developed within the Microsoft development environment, Promax PX relies upon the technology of Microsoft Windows, Microsoft Office programs and Microsoft SQL Server 2005. Master file data on products, customers, general ledger, trading terms and pricing can be exchanged between Promax PX and M3 using a range of industry standard document formats as well as simple text file transfers. Promax PX has the ability to import and export data using but not limited to stored procedures, XML, FTP & Flat file transfer.

FLEXIBLE INTERFACE CONFIGURATION

Promax PX Interfacing is flexible and user friendly. The Promax PX data interface is controlled using a component called Timed Transfers. The Timed Transfers system uses a time and/or event based excecution method to exchange data located in specified sources within M3 or any other repository. Typically syndicated data sources like ACNeilsen, IRI or Synovate data are required for Promax PX modelling purposes.

Read more about “Interfacing Promax PX with Movex (M3)” by downloading the complete whitepaper

Interfacing Promax PX with JDE

OVERVIEW

Fundemental to the implementation of Promax PX is establishing communication of essential data between its database and that of the other systems in the business environment. The efficient transfer of “back office” data makes the Promax PX a seamless part of the whole JDE business system. Developed within the Microsoft development environment Promax PX relies upon the technology of Microsoft Windows, Microsoft Office programs, and Microsoft SQL Server 2005. Master file data on products, customers, general ledger, trading terms and pricing can be exchanged between Promax PX and JDE using a range of industry standard document formats as well as simple text file transfers. Promax PX has the ability to import and export data using but not limited to stored procedures, XML, FTP & Flat file transfer.

FLEXIBLE INTERFACE CONFIGURATION

Promax PX Interfacing is flexible and user friendly. The Promax PX data interface is controlled using a component called Timed Transfers. The Timed Transfers system uses a time and/or event based excecution method to exchange data located in specified sources within JDE or any other repository. Typically syndicated data sources like ACNeilsen, IRI or Synovate data are required for Promax PX modelling purposes.

Read more about “Interfacing Promax PX with JDE” by downloading the complete whitepaper