Sales Volume Planning

Sales Volume Planning — no longer considered an art.

Promax PX, the analytical approach!

Developing a forecast ready for Supply Chain Planning has long been considered an art which few CPG businesses have mastered.  The Promax PX volume planning capabilities demystifies this process and has transformed activity based forecasting, statistical modelling and market intelligence into an automated analytical approach.

Most demand planning systems have a supply chain bias and were derived to solve the problems of organisations with large non-promoted SKU counts. The nuances of demand management in today’s leading consumer goods companies supersede the capabilities of these traditional demand planning systems. The large amount of promotional activity and the availability of consumer data, requires a fresh approach to demand prediction.

At Promax, we recognise that CPG companies need to understand the demand signals from the perspective of baseline and promotional uplift. This requires a multi-causal approach to data analysis that concurrently models baseline, trend, seasonality, the effect of price and other promotional factors such as store facings and advertising activities. We also recognize that the promotions are constantly evolving and therefore affecting the forecasts. With Promax the forecasting process is streamlined allowing predictions to use the most recent information, and not be out of date because of an arbitrary demand planning process.

Promax PX captures all the key elements

Activity Based Forecast

Events such as promotions are individually defined and modelled. All the sales team has to focus on is keeping their promotion plan up to date and the system automatically generates a forecast. Promax PX enables the decomposition of consumption data and identifies the elements that make up the demand signal including the effect of price discount, catalogue advertising, media advertising, in-store display location and the effect of competitor promotions on the baseline sales.

Forecasting Horizons

The forecast of sales volume is of interest to many stakeholders in the business; supply chain, marketing, finance and management.  Their requirements may extend the forecast horizon beyond the detail obtained from the activity based promotional plan. Promax PX can append the activity based approach and create a longer range forecast with a horizon that meets the needs of all the stakeholders. With Promax you have a forecasting environment that meets the operational and strategic needs of the business.

Buying Behaviour and Consumer Demand

There is a strong link between the consumer response and retailer orders and the importance of having the stock available to meet demand – however the typical demand planning solution doesn’t recognize this link. Promax PX solves this problem by learning the behaviour of the retail buyer for each promotion activity.  The promotional lift is profiled over the lead time and life of the promotion in accordance with a model derived by analysing buying patterns of previous activities of a similar type.

Market Intelligence

Changes in distribution, store facings, marketing activities and product supply issues are just a few examples of the need to incorporate this intelligence into the forecast.  New product introductions also represent a major challenge and Promax PX facilitates the ability to use existing product statistical data that may be of a similar nature to the new product.

Forecast Accuracy

Knowing and understanding the accuracy of the forecast process is important, however the most important consideration is to improve the forecast accuracy.  The Promax innovative approach to Total  Volume Planning improves accuracy through a focus on consumer behaviour.

The Promax PX approach to successful Sales Volume Planning

• incorporates strong links between all stakeholders; supply chain, marketing, sales, finance and management.
• completely focused on CPG industry activities and variables
• not constrained by typical analytical timeframes of a monthly process – Promax PX analyses on demand!
• ground-breaking technology which is not constrained by traditional forecasting paradigms.
• captures all data options including scan data and has the capability of meeting the needs of Supply Chain Planning (SCP)

Sales Volume Planning in Promax keeps track of the physical volumes that are the result of the promotional programme. The promotional volumes are automatically transferred from the Promotion Plans for inclusion in the total Volume Plan.  Sales Volume planning can be used to set budgets and generate up-to-date estimates, and can also be exported to budgeting system external to Promax. This capability gives sales executives visibility of the promotional plan in volume terms.

Promax Sales Volume Planning includes functionality that:

• compares planned volumes with targets and actuals
• allows users to review current year versus previous year, and year to date
• supports exception management of key issues

Ex-Factory Forecasting

Promax is unique in providing sales and ex-factory forecasts that are fully synchronised with the promotional plan in a single, fully integrated solution.

Promax provides a ‘one-number’ forecast for Sales and Operations Planning and communicates this with other internal customers such as the Supply Chain, Finance and Customer Service. This promotes better planning and execution for current and future promotion cycles. The result is improved coordination and synchronisation of promotions which, in turn, leads to accurate demand planning, less inventory holding, and ultimately a higher profit margin.

Promax Ex-Factory Forecasting provides:

• statistically generated forecasts using scan or ex-factory data; automatic phasing from scan (buy period) to ex-factory (sell period) for promotional volume
• forecasts at any level, including by Account, Product, or Aggregated
• ability to manually or automatically add non-promoted volumes within the Account by week or period
• ability to include/manage Investment Buying

Supply Chain & Manufacturing

Leading organizations are quickly realizing that improving the coordination and synchronization of promotions will lead to better demand planning, less inventory, and overall, a higher profit margin.

Sales and Marketing Departments have the responsibility to manage the promotional plans. In addition, these teams also need to keep the supply chain informed of their plans to ensure that manufacturing produces the ‘lift’ amount that has been anticipated for the promotion.

Promax informs the supply chain making sure that the promoted products are at the appropriate locations at the right time when the decision has been made to execute the promotion. After the promotion has been completed, the actual results are fed back to sales and marketing, typically through the Sales and Operations meeting for future planning.

These internal integrations are crucial to the success of a promotion including linking the Demand Management function with Trade Management. The overall process would focus initially on minimizing out of stocks and excess inventory, then advancing to maximize yield and revenue.

Promax, is unique in providing ex-factory forecasts which are fully synchronized with the promotional plan in a single, fully integrated solution. Promax provides a ‘one-number’ forecast for Sales and Operations Planning and communicates this to other internal customers such as the Supply Chain, Finance, and Customer Service. Improvements in the execution of promotional cycles lead, in turn, to higher company revenue and profits.

Supply Chain Metrics

During the initial modelling phase of a Promotions Plan, Promax provides ex-factory forecasts that allow manufacturers to plan for the lift associated with promotional activity, taking into account the timing of promotions as well as the geographic spread.

Post-implementation, Promax allows companies to reconcile the performance of their supply chain — from manufacturers through to distributors to retail outlets and consumer purchases — using the planned ex-factory forecasts, actual production and distribution data, as well as retail scan data.

By integrating all data links in the supply chain, Promax reduces the number of’ ‘unknowns’, giving companies a unique ability to measure the efficiency and effectiveness of their supply chain in relation to trade spend. Managers can see the impact that promotions have on their supply chain as well as the capability of their supply chain to accurately deliver to plan, avoiding out-of-stocks or excess inventory holdings.

Download the  “Total Volume Planning with Promax PX” White Paper to learn more.