Food for Thought? Business Intelligence (BI) data can put manufacturers and distributors at a competitive disadvantage
Slow to generate, under-utilised and inaccurate Business Intelligence (BI) data can put manufacturers and distributors at a competitive disadvantage. Here, Daneel de Villiers, managing director of De Villiers Walton Ltd, explains how getting to the root of difficulties with underlying IT systems has enabled leading players in the grocery industry, such as the SHS Group, to generate better Business Intelligence.
It is essential when carrying out major IT projects, particularly those which will affect key workers within an organisation, to generate a clear picture of the businesses’ strategy and future goals, as well as the day-to-day usability issues. For this reason, as a specialist SAP consultant, we find it essential to adopt a business-driven approach when working towards removing some of the complexities associated with ERP systems such as SAP.
Recently, we collated customer feedback from corporate clients operating in a number of manufacturing sectors, including the food and drink industry. What was most clear from our research was that many organisations are at a competitive disadvantage because they do not have immediate access to accurate, business-focused information to support their corporate objectives.
The corporate CFOs and board directors that we consulted reported that faster or instant access to more accurate data would aid them in their daily work and give them more flexibility with their time. Some said that they were ‘reasonably’ satisfied with their current BI systems, while others declared that their business software lacks the capabilities to suit their specific business needs.
Most of the organisations that did not currently have access to BI data believed their business would benefit from a more unified reporting system with better workflow processes. This feedback has also been reinforced by industry statistics - CIOs responding to Gartner’s 2010 Executive Programs CIO survey, for instance, placed BI as fifth among their top 10 technologies.
Yet we believe that often, companies are reliant on time-consuming internal reporting that may not always be totally accurate or up-to-date, rather than having the ability to access a single source of data on-line and have it delivered when it is needed in a format that is applicable to immediate business needs.
Even those with Business Intelligence software in place are typically not getting the most out of their investment because they are typically not optimised for users, or may not have been tailored for the individual needs and demands of the business. In our experience, this can result from data being taken from BI tools and then processed in such a way that the accuracy is compromised. Alternatively, the system architecture may be wrong for the needs of the business.
Our experience was confirmed by this year’s Business Application Research Center (BARC) survey, which polls BI end users and consultants in Europe and the US. The subsequent BARC annual report published in September confirmed the feedback that we had received in regards to poor utilisation and data quality and showed that BI software is extremely under-utilised by the companies that invest in it.
It is clear, however, that in today’s uncertain economic climate, Business Intelligence (BI) software is an extremely valuable tool that can help organisations to both identify efficiency savings and control costs. The accurate and easily-accessible information that advanced BI tools can generate is based on pre-defined key performance indicators that give businesses a clearer picture of current business activity and, crucially, can be used to create strategies that improve margins and increase market share.
A recent project for the SHS Group Ltd, a holding company within the fast-moving consumer goods industry, showed just how valuable good BI can be to food and drink manufacturers. The group, based in the UK and Ireland, incorporates twelve brand-owning or brokerage operating companies that represent own and external brands within the grocery trade.
While the SHS Group invests significantly in above-the-line spend on its own brands such as WKD, Shloer, and Merrydown Cider, its largest marketing investment is made in sales promotions, funding ‘buy one, get one free’ and other promotions with supermarket multiples, particularly on a seasonal basis for which it relies on smart reporting and intelligent financial planning.
SAP is in operation for every one of the SHS Group’s business processes across all territories and operating companies. It also has the fast-moving consumer goods trade promotion management (TPM) aspect of SAP. All marketing and trade spend is planned in SAP’s integrated planning tool and executed in the customer relationship management (CRM) component of SAP.
The group uses SAP’s enterprise core component (ECC) to take orders. Information from this activity – including sales promotions – are all incorporated into the SAP Business Intelligence (BI) tool in the data warehouse, where all integrated plans for trade spend start. In large organisations in particular, the information generated from this accurate BI enables both chief financial officers (CFOs) and other board level directors to be better informed when they make important decisions about the future of the business.
For the SHS Group, the benefit of this closed-loop SAP solution is that all marketing and trade spend can be planned in SAP and the results retrieved at a very detailed level, enabling the firm to examine the effectiveness of its below-the-line spend by brand and by territory.
When our team first met with The SHS Group, it had already begun its BI project but had not had the support it needed to make the most of the integrated planning module. The first part of our work was therefore to re-design the proposed project, bringing it back to basics and aligning its functionality with the needs of the business.
In a follow-up project, we added additional functionality to the SAP account planning module that allowed sales force account managers to re-forecast how much they were going to spend on promotion and what they expected to sell on a monthly basis.
Happily, the firm has reported that it can now plan its annual trade spend much earlier in the year. Accountability has also been improved because everything can now be done at a detailed level by the account manager who will ultimately be held responsible for the result.
Previously, the SHS Group was only able to analyse its top accounts and could take as long as 13 weeks after month-end to turn around a months’ worth-of essential sales analysis. Now, the data can be accessed at month end.
Reaction from management and users within The SHS Group to the improved SAP BI solution has been extremely positive. All users have access to a single set of figures which has helped relieve anxieties in as users can see results at a detailed level and identify potential problems in time to react to them.