Promotional campaigns place high demands on an organization’s commercial and operational processes, and require seamless alignment between the two. Perfetti Van Melle knows this only too well, which is why the company is developing its Sales & Operations Planning (S&OP) process to improve the results of its promotions. What are the main challenges, and how are they being tackled? Supply Chain Director Willemien Broeders reveals all.
During the Solventure inspiration session on 25 April 2018, Willemien Broeders talked openly about Perfetti’s experiences based on two concrete cases of promotional campaigns: St. Martin’s Day/Halloween and the Albert Heijn ‘Hamsterweken’ bulk bargain weeks. These are two very different types of campaigns, each with their own challenges in terms of the necessary data, planning, alignment and execution.
Planning Halloween in April
A ‘Mix of Minis’ is a value pack containing an assortment of mini bags of branded confectionery such as Mentos, Fruittella and Chupa Chups lollies. The product is sold all year round and the bags are ideal for handing out. “St. Martin’s Day (11 November) and Halloween (31 October) are of course prime occasions for handing out confectionery,” says Willemien Broeders. “That’s why we run promotions with various retailers throughout Europe around that time of year, resulting in sales up to four times higher than normal. That creates a lot of pressure for production, and it is particularly complex because all the different types of sweets are made in different factories and even in different countries, all with different production capacities. Everything comes together in Breda to be packaged. We supply to our retail customers in September, so we have to start adapting the production activities from June/July onwards which means making the forecasts now, in April.”
Capacity not limitless
Two factors have a big impact on the success of the promotions: a well-prepared demand forecast, and optimal utilization of the international production capacity. Willemien: “Up until a year ago, each country made its own forecast in its own system, which ranged from an Excel template to a basic forecasting tool. It was a time-consuming and complex job to combine all those forecasts, plus it was difficult to assess their quality. Besides that, we’re keen to make optimum use of our production capacity, in terms of not leaving capacity underutilized but also not creating bottlenecks either. However, we used to do our planning using an ERP system that based its calculations on limitless production capacity. As a result, we still ended up checking and adjusting much of the planning manually for each production site.”To solve both of those problems, Perfetti Van Melle is now working with a uniform S&OP methodology and associated tooling on an international level. The international forecasting process is largely operational already, and the production planning module is currently being set up and integrated with the forecasting part, resulting in end-to-end visibility of the whole process.
Time to buy in bulk (but not too much)!
Bulk promotions are aimed not at retailers, but rather at encouraging consumers to stock up on items they need – and that sums up the challenge of these types of campaigns by major retailers. “Bulk promotions aren’t very lucrative,” explains Willemien, “but you don’t want to miss out on them either, so it’s very important to plan things carefully, ensure that optimal promotional volumes are delivered and keep a close eye on the process during the promotional period. That used to be very difficult; we lacked good data analytics and had to do much of the work by hand.”
Forecasting and monitoring
In the case of retailer-driven campaigns like these, the new system now enables Perfetti Van Melle to benefit in two very important ways:
- 1. Preparing a good demand forecast per retailer that the company can compare against the retailer’s own forecast in order to agree on a realistic promotions volume together. Willemien: “As the supplier, you don’t want to supply too much product at the discounted rate, but out of stocks are not an option during the campaign weeks either.”
- 2. Monitoring the retailer’s order volumes during the campaign weeks so that timely discussions can be initiated if they are higher than agreed. Willemien: “In that case, the question is: Should we still supply product at the discounted rate? You can only discuss this properly if you spot the signs early on and have reliable data.
