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data harmonization

Singing from the Same Trade Promotions Song Sheet

Many companies don’t harmonize their data sources for trade promotion planning and optimization (TPO) because they don’t have a system to do it.

Picture the scenario. You’re the conductor of a choir. But all the voice parts – the sopranos, altos, tenors, and basses – are all singing from different locations, nowhere near you nor each other. Even performing using technology such as Zoom, the result is disjointed, out of time, and out of tune.

Now translate this scenario to trade promotion planning. Where you have multiple internal and external data sources, none of them integrated. Any plans resulting from a hard-wrought manual analysis of these various sources in isolation are bound to be missing a few tricks at the very least. Suboptimal at best, and downright inaccurate and misleading at worst. Possibly resulting in large gaps between trade promotions budgets versus what is actually achieved.

Yet many companies don’t harmonize their data sources for trade promotion planning and optimization (TPO) because they don’t have a system to do it.

TPO requires multiple data sources, but they might sing in different languages

Obviously, you can’t optimize your trade promotion planning in a vacuum. Multiple data sources are required. These start with historic data, from internal shipments and sell-in through to wholesaler and distributor depletions and sell-through data, to retailer POS/scan sales sell-out. Ideally you need 2-3 years’ sales promotion data history, including price points, to allow for predictive promotions scenario planning.

There needs to be a log of each promotional mechanic, and its consumer behavior objective, whether that is increasing spend, average weight of purchase (AWOP), frequency, category, and basket penetration.

Then there are additional insights and data feeds collected from Retail Execution (RE) solutions, loyalty data, store back KPIs, as well as retailer feedback on promotion performance and overarching shopper behavior trends and insights. These all help to provide a more holistic picture on how to create top-down channel and customer requirements to create effective promotional plans.

That’s quite a lot of sources. And each are going to have their own metrics, and their own language and terminologies. This multiplicity of sources can create inconsistencies and inaccuracies.

How to sing in harmony

TPO is predictive. It reduces the guesswork involved in forecasting by harmonizing data, modeling baselines, optimizing planning through predictive analytics, and applying post-event analysis. It assists with supply chain optimization and improves agility and efficiency. It ensures an end to end financial, demand planning and customer planning system that provides a single source of truth – a single songsheet, if you like – to manufacturing, marketing, and selling brands.

Data Harmonization’s role in TPO is about centralizing internal data such as shipment and spending with external data such as syndicated and POS category, RMA and SKU level data into the one single source of truth using a single language. This better enables cross-factor analysis and provides a whole-of-promotion viewpoint for your trade promotion plan ‘composition’.

Data Harmonization has a number of steps. After acquiring the various identified internal and external data, all of the data is ‘ingested’ – swallowed whole – into a central system where it is cleansed and combined. It is then harmonized based on your business and product hierarchy. Language is smoothed to remove discrepancies and outliers. For example, an item that had a different description in three different data sources will now have a consistent description and performance from all three sources that can be viewed in one place. Following harmonization, custom market metrics are layered in, and then analysis begins by channel, brand, SKU, or other identified customized subsegment.

You can see the benefits of this for delivering retail customer specific promotion plans as part of Joint Business Planning (JBP), for instance, because you can better analyze activities within a specific customer. Even at the most basic level, such as accessing a single-source history of both actuals shipped & consumed, helps drive a forecast that takes into consideration your sales trends, seasonality, and outliers to give you and retail customers a more accurate view of the future.

A visible score to sing from

Inaccurate forecasting leads to surprise spending and/or shorted orders due to lack of supply. A TPO system provides visibility. Visibility of P&Ls, customers, brands, and promotions. Visibility of ROI, to enable you to see which promotions have a negative or positive ROI to adjust your promotions strategy. Or to prove or disprove the effectiveness of your promotional strategy itself. Visibility of which promotions perform to a minimum ROI standard, i.e. 20%. Visibility of trading terms and any SKU’s cannibalized by the promotion. Visibility of which promotions benefit the brand, and which benefit the retailer, based on inputs around messaging and attributes such as support spend on catalogue and above the line media.

All of this enables you to change your trade promotion ‘musical score’ composition for the future. And it’s all in the same language. No more reading some data inputs in the equivalent of French and others in the equivalent of Italian and having to figure out the common translation.

Data harmonization as part of a TPO system ensures that your business choir is singing in four-part harmony from the same songsheet, for a result that is more pleasant to the ears, eyes and P&L.

To learn more about using data harmonization for Trade Promotion Optimization, or to schedule a demo, visit: https://exceedra.com/solutions/tpm-o/ 

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