Demand and Sales Planning
IBM Cognos TM1, IBM Cognos BI, Revelwood Performance Toolkit
The repeal of Prohibition resulted in not just legalizing alcohol again in the U.S., but it also resulted in the creation of a complex three-tier system for alcohol distribution. The three tiers are producers, distributors, and retailers—producers sell their products only to wholesale distributors, who then sell to retailers, such as liquor stores, grocery stores, restaurants and bars. This extra tier between a beverage manufacturer and the actual seller of the product adds a layer of complexity to demand and sales planning.
One well-known manufacturer of craft beers, hard ciders and malt beverages creates and sells more than 100 different products to a network of 350 wholesalers. The brewer wants to grow sales volume and market share by identifying which wholesalers are selling the most, by product. Additionally, since this brewer creates products with “sell-by” dates, it needs to identify and address the wholesalers who have the most returns of past sell-by date product, and do so by product.
Revelwood designed and developed a demand and sales planning solution using IBM Cognos TM1 integrated with IBM Cognos BI. The Revelwood team developed cubes that enable the brewer to track and analyze distribution, sales, depletions and returns by wholesaler. The system first tracks shipments to each wholesaler. Then it records depletions—which products at what wholesaler have gone out to retail outlets. Lastly the system tracks returns from the retailer to the wholesaler and back to the brewer.
Having the right analytics infrastructure allows the brewer to ask any number of questions, including:
- Who are my best and worst performing wholesalers?
- What are the best and worst selling products by wholesaler?
- What is the distribution to depletion ratio by wholesaler?
- What is the return rate for each product by wholesaler?
With the TM1-based demand and sales planning system, this brewer can now make strategic decisions on where to invest marketing and sales support by wholesaler. The brewer can identify the top performers and develop strategies to keep them there. Conversely, the brewer can identify those wholesalers who are not performing well or who have a higher volume of returns. This allows the brewer to develop strategies to improve their performance or make the decision to discontinue business with low-performing wholesalers.