Demand Signal Repository - An IT Solution For CPG Industry

A Demand Signal Repository(DSR) is the process of integrating and cleansing Point Of Sale (POS) data with internal data and market research data to provide business users with reports that will identify areas that require immediate attention.

POS data

Provides insight into parameters such as

• Which products are selling
• When are they selling
• Where are they selling
• Who is buying them

With rising competition and contracting margins, CPG companies are willing to leave no stone unturned in optimizing their processes through POS insights and leveraging them to make maximum moolah. The CPG companies are making the best efforts to understand when, where and which products doesMr.Gupta or Mrs. Khanna buy.

POS data is bound to reduce the bull whip in the supply chain by laying out monitoring mechanisms so that each and every activity could be optimized and cost advantages could be leveraged.

An increasing focus on POS data isn’t something out of the blue, it’s been their ever, but the complexity and difficulty involved in analyzing that data made it harder for the CPG companies to put it to productive use. However, with the evolving demand data solutions such as the Demand Signal Repository (DSR), utility of the POS data for making business decisions have become a popular and profitable phenomenon.

The DSR processes streamline the integration of point of sale data. DSR can be leveraged across multiple functional areas including category management, supply chain, inventory management, promotion and event management, sales, marketing, etc. The biggest challenge that was encountered with analyzing POS data was cleaning data gathered from various sources and making it uniform for effective use and analysis. However, DSR’s now have this capability to organize data in a uniform manner and analyzing each and every transaction at the retailer level.

DSR insights

Demand Signal Repository could be used to optimize various processes throughout the supply chain, marketing, sales etc. It can be used to provide insights which would help in the analytics to channelize and manage an organizations spend accordingly.

Areas where DSR can offer insights would include –

• Inventory Optimization
• Out Of Stock
• On Shelf availability
• Trade Promotion Effectiveness
• Demand Forecasting
• Consumer Insights
• New product Introduction
• Distribution gaps
• Others

Some of the reports / insights mentioned are inbuilt in various DSR offerings as dashboards. Other capabilities could be achieved by enhancing and customizing the DSR offering. Lot of IT companies have identified this opportunity and are offering services to their CPG clients in this area. The services could vary from just implementation to consulting to providing add on services and consulting. These IT companies are getting into partnership with the DSR vendors and offering it to the CPG clients along with these services.

Gaining insights in these areas using Demand Signal Repository would tend to make businesses more profitable and increase their ROI.

Some of the challenges faced in effective implementation of DSR

• Integration of retailer data with other data sets or the data quality itself.
• Insufficient / Inaccurate data.
• Lack of funding and leadership support.
• Organizational barriers.

Companies which have been able to wither these challenges have emerged much profitable than their peers.

Effectiveness of DSR

One of the leading consulting groups in the consumer products industry, Hitachi Consulting has conducted a survey as to how effective these initiatives have been. The survey reveals that –

The DSR is pervasive and rapidly gaining maturity. Most CG companies, both large and small, have established a DSR capability and plan to expand it.

• Cross-functional involvement (e.g., Brand Marketing, Trade  Marketing) seems to be more prevalent across CPG companies starting with DSR now and not just IT which seemed to rule the roost few years back.
• The largest companies (>$10B in revenue) have made the greatest strides with the DSR.

The DSR is producing good returns, and value recognition comes quickly, in most cases.

• Companies are using few primary metrics to assess the value of the DSR such as Sales Forecast Accuracy
• The most beneficial outcome of the DSR to CPG companies is the improved ability to analyze pricing and promotions.

Future Priorities of DSR

In future, CPG industry is looking towards

• Demand driven industry – Pull based
• Collaboration with the retailers to leverage DSR abilities to a maximum
• Trying to gather more POS data sets for maximizing the benefits of DSR

DSR Offerings

Prominent DSR offerings in the market are

• Oracle Demand Signal repository
• Teradata Demand Signal Repository
• Shiloh Technologies
• SAP Demand Signal Management (to be launched in Nov 2012)
• Vision Chain DSR

SAP DSM would be launched on SAP HANA platform which is an in memory database bound to increase the speed of analytical capabilities by approximately 350x times. This product by SAP could lure many CPG companies to incorporate DSR capabilities as they could also leverage their SAP ERP data ( along with the POS data ) which is the most widely deployed ERP in organizations.

Clients of various DSR offerings

Major clients of DSR include Bayer Healthcare LLC, Closet Maid, The Dannon Company, Del Monte Foods, General Mills, H.J. Heinz, Mead Johnson Nutrition Company, Merck Consumer Care, Newell Rubbermaid, Inc., and The Scotts Miracle-Gro Company, Heineken, Novartis, Saralee, Conagra Foods etc.

This article has been authored by Gaurav Sarda from NITIE.

Image: FreeDigitalPhotos.net