How Promotions Planning Enables Collaboration That Pays Off
Promotions planning is challenging, but promotions planning software can help alleviate some of the common pain points companies face when they try to improve their forecast accuracy and increase promotions generated revenue.
Marketing and supply chain don’t speak the same language. They have different views of the world: marketing with an external customer and competitor focus, supply chain with an internal vendor and network focus. One area of alignment should be service levels, but how do you collaborate to optimize inventory and thus service levels when you don’t speak the same language? Even harder, how do you do this effectively when you’re dealing with planning promotions? It can feel impossible. Many organizations struggle with this challenge, leading to siloed planning approaches and dark data that can cause more harm than good. Planning promotions effectively isn’t easy, so it’s little wonder that forecasting promotions’ impact is an elusive skill that escapes many planners. Forecasting promotions can be extremely complex. Demand signals, lead times, and other various factors can differ significantly at the channel or store level. Forecasting demand isn’t the only challenge. Supply constraints can also hinder promotions and lead to unmet service levels.
How to eliminate silos in your promotions forecasting
So how do you break the cycle of siloed promotions forecasting and execution? I believe that a promotion planning solution can facilitate smarter promotions planning and enable more profitable results for your campaigns.
Promotions planning software can improve your promotion planning process through better collaboration and can help functions stay aligned with a single source of structured data.”
Years of managing and implementing sales and operations planning (S&OP) processes has taught me that cross-functional collaboration is key when it comes to managing an efficient and profitable organization. When the operations team doesn’t know what marketing is planning, they will continue to optimize based on historical demand patterns. That may be fine if nothing changes. However, as soon as you throw promotional activities in the mix you change the demand patterns. If operations isn’t adequately prepared–and by adequately I mean with enough lead time to react to the change–you can end up with insufficient stock to meet the promotional demand. Poor service levels and upset customers make for a frustrated marketing team. It isn’t just about marketing communicating with the supply chain team, this challenge is in effect for the opposite direction as well. If marketing isn’t aware of supply constraints, we can end up with the same challenge of unmet service levels and disappointed customers. This probably isn’t new information for anyone who has worked in marketing or supply chain. Since everyone knows this dynamic is at play, many people overcompensate. Marketing might turn in forecasts that are slightly inflated to their needs so that they can ensure enough stock. Operations might under-promise and over-deliver to avoid the “situation” they faced during the last promotion. The end result, costly excessive stock.
Siloed planning leads to lost sales and reputational damage. To combat this, promotions planning software can bridge the gap between marketing and operations. This will improve your forecast accuracy, and subsequently raise service levels. Clean and structured data is essential. Marketing should be able to plan, design and review their promotions in a transparent way that provides invaluable data to streamline the supply chain.
Managing data in the promotion planning process
Far too often, marketing’s forecasts are kept in spreadsheets, disconnected from other data sources. Changes made in the spreadsheet do not quickly or easily translate into the operational plans. Having a single source of structured data with promotions planning is the best way to ensure this alignment. Why doesn’t marketing directly input the promotions plans into the supply chain planning software? Maybe they could… but that pesky language barrier can cause problems there as well. The data and information that is relevant for marketing and that which is relevant for the supply chain team can be quite different in terms of scope and granularity. Promotions planning software that integrates with a supply chain planning solution helps companies translate marketing data into operations data. Marketing can plan their promotions in a way that is natural with an interface that is easy to use. Supply chain can stay in sync with the latest changes and promotions plans with the level of detail they need to effectively plan the right level of stock, at the right locations, at the right time.
Promotion management case examples
A retail company discovered the power of promotions planning: “When we started using the new promotions software, we migrated from planning promotions in spreadsheets to an easy-to-use multi-user platform. All of a sudden, we could easily bridge the gap between the design of the promotions that the marketing team was responsible for with their integration into the supply chain forecast. Among other things, this has facilitated the collaboration both internally within the marketing department as well as with the rest of the operations teams. Ultimately, we were able to get the right stock at the right place and reap the benefits of better forecast accuracy.”
Another benefit of promotions planning for CPG and retail companies is the ability to utilize more advanced forecasting methods than those available in a spreadsheet. Forecasting promotions accurately is quite difficult. I used to believe a good forecast was akin to art, but really it is a science. A great promotions planning solution will allow you to incorporate machine learning into the promotions planning process. It allows marketing to use machines instead of minds to calculate and score a promotion’s uplift potential. Given the complexity of forecasting demand, let alone uplift from promotional activities, I believe everyone should be considering the benefits of machine learning to improve their forecast accuracy.
A CPG company uncovered the hidden superpower of promotions planning: “We wanted to bring our promotions planning to the next level by integrating the use of machine learning. What promotions software brought us was a structured data repository for our promotions that we can maintain with a web application. Now we are able to automate using lessons from past promotions to improve our forecast for future promotions.”