ECR AP - The need for collaboration - ECR Community

ECR AP Award Silver
Consumer value creation through Joint Promotion & Event Forecasting (JPEF)
“Being each others’ best business partner” By Hul India and Tesco India
Ganesh Ananthanarayanan General Manager Modern Trade
HUL
In 2011 when we started the project we said our common intent
is to move to share of wallet to share the heart of the shoppers.
That is what will give us value on the long run.
Background In India:
Modern Trade business in India has close to “TRIPLED” in the
last 5 years. At the moment it is 8-9%. There are a lot of demand
and supply drivers for this growth.
Operational Complexity in India:
� MRP: India is amongst 3-4 countries in the world having
MRP (maximum retail price) regime: none of the product
can be sold above a maximum price. The band of operation
is very narrow.
� Tax situation is different in every state which means both
retailers and manufacturers have to have Distribution Centers
in every state. Unilever have 42 DC s in India. Having
over 1000 SKU we have 40 -45 thousand SKU DC combination
to work with
� Challenging infrastructure
All these factors make it a complex country to operate in.
As a plus the Indian Consumer is a very demanding lot who
wants the “Best Deals Everyday”
Uday Varma (Commercial Director, TESCO India)
From retailer point of view price and promotion are very important.
Modern trade is still only 9 %. Driving the shift from
traditional trade to modern trade is the value what costumers get
in large stores like TESCO. This was fueled by macroeconomic
factors also so consumers wants to save more and looking for
promotions.
Different research shows also :
� Customers are actively looking for promotions going from
25% to 39%
� Customers shopping at 2 or more shops consistently is growing
from 11% to 29%
That leads us to the criticality of promotion planning and improved
forecasting of major promotions/events These are the key
to drive up :Service levels, Availability/ OSA, Customer satisfaction
and Market share.
Seeing all of the external and internal factors you can imagine
that forecasting is extremely difficult. That forced us to see how
we could do this part of the business collaboratively. Unilever
and Tesco has decided to do joint promotion and event forecasting
with the following objectives:
� Minimalistic forecasting error
� Reduce opportunity loss
� Reduce excess inventory
� Customer delight through high availability of promotions
that have a unique value proposition
Vijay Nehra Customer Service Director Modern Trade HUL
We looked the promotion planning from technical and adaptive
aspects. Technical aspect is easier. The adaptive part where you
start to share information with transparency is more challenging.
Joint Promo Plan – Guiding principals
� Common focus to grow specific categories, based on
improved consumer and shopper satisfaction,
greater volume
greater turnover
higher profits
� Common goals, objectives and decisions must be based on
facts and data
� Parties must be committed to implement it & willing to
spend the resources necessary
Erika Vida (Supply Chain Director, TESCO India)
As a result of our Joint Promotion and Event Forecasting:
For Consumers:
� TESCO ranked No. 1 by shoppers in CQT Tests on Promotion
/ Price perception
� Higher loyalty seen through better promotion purchase
� Better savings for the family in a volatile macroenvironment
For TESCO
� TESCO gains market share – move up from 5.6% to 6.2%
post execution of JPEF
� OSA & Service Level > 97%
� 10% improvement in “days on hand” through forecast accuracy
improvement of 2100 bps
For UNLIVER:
� Unilever gains market share in TESCO – improvement of
170 bps
� Higher brand loyalty / stickiness to Unilever brands
� 2% sales growth through the collaboration
Alex von Behr , Anthony Rose , Vijah Nehra , Erika Vida , Ganesh Ananthanarayanan
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