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Summary
Until recently the retail customer account teams at consumer packaged goods (CPG) manufacturers often had a hard time understanding current conditions on retailers’ shelves. To determine if a particular product was out of stock or if their promotions were executing properly, they had to scrape together data from many different retailer portals, compare numerous sources and devise their own spreadsheets for decision support. Today new software technologies can simplify this analysis. One vendor of such an application, TrueDemand Software, offers a product in software as a service (SaaS) form that enables account teams to anticipate, sense and respond quickly to changes in the retail supply chain. Ventana Research recommends that organizations assessing their demand management processes evaluate this software to determine whether it could improve their sales and supply chain performance management efforts.

Assessment
Large makers of consumer packaged goods typically have a variety of people who handle their retail account management processes. They include replenishment analysts, who resupply their assigned retail accounts weekly; merchandisers, who regularly visit high-volume stores to examine their products’ shelf space and inventory; store operations managers, who manage merchandisers; customer forecast analysts, who forecast demand for a category of related stock-keeping units (SKUs); and brand managers, who plan, develop and direct the marketing efforts for a particular brand or product and are involved in the company’s sales and operations planning process.

Until recently, each had to wade through massive amounts of point-of-sale (POS), retail and distribution inventory data, found in retailers’ portals and their own internal shipment, pricing and promotion reports, to understand current conditions on the retail shelves. They also used this data to determine if changes were needed in a particular product headed to a particular retailer’s distribution center. To perform these data analyses, they typically compared numerous reports, application-specific business intelligence data and, of course, complicated spreadsheets.

TrueDemand Software is one of a number of software vendors that provide technologies to simplify account management. TrueDemand’s Account Team Management Solution enables account teams not only to respond quickly to changes in the retail supply chain but also to anticipate them. Companies can fine-tune the mathematical algorithms that are used to generate the analysis, which were developed in conjunction with TrueDemand’s premier customer Kimberly-Clark, for accuracy and retailer type. TrueDemand’s Account Team Management Solution software looks at the whole supply chain, from manufacturer to shelf, and assesses what intervention can best prevent out-of-stock situations. The software reduces the number of “false positives” – that is, alerts that that will not impact performance – and ranks the impacts of potential actions on sales, thereby guiding users to those that will have the most significant negative impact, such as lost sales. The software also takes into account history and context. For example, when a distribution center’s inventory is low, the software has been programmed to calculate that shipments already are on the way and that taking any more action could jeopardize service level agreements.

Market Impact
The generic event management agent technology that has been available provides automated rules-based alerts and responses to operational and supply chain events to support overall operational performance improvement. The premise on which this was marketed was that since agents could be notified of changes in business transaction events, they would be able to keep problems from developing. Those applications also were supposed to enable faster tactical responses and speedier decision-making to keep operational activities and customer service levels on track with performance objectives. But event management agents failed to provide this alignment because most provided only early detection of what had happened and not indicators of what would or was likely to happen. They also did not provide guided responses – that is, they couldn’t tell users what they should do. Finally, they did not provide feedback to improve processes such as recommendations for enduring performance gains. As a result, few companies were able to use agents effectively, and implementations of this technology that crossed functions and applications were complex and costly. Swamped with too many alerts, users wondered which ones to respond to, creating a disconnect between front-line decision-making and strategic objectives.

TrueDemand takes a different approach. Its application combines analytics that predict out-of-stock situations in stores with a decision support system that allows retail customer account teams to figure out what to do once they identify a problem. Other vendors provide tools for retail customer account teams; for instance, Terra Technology’s software works with traditional demand-planning systems to monitor daily demand signals and to improve the accuracy of near-term forecasts.

Recommendation
CPG companies that seek to manage product sales performance are discovering that they also must manage their retail supply chain replenishment processes. However, the array of unintegrated repositories in which sales, fulfillment and retail data resides complicates managing activities involving and information on hundreds of SKUs and thousands of stores. Organizations that want to improve performance of the retail sales channel should consider TrueDemand for account and activity management. Ventana Research sees this application, specifically designed for sales and supply chain performance management, as a useful tool for executing strategy in this area of business.