Page 64 - Retail World March 2021

REVENUE MANAGEMENT REVENUE MANAGEMENT IN THE AGE OF IIOT Technology has served to make the supply chain and forecasting, particularly for promotions, easier and more reliable. By Exceedra Sales Director APAC Simon Elsby. Revenue management has, in the past few years, shifted from being a manufacturer- centric discipline to one embracing the supply chain – manufacturers, retailers, wholesalers and distributors. Technology and the industrial internet of things (IIoT) are speeding up and enhancing revenue management benefits for all parties. Here, we outline a couple of ways in which this is occurring. A recap on revenue management Revenue management systemically applies analytics across the supply chain to create, capture and retain sustainable value for consumers, shoppers, retailers and manufacturers. Orientated around incremental volume, revenue and margin growth, range optimisation and promotional planning, typically its scope includes all trade facing investment across the marketing mix, including brands, products, packs, channels, consumption and shopping occasions; investment required to execute such as trading terms, promotional displays, sales force; and pricing architecture. It considers channel, geography, route to market and trading up (premiumisation) or down (private label). Promotions planning and forecasting Technology, including tools such as blockchain, enables better visibility of the supply chain. One way in which this is evidencing itself is in the ability to look at full P&L information in real time concurrently across all parts of the value chain: the manufacturer, the retailer, and the distributor, to ensure that promotions are beneficial for all stakeholders, and optimise category revenue and profitability. This means looking at all costs of the promotion, including discounts, POS and promotion materials, inventory costs and working capital considerations. In the case of the distributor or wholesaler, which will be taking a margin on cartons moved, \[it means\] providing a fully ‘loaded’ costing including its own sales force and logistics infrastructure.Technology is also allowing better visibility across the trade promotions management system of Plan > Execute > Monitor > Optimise. At the promotions planning stage, the ability to see financial measures, such as gross margin, at a channel and customer level is required – along with the ability to view annualised, monthly and weekly promotions. All aspects of managing customers, forecast volumes, predictive analytics based on history and promotional objectives and mechanics, and scenario planning and ‘what-ifs’ pre-promotion are simulated and captured. Financial governance rules and protocols are set to manage variances, scenario planning and constraints, such as maximum 62 RETAIL WORLD MAR, 2021