Getting Your Fizz to Pay Off with BI

By Lisa Vaas  |  Posted 2005-06-21

Getting Your Fizz to Pay Off with BI

Used to be, soda was soda.

Used to be, a sales rep standing in front of the cool mist pouring out of the soda pop cooler would go on gut instinct when it came to figuring out what to charge a convenience store for a shipment of RC cola or 7UP.

Then there came acquisitions. Costs went up, and margins shrank. Consumers started getting a taste for all manner of beverages—sports drinks, flavored waters, fruit teas, juice concoctions, you name it.

And to top it all off, big-box stores like Wal-Mart suddenly started calling all the shots, demanding data to sate their thirst for predictable, consistent profitability.

How, in a fast-moving market like soft drinks, does a sales rep on the street know how to manage an account, with all this new packaging, new products and new options available to every account? How does a vendor come up with the information to predict and report on the data big boxes are demanding: Namely, how much can vendors add to the bottom line?

For Royal Crown Bottling—purveyor of RC, 7UP, and a growing line of other soft drinks, teas, fruit drinks and bottled water in a territory that spans Indiana, Illinois, Kentucky, Tennessee and Missouri—the answer was Margin Minder Max, a BI (business intelligence) platform from Salient Corp. thats based on the companys latest UXT high-performance data integration software.

With UXT, the newly automated sales team left behind a homegrown information analysis system that involved reams of paper and weeks of analysis. RC Vice President of Sales and Marketing Chad Metten described the former setup as being just your basic data dump into an AS/400—thats as fancy as it got.

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"The IS guys would produce a sales generator report, which is what we hard-key to settle invoices," he said. "That information was basically summarized in a lengthy green-bar report that youd have to go in and analyze yourself."

Today, with the click of a button on UXT, managers can find profitability on an account, whether RC is making good on marketability programs, and what packages and brands work together to enhance sales and profitability.

Not only can RC hand over the detailed information necessary to smooth its relationship with Wal-Mart, but its also using the big-box approach to better understand how to help smaller customers by getting the product mix and pricing strategies right.

Results are improved profitability of 10 cents to 15 cents per case, thanks to more effective pricing strategies. Sales volume is up with customers of all sizes, and rapid response has changed from two weeks to next day.

Best of all, RC has gained insight to stay competitive as the company builds market share.

Next Page: The IT manager weighs in.

The IT Manager

Weighs In">

For example, in a recent analysis of the Kroger grocery stores in southern Illinois, 80 percent of sales volume was attributed to advertised promotions, with only 20 percent of volume being moved in weeks lacking promotion.

Using that information, RC built a blended, low-price-everyday strategy for the grocery chain: a win for both RC and Kroger.

David Palmer, IT manager for RC Bottling, arrived at the company long after the decision to use Salients original technology had been made, back around 1992 or so.

But he was at the helm when RC updated from Margin Minder to Margin Minder Max, introduced last year.

UXT tracks commercial and operational data in real time, integrating billing, syndicated, survey, supply chain and causal information.

It organizes these data streams into a comprehensive accounting of an enterprises activity and delivers it in a form so that users can correlate their own actions to profit, growth, efficiency and productivity. Max shows the connection graphically, continuously, in real time.

RC was actually a beta site for UXT, so the company had input on much of the tools improved flexibility, additional options and views.

Compared to other products hes used for BI warehousing, including a long-ago product called Flagship, from Pilot Software, UXT is much easier when it comes to changing data, manipulating data fields and creating your own fields, Palmer said.

Other data warehouse/BI applications Palmer has used include Cognos Inc.s PowerPlay OLAP software and Cube, a product which, he said, likely doesnt exist anymore.

Compared to these, creating data is "reasonably easy" in Salients tool, Palmer said. Also, from a user standpoint, UXT has "wonderful pieces" called bookmarks and supermarks that allow RCs IT team to easily set up when they call daily business thumbnails.

In these thumbnails, all users—including about 30 managers from all RC branches, most of whom run distribution centers—log on every day to see the status of current business.

"They can go through them and dont have to spend an inordinate time manipulating data," Palmer said. "They can see what they want to see fairly quickly, but if they want to drill down, theyre capable, and UXT is conducive."

Usability is what Metten, as well, likes about the Salient tool, as compared with similar technology hes seen from SAP AG and others.

"SAP has a tool," he said. "There are lots of tools out there. But to look at all the information on one page, and to get it concise and have all information you need, and the maneuverability, its one click or up and down instead of cutting and pasting that you had to do in other tools.

Next Page: Next up: Canning the bum vending machines.

Next Up

: Canning the Bum Vending Machines">

"Margin Minder jumps off the page at you, and its all on one page. Other systems you had to bounce around in it or click tabs to get the information you need."

Next in store is for RC to look at routing tools to get the most out of salespeople and trucks. Metten said that RC is looking at tools that will help to plot out routes to see whats most efficient—of particular importance in these days of rising fuel costs.

"We go too often, unfortunately, to our customers," he said. "If we could call on them two instead of four times a week and not hurt volume, it would help as far as a cost-cutting measure."

RC will also be using UXT to study what vending machines are paying off and which are becoming big, humming paperweights.

"We found, we place a lot of vending equipment on full service, which is, we put a vending machine in front of a beauty shop or factory," Metten said. "Our driver delivers the product, we take the money out, and we pay a commission on the right to sell drinks.

"We have 6,000 pieces of equipment on the market. We have a commitment to purchase 500 annually. We found that with many that weve placed, companies have changed, and a lot of pieces of equipment werent paying out anymore."

RC could use Salients tool to target the nonprofitable vending machines, identify their location, call on the customer to see if theres a better way to service the equipment, or maybe just go and pick it up and put it somewhere else where the company could make some money off it, Metten said.

"It took me five minutes to identify a customer, where previously it would have taken five months," he said.

And that is time that RCs managers can devote to what truly matters—inventing and distributing more fizzy and nonfizzy things to drink.

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