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Promotions Planning to bridge the gap between marketing and operations

Alis Hinrichsen
Alis Sindbjerg
Hinrichsen
Thought Leader & Strategic Advisor

As you probably already know, cross-functional collaboration is key when it comes to managing an efficient and profitable organization. In many companies it is a challenge to translate the plans marketing are creating into operational plans. There is a need to bridge the gap between marketing and operations. If that is also true for your organization that could mean that you are missing out on 10-15% of bottom-line potential.

In this blog post we will investigate what it takes to realize the potential by digitizing the process and thereby bridging the gap between marketing and operations.

Bridging the gap is about creating transparency
Marketing and supply chain do not 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.

Siloed planning leads to lost sales and reputational damage. To combat this you have to 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.

Why is it necessary?
When the operations team does not 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 we 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.

A new way of 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.

What does it take?
Cross-functional teams can benefit from digitizing the processes between marketing and operations by implementing a platform which synchronizes demand shaping campaigns and promotions with operations. It can provide a common platform giving all planning stakeholders a single view of operational data that is relevant to their individual roles.

It gives marketing professionals a powerful tool to view and scenario-plan campaigns and promotions in synch with supply chain operations. In turn, the forecasted impact of marketing’s campaigns on the baseline forecast are fed back into operations teams, so they can adjust their plans accordingly.

With the right platform you can improve your promotion planning process through better collaboration and help functions stay aligned with a single source of structured data.”

A retail case
A retail company discovered the power of bridging the gap between marketing and operations:

“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.”

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