Function:

Volume Planning

Products:

IBM Cognos TM1, IBM Cognos BI, Revelwood Performance Toolkit

Challenge



When you go into most liquor stores, it’s obvious there have been big changes in the beer industry. Just a few years ago the beer case was dominated by what was then the big three—Budweiser, Coors and Miller. Today, those three are still there but much of the shelf space is consumed by an ever-increasing number of products from craft brewers.

One manufacturer of craft beers, hard ciders and malt beverages creates and sells more than 100 different products. This brewer sits in the middle of an increasingly competitive beer market—it’s much smaller than the big three, but it’s much larger than most craft breweries. As a result of these market dynamics, the brewer wants to grow its market share in the overall beer market, in the smaller craft beer market and in the increasingly popular hard cider and malt beverages markets. To do this, the brewer wants to understand consumer buying patterns by product, by region and by time. The analysis also has to factor in packaging—each product SKU is based on its packaging. Six packs, 22oz bottles, cases and kegs all have individual SKUs. This insight will enable the company to better optimize packaging, production, marketing and sales for maximum revenues and profit.

Solution



Revelwood designed and developed a volume planning solution using IBM Cognos TM1 integrated with IBM Cognos BI. The planning cubes allow the finance and operations teams at this brewer to plan volume across products and times. The cubes incorporate not just historical, annual, quarterly and monthly data, but also daily sales data, enabling the brewer to make rapid, but data-based decisions in this fast-changing market. The system also incorporates current product pricing data, ensuring financial projections are accurate with today’s numbers, not last month’s numbers.

 

Results



Having the right analytics infrastructure allows the beverage manufacturer to ask any number of questions, including:

  • What is the highest selling product by district and by region?
  • Based on last year’s sales of X product, how much should we brew this upcoming year?
  • Which products are growing or declining in sales?
  • Is there a seasonality to certain products and how should that impact brewing operations?

With the TM1-based volume planning system, this brewer can now anticipate demand based on previous sales volume. And it can do this in many different ways. For example, the brewer measures and tracks sales in three different time dimensions: fiscal year, sales year and calendar year. TM1 gives the finance team the ability to look at current sales volume and trends, compare them to historical sales volume and trends, and then provide that insight back to the brewing operations team. Armed with that knowledge, the brewing team can determine what products need to be made when, in which formats, and in what volume. It can also use this data and insight to predict how new products will perform, based on the sales and volume data of similar products within its portfolio. The brewer can also project revenues based on volume and current product pricing.