In January 2006, The Harvard Business Review published “Competing on Analytics” by Thomas H. Davenport. In this seminal article, Davenport discusses how applied data is being used to transform the customer experience. Companies as different as Amazon, Harrah’s, Capital One and the Boston Red Sox are crunching their way to victory with technology and a culture grounded in analytics.
It’s time to add Heidelberg Distributing to this list, but with an important distinction. Heidelberg is applying analytics with its largest grocery retailer in a highly-collaborative fashion. They use finely tuned demand forecasts by product, store and date to improve promotional effectiveness, reduce out-of- stocks and manage inventory levels.
Ohio-based Heidelberg Distributing Co.is the Midwest’s largest beer, wine and spirits distributor and is ranked among the Top 25 largest beer distributors in the U.S. It markets and sells some 18,000 beer wine and spirits products to 26,000 beverage retailers in Ohio and Kentucky and has been in business and family owned for over 75 years. The company’s vision is “thriving, adapting and leading the way to be our customers’ number one choice,” and senior managers have built a culture of continuous improvement. So it’s no surprise that Heidelberg is leading the charge in using product analytics to boost sales.
Nick Ducey, vice president of sales for Heidelberg’s Cincinnati and Dayton beer divisions, and Rob Gardiner, corporate business analyst, are at the forefront of how this works. Their approach is designed to provide the highest levels of service to their retailers.
In support of thse efforts, Heidelberg uses Market6, to track its sales forecasting, past performance, out-of- stock inventory, display performance and more–on demand, in the cloud, every day.
Gardiner applies daily Market6 intelligence for sales, lost sales percentages and out-of-stocks (both on shelf and display) and compares performance across stores, teams, the region, division and the state of Ohio as a whole. Heidelberg's sales associates know exactly where they stand and management can now specifically use targeted data to improve sales and ensure retailer satisfaction.
Because not all stores have the same footprint and therefore have varying sales volumes, Gardiner's team uses existing data in Market6 to derive new measures, allowing them to analyze out- of-stock rates. The resulting index allows Heidelberg to compare store performance regardless of size.
Rather than simply look at the absolute number of out-of-stock ‘events’ for each store by day, the team calculates an index which compares the events to overall sales volume for each store. This allows them to analyze performance across stores of varying size and pinpoint where the rate of out-of- stocks is highest. Using this approach, Heidelberg has reduced out-of-stock events by 17.5 percent year over year.
It’s not only about the data. For a company to truly compete with analytics, it must begin to operate differently inside its sales organization. For Heidelberg, this meant educating sales teams to use factual data to work with store managers in a more collaborative way. But since Heidelberg is a distributor, it also meant working with suppliers to ensure the supply chain supports variations in demand and patterns of change over time. This connected system of supply, distribution, analysis, sales, retailer and store managers works from the same set of data resulting in true collaboration.
The result? Heidelberg has seen a very positive shift in how its team leaders and key account managers interact with store managers. Armed with a significant competitive edge, they had demand estimates for each product Heidelberg distributes. Historical data and current share gives them selling points for upcoming holidays and promotions. Sales teams are able to provide expert guidance to store managers, guidance grounded in facts from Market6. True category leadership has emerged since Heidelberg brings more to the party than just its own data.
All of this is done with one overriding goal in mind: Improving performance at the store level. By blending new-found insights with planograms, analysis of store authorizations and promotional plans, Heidelberg collaborates with store managers to optimize displays, especially around key selling periods. But the planning starts well in advance. Heidelberg sales associates work with store managers in the aisles to provide a valuable resource. The pre-sales team at Heidelberg has access to data and can spot trends over time, allowing them to make recommendations grounded on facts and order more efficiently.
After 50 weeks of using this approach, Gardiner did an analysis by week comparing 2015 to 2014. Heidelberg identified that out-of-stocks had been reduced 92 percent of the time after analytics were in place. Since the historical performance analysis is now on-going, the data continues to mount, resulting in more powerful insights every week.
Another advantage is identifying product returns. Market6 analytics help identify the root cause, which ultimately helps us reduce delivery costs and increase the bottom line.
In a short period of time, Heidelberg Distributing has transformed the way it does business. Now sales teams are hungry for more information and are looking at ways they can access new scorecards directly from remote locations.
Heidelberg’s accomplishments stand as the benchmark against which others will be measured. The use of analytics, the degree of collaboration, the competitive distinction and business transformation were all implemented and delivered within 12 months.
This post appeared on BeverageWorld.com.