Ensuring successful promotions for SA Breweries

The South African Breweries became aware that some marketing promotions were not having the desired result. Root causes included the lack of sufficient alignment between below-the-line items and above-the-line activities, which had the potential to dilute the overall brand experience.

The South Africa Breweries’ (SAB) strategic focus centres on four priorities: creating a balanced and attractive global spread of businesses; developing strong, relevant brand portfolios that win in the local market; constantly raising the profitability of local businesses; and striving for sustainability at all levels of the group’s business interests and activities.

SAB’s success in the local beer market has done very little to dilute its focused and proactive approach to building the equity of its product brands and ensuring that these are brought to market in an efficient and exciting manner that resonates with customers and consumers. While its international premium brands compete at the top end of the market, SAB is focussing most of its resource behind five ‘power brands’: Castle Lite, Hansa Pilsner, Castle Lager, Castle Milk Stout and Carling Black Label in the large and very important mainstream South African segment. In parallel, SAB seeks to offer superior value and service to retailers and to make the most meaningful contribution to society.

The strategy calls for greater investment in market-facing, brand-related activities – everything that touches consumers, retailers, government and the community. To this end, SAB is squeezing out all possible inefficiencies from non-market-facing operations such as production, supply chain and administration, and channelling the savings into its brands, marketing and distribution. The aim is to achieve a virtuous cycle whereby greater scale in the marketplace presents opportunities for higher efficiency, which in turn creates more funding for marketing and sales. This drives demand and generates further scale efficiencies.

Marketing

Below-the-line (BTL) point-of-sale marketing campaigns must be aligned with above-the-line (ATL) activities such as nationwide television and radio advertisements.They are very specific, memorable activities focused on creating the right customer experience within targeted groups of consumers. BTL and ATL ‘messages’ must be aligned, they must hit the market at the same time, and carry a uniform and aligned promise to the target audience to ensure promotional success and the resultant full marketing benefit.

They are under the direct control of the organisation.

SAB uses BTL marketing techniques to target clearly defined consumer groups rather than a mass audience like its ATL activities. The purpose of these activities has been to develop the brand by creating awareness and building a brand profile. BTL activities require in-store, point-of-sale and other promotional ‘assets’ to carry its message across.

BTL ‘assets’ are grouped as ‘merchandise’ (general promotional items such as shirts, caps, pens, beer glasses, and other similar items) or ‘campaign kits’ (in-store prizes, posters, shelf displays and banners) linked to a specific marketing campaign.

Problems

In the period from 2009 the South African Breweries embarked on an aggressive marketing strategy that saw marketing spend grow more than 100 percent in real terms. This had a resultant impact on the promotional supply chain, which remained largely unchanged and was not able to evolve fast enough, in line with the growing marketing campaigns.

Some of the challenges that resulted included instances of reduced on-time-in-full (OTIF) delivery of BTL orders into sales regions. There were instances where BTL campaign material sometimes reached the market late. This had the potential to confuse the customer and to dilute the overall brand experience.

Poor visibility of supply chain activities and inventory holding across all parties resulted in excess or sometimes obsolete inventory. One of the main reasons was that the SAB team responsible for BTL promotion execution was split across multiple business functions. This was not an ideal way to manage.

The lack of the most up to date warehouse and information management systems resulted inlow confidence in the available information on-hand and impacted decision making. The lack of structured processes and process adherence also contributed to challenges SAB was facing.

Some of the high inventory holding was difficult to administer and control, bringing about high operational costs and a high Stock-In-Transit account. The symptoms included unsatisfactory campaign outcomes that had the potential to harm customer relationships.

Solutions

A joint project team from SAB and its strategic partner InSync Solutions was tasked to examine and analyse the challenges and present solutions to the problem to SAB’s steering committee. The journey SAB and InSync Solutions undertook was to build an improved, professionally managed, trusted, aligned and integrated BTL supply chain that efficiently and effectively supports the achievement of the SAB business goals.

The solution addressed critical facets within the BTL supply chain.

People:An executive responsible for BTL was appointed and KPIs across the supply chain were aligned to the common objective of promotional execution excellence. Numerous multi-disciplined workshops chartered the way ahead, determining some quick-win actions and some long-term projects to meet future targets. The SAB Organisational Design and Development division assisted in a change management programme to support the new processes. Two departments were established: one operational and a ‘traffic’ department to maintain track of the current status of each project. Promotional project teams were also established to administrate each promotion on a project basis.

Processes:A new integrated end-to-end process was designed.

Internal processes:The internal processes preceding the primary logistics function were streamlined with tools implemented to align data flow from SAB to the primary logistics service providers.

Primary logistics function:All the processes for the logistics function were redesigned and supported by new technology.

Secondary logistics:The processes for all the depots across the country were redesigned to align them with their receiving, inventory management and redistribution activities.

Process controls:Integrated control points were built in across the supply chain, which serve as stage gates, enabling quicker decision making.

Network:The two existing BTL warehouses, one in Midrand and the other in Alrode, were analysed – on capacity, existing infrastructure and geographical location – and deemed inappropriate to support the new process. The two warehouses were consolidated into one fit-to-purpose new site, supported by 53 regional hubs, servicing almost 63 000 licensed outlets nationwide.

Technology implementation:AdOr was adopted as the new Warehouse Management System, which improved the material movement control through full handheld (scanner) capability. Visibility improved across all functions through live interfacing with SAP, SAB’s ERP system. Real-time reporting was made available using LITE, a web-based solution, used for material flow control and real-time information at the regional SAB depots, and redistribution processes improved at receiving stations.

Outcome

The impact of the turnaround strategy on the BTL Supply Chain resulted in a significant increase in consumer promotion activity and effective spend.In the 2012/2013 fiscal year more than 523 000 kits were delivered in almost 70 000 shipments.

The project resulted in immediate and sustainable quantifiable and non-quantifiable outcomes:

Non-quantifiable
• Customer satisfaction improved – licensed retail outlets such as liquor stores, restaurants and pubs benefited from the improved alignment between ATL and BTL campaigns.

• Real-time reporting of supply chain metrics became a reality.

• Promotion project teams were enabled to make better and quicker decisions.

• Documented and standard business processes were available. This made it possible to bring new employees on board quicker, and to measure individual performance.

• Flexibility of the production schedule (assembly of kits) increased. This makes the BTL function more agile to respond within the tight time-lines of a marketing campaign.

Quantifiable
• Reduced inventory holding – inventory on-hand and obsolete inventory saw a 50 percent decline.

• Inventory stock accuracy is now up to 99,9 percent.

• Order fulfilment – the on-time-in-full (OTIF) delivery of promotional orders increased by more than 84 percent, a vast improvement compared to previous years.

• Production throughput doubled while decreasing OPEX.

• Volume and share growth resulted from 100 percent market penetration.

The road ahead

The journey the South African Breweries and InSync Solutions undertook to build a professionally managed, trusted, aligned and integrated BTL supply chain that efficiently supports the achievement of SAB’s business goals, has been effectively achieved.

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