Technology and Operations Management
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- Assignment: RC TOM Challenge 2017
P&G: End-to-end Supply Chain Model
P&G has established its competitive edge to lead the global supply chain with the concept of end-to-end model. How does the company leverage digital capability to build its supply chain model?
Emerging Digital Business Models
The past 30 years have been a massive change in P&G’s supply chain operations. Without a doubt, digital technology is being one of the biggest drivers of such transformation. According to Supply Chain 4.0 in Consumer Goods, the focus of the supply chain management role has altered to “advanced planning processes” based more on the actual demand from end consumers enabled by digital analytical forecasting and integrating operations planning. [1] Such demand-driven model, in which sensing and responding to demand as quickly as possible, requires manufactures to reconsider its production to shipment network design. In order to meet such demand, P&G integrated data-driven production flow of operations that significantly improved responsiveness as well as transparency. [2] As a result, the digital pieces of the supply chain that used to be discrete individual steps now become more holistic, real-time management of the entire ecosystem. [3]
End-to-end Supply Chain – From Factory to Shelf
P&G has leveraged large-scale application of advanced analytics and digital technology to excel in its ability to manage complicated global supply chain with more than 130 manufacturing sites serving over 180 countries. One of the key drivers is an “end-to-end model” that connected the siloed steps from suppliers to retailers to provide the most value to the end consumers, “with faster-than-ever response times” [2]. The concept of integrating the whole value chain allow every stakeholders of its eco chain to minimize the unnecessary inventory as well as to speed up the system.
Pathways to Just Digital Future
P&G integrates its supply chain software with its suppliers, distributors and retailers with a notion of joint business planning with key stakeholders. [4]. To fully integrate different parts of the chain, understanding that digital automation of workflows that allows high visibility of any movement in each step is a key to enable end-to-end model. Digital automation of workflows empowered by use of algorithm-driven tools to reduce exceptions, enables end-to-end planning, connecting headquarters, manufacturing plants, distributor, and retailers. [2]
One highlight in logistics capability, called “Distributor Connect” connects P&G with distributors. [5] Digitally enabled operational program, it allows all the transportation, from raw materials from suppliers to finished goods to retailers, be accessible in one source of data, on their laptop or mobile, for the supply managers to track the status of the delivery. With enhanced real time visibility of where things move, Distributor Connect significantly reduces inventory across the ecosystem and the ‘deadhead,’ trucks not optimally utilized, by about 15%. [3]
Similarly, not only does P&G support with mobile-phone applications that enable retailers to check the status and order more products, it fully incorporates “GDSN,” Global Data Synchronization Network with the operation with retailers. GDSN enables 100% automated commerce without human intervention. [6] This capability significantly improves the human error between retailers and companies and save cost for all the parties.
Leaping for the next step to enable R&D Lab to Shelf
These ‘end-to-end’ approach, enabled by digital capabilities, allow the company to accelerate the time to deliver its products to the market. However, the implications of rising digitalization trend do not just start from manufacturing. It goes back into product innovation. [8] If we look at different industries, for example apparel industries, digital landscape has pushed each brand to take advantage of latest technology such as AI to realize real-time personalization. [7]
To truly accelerate the cycle of innovation, the company should consider the following:
- Unlocking insights through Advanced Analytics – If we can quickly identify the insights from the big data, could we capture primary demand for the manufacture without sequential researches to ‘qualify’ the products? AI will enable the company to better understand and interpret individual customers’ preferences. This will allow us to shorten the lead-time to explore different options of formulations. This approach will also significantly reduce finished goods inventory with more precise demand forecast while offering the better value proposition to the end consumers.
Questions to be answered
As we have better clarity of the current practice with digital capability, P&G will continue to face challenges including the following:
- How could the organization fully integrate the product innovation phase into the end-to-end model to meet the individual needs of end customers?
- How could a company continue to leverage economy of scale while meeting the demand from each retailer just in time?
- As digital technology is constantly evolving, how could P&G stay afloat in such transformation?
(word count: 776)
[1] Alicke, K., D. Rexhausen, and A. Seyfert, “Supply Chain 4.0 in consumer goods,” McKinsey & Company, April 2017, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/supply-chain-4-0-in-consumer-goods], accessed November 2017
[2] Aronow, S., Nilles, K. and Romano, J., “The Gartner Supply Chain Top 25 for 2017”, Gartner Inc., May 25, 2017, [https://www.gartner.com/newsroom/id/3728919], accessed November 2017.
[3] Chui, Michael, “Inside P&G’s digital revolution,” McKinsey Quarterly, November 2011, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/inside-p-and-ampgs-digital-revolution], accessed November 2017
[4] Fritzen, Soren., F. Lefort, O. Lovera-Perez, and F,. Spangar, “Digital innovation in consumer-goods manufacturing,” McKinsey & Company Consumer Packaged Goods Article, November 2016, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/digital-innovation-in-consumer-goods-manufacturing], accessed November 2017
[5] Trebilcock, Bob, “What Does It Take To Remain A Supply Chain Leader?”, SupplyChain247, January 2015, [http://www.supplychain247.com/article/what_does_it_take_to_remain_a_supply_chain_leader], accessed November 2017
[6] Vadino, Jessica, “Digital Transformation in Retail: How to Take Advantage of Innovation”, E-Apparel, June 23, 2017, [https://apparelmag.com/digital-transformation-retail-how-take-advantage-innovation], accessed November 2017
[7] Boudet, Julien., B Gregg, J Heller, and C, Tufft, “The heartbeat of modern marketing: Data activation and personalization,” McKinsey & Company Marketing & Sales, March 2017, [https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-heartbeat-of-modern-marketing], accessed November 2017
[8] O’Mahar, Kevin, “CPG: the Post-Replenishment Supply Chain Challenge,” Logistics & Transportation, Nov 30, 2016, [https://www.forbes.com/sites/kevinomarah/2016/11/30/cpg-the-post-replenishment-supply-chain-challenge/], accessed November 2017.
Photo credits:
Davenport, Thomas H., “How P&G Presents Data to Decision Makers,” Harvard Business Review, April 2013, [https://hbr.org/2013/04/how-p-and-g-presents-data], accessed November 2017
Fritzen, Soren., F. Lefort, O. Lovera-Perez, and F,. Spangar, “Digital innovation in consumer-goods manufacturing,” McKinsey & Company Consumer Packaged Goods Article, November 2016, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/digital-innovation-in-consumer-goods-manufacturing], accessed November 2017
Student comments on P&G: End-to-end Supply Chain Model
Shoko, I found it very interesting to understand a little better P&G’s supply chain and how they are taking steps to digitize it. I also agree that increasing speed to consumer, visibility and rastreability are key to win in this game. Companies have now the ability to create a digital “twin” of the products they sell and track it throughout its entire supply chain. One question that I have is to what extent is P&G leveraging Internet of Things in their products and whether or not this is even a consideration for them, since some of their products are somewhat commoditized.
Thanks for sharing this CPG example. The idea that P&G can go further in these digitization efforts to eventually cut off parts of the supply chain is intriguing. If this is the case, how and why are their supply chain partners currently collaborating in ongoing digital efforts, if the ultimate result might be to dis-intermediate them? Do you see a future where current supply chain actors remain in a partly digitized world, while P&G pursues a different segment of customers altogether through a P&G-only, truly digital approach? While there likely is enough gross demand to support multiple supply chain types at first, we can imagine that if the direct-to-consumer is superior, the impact of factors such as network effects may favor an winner-take-all shift to that model.
Shoko, thank you for the great insight into P&G’s world renowned supply chain. You addressed many of the aspects I wondered about in my previous career as a Walmart category manager!
The question you brought up about customization in order to meet the individual needs of end customers is particularly salient. The crux of this issue is something we’ve discussed greatly in class recently: network effect and a chicken or the egg situation. Retailers and suppliers both hold an immense amount of rich information, but are often reluctant to share with their partners. Trust needs to be built into these relationships in order to maximize the size of the pie and total potential upside for everyone. Digitization is making this increasingly easier in practice, but time will tell whether the retail and CPG industry titans will be willing to share their “secrets”.
Thank you Shoko for this insightful article about P&G and its supply chain. I think you brought up a very interesting point around ‘Direct to Consumer’ and the possibility that some part of supply chain would be cut out. It is applicable to both how the physical goods get from manufacturing plant to consumer and how the information feedback loop goes back from customer to manufacturers.
I totally agreed with ‘Distributor Connect’ and its benefits to all the parties ‘from factory to shelf’. In addition, we could already see that digitalization has disrupted the industry even further as manufacturers bypassed the ‘shelf’ and went directly to consumers through online platform. Traditional retailers have changed the way they operate as well as their role in the whole supply chain from being the ‘shelf’ to being the ‘logistic guy’ as they moved to online channel. The joint business plan will have to be more rigorous as customers become omni-channel.
One way P&G could do to stay up-to-date with digital transformation is to form strategic partnership with cutting-edge parties in the supply chain. For example, it joined with Amazon to introduce P&G’s brand dash button where consumers have the button at home and place their orders when they are running low on specific consumable products. This is extremely convenient for customers and also gives a real-time order transparency right from the consumers – one step beyond the transparency at retailers.
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Walmart Luminate: What You Need—and Need to Know—to Grow
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Walmart Luminate is ushering in a new era of retail insights for consumer packaged goods (CPG) companies. Fundamentally, according to Walmart, Luminate will “further democratize a unified view of retail insights, making it easier for suppliers of all sizes and merchants to grow their businesses.”
With full visibility into in-store and online performance data, CPG companies can leverage a single source of truth to enhance supplier-retailer collaboration and improve customer-centric decision-making.
In this guide we will discuss:
What is Walmart Luminate?
- Luminate Basic
- Channel Performance
- Shopper Behavior
- Customer Perception
Retail Link-DSS vs. Luminate Basic and Charter
- Importance of Luminate for CPGs
- What Data You Need and How to Get It
- Why Clean, Harmonized Data Is Essential
- The Need for Automating Walmart Data Collection
- The Benefits of Using Retail Velocity's VELOCITY ® Platform with Luminate
UNDERSTANDING WALMART LUMINATE
Walmart Luminate is Walmart’s proprietary comprehensive data analytics product suite within Walmart Data Ventures . It replaces the older Decision Support System (DSS) within Walmart’s Retail Link, which has its limitations and can be time-consuming and cumbersome for users.
This transition to Luminate marks a significant shift in how Walmart and suppliers will manage and utilize data. Walmart believes this changeover to a more responsive, flexible, and better-equipped platform will help suppliers connect with their buyers and account managers more effectively in today's complex retail environment. This improved alliance will streamline joint business planning , leading to more effective results for Walmart and suppliers.
Luminate, billed as a next-generation data platform, will contain more comprehensive datasets, feature more user-friendly interfaces, and offer a suite of advanced reporting tools. Additionally, it will provide greater data transparency and new metrics so brands can gain a deeper understanding of category health and consumer trends.
Luminate Basic and Luminate Charter
Walmart Luminate offers two subscription options: Luminate Basic , a required free version that provides access to select features and data in Walmart Luminate, and Luminate Charter, an optional paid package that allows full access to the entire Walmart Luminate product suite.
Walmart Luminate Basic
Walmart Luminate Basic subscribers will have access to standard operational metrics with pre-packaged and ad hoc downloadable reports to unlock business-critical insights needed to run and grow their Walmart business. This includes a subset of Channel Performance features and insights spanning store sales; e-commerce sales; store, distribution center, and fulfillment center inventory; and demand forecasting.
Although Walmart Luminate Basic does not include all the features of the paid Charter version, many of those features will still be accessible to suppliers in Retail Link (e.g., OTIF scorecard and SQEP dashboard). Also, Basic will not allow report sharing, data feeds, and data consumption via APIs.
Walmart Luminate Charter
The Walmart Luminate Charter package is comprised of three products (or offerings or modules): Channel Performance, Shopper Behavior, and Customer Perception.
- Channel Performance is a reporting tool like Retail Link in that it contains similar functionality and information; however, it offers much more. Channel Performance provides insights into supplier performance across channels: i.e., omnichannel sales, inventory, and store demand forecasting data. This module allows suppliers to gain a comprehensive view of sales, whether in-store, online, delivery, pick up ship to home or store, and ship from store. It also provides on-time-in-full (OTIF) performance visibility, unique operational metrics such as nil picks and online pickup and delivery, and dynamic restatements.
- Shopper Behavior enables suppliers to monitor shopper behavior to better understand how shoppers interact with their category and brand shoppers. Shopper Behavior allows brands to analyze the changing customer shopping habits and adjust more quickly with better data to correspond to consumer demand. This module, in general, tells you the “what” behind the buy. With Shopper Behavior, suppliers get access to detailed reports about brand loyalty, product or competitor switching, trialists, benchmarking, basket pairing, product assortment, product substitutions, and more. The module also provides insight into competitors’ channel performance.
- Customer Perception unlocks the “why” behind the purchase by capturing on-demand customer feedback through access to a community of verified Walmart shoppers. Suppliers can utilize this module to conduct in-depth interviews, user testing, and concept testing to plan for and drive future growth.
API Key and Additional Benefits
Unlike Retail Link, Charter includes an API key to feed the data to an external platform or software solution such as VELOCITY for data cleansing and harmonization and deeper analysis. This allows brands to have more control over their data and improves its usability.
Exclusive benefits for Charter subscribers include access to a dedicated account team and engineering support for API ingestion. Additionally, subscribers will have access to new and unique datasets, such as insights into digital product transactability (e.g., information on items added to an online shopping cart and purchased through grocery pick-up and delivery).
Overall, with Walmart Luminate tools and insights, CPGs can better understand the Walmart customer and optimize omnichannel operations with increased speed and greater clarity.
THE IMPORTANCE OF LUMINATE FOR CPGS
For CPG companies, Walmart Luminate's enhanced data and reporting capabilities and greater ease of access to the data are game changers. With more available data, more timely data, and unified data—suppliers have increased visibility into their performance to make more informed decisions, optimize their supply chains, and improve their overall retail strategies with Walmart merchants. The ability to combine inventory and sales data within a single report, for instance, offers a more comprehensive view of retail performance, enabling better forecasting and inventory management.
Because Luminate provides more sophisticated tools for segmenting Walmart retail data (for example, companies can now separate brick-and-mortar sales from online sales within the same platform), CPG companies can develop more targeted strategies (e.g., sales, marketing, trade promotion, new product launches ) and gain nuanced understandings of different sales channels. Furthermore, Luminate’s advanced date handling improves the accuracy and relevance of reports, ensuring that brands are working with the most current and actionable data and insights available.
WHAT DATA DO YOU NEED AND HOW do YOU GET IT?
While Luminate provides an abundance of data, it's important for CPG companies to focus on the most relevant information that helps drive profitable growth. Key fields and attributes related to daily retail data, such as sales performance, inventory levels, and supply chain metrics, are essential. These daily data points help businesses more accurately track their products' performance, effectively manage stock levels and avoid out-of-stocks, optimize trade promotions , and ensure timely store replenishment.
Reports in Luminate can be built in Basic and Charter subscriptions; however, Basic reports can only be fetched manually (with the data dictionary aiding in understanding DSS field names). Luminate Charter offers more selection options, such as the previously mentioned separating physical store POS data from dotcom sales. Additionally, API access—especially when aided by an automated data ingestion solution like VELOCITY—provides faster data extraction and facilitates seamless data integration with existing systems or third-party solutions and workflows to drive deeper analytics, further improve strategy development, and improve retail execution . With this approach, you gain more control of your data, and you get more data to better inform your planning and execution decisions.
WHY having CLEAN, NORMALIZED, AND HARMONIZED DATA IS ESSENTIAL
Even with Walmart Luminate's advanced features and richer datasets, the quality of your data remains paramount. Clean, normalized, and harmonized data ensures accurate reporting, analytics, and insights not only for individual Walmart stores and across Walmart stores but also for cross-retailer comparisons—that is, if you want to gain a comprehensive view of your overall business performance.
"Although Walmart Luminate will provide more data than the company previously did and provide more detailed data, it doesn’t necessarily mean that data will always be clean and accurate."
Data cleansing, at its core, involves identifying and correcting errors in the data, such as duplicates, inaccuracies, and inconsistencies. Data normalization structures the data in a standardized format, while data harmonization ensures that data from different sources is comparable and compatible. No matter the data source (Walmart or other retailers) or how trustworthy you believe the source to be, these processes are essential for ensuring and maintaining optimal data integrity and ensuring that reports and analyses are based on the most precise and reliable information.
Although Walmart Luminate will provide more data than the company previously did and provide more detailed data, it doesn’t necessarily mean that data will always be clean and accurate. And it’s important to remember that clean data is not only about accuracy; clean data also enhances the usability of the data. When data is standardized and error-free, it becomes easier to integrate with other systems and applications, analyze, and derive insights. This leads to more confident and effective decision-making and strategic planning, ultimately driving better business outcomes for all parties involved.
THE NEED FOR AUTOMATING WALMART DATA COLLECTION AND MANAGEMENT
Walmart Luminate represents a big step forward in strengthening retail-supplier communication and collaboration and driving mutual growth through greater customer-centric insights. With this significant step, though, comes a substantial investment that suppliers anticipate yielding a high return. Therefore, it’s crucial for suppliers to have the quickest and easiest access to the highest-quality data and optimize its usage for making strategic decisions that maximize their investment.
Simplify Data Extraction and Collection
Handling large amounts of retail data manually can be overwhelming for CPG companies and is prone to costly errors. Implementing an automated data collection, cleansing, and harmonization solution such as the VELOCITY ® retail data platform simplifies the extraction and management of data, ensuring seamless ingestion, integration, and updates of daily SKU-store-level data.
Spend Less Time Wrangling Data and More Time Growing Your Business
One of the main advantages of data automation and VELOCITY is that it significantly improves data accuracy. It also brings joy to IT personnel, data analysts, and business analysts as it reduces tedious manual work and frees up their time to focus on more valuable tasks. This includes uncovering insights that can drive sales, revenue, and profitability.
"Automated data pipelines enable near real-time data processing and integration, ensuring that decision-makers have access to the most up-to-date information when they walk in at the start of the workday."
By automating data ingestion and cleansing of Luminate data through VELOCITY, CPGs can significantly reduce the risk of human error and ensure more consistent data quality so teams across the enterprise can work from one accurate and reliable source of data and actionable insights.
Moreover, automated data pipelines enable near real-time data processing and integration, ensuring that decision-makers have access to the most up-to-date information when they walk in at the start of the workday. This is particularly important in the retail industry, where market conditions and consumer behaviors and demand can change rapidly and without notice. With automated data processes that put timely, trustworthy data in the palm of CPGs’ hands, brands can respond more quickly and appropriately to those changes and maintain a competitive edge.
BENEFITS OF USING VELOCITY WITH WALMART LUMINATE
Collecting and integrating Walmart Luminate with the VELOCITY platform offers numerous benefits to CPG companies:
- Streamlined Report Generation: VELOCITY can support data ingestion from both Basic and Charter subscriptions. The platform simplifies the report generation process, allowing users to build and fetch reports efficiently. This includes leveraging the Luminate data dictionary for precise data retrieval and using advanced selection options available in Charter.
- Superior Data Handling: VELOCITY enhances data management capabilities, improving date handling and allowing the combination of inventory and sales data within a single report. This provides a holistic view of retail performance, facilitating better collaborative decision-making and strategic planning.
- Advanced API Integration: VELOCITY anticipates ease of integrating Luminate’s API, facilitating seamless data flow and enhanced analytics capabilities. This integration enables businesses to automate data retrieval, ensuring that they always have access to the most current and relevant data.
- Enhanced Data Accuracy: By automating data cleansing, harmonization, and normalization processes, VELOCITY ensures that the data used for analysis and reporting is accurate and reliable. This leads to more meaningful insights and better business outcomes.
- Real-Time Data Access though VELOCITY’s dashboard: VELOCITY’s automated data pipelines provide real-time access to retail data, allowing businesses to make timely and informed decisions. This is particularly valuable in the fast-paced retail environment, where timely insights can drive competitive advantage.
- Scalability and Flexibility: VELOCITY is designed to handle massive volumes of retail data, making it suitable for companies of all sizes. The platform’s flexible architecture allows it to scale with the business, ensuring that data management capabilities grow in line with the company’s needs.
- Cross-Retailer Analysis and Comparisons: With more than 650 available retail data adaptors, VELOCITY can acquire and consolidate daily item-store-level retail data from any retailer, retailer data portal , or retail data source. This enables brands to conduct comprehensive cross-retailer analyses to gain a holistic view of their business and compare retailer and product performance by geography, store type, channel, and more. Sales, marketing, and demand planning teams need to work together to manage future production, trade promotions, and sales more effectively; thus, being able to quickly and easily collect and manage data and derive actionable insights across channels and retailers is critical to success.
In the dynamic retail landscape, effectively managing and analyzing data is crucial for success and staying ahead of the competition. Walmart Luminate, combined with Retail Velocity's VELOCITY software, provides a robust solution for optimizing retail operations. By focusing on gathering and leveraging the most relevant data and ensuring it is clean and harmonized, CPG companies can make more informed decisions that drive profitable growth and ensure retailer relationships with Walmart remain strong and mutually beneficial.
VELOCITY not only simplifies the data management process but also enhances the quality and usability of the data, leading to more effective strategic planning and retail execution. By integrating Walmart Luminate with VELOCITY, businesses can unlock the full potential of their retail data, gaining deeper insights and driving better business outcomes.
Explore how VELOCITY can transform your retail data management with Walmart (and all retailers!). Contact us today to learn more about integrating Walmart Luminate with our industry-leading software.