Moving Beyond Sales & Operations Planning at Mahou San Miguel
Evolving from S&OP to IBP to drive an 18 month forecast and improve collaboration across sales, marketing, finance, and logistics
Spanish beer company Mahou San Miguel, one of the key international players in FMCG, embarked on a transformative journey to evolve its Sales & Operations Execution process into a structured S&OP cycle and then into a fully Integrated Business Planning (IBP) approach. To support the change, the business chose the Board platform, using it to introduce a collaborative forecasting process that covers an 18-month time horizon. The process combines the single forecasts from all the key areas of the organization in one complete version, which is seamlessly integrated with the simulation capabilities of Board to generate and compare different business scenarios.
- Industry: Food & Beverage
- Department: All
- Revenue: 1.4 billion
- Employees: 4,000+
- Sales Value: 19.3 million hectoliters
- Countries: 70
A family-owned Spanish company, Mahou San Miguel (MSM) is the sector leader in the country with a production share of 32%. It has 10 brewery centers worldwide (eight in Spain, two in the USA, four water springs accompanying its bottling plants, and a professional team of more than 4,000 people.
The firm's history dates back more than 125 years, beginning with the birth of Mahou in 1890. Following continued growth, it now has an extensive portfolio of Spanish beers, including Mahou Cinco Estrellas, San Miguel Especial and Alhambra Reserva 1925; pioneering products in their category, such as San Miguel 0,0, Mahou Barrica and San Miguel ECO; and brands suitable for coeliac sufferers such as San Miguel Gluten Free and Mahou Cinco Estrellas Sin Gluten. It also offers an extensive range of international beers including Corona, Budweiser, and Leffe courtesy of agreements with partners including AB InBev and Warsteiner, and mineral water brands such as Solán de Cabras.
Internationalization is one of the company’s strategic cornerstones for development. It produces more than 70% of Spanish beer consumed worldwide and has a presence in over 70 countries.
From Sales & Operations Execution to Collaborative Sales & Operations Planning
MSM aims to maintain its position as a key player and reference in the Fast-Moving Consumer Goods (FMCG) sector at an international level, whilst leading the natural and authentic beverage categories in which it competes in the Spanish market. To do this, the company’s management team began a digital transformation effort that focused on the use of innovative technology to leverage information as a competitive advantage, alongside their traditional value of placing consumers and employees at the center of their decisions.
Managers began by looking at the Sales & Operations process, searching for technology that would help the business evolve from Sales & Operations Execution (S&OE) to Sales & Operations Planning (S&OP), extending the timeframe of the plans. They wanted to move from an executional way of working to a perspective and proactive approach. Once a mature S&OP process had been established, the company decided to improve it further by combining forecasts from across the organization. As Marina Anton, S&OP Lead at MSM, recalls:
When we ran our first S&OP, we realized that we were collecting forecasts in different ways, mainly through Excel spreadsheets based on the inputs of different teams. That was quite unstructured, and the focus of our forecasting process was only on the current month or the next month at the most. Therefore, we decided to create a cross-functional team to be sure that all the company was involved in the data collection process and the S&OP was not driven just by one or another team.
The new solution had to provide a collaborative environment where the conversations were about the value, i.e., the impact of the volumes on the business, rather than just the mere quantities. Additionally, given the complexity of MSM’s product portfolio, the management team needed a platform capable of easily segmenting and analyzing their portfolio to support a more reactive and responsive way of planning.
Shifting from volume to value with a decision-making platform
After an evaluation of several software solutions, MSM opted for the Board platform because they founded it very agile, oriented to business, and user friendly:
The most important thing we recognized was that Board allows us to jump from volume to value conversations: through the decision-making platform we are able to translate our information into value, for both the company and our customers, says Marina.
The first stage of the process involves the collection of all the volumes of the sales forecasts for the coming months, including information about sales promotions. This is done through a combination of automated and manual input. Once all the data is consolidated within the Board platform, the management team can generate all the P&Ls per channel, considering eight value criteria or dimensions such as account managers or SKUs. Finally, using the same sets of volume and value data, the company can generate different business scenarios through Board’s simulation capabilities.
Board is our single point of truth for our sales forecast figures and all teams are now aligned in one single forecast. That allows us to focus on value because we can evaluate the impact of the volume forecasts in financial terms. Besides, our product portfolio’s complexity can easily be segmented through Board’s analytics capabilities and consequently our S&OP process as well, Marina continues.
The S&OP process supports a consensus meeting every month, where the sales team validates a three-month forecast and evaluates the activities based on corporate KPIs, all within one platform – Board. Collaboration has been significantly increased as a result and the team has been empowered by the complete visibility they have of performance. This was particularly beneficial in the wake of COVID-19 with physical meetings unable to take place.
Extending S&OP to Integrated Business Planning
After achieving a structured S&OP cycle, the company decided to extend the use of Board by evolving the S&OP process into an Integrated Business Planning (IBP) approach that involves Sales, Marketing, Finance, and Logistics executives. These key stakeholders have joint responsibility in the forecasting process. As Marina explains,
We moved forward from an S&OP to an IBP process with our Executive S&OP meeting focusing on 12 or 18-month forecasting, combined with scenario management driven by Board. That helps us to anticipate risks and opportunities across our demand process, and proactively navigate through what is coming, also simulating our forecast figures to understand the volume impact on our P&Ls in different ways. Furthermore, these forecast simulations help our Sales team – and the entire Company as well – to better understand the market needs, resulting in better conversations with customers.
This move from S&OP to IBP has given MSM several other great features and benefits, such as what they call “the IBP tracker”, i.e., a Board integrated reporting application that allows the company to compare the forecasting numbers against, for example, the previous year. Through it, they can understand the volume impact from an economic and strategic perspective. As Marina notes, the company has achieved many benefits with the new solution:
Thanks to the IBP approach introduced by Board, our forecast is easily translated into Net Sales and Gross Margin. The forecast validation and KPI evaluations are not kept at our Sales team levels,but extended up to our Executive levels. These activities are not static anymore because they consist of a live process that provides rolling forecasts. Also, the reporting and our management information system have really improved: the creation and management of reports is all self-service, within the same planning and simulation environment of the Board platform, where all the required information is available.
MSM is going to further expand the use of Board to make the most of the Integrated Business Planning approach. The company wants to drive its financial budgeting and planning process by combining it with the strategic plan and a production capacity plan, all within the Board platform.