Berlucchi - Case Study
Reporting, Sales Performance Management, and Operational Planning
The Berlucchi group was founded in 1955 by Guido Berlucchi, Franco Ziliani, and Giorgio Lanciani. It is an Italian market leader in the classic method sparkling wine industry and produces more than five million bottles per year. The company owns about 630 hectares of vineyards in Franciacorta, 100 in Trentino, 150 in Overpò Pavese, and three Vinification Centres in Borgonato (Brescia), Lavis (Trento), and Casteggio (Pavia).
With growing competitiveness, a rapidly expanding global market compared to a saturated national one, and a behavioral evolution of increasingly demanding consumers, Berlucchi's management team identified several priorities to effectively support the company's growth strategy:
- Optimization of the commercial strategy in terms of diversification of sales channels, with a strong focus on large retailers
- Definition of a sales planning model to optimize business performance and monitor its results
- Definition of a sales force incentive and credit management model
- Improved management and usability of relevant information, according to different user profiles, at all levels necessary for planning and analysis
From these considerations arose the need to equip the business with technological models and tools to manage the process in its entirety: from analysis of the results obtained and the related deviations, to the management and support of the sales force with dynamic and usable tools. These capabilities had to be integrated with the structure of the information systems used for business management without constraining their operations.
Berlucchi chose the Board decision-making platform for the project as it could support analysis processes, planning, and targeting in a single solution and adapt to the business’ requirements with ease.
The Management Intelligence project began with three main goals:
- Ensuring adequate coverage of the information requirements of the commercial management team and sales forces in the different territories
- Providing enterprise management with an effective reporting model that can immediately unload and display business components
- Implementation of a lean and flexible commercial planning system
The project was divided into two phases. The first focused on the design of a reporting model dedicated to controlling commercial performance, according to the different aspects of the marketing mix, and the sharing of market data. The structure of the control system is divided into the following areas:
- Statistical Reporting of Placed, Shipped, and Invoiced orders according to multidimensional daily reports
- Credit Management
- Customer Analysis
- Targeting system for the sales force
This first Board-supported model enabled the generation of a significant information asset, as well as the coverage of the basic information needs of the sales force and the teams responsible for its coordination. These conditions allowed the second phase of the project to start, which focused on the implementation of the Commercial Planning process.
The control model was developed using a well-established approach and was based on the articulation of the following tasks:
- Highlighting the information classes involved in the marketing and distribution process
- Defining the levels of detail by which to structure the information classes. The beverage sector requires multiple perspectives of detail: time, product category, customer, sales force, payment method, etc. These are accompanied by the need to monitor data according to classes of aggregations that can form clusters on an ad-hoc basis
- Optimizing information systems: the proper functioning of the designed model is based on the ability to capture data with extreme precision and at the right time from heterogeneous sources
A business intelligence environment was also created to articulate sales data according to the multiple business perspectives of the sector, including:
- Order date, delivery date, and invoice date
- Customer-product combination
- Ad hoc analysis for the large-scale retail and traditional channels at national and international level
- Order book verification - delivery process
- Control of the sales network
- Monitoring customer retention (number of customers served)
The control model developed with Board has enabled the creation of a consolidated database which can be used multidimensionally for all defined analysis dimensions. This database supports the definition of targeting and incentive systems for the sales force with ease and is extremely effective in driving budget results. On the basis of the final data it is possible to structure a series of operational tasks aimed at improving the sales activity in the territory, in particular:
- Pricing models, through which individual sales contracts are produced
- Definition of objective payment times, based on the customer analysis data available (indicators such as days of collection, days of delay, DSO, etc.)
- Definition of the target level of customer retention and customer acquisition (number of customers to acquire, etc.)
- Definition of objectives (mix of sales items by customer type)
The database also makes it possible to attribute target data according to the guidelines listed above and continuously check progress by detecting the summary information.
The desire to fully monitor sales and marketing activities creates the need to use heterogeneous data sources that are not always present within the company's transactional systems. As a result, the BI business model been designed to ensure the completeness of the available information by allowing users to:
- Carry out benchmark analyses of national and international competitors, leveraging external databases (which exist in a variety of formats) and reorganizing them according to the guidelines for the analysis and interpretation of information
- Integrate detailed information from industry guides for some market clusters
Similar to the sales force targeting models, combining the different sources of information provides sufficient data to define a business planning model. With Board, users can manage an integrated process in which all commercial variables are controlled, starting with sales volumes to determine all commercial discount conditions. The definition of turnover targets impacts the volume planning activity and therefore the sales listings.
The model, to be effective, must consider the dynamics of the sector and the capabilities that allow Berlucchi to penetrate the market. To support this, the planning flow is diversified depending on the target market segment. In particular, the following distinction is made:
- Large-scale retail channels, for which the process is based on the level of a single store
- HoReCa channels, for which planning is conducted at the agent level
In both cases, the model, thanks to Board's native tools, allows both a top-down and bottom up approach in order to ensure maximum flexibility in data input and to fully exploit the potential of a multidimensional model. In the case of the large-scale retail channel, for example, users have the option to define objectives at the level of customer, purchase group, or purchasing center, or individual, proceeding from the bottom up.
A special consideration for the beverage sector, and specifically in the wine segment, is the attention to the vintage dimension of production. The distribution of the product on the market cannot ignore this component, so the model allows users to differentiate volume planning based on:
- Bottles with Vintage
- Bottles with Vintage (thousandths)
In the first case, the model automatically segments the planned volumes based on the availability of stock, pursuing a FIFO logic. The distribution of the vintage bottles is planned accordingly. In the second case, automation leaves room for timely actions on the individual code, taking into account the promotional relevance of the distribution of the items.
Volume planning is an input to the definition of operating revenues. For this activity it is necessary to define the sales price lists, which are used to formulate the sales agreements with customers, as a gross price charge to which the different discount items are subsequently applied. Again, the Board-based planning model provides maximum flexibility in the definition of price targets in order to facilitate the commercial direction and help the agents in the simulation of orders.
The budget information (Volumes, Prices, Discounts, and Revenue) is then included in the reporting model in order to monitor the achievement of the targets and evaluate, through the analysis of variances, any corrective actions to be made to the enterprise operating strategy.
The adoption of a business control model had immediate consequences for how the business was managed. The structuring of information with Board in a single database, according to the dimensions of detail subsequently aggregated, provides both precision and flexibility in the navigation of the data for the entire commercial function.
The definition and control of the fundamental levers has enabled users to trace the logical path by which to structure the budget process, according to the guidelines that define the sales and distribution activity. The commercial management team now has the tools required to define the targets and then monitor their achievement, accompanied by sales force targeting systems aimed at minimizing variances between total and budget data.
In addition, thanks to the new control model, the information output of commercial planning is the starting point for the economic and financial planning process, which can now be based on more reliable and shared results.
Several future areas of development are being considered for Berlucchi’s Board platform:
- The development of a financial planning and reporting model as a next step to business planning
- Adding additional sources outside of transactional systems in order to improve the completeness of the database and enable greater depth in sales analysis. This includes the consideration of patterns related to purchasing behavior in order to improve customer retention by identifying a customer rating based on the frequency/purchase fidelity