Gruppo Poli - Case Study
Transformation of business-wide decision-making with Board
Poli Group: The quality of a family operated business, the convenience of a large retailer
With a story of continuous growth and expansion that started more than 60 years ago, the Poli Group operates successfully in the large-scale organized distribution sector, through 69 stores, 8 brands (including Poli, Orvea, Amort, Regina, and Italmarket), and 4 different distribution formats (traditional supermarkets, “Everyday Low Price”, “Cash & Carry”, and large warehouses).
In addition to the food assortment, the group also distributes household products, toys, cosmetics and toiletries, office supplies, and much more, guaranteeing differentiated price lines and key promotional opportunities. The group is a competitive player in the world of retail thanks to its constant desire to innovate the products and services it offers, with respect for the environment and natural resources.
The Poli Group at a glance:
- €555 million turnover
- 20.5 million receipts
- 1,700 employees
- More than 65,000 items
The Challenge: The digital evolution of planning and control processes
The Poli Group began to realize the limits of economic-financial planning based on a misaligned variety of spreadsheets, which was becoming an impediment that could no longer be ignored by a company with strong growth.
With more than 90 million records processed daily, the group's management controllers needed to evaluate its data based on a reliable yet quick planning and analysis system, considering the highly competitive nature of its market.
In this context, the Board decision-making platform was considered the most suitable choice, thanks to its unified BI and Performance Management environment, the flexibility of the solution, and its modern and immediate user experience. Board offers the possibility to view data in simpler or more detailed forms as required, while always maintaining a high level of intuitiveness for the user.
The Project: A single platform for planning and analysis at a strategic, financial, and operational level
Board was initially implemented for Financial Planning and Analysis before being expanded to other departments, as Sergio Del Pin, Group Controller, explains:
“Having successfully reached the initial project objectives in the area of Financial Planning & Analysis, we decided to use it progressively in other fundamental departments of the organization such as Sales & Marketing, HR, logistics, and warehouse management, as well as the managerial area.”
Board now supports:
- Fast Closing & Controlling: A fast closing method was applied to the monthly economic accounts on the level of the group, channel, brand, and store, down to the single store department per individual group company, and for the entire group.
After creating the consolidated profit and loss account for the group, corporate, brand, and channel, Poli continued with the product margin, defining the determinants that generated the year deviation from company planning.
During the first phase, Poli started with the gross sales achieved in the store, i.e. the sales values that would have been collected if discounts had not been applied for customers. Subsequently, real sales were considered (the sales values that were actually collected), considering the so-called “devaluation” of the sale, taking into account the average discount given to customers. At this point, the first level cost of the sold goods was added (which could be the average warehouse cost for centralized articles or the precise amount of the last supplier for specific articles). This results in the first margin. Poli then considered the promotions and bonuses at the end of the year resulting from the framework contracts etc. to obtain the second margin. It is also possible to intercept and analyze all costs resulting from transport and labor.
- Budgeting and Forecasting - Planning the sales and margins at the level of the group, channel, brand, and store, down to the single store department per individual group company, and for the entire group
- Personnel Analysis - Personnel Profit and Loss Statement, analysis of personnel variances (productivity, cost, efficiency, and use of the individual resources)
- Management and Operational Reporting (for all of the company’s departments) - Includes the analysis of inventory differences, warehouse rotation, coverage parameters, and slow-moving products (by SKU) as well as commercial margin variances taking promotional aspects into account
Results and Benefits: Significant insights transformed into fast, effective decisions in all areas of the Poli Group
The Board solution has made it possible for the Poli Group to considerably increase its ability to control its performance, the efficiency of its planning and analysis, the evaluation of the objectives, the impact of the variances, and the timely identification of differentiation and improvement opportunities. The implementation of various BI and Performance Management functionalities, together with the Board platform, introduced considerable improvements in the understanding of supplier, warehouse, logistics, and sales performance, also thanks to the measurement of specific KPIs.
Through real-time control integrated with fast and accurate planning, Board has made it possible for the Poli Group to align its economic-financial budgeting processes with the processes from the sales, marketing, procurement, and logistics areas. This guarantees a solid data foundation that is provided by an Oracle Data Warehouse and an ERP on an IBM AS/400 platform, as well as information from commercial management.
Board in the Poli Group now supports:
- More than 12,000 weekly reporting sessions
- The consultation of 373 types of report every week
- More than 254 weekly data entry sessions
The initial objective of the project, which was to create monthly closures of the profit and loss account while protecting data integrity, was largely achieved. Thanks to Board, the company was able to obtain all the data needed for the monthly closing at the level of the group, channel, brand, and store, down to the individual store department, in a timely manner.
Commercial Planning and Analysis
In the commercial planning and analysis area, Board has proven to be a tool able to provide precise and reliable analysis of internal and market data, considering and evaluating the impact of the current promotional dynamics:
“In our sector, the analysis of commercial variances is one of the most critical and relevant phases of management control. Just think that 1% of margin corresponds to approximately €5 million” – states Sergio. "Thanks to Board we are able to understand in an intuitive and immediate manner how many products we sell and where we sell them, down to the article-store level of detail.”
The Poli Group has used Board to develop a model that helps them understand the determinants that generated an increase or decrease in margin in comparison to the previous year:
“With Board we are able to identify and justify the reasons for a variation in margin, regardless of whether it depends on sales or suppliers, or is due to a change in our customers’ buying habits (different assortment mixes)” – points out Sergio. “The variation in absolute margin is “exploded” in detail for each deviation determinant.”
In addition, the Poli Group has achieved numerous benefits in the logistics area of the business, in particular for warehouse and stock management. Here, cross-analysis algorithms are applied for classifying and cross-referencing the article classes using a matrix approach (ABC classes of inventory and ABC classes of consumption) to avoid cases of over-stock or situations of under-stock.
“With the Regina brand we move about 50,000 of our 65,000 articles. As these are mainly products that do not have an expiration date like food items, we often risk forgetting them on the shelves. With Board's cross analysis it is instead possible to identify “critical” article groups, such as those that have a large amount of stock but are slow moving and therefore have low sales levels. If the turnover of these articles was not monitored we would not intervene and would have an uncontrolled accumulation of these products. With Board we can categorize these critical articles as ‘disposal’ and we can devalue them (offering the end customer a super-discount instore) until we have disposed of them all.”
Board has therefore made it possible for the Poli Group to optimize its assortment levels in stock management and obtain a better understanding of warehouse movement trends.
“Another critical article group that we are able to identify thanks to Board's cross analysis is fast-moving products with low stock levels. In this case, Board makes it possible for us to always be aligned with the correct amount of inventory” – adds Sergio.
In the following case, Board was able to provide an added benefit in the logistics area with regard to inventory differences:
“We usually record a 3% difference in inventories due to various factors, which can be operative (for example the perishability of food products), or due to theft. Thanks to Board's algorithmic functions, we are able to identify the most critical products - which in this case will be those with a very high cost of lost sales and a very high percentage of incidence - evaluate the causes (over-stock, management problems, etc.) and intervene in a timely manner, thereby minimizing losses.”
Board is also used in the Human Resources area to provide strategic support for monitoring performance from an economic point of view. It identifies variations from year to year as well as providing a strategic view of the individual stores, including an analysis of the career paths of personnel.
“Personnel cost is without a doubt one of the most significant items in our sector, especially the direct labour cost - that is the stores themselves. By using Board we are able to easily compare variations in cost with the previous year, therefore identifying the factors that caused the variation. We are able to understand in an immediate and intuitive manner that personnel cost increased, for example, due to indirect or hidden costs, unproductivity (illness, maternity leave), or seniority-linked salary increases, contract renewals, etc. With Board we were able to identify that in 2017, more than €1 million of costs related to unproductivity. Information of this scope is clearly useful and allows us to adjust our strategies in order to improve company performance.”
Finally, the marketing area is using Board to monitor the buying behavior of customers, analyze seasonal data trends to be used for targeted promotions, and make use of the results for direct up-selling and cross-selling offers.
KPIs and Management Control
The KPIs monitored by the Poli Group include the typical EBIT, EBITDA, ROI, and ROS, which are produced on a group and store basis in Board. In relation to specific daily activities, the group also uses the Board platform to control performance KPIs regarding the relationship between sales and hours worked; sales per square meter per store, brand, and group; average receipt sales; analysis of revenue via the loyalty card; and many others.
Board has also significantly improved the coordination of management control among the various departments, companies, and roles within the group, providing a platform with a single interactive environment in which it is possible to analyze, create and manage reports, plan, and make forecasts:
“Board is extremely versatile and simple to use. The last model we developed for a specific margin analysis was developed quickly using Board and transformed into a scalable application. The feedback from people who use Board in the group has been very positive. Recently, for example, a large number of new buyers who have started to work at our company have a much better impression of the software than other tools they have used in the past. I would absolutely recommend Board: in our market of reference we did not find a platform with the same level of flexibility among its competitors.”
Xpro Consulting: Extensive functional experience and in-depth product knowledge
The Xpro Consulting team, a partner of Board International, played a key role in the implementation of the project, combining aspects related to Performance Management, Audit & Compliance, and Process Performance.
By combining extensive functional experience with in-depth product knowledge, Xpro Consulting helped the Poli Group identify the most suitable solutions regarding the Board platform in order to increase the speed and effectiveness of the financial and operational analysis and planning processes, thereby improving management control coordination among the various departments, roles, and companies of the group.