How Integrated Business Planning is changing the face of large-scale retailing

PAC 2000A is the largest of the cooperatives belonging to Italy’s National Consortium of Retailers. Founded in 1972 and now with a sales network that extends across most of central and southern Italy – from Umbria to Sicily, via Lazio, Campania and Calabria – PAC 2000A has over a 1,000 members. The cooperative is committed to continuing the mission that first prompted the earlier retailers to join forces almost 50 years ago: to foster cooperation between retailers, to protect and increase the profitability of member companies, and to constantly improve their quality of service and offering to best meet the changing needs of customers.

By completing its merger with Conad Sicilia, a cooperative, PAC 2000A has consolidated its position as the largest cooperative in the Conad Consortium, both in terms of revenues and geographical coverage.  The new PAC 2000A is made up of 1,050 business partners, who have connections with their local areas and communities and have joined forces to tackle the challenges of the future. This, they consider, is achievable by: consolidating the Conad business model, sharpening their competitive edge, leveraging new logistical and organizational synergies and, above all, boosting their capacity to invest in a growth and development plan that covers the whole of central and southern Italy.

PAC 2000A shapes its decision-making and strategies around its partners and their businesses. It supports partners in purchasing and replenishing stock, the development of marketing strategies, the planning and remodeling of their stores, the production of advertising materials, and the training of their personnel.

An overview of PAC 2000A:

• revenues of €4.5 billion
• a market share of 22.95%
• 1,500 stores
• 20,000 staff

The selection process: Technology and methodology

PAC 2000A’s key objective in its approach to Business Intelligence (BI) and performance management was shaped by two needs. Firstly, to channel information from various disparate subsystems into a single technological platform, which would help simplify analysis and planning. Secondly, to adopt a method that would guide the implementation, management, and sharing of performance monitoring models. This second point focusses on the need for fast and effective adaption in the face of the rapidly shifting dynamics commonly associated with large-scale retailing.

“At PAC 2000A, we have a history of application development: for many years we met our needs internally, by designing and implementing in-house analysis solutions based on traditional techniques. When the size of the company, and hence the volume of data to control and monitor, grew too large to be managed with traditional tools, we looked to the market for a tool that would help us improve our ability to find and control information,” recalls Vanni Chioccoloni, CIO of PAC 2000A. “After a careful selection process involving various stakeholders and using a grid for comparing different vendors, we chose the Board Intelligent Planning platform. At the same time, PAC 2000A chose K.Group as its partner to implement the project, on the strength of the latter’s methodological approach to managing corporate information assets to support decision-making processes.” 

From BI to Enterprise Performance Management: Expanding the use of Board by following the path of Integrated Business Planning.

Initially, PAC 2000A’s use of Board software was confined to analysis and reporting. However, the original work team soon realized that the scope of the platform’s capabilities was much broader than originally imagined:

“We not only realized that Board’s analytics capabilities were much more sophisticated than those of any other application we had used before, we also realized we could extend the use of the platform to planning and Enterprise Performance Management in general, so as to support the decision-making of our top managers, ” explains Vanni Chioccoloni.

Over the years, the internal resources team has expanded with managers from various departments, from CRM to IT, sales and logistics, now included. Having initially adopted  a bottom-up logic, the team succeeded in transposing and interpreting the needs that originated from operational and management control processes by fully integrating the operational side of the business with its economic and financial side. This created a fully-fledged Integrated Business Planning (IBP) solution.

Thanks to the Board platform’s IBP approach, PAC 2000A managed to connect the sales and purchasing areas with the administrative and management control areas, with a view to achieving a complete convergence between the sales logic and accounting records. This helped ensure – among other things – full control of bonuses and contributions. Furthermore, by leveraging the IBP approach, the use of Board was extended to the logistics sector with a view to monitoring transport performance and developing analysis models that would enable the logistics manager to be able to constantly monitor all areas of goods management, right down to individual items of inventory. “We introduced Board across all business areas by implementing a hundred or so projects, aimed at supporting PAC 2000A’s management in the monitoring of logistical and sales performance, both in terms of sell-in, i.e. the Cooperative’s sales, and in sell-out, i.e. our network’s sales,” continues Chioccoloni. “Basically, it would be fair to say that the only area we haven’t used Board in is the switchboard!”

Below are various examples of the applications that could be built using the Board platform:

• Weekly sales margin
• Collection analysis – analysis of trends and bonus re-orders in the management of the Fidelity Collection
• Analysis of return transactions relating to promotional initiatives
• Conditional OS analyses (offer/standard): monitoring of sales of OS items reserved for Fidelity Card holders
• Hypermarket monitoring and budgeting (sales, margins and income statement)
• Network competitiveness analysis with pricing and margin control
• Management of end-of-year bonuses and contributions from suppliers
• Logistics monitoring
• Discount channel sales analysis
• Management control for the purpose of ensuring complete convergence between sales logic and accounting records
• Monitoring of the store ticketing system

“We started using Board by integrating it with our CRM before moving on to the sales sector, where we took advantage of the platform’s ability to analyze sales area data and the sell-in data of our stores,” recalls Vanni Chioccoloni. “We have also used Board to evaluate the performance of our ticketing system, in other words calls to our support service from our stores, in order to optimize resources and ensure business continuity.”

Promoting best practices across the group: Knowledge as a business model

PAC 2000A’s IT department has extended the use of Board to around 100 of the stores governed by the group. This rollout takes into account the needs of each individual store –with its own performance evaluation criteria – and retains a single, complete information baseline. Chioccoloni explains this further:

“After an initial phase during which our IT area set up analysis and reporting models for the company, we saw the gradual spread of a new corporate culture for the control and management of information. The positive feedback passed around by word of mouth enabled us to extend the scope of application of Board more and more, together with the best practices that can be implemented with this platform. To date, we have 350 computerized stores, where the performance management processes are completely digitalized and connected to a Single Point of Truth for receiving data flows to and from stores.”

Thanks to this robust information baseline, created, managed, and controlled with Board, PAC 2000A is able to combine data from different databases and represent them clearly in reports, dashboards, and scorecards which provide an integrated vision. This means that decision-makers do not have to worry about the source of the information and, so, there are fewer concerns over whether it is accurate, coherent, and complete - because it is validated in the Board database which guarantees data quality.

In addition to the multiple people using Board within its network of stores, PAC 2000A has a further 300 users within the cooperative’s organization who benefit every day from the myriad of applications built within the decision-making platform.

“For example, the company that manages our entire discount channel is separate – so to speak – from PAC 2000A, and uses Board applications created ad hoc for its own specific needs, as well as applications that have already been successfully trialed by our personnel at PAC 2000,” explains Chioccoloni. “Another example is the company that independently manages the entire hypermarket channel, where it became clear that we needed to develop special models, more closely tailored to their type of business than the Board applications designed for our stores. Thanks to the considerable flexibility of Board and the support of K.Group, we managed to develop various solutions that are the right fit for these needs.”

One of the main drivers behind the rapid uptake of Board across PAC 2000A, and other group companies, was the fact that it enables users to acquire know-how in both BI and performance management quickly, through a single product, rather than multiple modules each with their own architecture and operating logic.

“We have about seven people operating autonomously in the development and creation of projects and applications on Board, assisted by our partner K.Group, which helps us implement the new features of the platform that the vendor releases from time to time,” adds Chioccoloni. “So, it’s a knowledge team, rather than just a group of developers. This team not only creates application solutions on Board, but also promotes the benefits of using them, by explaining them to users and thus creating a virtuous circle of promotion and adoption of the platform.”

In this respect, one of the experiences with Board that the customer particularly appreciated was the introduction of “EPM-meetings” (Enterprise Performance Management meetings). “These are meetings of experts – mainly in CRM, IT, and HR, but also from other areas of the organization – who decided, more or less spontaneously, to share what they learned during the implementation of Board applications by meeting periodically to ensure continuity of knowledge, control and quality in relation to the projects undertaken with Board,” explains Chioccoloni.

To all intents and purposes, these meetings are “Centers of Excellence” and the people who take part in them also study how users use Board applications by analyzing the platform access logs. This helps determine which solutions are most effective, which are particularly necessary, and which might benefit from modification, by identifying, for example, those that need to be redesigned to make them more intuitive and a better fit for users’ needs.

“By harnessing the potential of these EPM-meetings, we aim to extend best practices to our newly acquired businesses, as indeed happened when Conad Sicilia joined our Group. It is no coincidence that we invited the Group’s top managers and decision-makers to the most recent EPM-meetings, to give them a presentation of the solutions that could be useful for Group companies, for example, for the hypermarket area, especially in the wake of the acquisition of the former Auchan units” concludes Chioccoloni.