Identifying and Explaining the Key Features and Capabilities of SAP Revenue Growth Management

Having examined the end-to-end processes in Consumer Products within SAP, let's delve deeper into the sales planning process and explore how it operates on an annual, monthly, and quarterly basis. All the activities that CP companies undertake to sell products can be categorized into three main areas: strategy and planning, execution, and analysis. All of these must be supported by a single, consistent digital core, which provides master data for customers, products, pricing, and financial. The actuals from sales, accruals, claims, and settlements reside within this digital core, helping to feed and connect other parts of the process.

In terms of strategy and planning, this encompasses commercial planning, which is a top-level annual operating plan, and the FP&A processes. CP companies need to devise their pricing strategy, set list prices, revise list prices, and analyze competitors' pricing. They will also engage in demand planning and supply chain processes to determine the volume of products that need to be produced based on their production capacity, as well as the volume of products they anticipate selling through their sales channels. This leads to baseline forecasts, and at the heart of trade and revenue growth management is the ability to create customer account plans and plan trade promotions, which we will explore in more detail in the next session.

On the execution side, there is a need to execute sales and promotion plans in real-time with the ERP, creating real-time pricing conditions and taking actuals back to actualize the plan. Some companies aim for high maturity in revenue growth management by pulling extensive data to achieve holistic plan optimization. This requires a solid core of ERP, master data, and fully executable trade promotion plans. These can then feed tools alongside third-party sales data from syndicated sales sources or Point of Sale data to automatically improve and recommend promotion plans. There are various routes to market for promotions and sales execution, including direct distribution, van sales, and e-commerce channels, such as marketplaces like Amazon or Alibaba, as well as retailers' own e-commerce and e-grocery platforms. Some brands also have B2B commerce capabilities to reduce the cost of serving their long tail of traditional trade customers. Additionally, some CP companies own their own direct-to-consumer channels.

Retail execution planning involves using SAP Sales Cloud to plan store visits for CP sales teams to check planogram compliance, ensure promotions are correctly implemented, and verify stock levels. This ensures promotions are as effective as possible, as misplacement in the store, non-compliance with the planogram, and stockouts can lead to poor promotion performance. All of this is important only if the claims can then be settled. Analytics play a crucial role, including pre-event analytics, post-event analytics, and increasingly, Artificial Intelligence and advanced analytics in revenue growth management to provide insights on where to make promotional investments. We will explore some of these aspects in more detail in the next lesson, particularly around trade management capabilities.

SAP enables the end-to-end process for CP sales by assisting Authorized Channel Partner (ACP) companies in their sales processes, starting from top-level commercial planning and pricing strategy. This includes demand planning, baseline forecasting, customer account planning, and trade promotion planning. SAP Revenue Growth Management focuses on producing customer and account plans, allowing key account managers to plan promotions quickly and efficiently. The planning process involves setting sales targets, allocating budgets, and displaying promotional calendars to track events, whether they are tactical promotions or long-term pricing agreements. The core of this planning is trade promotion planning, which involves creating pricing promotions and accommodating financial elements within the plan.

Execution involves the integration with ERP systems for real-time processing. Once trade promotions are approved, pricing conditions are written into the ERP to ensure correct pricing at the Stock Keeping Unit (SKU) level, even if promotions are created at a higher product hierarchy level. This integration powers the tracking of Key Performance Indicators (KPI) and provides data for gross to net Profit and Loss (P&L) understanding in customer account plans. Execution also includes financial settlement, where sales priced with rebate elements are settled by the accounts receivable team. This involves handling trade claims, invoice claims, and dispute claims from retailers, ensuring that agreements are honored.

Analytics wrap the entire process, providing insights into sales performance and profitability. SAP offers embedded analytics within SAP Revenue Growth Management, but also allows data extraction for use with third-party analytics platforms. Analytics are crucial for understanding product sales, planned versus actual volumes, and profitability across the product portfolio. SAP's ecosystem supports commercial planning, demand planning, and execution, with integrated business planning and partner solutions for optimization, forecasting, and AI insights. The Customer Experience portfolio enhances retail execution and dynamic visit planning, ensuring compliance with trade promotions and leveraging opportunities for increased sales. SAP's consistent digital core and product strategy ensure seamless integration across the ecosystem.