Lean & Mean

Marketelligent has been involved with a couple of large global CPG companies over the last few months; helping them in optimizing their Supply Chains. The work we have been doing has given us some good insights into the tangible benefits of this investment.

Essentially, supply chain optimization boils down to two things:
1. Ensuring that all end-consumer demand is fulfilled (Implying higher Revenues from higher sales)
2. Filling this demand with the least amount of inventory in the pipeline (Implying lower costs due to less money tied up in inventories)

#1 - "Ensuring that all end-consumer demand is fulfilled" is not as simple as it seems. Typically most manufacturers don't have a good view of end consumer demand. They typically have good visibility till their distributors; post which haziness sets in.  So visibility from distributors to retailers and from retailers to end-consumers is almost nil.  And in economies where bulk of consumer sales happens via the small to medium format retailers (as opposed to Wal-mart type boxes where POS data is backward integrated to manufacturers), it can be a significant issue.

Most manufacturers however have a very good view of their Sales and as a result, often wrongly extrapolate this to Demand. The appropriate way to do this extrapolation would be to also track 'Stock-outs' at a SKU level, track promotion effectiveness and decompose their incremental impact on sales, etc. A fairly complicated area, filled by a few unique solutions - Oracle Demantra, SAP APO, etc. Have not used them, but they claim they accurately help a business manage Demand.

Another way of accurately measuring Demand would be to have unconstrained supply for a few months. So there are no chances of stock-outs and as a result Sales = Demand.  Possible but expensive given that most manufacturers have hundreds of SKU's, and the costs to have unconstrained supply for a few months means a lot of working capital.

More on #2 - "Filling this demand with the least amount of inventory in the pipeline" in a subsequent post.

Cricket Live Predictions : mswinger

Over the last few months, we have been attempting to develop a tool to add predictive intelligence to the game of Cricket.  Our first offering in this area is for One Day Internationals (ODI) - mswinger. 

The tool does a couple of things:
- predict which team is going to win the ODI.  Predictions start off once the toss is done and continue in real-time throughout the match.  Predictions are based on historical data - approximately 300 matches and 500 variables - and are continuously updated to reflect recent performance.
- help a team plan its strategy on a real-time basis so as to ensure a win.

Catch a live demo of the beta version of the tool at www.mswinger.com ; you can get a schedule of upcoming ODI's here.   Next steps are to extend this capability to the immensely exciting T20 format. 

Role of Analytics in a Developing Market - II

My Partner - Roy Cherian - had blogged about the role of analytics in a developing economy a few weeks back.  I wanted to follow it up with a live case.  As always, case studies make a tangible connect to real business, and demonstrate well how companies will be all the better to adapt best practices.

A friend of mine been a Customer of one of the leading Telecom companies in India for the past 5 years.  He has 3 mobile numbers, a landline number and an internet connection with the same carrier.  And his ARPU (average revenues per user) across all Products is approx $100/month.  This customer had a poor experience with the carrier recently - one of his mobile numbers inadvertently got suspended.  Despite repeated calls to Customer service, talking to multiple Customer Service Representative (CSR's), he was not able to get it reactivated.  As a result, he cancelled his number and is in the process of moving his entire business to a competing carrier.

The carrier in question missed a significant business opportunity.  What could it have done better?
- Created a list of 'High Value' Customers.  In a country where ARPU's are in the region of $3 - $10, an ARPU of $100 is worth fighting for.  'High Value' is typically a function of Customer tenure, ARPU, breadth and depth of product usage, anticipated Customer lifetime, etc
- Recognized that the Customer had multiple Products.  Such Customers are typically lifetime loyalists and strong advocates of the brand.  The opportunity cost to the carrier is much more than the ARPU lost.
- Managed the Customer interactions better.  The moment the Customer had raised the issue of the suspended connection, the carrier should have assigned a dedicated CSR to handle his case to resolution.

A culture of analytics with a deep Customer focus could have been a savior for the carrier.  Unfortunately in a developing economy, managing growth often takes precedence over managing Customers.  Business Leaders who are quick to realize the power of analytics to delight Customers in an increasingly commoditized world will emerge winners.

13.6 vs. 10.4

2009 might very well have been an inflection point in the global economy.  It is the first time in history a nation beat the US in annual auto sales.  And that nation is China.  13.6MM for China vs 10.4MM for the US.  There might be volatility in the years ahead; the Chinese real estate boom might go bust; and the US might very well overtake China once again; but 2009 announces the true arrival of China in the global economic order.

Expect to see a lot of China-related action in 2010.  Not just in the auto sector; but across industries.  Time for businesses to sharpen their focus on China.

(btw, India sold 1.4MM autos in 2009)

TimesofMoney - A leader in Digital Payments

We are proud to have TimesofMoney as a client.  As a leading player in the Digital Payments space, Marketelligent has been partnering with them over the past few months in building out a robust Business Intelligence capability incorporating various dimensions - reporting, predictive analytics, CRM, forecasting and risk management.

Here is some feedback from Kunnal Sharma, TimesofMoney's Business Head for Global Remittances:

"TimesofMoney's Business Intelligence roadmap mandated strong resources who could work in unstructured situations to add business value. We were not looking for an IT solution provider. In our evaluation Marketelligent fit the bill of a partner who brought to the table a strong background in financial analytics, brilliant resources and a great execution capability. Our decision was not unfounded as Marketelligent has developed the Business Intelligence Unit as a critical unit within the organization and provided real business insights that help the organization make informed decisions. The Marketelligent team has consistently turned around solutions in quick time with fine quality. In retrospect we believe that Marketelligent was the right partner for us in all respects"