Better decisions for business with margin analytics
How data analytics helped identify a single source of truth to alleviate the profit margin leakages of a CPG giant. The secret lies in granular analysis.
The Big Picture
The most distinct aspect of data analytics is its ability to explore, dig deep, and look around for details from all possible dimensions. A quality that allowed Fractal to help a CPG giant turn around their profit margins with a Margin Analytics solution. Although it seemed like there was no apparent problem, the company was facing a significant deviation from its planned profit margins.
Fractal identified at the opportunity to dive deep and implement data analytics at a granular level to identify the drivers, understand the gaps, and arrive at a solution. The first step was to determine how and why these problems were happening.
Key Problem drivers identified by Fractal
- Highly scattered, complex data from multiple sources preventing purposeful impact analysis
- Disjointed data systems, multiple reports, and versions preventing profitability improvement
- Poor visibility on customers, products, categories, and how brands were performing
These problem drivers led to a negative impact on business and profitability.
Key Problem Areas
- Depleting margins
- Lack of common internal language with multiple versions of profitability reports
- Lack of right information with data latency
- Low confidence in data and reports
- Slow decision-making process
Fractal delivered a robust solution with the right blend of descriptive and predictive analytics to solve this complex problem.
- Automated collection, harmonization, and transformation of profitability related data from multiple sources, with varied data definitions and data hierarchies.
- Desired allocation logic to get data at the same granularity
- Design thinking led to solution to empathize with multi-functional teams across markets to build a robust solution
- A visualization interface at the core powered through a combination of complex algorithms and data engineering effort
- Leveraged cutting-edge predictive analytics to predict upcoming margins (accuracy ~85%) using real-time data.
- Prescriptive analysis to unlock potential margin enhancement and profitability opportunities
- Successful creation of a single source of truth with global views at a customer, product, and brand level
- Identified opportunities for profitability improvement at a lower trade expense
- PVM and profit pool mapping helped in understanding the financial boundaries during price negotiations with distributors and retailers.
- 80% reduction of manual effort in updating and maintaining thousands of P&L versions
- Identified focus groups that need to re-strategize to increase profitability
- Established and quantified the factors that impact changes in Profitability
Margin Analytics uses AI, design, and engineering to help big corporations harmonize and automate their operations where needed. It delivers positive profitability and identifies and eliminates leakages which often go unnoticed until an annual review happens. Why wait for a problem to occur? Instead, businesses can optimize decision-making and profitability, and alleviate possible gaps from occurring. Fractal looks forward to leading the change with unique business-centric capabilities for the future.