Next-Generation Joint Business Planning

A group of industry insiders debate the current state of JBP but reach consensus on where it should be heading for the benefit of manufacturers, retailers and, ultimately, shoppers.

The best way to have a productive and meaningful discussion about joint business planning between consumer goods companies and retailers is to establish early on that everyone is talking about the same thing. That’s because joint business planning, or JBP, means different things to different people. “The term is really loose,” says Patrick Fitzmaurice, CEO and “head farmer” of Caterpillar Farm, an organizational change-activation consulting firm based in Atlanta. “It would be interesting to put a stake in the definition of what we mean when we talk about JBP.”

Trying to nail down one specific definition based on interviews for this article was a flummoxing and ultimately futile exercise, but though there was no consensus on what JBP means and entails currently, there was a convergence of views on what it means and entails ideally. What came into focus is a vision of next-generation joint business planning, shaped by current and projected disruptions in retail. Modeling the JBP process of the future is beyond the scope of this article, but from those interviews, Path to Purchase IQ has distilled some of the essential elements.

The Prerequisites

By definition, JBP is collaborative, but in practice, manufacturers and retailers often aren’t truly collaborating. Instead, they’ve just slapped a new label on business as usual. Traditionally, a manufacturer’s sales rep met annually with the retailer’s buyer to discuss operating plans, including basic logistics and pricing, and the relationship that grew out of that was transactional, tactical and, inevitably, adversarial.

This relationship based on jockeying isn’t conducive to JBP, which requires true collaboration for win-win results. Going forward, for JBP to work, the plan must be co-created, the timeline longer and the approach cross-functional.

Trust is a sine qua non of JBP because of the transparency and exchange of information required of both parties. Each partner needs to understand the other’s business, its target shopper and its strategic goals. This understanding forms the basis of a mutually beneficial plan, and the open exchange of information – within the context of a confidentiality agreement – allows for its co-creation.

Trust isn’t the only foundational element that must be built. “I call it getting your house in order – developing supports internally before even having JBP discussions,” says Mike Holcomb, managing director of The Partnering Group (TPG), a Cincinnati-based consulting firm that works with manufacturers and retailers on collaborative planning. Without pillars in place, from the right technology to properly trained people, even the most smartly conceived plan will fail to reach its potential.

Because next-gen JBP requires resource reallocation and role changes internally, change management and cultural shift must take place. Toppling siloes, breaking habits and rethinking job descriptions are part of this process because JBP requires cross-functional connectivity, among other new paradigms in supplier-retailer relations. “Businesses run on systems that are slow to change – process systems, technology systems, people systems,” Fitzmaurice says. “A lot of legacy systems are holding manufacturers and retailers back from creating higher-order strategic initiatives.”

The Players

Traditional planning at the category manager and retail buyer level does not rise to the level of JBP. “Higher-level strategic planning, when done well, has a broad set of players who contribute in some way to the overall plan and its execution,” says Anne Chambers, CEO of Capre Group, an Atlanta-based sales and marketing consultancy that helps clients with JBP 2.0, which it calls “collaborative partnership planning.”

Disciplines involved in that planning process include shopper insights, shopper marketing, loyalty, category management, merchandising, sales, revenue growth management, supply chain, e-commerce and others. Team members are connected and aligned throughout each other’s organizations. “Defined roles and aligned performance metrics keep all parties focused on mutual goals,” Chambers says.

Omnichannel retailing, e-commerce, voice shopping and other developments bring more players to the team and “have an impact on the overall JBP process,” says Steve McGowan, regional vice president of shopper and consumer activation at Mondelez International. “Some additional people are included from both sides, and the strategic planning and alignment takes a broader look at the shopper journey to ensure that all touchpoints are being met.”

Bringing in this many players, and giving them new demands and priorities, makes leadership endorsement critical. “Leadership plays such a key role with change management and creating momentum in the organization,” Chambers says. “People need to understand this is a permanent shift; it’s the way we go to market now.”

Senior-level involvement is imperative on both sides to ensure follow-through and accountability. Though not bogged down in every detail, leaders oversee the entire process, from approving plans and allocating the necessary cross-functional resources to evaluating the results.

Arguably, the most important player is one who is never physically present: the shopper. A shopper-centric approach inspired by the needs of the partners’ mutual customers becomes the game plan for “the trifecta – the win-win-win for the shopper, retailer and manufacturer,” says Christopher Brace, founder and CEO of the New York-based marketing strategy firm Syntegrate Consulting.

Next-gen JBP requires significant time and resources. As a result, “Some retailers are backing away from the formal JBP work while still having really strong business plans with their strongest suppliers,” Holcomb says. Those that do engage in JBP do so strategically and selectively. “The manufacturers doing true JBP are working with two or three retailers in the country, and retailers are maybe doing it with four to six suppliers.”

The Process

Three essential elements of JBP are transparency, collaboration and agreed-upon performance indicators. “KPIs [key performance indicators] ensure that both sides are working against a consistent set of metrics that will help drive each respective business,” McGowan says.

Currently, collaboration tends to be lopsided, “but JBP at its best entails that the retailer and the brand co-create programs that meet the needs of the brand, the retailer and the shopper equally,” says Brace, adding that retailers prefer partners who demonstrate they understand category growth drivers and have a category-first mindset. “A common mistake is going to the retailer and talking all about the brand instead of starting out by saying, ‘Here’s what we know about you and your growth strategy, your strategic priorities and your strategic challenges, and here’s how we can help you meet those challenges.’ Another mistake is showing up with a program idea that’s too fully baked to allow for retailer input.”

Manufacturers with a good handle on consumer, shopper and category insights for their brands need to go the extra mile “to customize for the individual retailer’s shopper,” says Karen Sales, founder of Boise, Idaho-based sales and marketing firm KSMarketing and formerly vice president of shopper marketing at Albertsons.

Category comes before brand, insights inform the conversation, and each side helps solve the other’s long-term business challenges by pooling resources. According to Fitzmaurice, if there’s one question that drives the planning process, it’s this: “Where is there growth we could be capturing together?” Partners reach an agreement on activities that will drive growth for both of them, as well as financial and nonfinancial targets, relevant KPIs, responsibilities and timing.

The traditional 12-month planning cycle is too short for JBP. A time horizon of two or three years makes more sense “in the current landscape where so much can change in so many areas – commodities, shipping, e-commerce, media and measurement tools, supply chain, overall footprint,” says Sales. “Set a joint target and have a rolling plan you are working against with quarterly check-ins and annual reviews.”

Technology will facilitate collaboration and program management. Shared access to a dashboard, with a common scorecard, will allow for ongoing joint reviews of the plan’s execution. Both parties can track agreed-upon performance measures. When those metrics are below par, the team can take corrective actions.

The Plan

The written plan is both the product of the process and the continuation of the process. In other words, the plan is a process. Based on mutual objectives and opportunities, it commits to writing the agreed-upon initiatives and activations; how and by whom they will be implemented; project milestones; expected benefits including return on investment; and performance metrics and results.

So parties can anticipate and react swiftly to changing market conditions, a joint business plan should take market trends and forecasts into account. Once the plan is deployed, partners continuously evolve it based on real-time results and market shifts. The retail industry is rocked by near-constant disruptors, and part of the plan’s purpose “is to adapt to those challenges and lay out how to positively leverage or counteract them,” Holcomb says.

Milestones include periodic check-ins when partners revisit the plan. “In most cases there’s usually an annual broader strategic alignment session followed by periodic check-ins on a quarterly or monthly basis to ensure we are all tracking and working against the collectively agreed-upon objectives,” McGowan says.

The performance metrics typically take the form of a joint scorecard with two sets of metrics. “One is the traditional category-health metrics of volume, sales and profit,” Chambers says. “The second set of metrics measures the progress on category strategies. These are specific to the strategy and may include metrics like trips, basket or shopper penetration.”

The Payoff

The financial benefits of next-generation JBP are evident on the scorecard, but beyond that are organizational benefits and – most importantly – benefits for the shopper. Many retailers and manufacturers have work to do before laying claim to those benefits or conferring them on the shopper. As Fitzmaurice sees it, the parties’ main problem is they’re not talking the talk, let alone walking the walk, when it comes to business planning. “Their discussions still focus on product and price issues instead of providing a better commerce experience,” he says.

Right now, few have mastered true JBP, says Brace, but that just means there’s a vast frontier with plenty of opportunity. “If you’re the first in your category to do it, you’ll gain a competitive edge,” he says. But hurry, “because that’s where the industry is headed.”

JBP 2.0 Cheat Sheet

Ante Up: What Both Sides Should Bring to the Table

• Cross-functional resources

• Applicable technology

• Shopper data

• Consumer and shopper insights

• Current and future category growth drivers

• Trends (industry-, technology- and shopper-based)

• Relevant intellectual property

JBP Best Practices for Manufacturers

• Show you understand the needs of the retailer.

• Give retailers an opportunity to influence programs. Don’t show up with “fully baked” programs.

• Share insights as to why shoppers do what they do inside the store, which stems from their life as consumers outside the store.

• Identify what is emotionally meaningful to the shopper relative to your brand, your category and the retailer.

• Translate those insights into stories that can be told in the retail space and other touchpoints along the shopper journey.

Source: Christopher Brace, Syntegrate Consulting

What JBP is NOT

• Handled at the buyer/category manager level

• Tactical trade negotiations

• Category management

• Promotional planning

• Short-term planning

• Brand focused