Tackling Trade Spend

Global sales of organic food and drink are soaring with revenues projected to approach $40 billion this year. In order to compete effectively with bigger rivals and satisfy growing consumer demand, Organic Valley Family of Farms, the nation's largest organic and farmer-owned cooperative, needed to re-engineer what had been a decentralized volume and trade planning system.

 

"We closed 2004 with a great deal of overspend and out of stocks, and we were turning customers away," says Tripp Hughes, director of marketing & sales - analysis & planning, Organic Valley. "The problem was that we weren't integrated. Our sales team held their own information; marketing held their own information and operations held their own information -- none of it connected."

 

TACKLING THE TRANSITION
In July 2005, Organic Valley announced plans to implement Oracle's Demantra Trade Promotion Management (TPM) solution to provide visibility into plans across the company; create more accurate demand projections and sales volumes based on advanced analytics; and improve the efficiency and effectiveness of promotional spends.

 

According to Hughes, the implementation of Oracle's Demantra TPM solution was seamless. The actual tool has been live for four months, but prior the launch, Organic Valley was challenged to align its fragmented business processes. "Just to get the Oracle solution launched required a lot of integration across the organization," says Hughes.

 

Hughes mentioned two key elements that ensured the success of the project, which resulted in sales forecasts and event plans that are synchronized across sales, marketing and operations: For one, Organic Valley Chief Financial Officer Michael Bebessem was the project sponsor and believed in the potential ROI from the start. Also, Organic Valley's sales team helped design the tool so that it met the specific needs of company.

 

MEASURING SUCCESS
The intent of deploying a TPM tool was to give Organic Valley greater visibility and reduce the overall risk of overspend. Today, Organic Valley is able to spend more efficiently and effectively by leveraging volume and trade expense planning capabilities. "The name of the tool -- Trade Promotion Management -- is misleading. We consider the process and technology to be integrated sales management, which all starts with volume management," says Hughes.

 

Going forward, Organic Valley will continue to expand and enhance the predictive elements of model because advanced planning leads to robust analytics on the back side. For now, however, it looks like Organic Valley is satisfying the organic market's rise in demand. In the last year alone, the cooperative achieved record success both in sales (up from $210 million to $328 million in 2006) and in farmer recruitment (up more than 300 farmers to 1,034 farmers). The increased number of acres and cows brought into the organic system was equally strong (up to more than 113,000 acres and 26,000 cows). Additionally, the Organic Valley brand is the top-selling brand in natural food outlets in the United States. CG