Tyson Foods Take a New Approach to TPM

Tyson Foods, a processor and marketer of chicken, beef and pork, did not drive the right levels of trade efficiency and effectiveness as a category leader. The pain was obvious: promotion planning lacked consistency and retailer demands were escalating while trade dollar spending was increasing year over year.

It was due time to critically reassess the entire approach "process, systems and people" as the first major step toward building more effective trade promotions through better planning, execution and analysis. The logic was if retailers could readily see how trade events benefited them, and could be involved in a collaborative process, they'd buy in more regularly.

The company's self-scrutiny turned up some key gaps in trade promotions. Michael Shinstine, Tyson's senior director of sales planning, explained the pitfalls at the Consumer Goods Technology fourth Annual Sales & Marketing Summit in 2007:

    * Rising costs: Trade spend and execution costs were rising, as were retailer demands and costs of goods and fuel, which accelerated performance pressure. Offering little relief, Tyson was inconsistent in its approach to events, and did not involve its customers in planning.

    * Insufficient data: Real-time spending updates were impossible with spreadsheet data. Syndicated data was hardly used. The absence of post-promotion analysis meant few valuable insights followed events.

    * No view of the future: Because model future promotions could not be predicted, the company was more reactive than proactive.

    * Rigid technology: Inflexible systems limited promotion planning to the fiscal year, rather than more appropriate customer timelines.

    * No empowerment: Teams often lacked the authority, selling experience and sales planning abilities to ensure powerful programs.


Spreading its Wings
Tyson undertook a one-year plan to dramatically transform its approach to promotion efficiency and effectiveness. Its broad self-assessment started in September 2005. By December that same year, the company was sizing how much more effective trade spend would deliver through a tighter grasp of total ROI across the business as well as ROI by account, by event and by promoted group and SKU.

"Tyson found that significant opportunity existed, but it varied by customer and product, and that required a tailored approach," according to Shinstine.

The company also discovered that most promotions were positive for customers and negative for Tyson. But, this would soon improve with knowledge of which products to promote together rather than separately, and with the company's new capabilities for pre- and post-analysis and predictive analytics.

Another plus was vendor-retailer collaboration based on a shared understanding of consumer demand. Putting the consumer at the center of the trade planning equation helped Tyson focus on what matters most "driving the right consumer behaviors to maximize total category objectives, not just total company portfolio metrics.

The food manufacturer soon attained a leadership position in trade promotions, with tailored strategies and events that grew retailer categories and Tyson brands. To achieve this, Shinstine says he was looking for a best-in-class technology partner that was:

    * Easy to use: The interface needed to follow current work flow. Sales planners had to be able to use the system intuitively. The system needed to build events the way Tyson plans. It had to develop a category plan versus a brand plan, and quickly build proposals.

    * Based on superior insights into consumer demand, with higher forecast accuracy

    * Scalable, and able to model all categories

    * Lower risk: Software-as-a-service (SaaS) delivery minimized the company's IT burden.

    * Enhances collaboration opportunities with retailers

DemandTec Promotion, a SaaS application from DemandTec Inc. met these criteria. This, along with re-configured business processes as well as better-trained teams, had Tyson ready to fly.

A Profitable Engagement
By upgrading its trade promotion planning process, Tyson achieved significant brand and category improvements and developed a more meaningful way to engage with key customers. This new approach to planning showed meaningful progress in just a few short years.

Shinstine can illustrate Tyson's actionable insights and distinctive ability to apply them to individual chains and events.

For one retail customer, Tyson discovered that promoting its boxed wing product produced unfavorable results for the brand. The DemandTec solution indicated that Tyson should shift ad dollars from the boxed product to the bagged line and buy a two-week display instead. Performance improved in many ways (see Figure 1).

Results like this earned Tyson the prestigious 2007 Category Captain Award from Progressive Grocer. Upon receiving it, Shinstine says, "We're constantly looking for ways to increase the effectiveness and efficiency of our trade promotion investment, while delivering more value to our retail customers. Through our use of this software application, we've taken a much more consumer-centric approach to promotions, creating a win for Tyson, our retail customers and, ultimately, the consumer."

Senior executive involvement at Tyson fostered the company's systemic change, and the payoff is indisputable, says Shinstine. Optimized trade promotions have generated differentiating gains and a stronger platform of trust and credibility with retailers, which further separate Tyson from its competitors.