The Board of our client, a large retailer with operations across multiple geographies, had concerns about the management oversight on the gross profit, profitability and cash flows of the business.
A key performance indicator (KPI) for the Board was planned, forecasted and actual gross margins. Measuring this KPI was a challenge owing to diverse business models and disparate growth goals across teams, multiple sales channels and once-off agreements resulting in non-standard discounting strategies. Additionally, the discounts were managed via a customer master price list linked to a debtor instead of on a product level, which is seen as best practice.
The objective for Team ALICE was to provide valuable insights into the sales and discounting behaviours of the organisation and to provide the Board with insights into their key KPI of gross margins.
ALICE Procedures & Outcomes
Using the ALICE Lab, we set out to capture insights into the organisation’s sales and discounting behaviours. Specifically, we created customized data and business intelligence reports:
- Sales per channel
- Sales and price movements (discounts) per client
- Sales price movements (discounts) per sales agent
- Further segmented to identify discounting behaviour across channels
Data Assets Used
To capture business intelligence and insights on the data mentioned above, ALICE had to connect with multiple data sources, including:
- A curated data asset with sale transactions by channel
- Debtor master data linked to sales
- Master data changes
- Organisation roles (security profiles) to debtor master data changes
The key to any business intelligence tool is to create capacity for senior management to spend time on high-level tasks and decision-making, rather than on collecting data and analysis. Through a vital combination of technology to process large volumes of data and provide data modelling capabilities and human intelligence to provide design thinking and process knowledge, this capacity could be created for senior management.
Human institutional knowledge within the client was applied to design algorithms to reverse-engineer the sales and discounting process, linking:
- Master price-lists
- Debtor price-lists
- Master data changes
- Costing information
- Discretionary price movements applied by sales consultants or clients
ALICE provides continuous oversight and insight into the sales and discount activities visualised as business intelligence outcomes. Using data science and ALICE’s built-in predictive modelling capabilities, the client was able to forecast gross margins and model multiple scenarios providing a more consistent KPI measurement and more comfort to the Board.