Tag Archives: AMR Research

Drugs, Devices or Data – Which is more valuable?

A few months ago we blogged about how so many state-level governments are adopting legislation limiting or mandating disclosure of payments to physicians. This spend compliance is now top of mind for many pharmaceutical and medical device companies.

With their physician data spread across the enterprise among accounts payable, expense reporting, ERP, and CTMS systems, it is no wonder that many companies are struggling to conform to the ever stricter reporting requirements differing from state to state.

Not surprisingly, many are turning to Master Data Management as a way of gaining a unified view of physician data across these disparate sources. Many are also discovering that multidomain MDM solutions not only improve compliance but lead to increased sales. Through a single MDM hub they are now able to manage and track critical product master data elements, such as drugs, devices in addition to physician data, and the added quality, accuracy and relationships they uncover has allowed them to optimize and improve their business processes and resulting sales.

This intriguing topic certainly deserves more attention than our simple blog post. Which is why we are delighted to say that on September 24th, there will be a webinar panel moderated by William Looney of Pharmaceutical Executive magazine. Featured panelists will include:
• Hussain A. Mooraj, Vice President, Healthcare & Life Sciences, AMR Research, Inc.
• Anurag Wadehra, Sr. Vice President of Marketing & Product Management, Siperian
• Dan Goldsmith, Partner, IBM GBS
• David J. Eiben, Director, Business IS Consulting – PM Compliance, Boehringer Ingelheim Pharmaceuticals, Inc.

The event is free and anyone can register at www.Pharmexec.com/valuable.

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Better Trade Promotion – It’s In The Data

In my previous post, I cited a recent AMR Research report, Trade Promotions: Are You Getting What You Pay For?, to make the point that business-as-usual is no longer adequate when it comes to CPG industry trade promotion efforts. What decision-makers are realizing is that the key to managing TPM programs in a more cost-effective and profitable way lies not in systems, but in the data itself. Indeed, what good are analytics if your data is incomplete, inaccurate, outdated, duplicated, and unrelated? In business terms, if you’re going to make the right decisions on which promotions to run next year, you need to be able to trust the data from last year’s reports.

Clearly the way forward lies in integrated data. The most effective way for sales and marketing executives to decide which programs to run is by identifying the correlation between sales results and aggregated information from previous trade promotion initiatives (including pricing, brand and demand metrics, plus competitive analysis from third party vendors, e.g., IRI & ACNielsen). Likewise, accurate insight into past performance helps enormously in predicting future trends and maximizing results. If you can recognize, relate, and resolve customer and product data across distributed systems, then improved sales planning and demand forecasting becomes possible. With the right framework, trade promotions can be analyzed across the full value chain.

For CPG companies that “right framework” is a master data management implementation. Master data management (MDM), long recognized a strategic business driver, enables organizations to unify and consolidate data about their customers, brands, pricing, and their distribution networks. MDM is particularly effective at integrating data that is fragmented across different systems and offline tools such as TPM, ERP, planning, CRM, financial systems, and yes, ad hoc spreadsheet files.

Additionally, MDM is effective for consolidating information from external data providers, such as IRI, TDLinx, and ACNielsen. Reconciling internal and external information from the field into a single repository for analysis improves decision-making and facilitates tracking of promotions across all functional areas. Through the creation of a centralized master data hub, CPG organizations can deliver the most reliable, complete views of key business data within their existing business processes and, more importantly, leverage these data assets within analytical business processes to improve trade promotion efforts. Return on investment in trade promotion is notoriously weak, with AMP reporting that fewer than 30 percent of trade promotion programs are profitable. CPG companies adopting MDM solutions can dramatically improve their TPM success rates because MDM drives boosts trade promotion effectiveness  in concrete ways:

• Accurate customer data improves performance within operational systems and legacy applications for better planning, tracking, and measuring.

• Clearer visibility into a unified distribution network improves supply and demand efficiencies.

• Cleansed, consolidated customer master data helps improve demand planning, forecasting, and account management, which in turn lowers invoice disputes, write-offs, order defects, and returned shipments.

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The missing data link for trade promotion effectiveness

Let me start with a few startling statistics around trade promotion management (TPM) that AMR Research has collected over the years:

• The average consumer packaged goods (CPG) company plans to spend $6M on TPM projects in 2009.
• CPG companies plan to spend 14% of their revenue on trade promotions.
• Fewer than 30% of trade promotion programs are profitable.
• Only 30% of CPG firms measure their promotional results

These numbers reveal two important things. First, CPG companies spend a lot on trade promotions. Second, even with an all time high spend, these companies are not seeing the intended return. It’s clear that trade promotions, for the most part, continue to be ineffective and unprofitable. Not surprisingly CPG companies are now looking for ways to remedy the situation. The question, though, is if low return on investment from TPM investment has been a long-standing problem, why haven’t CPG companies fixed it already?

In fact, many companies have tried to improve trade promotion effectiveness through various means, but few if any have attained this goal. The reasons vary, but the culprit in most cases is rooted in systems infrastructure. Most CPG companies have built up a complete set of applications in support of trade promotions over the years. Even so, few firms have a holistic view of their customers, products and the related distribution network that supports their promotion planning, forecasting and integrated analytics. Lack of integrated master data is the missing link here.

Indeed, what good are your analytics if your data is incomplete, inaccurate, outdated, duplicated and unrelated? More importantly still, how can you decide which promotions to run next year if you can’t trust the data used for your reports? What CPG decision-makers are realizing now is that the key to redirecting TPM programs in a more effective and profitable direction is the data itself.

If you can effectively recognize, relate and resolve customer and product data across distributed systems it then becomes possible to improve sales planning and demand forecasting. You can create the right framework for analyzing trade promotions across the full value chain. The way to make this all happen is to implement a master data management solution, and I’ll discuss exactly how to go about that in my next post.

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