Growing yogurt market share: Dannon uses IBM analytics to boost forecasting and focus on promotions
The dairy giant is using IBM’s cloud-based predictive analytics, including IBM Strategic Trade Planning and Customer Trade Planning solutions, to improve its forecasting abilities and control the delivery of the right product mix at the right time to satisfy consumers.
Through IBM’s trade and strategic trade planning solutions, Dannon can analyze shopper behavior through the use of big data and predictive analytics, to improve trade investment decisions and make more precise and accurate predictions on product volume and profitability.
“Our goal was to eliminate the time our sales team was spending on forecasting and instead focus their attention on executing their promotional plans, allowing them to work more closely with our retailer customers,” said Timothy Weaver, Chief Information Officer, The Dannon Company.
“Through IBM’s planning solutions, we not only streamlined the forecasting process for our sales team, but we increased our planning accuracy from 75 to 98%, helping us to further distinguish ourselves as the leading yogurt maker.”
“Dannon works with retailers across the country to make sure their shelves are filled with the precise product volume and promotions for each store location to meet shopper demand,” added Craig Hayman, General Manager, IBM Industry Solutions. “Through the use of predictive analytics, Dannon is able to understand, plan, and predict their business in ways that were unimaginable a few years ago.”
Michael Neuwirth, senior director of public relations for The Dannon Company, told us that the company began working on predictive analytics in 2010 and deployed its first trial in 2011.
“Shoppers are not analyzed - it is the store shelves that are analyzed and then reviewed against the promotional plan along with sales data,” explained Neuwirth.
Jay Henderson, global strategy program director, IBM Smarter commerce, told us that the company is seeing wide spread application of predictive analytics to big data by consumer products companies.
"This spans a wide range of product categories, including everything from juice to spices, canned produce, cleaning products, and household goods. The benefit varies less by sector or product category, and more by a company’s ability to combine great technology with people and process.
Predictive analytics are a like vitamin, those who make it a regular part of their regimen perform better, but just buying the bottle won’t make you better. The Dannon narrative illustrates this perfectly as they had great tools from IBM and were able to align their people and process.”
To meet continually changing consumer demand generated by promotions, Dannon must precisely anticipate how much additional yogurt is needed by its retailer customers, while also keeping in mind yogurt’s limited shelf life.
Empty shelves cannot be filled overnight and too much production can result in spoilage, both of which are losses for shoppers, retailers and Dannon. By utilizing the tools and statistics provided by IBM’s system, the company is able to more accurately measure how much yogurt they will need through predictive analytics, which ensures enough yogurt is on the shelf, resulting in happier shoppers, less wasted product, and a more profitable business for retailers.
The company would not talk about the individual costs and savings, but Neuwirth said that the cost of IBM Smarter Commerce is balanced by the efficiencies they find.
While the aim is to support market growth, Neuwirth added: “We cannot draw a direct correlation between our market share performance and our use of predictive analytics - there are simply too many other factors to consider in overall market share.”