In the highly competitive beverage arena, Cadbury Schweppes is the world's third largest soft-drink maker. But when it comes to space management, this company, which counts Dr. Pepper, 7UP, A&W Root Beer, Sunkist, Hawaiian Punch, RC Cola and Snapple among its beverage brands, clearly outshines its competitors.
In recent years, Cadbury Schweppes has taken space management to a whole new level using planogramming and automation software tools. The effort has helped retailers significantly grow soft drink sales. No easy feat, considering that sales in the category have been flat.
Craig Hodnett, vice president of category management at Cadbury Schweppes Americas Beverage (CSAB), Plano, TX, credits much of the success with the company's ability to quickly generate accurate, store-specific planograms for its key retail customers. "Retailers are so busy today and they're swamped with information. Often they don't know the true value of an item," says Hodnett. "And consumers are confused at the shelf. They may be looking for energy drinks or isotonics, for example, and not know where to find them."
In addition, CSAB has automated much of the space management process, which has enabled the company to shorten the amount of time it takes to create planograms, as well as reduce the number of people needed to create in-store plans, despite growing demands for plans by retailers.
In fact, the company has narrowed down the process to two people-what once took four hours per planogram now takes about 15 minutes, allowing CSAB to reallocate employees to other strategic opportunities.
"Space management is a combination of art and science," says Hodnett, a 20-year company veteran. "My team works at the art while the software helps us with the science. Speed-to-insight is one of our core competencies. It's about understanding the consumer. In the old days, companies used to segment their business based on demographics and that's antiquated thinking."
Speed-to-shelf is a top priority for retailers as well. "We want to be the manufacturer of choice in whatever category we choose to participate in," says Hodnett. "That may sound easy, but when you're the third player in the category, this is a huge undertaking. It's all about speed-to-shelf. Whoever gets to the shelf fastest, wins."
And the efforts are paying off. CSAB says it has realized a 93.75 percent reduction in planogram processing time and an increase in productivity after utilizing the advanced capabilities of its tools.
Optimizing Space, Assortment
Like most manufacturers, CSAB is continually challenged by its retail customers to provide more impact on store shelves, so it was spending a great deal of time producing large amounts of planograms. In 2005, the company began to work with a top-five retailer and JDA Software Inc., Scottsdale, AZ, to optimize its space and assortment strategies by developing store-specific planograms. CSAB is using JDA's Space Planning by Intactix and Space Automation by Intactix.
"We worked with the retailer and JDA to develop methodology in both assortment and space management that is very different from what our competitors are doing," says Hodnett.
The company wanted to create, merchandise and validate 950 Carbonated Soft Drink (CSD) planograms for more than 1,400 stores in seven weeks. The space merchandising strategy incorporated a days-of-supply approach per SKU per store (vs. space-to-sales) which maximizes efficiencies, increases turns, decreases shelf inventory and reduces out-of-stocks.
JDA's Space Planning helps manufacturers and retailers place the right products in the right positions at the right time. It can analyze how much product can be sold, how many cases to keep in stock and how much space is needed to support sales requirements. The tool can also help determine target inventories for each product, as well as reduce inventories while keeping the right amount of product on hand.