What Is Joint Business Planning?

by [Ursula Brady](/content/author/ubrady/ "Posts by Ursula Brady"/index.html)

“Joint business planning is a way to establish trust, which involves honesty and integrity. We can’t be successful without our suppliers.”
— Charles Redfield, Executive Vice President and Chief Merchandising Officer, Sam’s Club (Walmart)

Tectonic Shifts in the Retail Environment

The symbiotic relationship between retailer and Consumer Packaged Goods (CPG) companies has, till now, been able to support steady growth based on demand alone. Now, as the Consumer Goods (CG) industry continues to shift away from organic expansion, the need to reach more customers and engage new audiences is more important than ever.

Let’s dive into some of the key shifts our customers are seeing in the retail environment:

• Competition: Authentic challenger brands are continually entering the market. According to a recent survey carried out by McKinsey, 30-40% of consumers have been trying new brands and products during the pandemic. Of these consumers, 12% expect to continue to purchase the new brands after the pandemic.

• Price Pressures: Global supply chain stress has created issues for companies seeking to keep costs down. Disruptions in labor markets have seen 15% of companies having insufficient labor for their facilities to keep up with increases in demand, leading to inflation re-emerging as a significant problem for the first time since the 1970s.

• Regulations: Changing consumer needs are encouraging the rise of new, healthier alternative brands as well as instigating legislative change. For example, in October 2022, HFSS (High in Fat, Salt & Sugar) regulations will see a crackdown on promotions for unhealthy food and drinks.

Traditional Account Management Is Obsolete

“Global forces are now shaping retailer action in a post-pandemic world, amplifying deep-set forces and compelling retailers to develop new or enhanced strategies in response.”
— Evan Sheehan, Retail, Wholesale & Distribution Leader, Deloitte Global

These shifts have caused retailers to change the way they do business; the traditional playbook needs to be thrown out and rewritten. As increasing numbers of authentic challenger brands come to market, competition has never been higher.

For both retailers and suppliers, Key Account Management (KAM) needs to be revisited. A culture of test & learn in real time must be applied to contend with these new market entrants. With “key accounts contributing between 40% to 80% of revenue for a branded supplier” in developed markets as indicated by this article by Bain & Company, the time to reinvent is now.

Major incentives for change can be distilled into these three points:

Negotiation Can Feel Like a Zero-Sum Game

In the past, the CPG industry power dynamic has often favored the supplier, but this is no longer the case. Only 3% of retailers are in an exclusive relationship with just one supplier in a given category. This indicates the clout they hold to sway access to consumers is higher than ever before.

Visibility at point-of-sale for products is vital for CPG companies. For retailers, getting the product in-store to sell is their business. Joint Business Plans need to be collaborative. Both sides must ‘be prepared to share information with each other’ to achieve success, as indicated by IGD.

How Can Joint Business Planning Be Achieved?

For companies collaborating on Joint Business Plans, proactive steps must be taken to benefit both parties. Bain & Company have set out five key steps to achieve ‘more trustful and productive’ relationships:

1. Understand the Retailer’s Economics as Well as Your Own

Entering into a business relationship with a full understanding of each partner's market position is pivotal. Data transparency reduces the possibility of surprises that might derail the plan.

2. Differentiate Your Joint Business Plan and Align It With Your Retailer’s Strategy to Target Shoppers

Customer data from the collaborative JBP can help maintain product stock levels, illustrate demand, and identify distribution trends. Understanding target segments is crucial for success.

3. Have Teams on the Ground Executing Key Customer Touchpoints and Confirming Compliance

Real-time compliance checks are essential. Teams in the field can perform checks and share information faster, preventing major roadblocks.

4. Maintain Year-Round Contact With Customers at Multiple Levels and Functions

Regular meetings should correct mid-cycle issues, aligning both parties on real-time results and solutions. Clearly defined performance metrics are essential.

5. Use the Most Advanced Tools and Insights to Stay on Top of Your Joint Numbers

CPG companies need to leverage real-time insights from various data sources, ensuring effective communication across teams to maximize value from trade spend.

Aforza & Joint Business Planning

Aforza drives Joint Business Planning with an end-to-end platform that includes:

• Account 360° View: Complete visibility into account hierarchies and engagement activity across channels.
• Real-time Data & Insights on Account Performance: Insights into key account performance from various data sources.
• Integrated Trade Promotions: Optimizing trade spend and targeting key customers with real-time promotion insights.
• Retail Execution Checks from Field Sales Teams: Ensuring compliance and capturing promotion-based orders with precision.
• Digital Asset Management: Centralized access to important documents against the account, such as contracts and Joint Business Plans.

With industry-leading innovations, Aforza helps consumer goods companies create productive account collaborations that unlock revenue potential.