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INTRODUCTION

4GH, is one of the largest European telephone distribution chains, with more than 300 stores in Italy. 4GH has chosen E3 as a complete solution for its company and has also activated the Datamart and Commercial budgeting solution in record time.

ANALYSIS

Objective

The company has lately experienced an intense development of its distribution network, accompanied by a challenging company merger. In this context, the Datawarehouse and Commercial Bis Retail budgeting is aimed at supporting process innovation and commercial rationalisation.

Why did they choose the E3 Suite?

• Software solution with a preconfigured database, easy to be parametrised
• Software supported by consultants highly experienced in the retail sector
• Bis Retail also supports the Oracle platform that has been chosen as the primary technology to develop the company’s information system
• Bis Retail offers different application solutions that can guarantee the full evolution of the management control function for the next years
• Bis Retail can work in cooperation with the team using internal resources, providing training to obtain knowledge and autonomy to manage the processes

Overview of the 4GH Commercial Budgeting Process

In December 2006, the Group 4G decided to activate the Commercial Budgeting solution. They are one of the largest European telephone distribution companies due to their recent merger with other companies of the sector and have more than 300 stores in Italy.  The Commercial Budgeting solution is focused on the integration of the sales network activities distributed in the national territory, and the purchasing department managing product categories for different suppliers and brands and planning the volume of purchases for 2007. Before introducing the E3 Suite, sales budget was performed separately from purchase budget, without having an integrated and unitary overview of what was being planned for the sales network. Thanks to E3, it was possible to develop two integrated and perfectly harmonised processes that follow these steps:

1. Sales Budget: Based on the internal trends of volume and price, along with market trends. It is organised referring to the store / product sector according to the rules defined by the administration ad control office; following this process the budget is distributed to area managers (divided into the stores that they manage); area managers can apply financial corrections and submit the updated budget to the central office; after being integrated with the corrections, the budget is confirmed by the E3 datawarehouse system;

2. Purchase Budget: Once the annual sales budget has been confirmed, it is divided into months by the E3 system on the basis of historical sales data per month/product category and also on the mix of brands (supplier) in order to activate the sales budget in terms of product category; every buyer/category divides their product categories according to the margins and market trends recorded in external databases the last financial year; every buyer/category can review the range of their categories, repositioning their suppliers based on three factors: the share, each supplier is allocated within its category, the selling price and the purchase price. After having finalised the purchase budget, it is confirmed by the system and it generates a planning of purchases and the presumed structure for 2007; both the purchase and sales budget is available on the datawarehouse system for comparison with 2007 final data.

3. Goal management: Once the budgeting process has been finalised and confirmed, it generates sales function objectives, in terms of mix and margins for both stores/sales representatives, where the objectives are represented by the value and quantity of items sold on a monthly, weekly and daily basis. The support provided by the IT team but especially by the team controllers Lorella Bianchini and Filippo Pavesio was of paramount importance. They contributed in terms of methodology, support and internal functions coordination.

IMPROVEMENT

Outcomes

The commercial database has already been released only two months after the start of the project:
• Product category performance, with adjusted margin and promotion dynamics
• Sales Budget distribution process
• Purchase Budget process, category-based

Particular attention was paid to the budgeting process, focused on the integration of purchases and sales processes.

Gianluca Di Venanzo, 4GH General Manager, says: “Before introducing the E3 Suite, the Sales Budget was developed separately from the Purchase Budget. With E3, it was possible to develop two integrated, cooperative and harmonised sales and purchase goal management processes. We expect to improve considerably the incentivising effect of the budget in terms of sales and purchases.”

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