Gaining visibility of trends in customer demand is important for any business but for a company with lead times of up to a year, it is essential. Internationally renowned piano manufacturer Steinway & Sons is using PrecisionPoint business intelligence software to gain unprecedented insight into sales and inventory from its Microsoft Dynamics Navision (NAV) ERP solution.
PrecisionPoint enables sales to be analyzed in multiple dimensions: by product type, size, finish, dealer and customer type – domestic or institution. Indeed, Steinway & Sons is even analyzing which products are most popular for performance venues, and which for practice rooms. Combining data from disparate sources, including a dealer targets database, enables the company to track dealer performance, also by product and market.
As a result of this insight, the company has been able to reduce its inventory levels and improve its understanding of the evolving trends in customer demands.
Steinway & Sons
Founded in 1853 in a Manhattan loft, Steinway & Sons is credited with the development of the modern piano. The pianos have always been built one at a time, with skills handed down from master to apprentice. Today, the company produces around 2,500 pianos each year, and still builds its pianos in the same way, both in New York and Hamburg.
While production values remain unchanged, the market for pianos has evolved somewhat in recent years, including demands for different styles and sizes, as well as in response to the economic downturn. As Gary Conte, Director of Product Distribution, Steinway & Sons, explains, “While home ownership of pianos has declined a little, there is still a very strong institutional market demonstrating good demand for new instruments for music schools and performance venues, especially in the US.”
With manufacturing located in two of the most expensive cities in the world, Steinway & Sons needs to keep close control over production costs; while escalating distribution costs are also a concern for this truly international operation. And with products sold via a network of distributors across the globe, it is also important to keep track of trends in dealer performance against targets by territory, market type and product style.
In common with many manufacturing companies, Steinway uses the Microsoft Dynamics NAV ERP solution. However, Conte explains, “While NAV is very good at collecting data it is not good at retrieving information. NAV provides some standard canned reports but to gain any real insight demands extensive work in Microsoft Query. Trying to understand how the tables and fields are set up and how to link tables makes this process very challenging for non IT users.”
Rather than spending hours hand-crafting queries, Steinway & Sons opted to implement PrecisionPoint for Microsoft Dynamics NAV business intelligence software. “I am not an IT person, but I find PrecisionPoint very easy to use,” says Conte. “The data required is summarized in a cube and I can access that cube with no need to understand the underlying data structure.”
Steinway & Sons is primarily using PrecisionPoint for monthly sales and inventory reporting, as well as ad hoc reports in response to specific business requests. Sales are analyzed in multiple dimensions: by product type, piano size and finish, as well as geography. These reports are distributed throughout the organisation, from the overall Company President to District Sales Managers, the New York operations President and the entire marketing team.
“The monthly reports could not be simpler: I select the current month and all the reports are immediately updated. There is no need to worry about importing or reformatting data,” Conte confirms. “Using PrecisionPoint enables Steinway & Sons to reveal valuable trends in product demand – by size and between different product lines. It also reveals the way customer preferences are changing, such as the shift towards smaller pianos and the demand for black rather than natural woods.”
The company is also tracking where products are used – for example, which models are purchased by music schools for performance venues, and which for practice rooms. As Conte says, “PrecisionPoint makes it so much easier to grab that information from NAV and work with it.”
Multiple Information Sources
Steinway & Sons is also able to combine multiple sources of information – including a database holding dealer targets – to gain further business insight. Conte says, “The ability to track dealer performance over time and against target, for specific products and within both domestic and institutional markets, is invaluable. Using PrecisionPoint it is very simple to pull information from multiple sources and merge it into a single consolidated dealer performance report.”
In addition, Steinway & Sons routinely undertakes ad hoc reports to meet specific business requests – such as analysis of sales across South America, by country and product.
With each grand piano taking nearly a year to create, and lead times on even standard pianos upwards of six months, it is becoming ever more important to improve understanding of sales trends to ensure production meets customer demand down the line. Furthermore, given the changing market it is also important to avoid unwanted inventory where possible.
The use of PrecisionPoint has enabled Steinway & Sons to radically reduce the value of its US inventory, using trends in sales history to optimize inventory while still satisfying orders from dealers in a timely fashion. “Inventory analysis is incredibly straightforward using PrecisionPoint. Steinway & Sons was able to reduce inventory value significantly and has been able to track to target inventory levels year on year. Over the last three years, we have been able to reduce our finished goods inventory by over 10%” says Conte.
Throughout its use of PrecisionPoint, Steinway & Sons has retained a strong relationship with the company, embarking upon periodic training courses to ensure staff are exploiting the latest functionality and features. Looking forward, Steinway & Sons plans to further improve forecasting, combining insight into market change with additional sources such as dealer promotional activity to become more effective at predicting demand.
As Conte concludes, “PrecisionPoint is an incredibly efficient way of accessing the data within NAV to gain valuable business insight. In an evolving business, with long lead times, improving this understanding of trends in customer demand is a key component of Steinway & Sons’ on-going business planning.”
Foxconn chairman says expects “limited impact” from chip shortage on clients
TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients will face only “limited impact” from a chip shortage that has rattled the global automotive and semiconductor industries.
“Since most of the customers we serve are large customers, they all have proper precautionary planning,” said Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd
“Therefore, the impact on these large customers is there, but limited,” he told reporters.
Liu said he expected the company to do well in the first half of 2021, “especially as the pandemic is easing and demand is still being sustained.”
The global spread of COVID-19 has increased demand for laptops, gaming consoles, and other electronics. This caused chip manufacturers to reallocate capacity away from the automotive sector, which was expecting a steep downturn.
Now, car manufacturers such as Volkswagen AG, General Motors Co and Ford Motor Co have cut output as chip capacity has shrunk.
Counterpoint Research says the shortage has extended to the smartphone sector, with application processors, display driver chips, and power management chips all facing a crunch.
However, the research firm predicts Apple will face a minimal impact, due to its large size and its suppliers’ tendency to prioritise it. Apple is Foxconn’s largest customer.
Foxconn is looking at other areas for growth, including in electric vehicles (EVs), and Liu said their EV development platform MIH now had 736 partner companies participating.
He expected it would have two or three models to show by the fourth quarter, though did not expect EVs to make an obvious contribution to company earnings until 2023.
Liu also said the company was still looking for semiconductor fab purchase opportunities in Southeast Asia after not winning a bid to take over a stake in Malaysia-based 8-inch foundry house Silterra.
(Reporting by Ben Blanchard and Jeanny Kao; Writing by Josh Horwitz; Editing by William Mallard and Ana Nicolaci da Costa)
EU seeks alliance with U.S. on climate change, tech rules
By Sabine Siebold and Kate Abnett
BERLIN (Reuters) – Europe and the United States should join forces in the fight against climate change and agree on a new framework for the digital market, limiting the power of big tech companies, European Union chief executive Ursula von der Leyen said.
“I am sure: A shared transatlantic commitment to a net-zero emissions pathway by 2050 would make climate neutrality a new global benchmark,” the president of the European Commission said in a speech at the virtual Munich Security Conference on Friday.
“Together, we could create a digital economy rulebook that is valid worldwide: a set of rules based on our values, human rights and pluralism, inclusion and the protection of privacy.”
The EU has pledged to cut its net greenhouse gas emissions to zero by 2050, while President Joe Biden has committed the United States to become a “net zero economy” by 2050.
Scientists say the world must reach net zero emissions by 2050 to limit global temperature increases to 1.5 degrees above pre-industrial times and avert the most catastrophic impacts of climate change.
The hope is that a transatlantic alliance could help persuade large emitters who have yet to commit to this timeline – including China, which is aiming for carbon neutrality by 2060, and India.
“The United States is our natural partner for global leadership on climate change,” von der Leyen said.
She called the Jan. 6 storming of the U.S. Capitol a turning point for the discussion on the impact social media has on democracies.
“Of course, imposing democratic limits on the uncontrolled power of big tech companies alone will not stop political violence,” von der Leyen said. “But it is an important step.”
She was referring to a draft set of rules unveiled in December which aims to rein in tech companies that control troves of data and online platforms relied on by thousands of companies and millions of Europeans for work and social interactions.
They show the European Commission’s frustration with its antitrust cases against the tech giants, notably Alphabet Inc’s Google, which critics say have not addressed the problem.
But they also risk inflaming tensions with Washington, already irked by Brussels’ attempts to tax U.S. tech firms more.
Von der Leyen said Facebook’s decision on a news blackout on Thursday in response to a forthcoming Australian law requiring it and Google to share revenue from news underscored the importance of a global approach to dealing with tech giants.
(Additional reporting by Foo Yun Chee; editing by Robin Emmott and Nick Macfie; editing by Jonathan Oatis)
Packaged food giants push direct online sales to gauge consumer tastes
By Siddharth Cavale and Nivedita Balu
(Reuters) – Packaged food giants including Kraft Heinz, General Mills and Kellogg are pushing sales of their products to consumers directly via their own online channels, in a quest to gather more data about shoppers’ purchasing habits.
Velveeta-cheese maker Kraft Heinz saw its e-commerce sales double in 2020, now representing more than 5% of its global sales, Chief Executive Miguel Patricio said at the virtual Consumer Analyst Group of New York (CAGNY) conference this week.
The company sells Heinz baked beans and tomato soup by subscription or in bundles directly to consumers on a “Heinz To Home” website in the United Kingdom, Australia and Europe.
Sales on the site are “giving us valuable insights into consumer behavior, enabling us to quickly test and learn from innovations,” Kraft’s head of international business, Rafael de Oliveira, said at the conference.
Kraft would continue to use the site as a channel to generate strong sales in developed markets, he said.
The company also counts sales of its products through marketplaces such as on Amazon.com and Walmart.com as part of its e-commerce sales.
U.S. shoppers spent on average $1,271 buying groceries online last year, 45% more than they did in 2019 as the pandemic spurred shopping online, according to market research firm Earnest Research. In contrast, the average dollars spent in stores rose only about 7% to $3,849.
PepsiCo sells products including Doritos, Quaker oats and Gatorade directly to consumers through two websites, pantryshop.com and snacks.com, both launched in 2020.
Chief Financial Officer Hugh Johnston said that more than 45% of the company’s capital investments over the next few years would be dedicated toward manufacturing capacity, automation, and a “ramping up of investments in our e-commerce channel.”
As major online retailers including Amazon.com and Walmart.com continue to gather valuable data on shoppers, many packaged food manufacturers are keen to gather their own data on shoppers, too.
“COVID (has) simply accelerated our digital growth and has provided us with yet another source of data and insight,” Monica McGurk, chief growth officer at breakfast cereal maker Kellogg Co., told the conference.
Kellogg, producer of Corn Flakes as well as Pringles chips, said on Wednesday it had launched a direct-to-consumer website focused on digestive wellness. The group plans to sell its new Mwell Microbiome Powder for gut health via the site to gather data on customer interest before it launches the product more widely.
E-commerce sales have doubled in the past year and now represent about 8.5% of the group’s $13.77 billion in annual sales, Kellogg said.
Pillsbury dough-maker General Mills also sees the benefits of tracking consumer habits more closely.
“We’re aggressively investing in data and analytics. We are gathering unparalleled insights from the first-party data we collect through our brand websites,” General Mills’ Chief Executive Jeffrey Harmening said at the conference.
On its Bettycrocker.com website, General Mills provides hundreds of recipes using Betty Crocker cake mixes and frosting. The site leads people to the closest store or an online retailer where they can purchase the products, thereby generating data for General Mills on what a particular customer from a certain zip code is buying. The company does not sell the food products directly on its website.
Consumers, however, may have to shell out more if they shop directly from brand websites.
Prices on the two PepsiCo sites, for example, were generally higher than those on Walmart.com or Amazon.com, Reuters checks show. On Walmart.com, for example, a 10 oz pack of Doritos Nacho Cheese was on sale for $2.50 compared to $4.29 on Pepsico’s website.
Kraft Heinz offers tins of soup, beans, pasta and baby food bundled into packs ranging from six to 25 items and costing between 10 and 20 pounds ($14.01-$28.03) on its UK website. It told Reuters the relatively higher prices of items and bundling of packs than on some other online marketplaces was to be able to eke out a margin after including delivery costs.
“Longer term, we see real value in this channel to be an insight and data channel for us,” Jean-Philippe Nier, head of e-commerce for Kraft Heinz’s business in the UK and Ireland, told Reuters. People are more prepared to order directly from manufacturers than they were before. The time is now.”
Graphic: Direct online sales to cross $20 billion in 2021 – https://graphics.reuters.com/PACKAGEDFOODS-ECOMMERCE/rlgpdexngvo/chart.png
($1 = 0.7137 pounds)
(Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru; Editing by Vanessa O’Connell and Susan Fenton)
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