C1 - Internal use

Reflection – Design Thiking for Business Innovation  Fazal Magdy    Mind Mapping for Development of Finance Tools    Challenge

I work in the financial area of a large cosmetics company. The proposed challenge was to create a gross  margin simulator that was easy to use for both the finance team and the Marketing and Supply teams,  our main client areas.

The marketing team used to use this type of simulator to evaluate the possibility of adding or not a new  product to our catalog based on its cost and proposed public price, and whether or not this product has  an acceptable gross margin when compared with other products of our existing catalog. This simulator  used to be updated once a year and after a few months it was out of date with current financial  assumptions, so they depended on the financial team for all analyzes.

The Supply team were not used to use any tools, depending also on the financial team for simulations  and price and gross margin checks. For the financial team, this represented an increase in the workload,  and also a lack of a global view of all impacts, in addition to the fact that the brands themselves had no  track of their financial health.

Application

The tool chosen for the development of the project was the (3) Mind Mapping, with which it would be  possible to generate insights based on exploration activities and using them to create design criteria. Thus,  a survey was carried out with the areas involved to understand what the real needs behind the gross  margin simulator were. Is it just the need to change the price? Or a mere listing with the gross margin of  the products? It was easy to see that it was not.

Through the online survey tool, I collected answers about the two main points:

1- Impacto esperado em seu escopo de trabalho (BP – Business Partner):

2- ID Name  Answers

1  BP  Marketing 1

We would use the simulator to make decisions about the products public price  and also whether we will import them or not; it is part of a strategic decision for  each brand.

2  BP Supply 1  Portfolio simplification based on business profitability.

3  BP Finance 1 Agility on decision-making analysis

4  BP Finance 2 Portfolio analysis

C1 - Internal use

5  BP  Marketing 2

Calculate the impact of launches and price changes on the brand's GM. Make the  brands healthier .

6  BP Supply 2  As demand planner it is important to have information on product margins for  decision making. In this case, it is more information than simulating scenarios.  For national coffrets, this simulation is more useful, as it is important to evaluate  combinations of items that will give the best result for the division.

7  BP  Marketing 3

High. I need to perform the calculation of the innovation margin and with the  simulator I will be more "independent" to continue with the simulations

8  BP  Marketing 4

that allows a more agile and consistent work, with information security

9  BP  Marketing 5

Help me decide the best profitability for the brand's innovation plan, combining  the demands of innovation so important for our market.

De  <https://www.johnson.biz/wp-content/appcategory.php>

2 – Must have features:

ID  Name  Answer

1  BP Marketing  1

I hope to be able to simulate the product margins in a practical, objective and  assertive way, serving as a basis for important brand decisions.

2  BP Supply 1  ability to analyze the business REX according to the decisions / simulations made.

3  BP Finance 1  Clarity of information, easy to use and understand

4  BP Finance 2  Analysis of the item's contribution to the brand and to DL to understand its role  in the portfolio

5  BP Marketing  2

Calculate the impact of launches and price changes on the brand's GM. Calculate  GM SKU. Understand GM medium / size category.

6  BP Supply 2  Visibility of the gross margin of products and assessment of scenarios for  promotions. I intend to use these product information in the S&OP cycle, in prior  decisions and in the portfolio optimization cycle (2 times a year).

7  BP Marketing  3

I hope that I will be able to calculate the margin for both imported and national  products such as (local coffrets) in a way that is easily accessible.

8  BP Marketing  4

That assists in the decision to launch or not a product, that directs price decisions  and that shows clearly the impacts that such decisions can generate on the brand  and the division as a whole.

9  BP Marketing  5

Automatic push of the CIVs base as soon as we feed the code n worksheet and  column with designer bench by category. Ex: Bench margin Armani frag fem when  simulating the margin of a feminine release.

C1 - Internal use

De  <https://www.johnson.biz/wp-content/appcategory.php>

In addition, a survey was carried out in parallel with the directors of each area to understand what were  the results they expected for those who would use the tool. Mind mapping was applied effectively, with  responses from all three client areas: finance, supply and marketing, allowing the co-creation of  something that would optimize solutions for all areas.

Insights & Approach

From the results obtained in the research, it was possible to identify that something much more robust  regarding the content of data would be necessary and, at the same time, it would be easy to understand  than a simple public price variation simulator or a gross margin listing by product.

The marketing team was looking for a tool to assist them in making decisions about the public price of  launches, the feasibility of importing new products and innovations, that is, a basis for strategic brand  decisions. In that way, it would be possible to monitor the sustainability and health of their brands much  more easily, in a more independent way from the financial team.

The Supply team, as well as marketing, was also looking for something more than what they presented in  our initial conversations. Not only did they seek greater visibility of gross margin at the product level, but  also a simulator in which they could play with the units, seeking the best combination of units / gross  margin that would bring the best result for the division as a whole. This would make it easier to work on  portfolio optimization / simplification, which was already a project within the team.

Finance also sought many benefits. A simulated gross margin result that would allow us to further analyze  the existing portfolio, launches and brands; greater agility to respond to the constant demands of other  areas; assistance in making strategic decisions, cost allocations, etc; greater visibility of the main  contributors / margin thinners; simulation of results (budget & forecast).

As a result, as requested by our directors, we can list:

1- Easy to use simulator for all (real, budget & forecast);  2- Portfolio optimization;  3- Product delisting, which opens space for more innovation;  4- Increase of financial awareness;  5- Independence of teams for decision making.

Approach - In an upcoming experiment, I would also use the learning launch tool earlier. In this case it  was applied with 2 people only.

