PROJECT BACKGROUND

CURRENT SITUATION13
Selecta has over 24,000 outlets nationwide with over 120 unique SKUs (Standard
Keeping Units). (However, our proposed project only tackles the supermarket channel,
composed of around 1444 stores, because it is the channel that carries the most SKUs at
any given time and is the most consistent in ordering owing to the fact that they have the
most customers.) Each of those 24,000 outlets are assigned a limited number of freezers of
varying sizes with limited space. Typically, smaller outlets such as sari-sari stores and
convenience stores receive the smaller sized freezers while supermarkets receive the larger
ones. With over 120 SKUs, Selecta couldnt possibly fit all the products in their arsenal in a
healthy amount within that limited capacity. Enter the SBM, the Standard Booking Mix.

Purpose of SBM
The SBM is a document that specifies the optimal mix of Selecta products and in
what quantities to be placed inside a freezer to ensure strong revenue generation. It is a
product of consumer insight and purchasing patterns and management plans, innovations
and forecast. It is generated using the most recent 3 months worth of sales data. SBMs aim
is to minimize random orders and to remove the pain of having to think of which stocks to
resupply to which stores. It tries to provide an objective means for the salesmen to
accomplish their ordering responsibilities by using historical sales data. Currently, Selecta
generates 7 unique SBMs, one for each channel, every 3 months.

Usage of SBM
The current process of how Selecta distributes ice cream begins when the forecasted
values per SKU (Standard Keeping Unit)14 is given to the Customer Development (CD)
13

Dee, Janine & Del Rosario, Nasvin. Client Meeting. Personal Interview. July 30, 2014.

10

PROJECT BACKGROUND
Department by the Demand Planning (DP) Department. The turnover of this data is done
during the quarterly meetings held at the main office in Pasig. These forecasts are done
once a month, but are only given to the CD every 6 months. These data can be retrieved
earlier though upon request. When requested, the CD can expect the data to be sent to
them within the day of the request. Together with the forecasted data, the CD generates the
historical sales data. Both the historical sales data and the forecasted data are used
generate the Standard Booking Mix (SBM)15 per channel.
The SBM is then given to the Salesmen of Selecta via e-mail. The generated SBM is
handed to the different salesmen and guides them in their product ordering decisions by
providing them the suggested SKUs to include in their supply order.
The Salesmen further distribute the SBM to the Merchandisers. The manner of data
transferring will depend on the salesmen. Some salesmen opt to call meetings and
personally hand over the data while others opt to text, call, or e-mail. The most common
method is via e-mail. Once the merchandisers have the data, they will use this data as a
guide in ordering which ice cream products for selected stores. Though given an exact
number of SKUs to order, the salesmen are not required to follow this. Their experience on
the ground licenses them this flexibility by providing insights on which products might do
better for which particular stores.
Once the Merchandisers know what they need to order for the store, they contact the
Salesmen and these Salesmen fill up a Sales Order (SO) form16. The filled up forms are then
given to the CSR (Customer Service Relations) Department. The CSR Department is in
charge of inputting the orders into the companys SAP system. The following day, the

14

Standard Keeping Unit: product identification code.

Standard Booking Mix: See appendix.
16
Sales Order Form: paper filled up to begin ordering process; contains all SKUs; See Appendix: Sales Order form

15

11

PROJECT BACKGROUND
warehouse is expected to deliver the products to the stores. The maximum amount of time
for an order to be fulfilled is 48 hours.
One Salesman handles seven to ten merchandisers. It must be noted that the
merchandisers are third-party service providers; therefore they are not employees of
Selecta. The merchandisers frequent the stores assigned to them twice a week. The
salesmen, on the other hand, visit the stores their merchandisers handle at least once a
week. An outlet is attended to at least twice, by the merchandiser, and once, by the
salesman, in a week.
Currently, Selecta follows a channel-based creation of SBMs every 3 months. This
means that for 3 months, stores under channel X will follow the SBM created for that
channel. At the end of the 3 months, Brand Building and Customer Development
departments of Selecta come together to discuss the creation of the next 7 SBMs which will
serve as a guide for the ordering of products to be restocked in the stores of the 7 channels
for the next 3 months.

Creation of SBM
The SBM creation relies on the four main numerical data that the Demand Planning
department is tasked to gather, coming from the previous 3 months worth of sales data from
each store. These data are namely: Historical Value, Historical Volume, Forecasted Value
and Forecasted Volume. A single employee handles the calculation of the SBM
permutations. Each of the store data will then be compiled and segregated in an excel file on
a per channel basis, containing necessary data that can be used as the base for the
permutations of the SBM. Before the actual creation, Brand Building and Customer
Development will have its quarterly sales planning meeting in order to determine the ice
cream flavors that will be focused for the semester, which will then increase the value of the

12

PROJECT BACKGROUND
Forecasted numerical data in the created excel file. Customer Development will then release
its National Must Haves, National NPI (New Product Innovation) Must Haves, Channel Must
Haves and Channel NPI Must Haves that will serve as their priority during its creation.
In order to find the rest of the ice cream that will be placed in each specific freezer
combination, the employee handling the SBM creation will use a pre-formulated excel sheet
to eventually get the ice cream flavors garnering top performance index, which will then
result in a cumulative count of 80% to gather the Booking Mix apt for a specific outlet. The
quarterly SBM creation is done for a week because of the large store count of 24,000 for
seven channels, which might even expand to a bigger store reach due to its planned store
openings, reaching to around 10,000 in the next few years. The finished SBM per channel
will then be sent to all salesmen in order to adjust each stores' SBM according to its derived
data. This process will then be repeated on a quarterly basis for alterations coming from
consumer sales insight and seasonality adjustments.

BUSINESS PROBLEM17
At its core, Selectas primary concern is the complexity of the calculation and
generation of the SBMs. Due to its complexity, calculating the 7 SBMs for the 7 channels
takes around a week by a single individual. This prevents Selecta from being scalable; that
is, the complexity of the generation of an SBM hinders Selecta from making the SBM even
more effective by shifting from a channel-based calculation, to a per-store based calculation.
A per store calculation would be even more accurate, customized and would increase the
probability of higher revenues per store.
Maximizing revenue requires an understanding of the different markets that the
product or service is being offered in. (e.g. A mall catering to upper class members of
17

Dee, Janine & Del Rosario, Nasvin. Client Meeting. Personal Interview. July 30, 2014.

13

PROJECT BACKGROUND
society, such as Rockwell or Shangri-la, may have better Magnum sales than in slummier
stores or supermarkets.) Unfortunately, Selectas current system does not allow them to be
sensitive to the different markets. Their salesmen, tasked with resupplying the different
stores Selecta freezers, have minimal scientific means to justify their booking mix orders.
Because Selecta has products in 24,788 stores18 all over the Philippines, the generation of
standard booking mixes (SBM) and permutation of freezers specialized per store proves to
be a difficult task for the main office. They have the means to get the data per store, but the
encoding and processing of each stores data in their SBM excel sheet is rather tedious and
may cause obsolescence of data.
Selecta wishes to address the disparity each consumer wants of his ice cream, which
is why they tried to centralize all forms of permutations. Given the five different channels of
Selecta, namely Supermarkets, Convenience Stores, Destiny Stores, Groceries and SariSari Stores, each of these vary the size and number of freezers as well as the products
found in the freezer. This process is done as such to change the taste that is brought in the
channel from different types of stores, since buyers from a sari-sari store will have a different
taste compared with customers from convenience stores. However, we must take into
account that a supermarket from Taguig still has a lot of difference compared with a
supermarket in Butuan given the difference in culture, lifestyle and social class found in
different parts of the archipelago.
Selecta wishes to maximize its customer relations and feedback-to-result process by
enhancing its SBM permutation to work. Although the given calculations provide enough
sales to have enough for them to gain a big amount of profit, the potential of gaining an even
bigger market share can be done. The main problem of the current SBM permutation system
is that, although it uses sales (or historical) data and forecasted data, it is minimally
18

Total Stores per Channel. Excel file.

14

PROJECT BACKGROUND
grounded in view of the fact that the data is on a per channel basis, not taking into account
the sales incurred by a particular store only. Because of this, some of the salesmen and
merchandisers choose to veer away with the standard booking due to the customers
prescription of specific products per store. It is a product of instinct and at best, a hunch on
what products will bite in that market. Even if the salesmen possess a better understanding
of the stores they are handling and which combination of Selecta products would be more
financially beneficial, the greater and more data-supported potential relies on a more
scientific and research-driven permutation to calculate a more unique and reliable mix for
each store.

THE PROJECT
The proposed process centers on altering the SBM generation process and focus.
SBMs will be created on a per store basis instead of the current per channel basis. For the
project, the team will not be handling all stores of all channels, but only on the stores for a
specific channel: supermarkets. This includes 1,442 of the 24,788 stores19 that order Selecta
products. Creating a more specific SBM will address Selectas mission by making the
products more tailored and thus creating a more enjoyable ice cream experience for their
customers.
Once the SBM is generated, the Salesman hands it over to the merchandisers, who
will then use the SBM as a guide in ordering the ice cream for a specific store. Once the
merchandiser knows what he needs to order, he contacts the salesman via call or text to
relay the order. It is the role of the salesman to input the orders into the system. The
Merchandiser is still not required to order what is suggested (in terms of quantity), but the
proposed system will limit the SKU choices that can be ordered, making the orders closer to
19

See Appendix: Total Outlet per Channel

15

PROJECT BACKGROUND
the SBM. The system will then send the Merchandisers order to the CSR department. Once
the order is sent to the CSR, the department places the order to the warehouse; this is
outside of the project scope.

Pros

Cons

Salesmen/End-

Less manual labor

Users

Unique
which

SBMs
hope

per
to

supply order form

store,

increase

sales.

No control over SKUs on

Forced to follow the SKUs

suggested

Ordering system to facilitate

by

the

SBM

produced.

logged-transactions

Decision making process is

made

easier

by

the

quantity

of

generated SBM

Flexibility

on

suggested SKUs to order

Selecta Top

Management

Eliminates problem regarding

Complex

loss of sales due to general

development expense

SBM

Unique SBMs per store will

increase

sales

by

forecasted 28 million per

year.
20

20

See Appendix: Forecasted Increase on Sales

16

The

system

system

is

an

independent ordering system

that is not connected to their
own

SAP

system.

This

PROJECT BACKGROUND
means

that

additional

there

is

encoding

an
or

uploading to be done by the

CRS department to the SAP
system.

17