In this article we will explain the concept of cannibalization, what is its effect on promotions and how SAP SNC allows us to manage it.

Cannibalization has an impact on forecasts and promoted sales, making the future more unpredictable. To manage this particularity, the Supply Network Collaboration (SNC) module has the “Promotion Cannibalization” feature.

The system calculates the effect of cannibalization when:

• A new promotion is created
• An existing promotion has been updated in the SAP SNC Web UI or via a “ProductDemandInfluencingEventNotification” XML message.
• Each time a promotion is selected to be updated during the Planning Service Manager (PSM) run.

Implementation

To achieve the effect of cannibalization, at least two products impacting each other in the called cannibalization group must be related. The cannibalization factor must be assigned to the products.

If a promotion is created for a product that is in a cannibalization group, the forecasts for the other products in the group are reduced based on the cannibalization factors.

Example

A 5% discount increases the sales of bottles of shampoo bottles to rosemary of 30,000 units, dropping bottles of 250 milliliters of 3,000 units and sales of bottles from 500 milliliters to 5,000 units.

For each product insert a factor of cannibalization. This factor is a positive or negative number that represents the amount by which the sales of the product are positively or negatively affected by the promotion.

By:

Carlos Vera  – Linkedin