BI in FMCG Industry - Raj Basu

©Company confidential

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Major changes in FMCG industry
• Indian Consumer changes • Larger disposable income
• Middle class segment bulging • Greater global exposure • Greater appetite & demand for global products • Differentiated product & service requirements

• FMCG space dynamics • Explosion of products
• Explosion of markets (Kirana & Organized Retail) • Rush of new players • Global players bringing process and intelligence maturity • Increasing competition • Supply chain bottlenecks

• Impact on FMCG strategy & operations • Increasing Flexibility
• Outsourced Contract Manufacturing • Demand driven supply chain • Improving Customer service • Retail outlet segmentation • Customized Retail service • Supply Chain segmentation • Greater Organizational Alignment • EPM, Divisional Scorecards •Integrated Sales & operations planning • Greater Customer focus • Demand analysis • Product charateristics ©Company confidential

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EPM/BI needs of the FMCG Industry
• Rapid EPM adoption for Org Alignment & strategy management • Balanced Scorecards (Strategy Maps, Business Scorecards)
• Budgeting, Planning & Consolidation systems • Operational performance management

• Financial Analytics for greater ROCE • Working Capital Optimization (C2C Cycle)
• Debtor Analytics • Payables Analytics • Inventory Optimization • Treasury Cash Analysis

• Operations Analytics • Plant Performance Management
• MES Analytics

• Customer Analytics • Trade Promotion Analytics
• WD Profitability • Outlet performance • Channel Analysis • Integrated Consumer Demand & market performance visibility

• Supply Chain Analytics • Supply Chain Performance Management
• Product Cost & profitability analysis • Operational Planning efficiency • Inventory visibility & optimization • Supply Network efficiency • Spend Analytics

©Company confidential

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supply chain bottleneck alerts. poor AVF scores etc • Global players are even further ahead • Trade Promotion Analytics. Segmentation based promos. route optimization and advanced forecasting and predictive demand models ©Company confidential 4 .Key BI Trends in the FMCG industry • Major Indian FMCG players are making rapid strides in enabling Business & Competitive intelligence as a key differentiator • Most of the large FMCG companies are centralizing BI as a shared service on a common platform across it’s businesses and brands with a razor like focus on getting Best-In-Class service • Most of them are already deep into state of art Business Intelligence • ability to check on an outlet consumption pattern on a handheld before meeting the owner • ability to analyze secondary sales based promotions rather than primary uptake • ability to provide outlet based actionables rather than market level inputs like OOS.

plans and responsibilities within the organization. in order to align goals and strategies with operational objectives.Feedback Strategic Objective Functional Objectives Unit Objectives Individual Objectives Level 1 : Business Functions Level 2 : Units Adopt New Technology For Manufacturing Flexibility HR Effectiveness Key Business Benefits ©Company confidential 5 .EPM Objectives FMCG majors are interested in implementing a Performance Management (PM) program across the enterprise. Develop Superior Consumer Insight Strategy Communication Incr Share Holder value Sustained Profitable growth Accelerate Organic Growth Improve Productivity Effective Model To Identify Capability Measure Performance Development Needs Process Efficiency Customer Satisfaction Financial Performance Objective Measures Initiatives Organizational Strategy Alignment Communication Business Performance Vision Level 0 : Corporate Closed Loop .

must we satisfy Internal Process “Efficiency” To satisfy our customers. what “Profitability” financial objectives must “Return on Capital Employed” we accomplish Key Imperatives Key Questions Customer “Consumer Satisfaction” “Market Share” To achieve our financial goals.Classic Balanced Scorecard Framework Perspective Vision & Strategy Effect Financial Results To Satisfy our shareholder. must we excel in Cause Learning & Growth Action “Knowledg e” “Innovatio n” To achieve & maintain our competitive position. what customer needs. what internal business processes. how must the organization the Organization learn & improve Balanced Scorecard incorporates a double loop feedback around both internal business processes and external outcomes ©Company confidential 6 .

Cash –To-Cash. Procure-To-Pay cycle times Analytical Capability • Outlet Service Route Optimization • Outlet Segmentation • Analytical Forecasting • Six Sigma Analytics • Price Elasticity Analysis • BCG Portfolio Analysis • Human Productivity Analysis • Loyalty Analytics Integrated Analysis across value chains • Impact of Food FG Warehouse location on Food Categories operating margins • Impact of Leaf stock at ILTD on price elasticity at ITD • Impact of potato sourcing bottlenecks on Bingo Freshness ©Company confidential 7 .Decision-making challenges at ITC Businesses Organizational Alignment • Business Performance Mgmt – Executive. Unit Level Scorecards • Employee Performance Mgmt – Personal Scorecards Fact Based Decision-Making / Actionable Intelligence Tactical • Targeted Promotions & variable pricing • Outlet Segment specific service packages • Profitability based supply routes • Demand driven inventory management Operational • Exception based operations at the Factories • Stock optimization across supply chain nodes • Fast tracking complaints from High Value Cust • Personnel workload mgmt across stores Performance Visibility • Promotion & marketing impact tracking • Supply Chain bottlenecks • SKU velocity • Logistics impact on operating margins • Store Allocation efficiency • Reservation Pipeline vs Forecast • 360 deg Customer Views • 360 deg Supplier views • Cost variance tracking • Order-To-Fulfillment. Functional.

Alerts. Data Models. BI Tools. Metadata ©Company confidential 8 .Functional Metrics. What-If Analysis. Databases.Dashboards.EPM driven BI at a US Food Distribution Major Strategic Goals Strategic Metrics/Scorecards Demand Initiatives Some Analysis Areas • General Analysis • Sales Force Effectiveness • Trade Promotion Effectiveness • Marketing Effectiveness • Market Analysis Sourcing Initiatives Supply Chain Initiatives Customer Initiatives Some Analysis Areas • Spend Analysis • Supplier Performance Analysis • Item & Brand Analysis • Bid Analysis • Competitive Analysis Some Analysis Areas • Delivery Effectiveness • SKU rationalization Effectiveness • Backhaul Effectiveness • Carrier Performance Analysis Some Analysis Areas • General Analysis • Segmentation Analysis • Contract Compliance • Business Review Analysis • Customer Profitability Analysis Business Functions . Reports. Guided Analysis IT Functions . Scorecards. ETL.

metric/report generation ) Outlet Sales. A/P. Market Research. Salary Advice. Forecast. Transformation & Loading ETL Layer Source Systems SAP Visual Audits Sales Force WD System & CRM Excels PLM HRMS ©Company confidential 9 . Visual Merch Audit. Food. Transport Orders. Production Plans. PCB Brand Perf Mgmt Mkt Research Perf NPD Perf Operations Perf R&D Perf Emp Perf Finance HR Perf Portfolio Perf Procurement Perf A common data set populates the entire model enabling :• • Scalability • EPM. number crunching. Purchase Orders Inventory. A/R. BI Model • System Performance Integration • data linkages • business rules Channel Perf Plant Perf Workforce Eff WSD Perf Emp Eff BI Layer (Business logic. Production Jobs Data Extraction. Stock Tr Orders. Cleansing.A single BI System should support the EPM Model Performance Management Model Corp TM&D HR Perf Sales Finance Planning Perf Category Perf Dist Perf Branch Perf WD Perf AM Perf AE Perf Promo Perf Warehouse Perf Outlet Svc Eff Route Eff Network Eff Logistics Perf Scheduling Eff Carrier Eff Distribution CBSC. re-distribution Costs Data Warehouse (Data Storage) Business Plan. Data. Staging. Invoices.

transportation sharing and backhauling. reverse logistics etc across categories ©Company confidential 10 .Some benefits of integrated modeling for FMCG • Impact of raw material shortage on retail offtake • Analysis of a request for a short runner on • Factory productivity vis-à-vis customer service • Correlate/factor-in market demand (IMRB) into AE performance • Decision on extending Promotions based on raw material availability • Analyze impact of sales strategies/norms on Market standing • Analyze synergy opportunities like sharing warehouses.

Brand Management Transformation Process Improvement Transformation Supply Chain Transformation …Need a Performance Mgmt & BI Transformation to empower & measure effect of transformation ! BI Transformation Roadmap EPM & BI Workshops Define Performance Mgmt Model Framework Metrics Models Scorecards Alerts Linkages/Alignments Analysis Flows Dashboard Designs Biz Case/ Info Needs Get Mgmt Buy-In Define BI Strategy Create BI Governance Model Identify Sponsor Create Steering Comm Create Execution Comm Comm to all stakeholders Set expectations/Time Create Project Plan BI Implementation BI Change Mgmt BI Value Mgmt wareness Creation ppreciation of Best Practices tent Generation Technology Drivers App Architecture Data Architecture Platform Selection Vendor Selection Initiatives Roadmap Effort Estimation Business Requirements System Requirements Design Development Testing Deployment Training Communication Biz Process Changes Expectation Mgmt Usage Monitoring BI Support Processes Risk mgmt KPO Customer Service Business Impact BI Perf Mgmt BI RoI BI Enhancements ©Company confidential 11 ..Typical BI Transformation Roadmap Major Organization Transformations….

convincing them of the value. which makes it even more challenging and critical aspect of achieving success Key Questions for Change Mgmt Planning What will change ? Why will it change ? How will it change ? Who will change it ? Change Change is enabled through 4 key change perspectives People Participation • • • • • • Business Sponsorship Business Buy-In. bringing people on board.BI Program Change Mgmt Challenges & Strategy An effective Change Management strategy for BI Program starts at the Kickoff and ends at satisfactory system adoption and positive customer feedback. goading them to use it the right way. Change Management is an ongoing process and is part and parcel of an effective BI Governance Model. Ownership Identify Business Change Agents Remove Business IT gaps Remove fear of Retrenchment Create Senior Mgmt Champions to spread the message • • Processes Identify and Plan for process changes early on Create effective communication channels and joint project plans with other process owners Cultural and governance change needs to go along with process changes • Systems Identify & Plan all system changes early on (Frontline systems may need to have more checks and measure to improve data quality) • Create effective communication channels and joint project plans with other System owners • Communicate all system changes to the Organization • • • • • • • • • • Culture Business Driven Program Showcase Business Benefits Keep business in loop during change in scope Embed in biz processes like sales review etc Pre-empt business needs Communicate effectively Repeated Multi-media training Measure adoption. measuring business improvements. being a non-critical business application needs cultural process changes to leverage the investment. usage and publish figures Publish success stories • ©Company confidential 12 . However. BI.

Managed BI Svc) Service Vendor Selection BI Business Case Customer Focus ©Company confidential •Unique Sales & Customer view Service Service Quality •Unique Spend Improvementview & vendor •Management Supply chain wastes •Asset utilization gaps •Higher Governance Model employee productivity •Greater IT ROI Organization Risk Value •Single Analysis Platform across biz Alignment Management Assessment areas •Excel intelligence democratization ! 13 .Enterprise BI Strategy for ITC Business Intelligence Mission (SYSCO): BI Needs/ Painpoints Provide a single view of timely. BI Vision BI Strategy BI Business Case BI Budget consistent & actionable information across the enterprise through a common Execution Plan user interface accessible anytime. System) Tool Selection Service & Maintenance Service Model (Outsource. Implementation anywhere to authorized users. (Inhouse/Outsource) Definition Vendor Selection & Project Plan Architecture (Data. thereby Execution Model Scope Roadmap enabling fact based decision making. accurate.

following nine consecutive annual rises.So What’s Driving Trade Promotions?  New product introductions. 33. 22% in Europe. CRM based approaches typically just rely on sales estimates of trade promotion impact.000 in each of the previous two years. – Private-label products now account for between 15% and 20% of items sold in US supermarkets.700 new FMCG items in the US marketplace alone – up from about 32. but the least well controlled. – In 2003. thus ensuring that trade promotion accruals and supply chain preparations are based only on guess work Source : Forrester Research – No wonder senior execs get mauled by regulators and shareholders alike 14     ©Company confidential . Typically CFOs use a complex tangle of spreadsheets and enterprise app extracts to track trade promotion dollars but have no way accurately to estimate in advance the impact of a planned promotion.large and rising trade promotion spend – 10 FMCG firms interviewed by Forrester planned 2003/4 trade promotions at 16% gross revenues It all adds up to more than $100 Billion per year – Based on 2003 revenues. Private-label products. Result . and a staggering 42% in the UK. – It’s the single largest element of expense for FMCGs. the 50 largest FMCG manufacturers. – Wider assortment range in both North American and European stores constrains shelf space yet more.843 square feet. Declining shelf space. – Median US store size has declined since its 1999 peak of 44.

During and end of promotions 7 Execute Deals Analyze Opportunities for Brands and Markets 3 Plan.Closed Loop Process BEGINS with Analyzing Performance and Opportunities in the Business 2 1 Analyze Performance . Simulate and Evaluate Scenarios FINANCE OPERATIONS SALES TRADE MANAGEMENT BRAND / CATEGORY MANAGEMENT MARKET INSIGHTS Collaborate and Approve New Plans Generate new Promotions Plan/Forecast 4 Negotiate & Sell in Deals 6 5 Analytics Operational Linking Insight and Performance Management with Decision Support ©Company confidential 15 .

not many manufacturers have succeeded in measuring promotion effectiveness Only 7% of Manufacturers say that they are highly effective at evaluating promotion productivity. promotional spending is the highest whilst knowledge about their return and effectiveness is the lowest. 2002/Cannondale Study ©Company confidential 16 .. the problem is nobody knows which half!” William H. 4 4 • Of all investments. Unilever Corporation Source: Brandweek November 25. • For promotions. I n n e f f Ne ce tu i vt S r e ao l m e Hw i h g a h t l y E f f e c Et i fv e e c t i v e “Half of all promotional expenditure is wasted ….. Chairman. the driver is what was done the previous year • Most promotions are NOT evaluated in an objective and systematic fashion 3 3 3 3 3 • There are no management KPI’s to measure the business.Despite such large spends. Lever.

2% .5% Potential Manufacturer Value Chain Improvement (as a Percent of Sales) .2-.1% Up to 2.3% 0-.2-.4% .  80-90% of promotions are not profitable for manufacturers  Consumers are unaware of 51% of items bought on sale “Redeploy Inefficient Spending” B A C More Impactful Events RETAIN B C B B A B B EXPAND A C A A A A A B C C  Only 50% of manufacturers measure event CREDEPLOY C C C profitability 1.2-.3% .0% ROS Manufac-turing Labor Freight Fixed COGS Salesforce Distribu-tion Inventory Diverting and labor Carrying Cost All Other Source: Accenture Industry Experience and Trade Promotion Study ©Company confidential 17 .6% .5% (OR IMPROVE) C COST MINIMIZE “Manage Promotion Driven Costs” Less Impactful Events 2.4-.6% Percent of Sales .5% 10.1-.Substantial Opportunity for Manufacturers Research suggests that FMCG manufacturers can achieve up to a 40% increase in return on sales through improved trade promotion management.3-.

Some typical Trade Promotion Effectiveness KPIs Process Steps KPI Description Type of KPI Source of Information Role Impacted  Measure the efficiency of the  Shelf Availability entire supply network to ensure that product is available on the shelf at all times during the promotion  % of time that product is  Operational available on shelf in the correct shelf during the total time of the promotion  Retailer Inventory System  Brand Manager by SKU by shelf location  Account Manager  Supply Chain Planner  Retail Buyer/Merchandiser  Brand Manager  Account Manager  VP .Marketing  Measure the profitability of each promotion for the entire lifecycle  Promotion ROI  Incremental Revenue less  Tactical/Strategic  Manufacturer Sales & campaign costs.  Measure the lift in sales volume due to the promotion  Sales Lift%  % increase in base demand post promotion  Tactical  Retailer POS systems  Brand Manager  Account Manager  Demand Planner  Brand Manager  Account Manager  Demand Planner  Measure the extent of  Sales Drop % cannibalization due to promotion on other SKUs/Stores  % drop in base demand of  Tactical non-promoted SKUs in promoted Stores and promoted SKUs in nonpromoted Stores  Mismatch between POS  Operational sales volume and Store/Account Buy volume during promo period  Retailer POS Systems  Measure the extent of Forward Buy by Stores/Accounts  Store/Account Volume  Retailer POS systems  Manufacturer Sales systems  Demand Planner  Account Manager ©Company confidential 18 . creative Costing systems costs.

Lift%. SKU level.Trade Promotion Analytics – Hierarchy of Needs Operational Tactical Strategic • What will happen Demand Management TP Scenario Planning Customer Behaviour Analysis Inventory Management A N A L Y T I C S • What is happening • Why did it happen Ensure shelf availability Measurement of Sales KPIs – Store level. Drop% Determine and analyse Causals Evaluate Promotions Effectiveness Determine Promotion Costs Evaluate Store/Account Profitability Determine Order Status • What happened Measure promotion impact on sales volumes ©Company confidential 19 .

TPM Applications – Key Interfaces Customer Master Data Store Promo Adoption Channel Spends Consumer Off-take ERP Product Master Data Price Master Data Sales Performance POS Inventory SCM Customer Analytics Stock-Out data Consumer Billing Price @ Brand-Account level Historical Sales Trend CRM Base Demand Operational Application Store level forecasts Planogram Compliance Sales Returns Forecast Accuracy Order Backlog Inventory Availability Retailer Invoice data Total cost of promotion Retailer Promo penetration data Analytical Application Market/Cateogry/Channel Outlook Retailer Panel Data Consumer Panel Data SYNDICATE DATA Reports Exception Alerts Retailer Applications What-If Analysis FMCG TPM Application Causal Analysis Third Party Data Optimisation TPM Analytics FMCG Enterprise Applications ©Company confidential 20 .

Thanks ! ©Company confidential 21 .

predictive analytics etc) 1990 1995 2000 2005 2015 B1 2. Democratized. Root Cause Analysis Static Reports -> On-The-Spot Answers BI –> EPM/CPM BI -> Greater Integration Business Intelligence -> Intelligent Business (Exception based Mgmt.0 MIS/EIS Reports Increasing ©Company confidential 22 . Mobilized Pervasive BI (Business Planning. Collaboration) Data –> Insight.Evolution of BI Maturity BI Affordable. Alerts.

Evolution of BI BI 2.0 Excel Excel Excel Collaborative BI What-If Analysis Text Intelligence Maturity Increasing Desktop OLAP Reports Expensive Data Integration OLAP Reports EPM CPM Dashboards Scorecards Alerts Analysis Trails Predictive Analytics Static Mgmt Reports Web based OLAP Reports Integrated Data Repositories 2000 Exception Based Management Mainframes Data Silos Packaged ERP BI Real Time Analytics 1990 1995 2005 2015 ©Company confidential 23 .

Shopper & RegistryAnalytics Trade Trade Dynamics.Unilever Akili Unilever Global Working together with the business to fulfill consumercustomers Akili : Network : Connects all regional business units and its under one globalfaster pool cheaper whishes better. promotion management Enablers Common Identification Standards Single Platform – all regions Global Data Synchronization Standardized Processes & Systems Global Information Service Center Market Trends & Consumer Segmentation Network Planning & Optimization Competitive Intelligence Supply Chain & Demand Planning Global Manufacturing Integrated Sourcing Hubs Regional Supply Chain Data Pool Disperse d R&D Regional Demand Planning Regional Distribution Structure Category & Channel Marketing Collaborative Shopper Value Creation Regional Category Support Regional Channel Strategy Country Category Development Specific Intelligence By country Brand Activation Plans Integrators Common Business Performance Models Collaborative Planning ©Company confidential 24 . data and Global Intelligence Framework Supply Chain Intelligence Global Consumer.

Objectives Implementation of harmonized Nestle Business Excellence Best Practices – All Regions Managing Data as corporate assets – Implementation of single data standard – All Regions Implementation of standardized information system & technology – all regions Key Initiatives Supply Chain  Demand Planning  Manage risks to targets  Global Sourcing  Effective hedging  Working capital optimization  SKU optimization  Customer profiling & categorization Marketing Effectiveness  Consumer & shopper behavior  Trade dynamics & channel intelligence  Micro Marketing intelligence specific to regional needs  Drive operational channel marketing programs Portfolio Enhancement  By Geography.Nestle – GLOBE (Global Business Excellence) GLOBE . Category & by Product groups  Help to optimize product offerings  Identify new opportunity for growth of existing products in the global portfolio Strategic Partner  Help in M&A  Identify Cash Flow issues  Currency risks  Aid in investment opportunities Business Benefits Effective decision making Enables Shared Services Speed to share & Implement & reduces cost of operations new best practices ©Company confidential 25 .

Russia] Enterprise Exchange Service Sales Force Customers Logistics Vendors Forwarders Customs Financial Institutions Key Benefits a. Canada. Europe. Japan. Russia] SAP R/3 . Japan. c.Reebok – Global Business Intelligence Sales & Marketing Analytics Purchase Analytics Supply Chain Analytics mySAP portal Vendor Analytics Financial Analytics SAP BW SAP R/3 . Europe.AFS (Apparel & Footwear solution) [NAM. Canada. d. Europe.AFS (Apparel & Footwear solution) [NAM. Russia] SAP R/3 . Consolidated picture of performance – By brand. b. Canada. Russia] SAP R/3 . e.AFS (Apparel & Footwear solution) [NAM. Europe. Canada. By Period Fact based decision making – exception based Supply Chain management Driving accountability across organization –metrics ownership from top to bottom Better vendor control – vendor scorecarding Improved sharing of best practices within organization – visibility across organization ©Company confidential 26 . By Geo.AFS (Apparel & Footwear solution) [NAM. Japan. Japan.

Change Management Client Business Team Client Partner ITCInfotech Client Management Team • BI Program Management • Business Analysts • BI Support Portal (ITD. Business requirements. Dashboards • Maintain ETL Reporting. Escalations. Price Elasticity etc) • Analytics Experts • Business Optimization Services (Stock optimization. Financials. FBD. Route Opt) Reporting Services • Generate On–Demand reports.Managed-BI Service Model for ITC Client’s Client SLAs. Alerts. LRBD) Complexity Firewall Managed Service Vendor Facilities Security Control ITC Infotech Governance Measures BI Application Quality Control (Scorecards) Analytics Services Knowledge Services • SME (SCM. Database applications Data Management Services • Master Data Management Datacenter Systems & • Data Quality Management Infrastructure Services • Software Server Management • Hardware & network Management • • • • Architects BI Engineers ETL Engineers DBA Methodologies & Processes • Data Administrators • Data Analysts • Hardware Engineers • Network Engineers ©Company confidential 27 . Joint Planning. Hotels. CRMetc) • Business Analytics Services (Segmentation.

Business-Analytics Scope of Integrated BI  Financial Analytics  Profitability Analysis  Financial Planning Accuracy  Working Capital Analysis  Brand Analytics  Category & Portfolio Analysis  Marketing Spend Effectiveness  Brand & Market Analysis  TM&D Performance Scorecard  Operational Analytics  Production & Planning Efficiency  Unit Level Scorecard & Automation  New Product Lifecycle Analysis  Vendor Scorecard  SCOR Measures ©Company confidential  Customer Analytics  WD Profitability Analysis  Retail Outlet Analysis  Customer Service Effectiveness  Trade Marketing Analytics  Sales Analysis  Salesforce Analysis  Channel Analysis  Category Analysis  Trade Promotion Analysis  Workforce Analytics  Employee Attrition  Workforce Productivity  IR Effectiveness  Resource analysis 28 .

Business-Analytics Scope of Integrated BI  Distribution Performance  Supply Chain Planning efficiency  Supply Chain effectiveness  Supply Network efficiency  Warehouse Performance  S&OP Analysis  Forecasting Accuracy  Planning Adherence & efficiency  Variance Analysis  HR Performance  Recruitment Efficiency  HR Spend analysis  Working Environment Regulation Effectiveness  Payroll Efficiency ©Company confidential  Project Performance Mgmt  Project Planning efficiency  Project Spend & vendor Analysis  Project Execution effectiveness  Project Risk Analysis  Corporate Sustainability Performance  Carbon footprint. variance & credit analysis  Sustainability Spend Analysis 29 .

PCB Perf Brand Perf Mgmt Mkt Research Perf Network Eff Logistics Perf Scheduling Eff Carrier Eff Emp Eff NPD Perf Operations Perf R&D Perf Emp Perf Finance Planning Perf Distribution Finance HR Perf Category Perf Dist Perf Branch Perf WD Perf AM Perf AE Perf Promo Perf Portfolio Perf Procurement Perf Warehouse Perf Outlet Svc Eff Route Eff Channel Perf Plant Perf Workforce Eff WSD Perf ©Company confidential 30 .Integrated EPM/BI Capability Corp Performance HR Perf Sales TM&D Perf CBSC. Food.

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