Client: Nationwide Direct-Store-Delivery (DSD) Network
Problem:
The world’s largest food company and the owner of the nation’s largest frozen foods Direct-Store-Delivery
(DSD) network sought to accurately identify the cost-to-serve profitability for each of its 65,000+ customers, 1800+ SKU's served through 21 channels.
Scope of Work:
Quantalyst was called in to better leverage the client's existing corporate-wide performance management systems (CPMS) and implement auditable profitability reporting at the channel, customer and product level. The client had made several previously unsuccessful efforts. The success of the engagement required that existing software tools be utilized to the fullest extent.
What Quantalyst Did:
- Using the existing CPMS, Quantalyst identified the cost-to-serve costs on a nationwide basis for the US and integrated the cost-to-serve profitability reporting model.
- Using Microsoft SQL Server and another specialized package, we developed a single, unified cost-to-serve model that drives costs to the the approprate channel, customer and products, intersecting the costs to arrive at comprehensive profitability.
- Integrated the model with the monthly close for real-time feedback of monthly and YTD numbers, as well as auditable sub-segment reporting (18 hour closing window)
- The result is a single, verifiable source for all product, channel and customer performance analytics – eliminating stand-alone, non-auditable, ad hoc analysis and departmental (non-auditable) information silos
Results:
- Over 200 CPMS-trained employees now access the profitability reports regularly in order to inform operational decisions.
- Location-specific "profit templates" identify customers with profiles that do not meet hurdle rates.
- Customer and item statistics allow business managers to adjust store service and SKU profiles quickly in order to maximize account profitability.
- SKU rationalization decisions are based on profitability instead of volume targets.
- Processes are transparent across regions, allowing management to better gauge process effectiveness. Prior to this engagement, many regions had rationalized increased staffing requirements using "black box" or "we’re more complex" justifications.
- Improved systems utilization and process consistency across all regions.
The steering executive attests that this is one of “…the initiatives I’m most proud of [as it] has become institutionalized”.
This work has been presented at the USC Marshall School of Business Executives conference and at the Professional Pricing Society’s national conference.
