Kepak Convenience Foods gains a clearer view of the future

Enabling faster, more accurate forecasting with IBM Cognos Express

Published on 01-Sep-2011

Validated on 02 Dec 2013

"In some cases the IBM Cognos Express solution will literally replace hours of spreadsheet-based work with a few mouse-clicks." - Julie Devitt, Finance Director, Kepak Convenience Foods

Customer:
Kepak Convenience Foods

Industry:
Consumer Products

Deployment country:
Ireland

Solution:
Small & Medium Business, BA - Business Analytics, BA - Business Intelligence, Express, Information Integration, BA - Performance Management, Small & Medium Business, Business-to-Consumer

IBM Business Partner:
ProStrategy Colman

Overview

Kepak Convenience Foods is a division of the Kepak Group that specialises in producing a range of quality convenience food products for the retail and food service markets in Ireland and the UK, and has more recently expanded into the Dutch, Belgian, Danish, German and French retail markets. In recent years, the company has experienced considerable growth, especially in its frozen and chilled products, which it markets under the Big Al’s, Rustlers, Zugo’s Deli Café and Speedy Snacks brands. It employs approximately 380 people at two sites in Blanchardstown (Ireland) and Kirkham (UK).

Business need:
Kepak Convenience Foods operates in a highly competitive market sector: margins are tight, and fluctuations in factors such as the cost of ingredients can significantly affect profitability. The company wanted to find a way to increase the agility of its planning and forecasting processes, enabling it to react more quickly to changing circumstances.

Solution:
The Kepak team worked with ProStrategy Colman, an IBM® Business Partner, to analyse its existing budgeting and planning processes, and re-engineer them using IBM Cognos® Express Xcelerator. The company also uses IBM Cognos Business Intelligence to provide a range of standardised reports.

Benefits:
Provides daily insight into business performance, supporting faster, more confident decisions. Enables regular forecasting, helping to counteract price fluctuations and plan more accurately. Accelerates the annual budgeting process from three months to a matter of weeks. Automates data collection and validation, eliminating many hours of manual effort and improving data quality. Supports business growth – the finance team can handle a larger reporting workload without needing to hire additional staff.

Case Study

Kepak Convenience Foods is a division of the Kepak Group that specialises in producing a range of quality convenience food products for the retail and food service markets in Ireland and the UK, and has more recently expanded into the Dutch, Belgian, Danish, German and French retail markets. In recent years, the company has experienced considerable growth, especially in its frozen and chilled products, which it markets under the Big Al’s, Rustlers, Zugo’s Deli Café and Speedy Snacks brands. It employs approximately 380 people at two sites in Blanchardstown (Ireland) and Kirkham (UK).

Like most companies in the food and beverage sector, Kepak’s success depends on its ability to deliver high quality products in large volumes at the most attractive possible price, while also maintaining a steady profit margin – even in the face of rapidly changing market conditions.

Adapting to market conditions
“There are a number of external factors that can have a major effect on our costs, and therefore our profitability,” explains Julie Devitt, Finance Director at Kepak Convenience Foods. “For example, the price of meat and other ingredients, the foreign exchange rate between Ireland and the UK, or even changes to labour laws or food regulations, can fluctuate considerably during the year. To take advantage of emerging opportunities and mitigate risk, we need to be able to adapt to these changing conditions. However, it became apparent that our existing financial planning processes were not really flexible enough to enable this.”

A complex planning ecosystem
Kepak’s planning and budgeting processes were dependent on a complex ecosystem of spreadsheets and IT solutions, including a Movex ERP system and a FutureMaster volume planning solution. Consolidating data from all these sources to create the annual budget was a lengthy and complicated process, which usually took around three months each year. Forecasting was a similarly laborious exercise, so it was difficult to create the regular updates required to account for sudden changes in factors such as raw materials costs or exchange rates.

“Our FutureMaster system gave us enough information to forecast volumes, but for many other areas of the business – standard costs, pricing and promotions, distribution, marketing budgets, HR costs and so on – we found it very difficult to get an accurate picture at any given time,” says Julie Devitt. “This had an impact on business strategy: for example, if we saw an opportunity to launch a new product or enter a new market, it was difficult to to assess if it was financially viable. We wanted to have all the information at our fingertips to enable faster, more confident decision-making.”

The right solution from the right partner
Kepak decided to find a planning solution that could address these issues, and turned to IBM.

“We have been using IBM Cognos Business Intelligence for several years to analyse financial and operational data, and we knew of the good reputation of Cognos in the planning and budgeting sector,” comments Julie Devitt. “We asked IBM for advice, and they recommended several Business Partners with the right expertise to help us find a solution. When we met the partners, the team from ProStrategy Colman really stood out: it was obvious that they could relate to the situation we were in, and they immediately understood our needs.

IBM Cognos Express Xcelerator
The first step was to document the existing budgeting process and work with ProStrategy Colman to design a solution based on IBM Cognos Express Xcelerator. This was completed during the company’s traditional budgeting period, which enabled the project team to test the new solution against the existing process and ensure that the results were accurate.

“The test run for the Cognos Express solution was a great success,” says Julie Devitt. “ProStrategy Colman were invaluable during the implementation, helping us drive the project forward and providing dedicated consultants who practically became part of our own team. At the same time, they did an excellent job of training our in-house people to use the solution and build models, so we are now more or less self-sufficient.”

Cognos Express Xcelerator’s in-memory database provides on-the-fly calculations that model Kepak’s budgeting process. Data from multiple areas of the business (such as admin, marketing, overheads, product costs, pricing and sales volumes) is loaded into the application, and real-time calculations automatically provide a picture of how any or all of the data-sets impact profitability.

Automating manual processes
The new solution integrates with Kepak’s data warehouse, drawing pricing, customer, supplier and product data from the Movex ERP system, volumes data from the FutureMaster system, cost information from spreadsheets and promotional pricing from a Cognos TM1® cube. Instead of spending hours collecting, collating, validating, calculating and formatting this information by hand, Kepak’s planning team can rely on the system to automate all these processes – leaving them free to focus on more valuable analysis activities.

“In some cases the IBM Cognos Express solution will literally replace hours of spreadsheet-based work with a few mouse-clicks,” comments Julie Devitt. “We are really looking forward to using it for next year’s budget, because it should help us cut a three-month process down to a matter of weeks. Best of all, even though the demand for reporting and forecasting is continually increasing within the business, the increased level of automation has meant that we haven’t needed to take on any more staff.”

Regular forecasting, better decision-making
Crucially, the automation of these processes is also enabling Kepak to produce and revise forecasts on a regular basis, which enables the company to pinpoint areas of the business that are running over-budget, and deal more effectively with the fluctuation of external factors such as costs and exchange rates.

“We can make much more accurate predictions about what our position is likely to be at year-end, and this also helps us adapt our business strategy within the year,” says Julie Devitt.

“For example, if we can see that the business is doing better than expected, we might be able to fund an additional marketing campaign or put more money into product development or customer service – ultimately contributing to our competitive advantage over other companies in our markets.”

Scenario planning
In the near future, Kepak plans to make use of the sandboxing features of IBM Cognos Express and perform ‘what-if’ analyses in real time. By tweaking different variables in the planning models, analysts will be able to investigate the effects of fluctuating external factors, and create strategies to address the best and worst case scenarios. This should help to improve Kepak’s responsiveness to market conditions even further, and minimise the impact of unforeseen events on the company’s performance.

About ProStrategy Colman
ProStrategy Colman is a leading business and information technology company with offices in Dublin and Cork. It specialises in delivering high-quality, robust performance and business management solutions to the Irish marketplace, delivering a comprehensive range of solutions based on IBM Cognos and other technologies. Its portfolio of services includes project management, business consultancy, implementation, training, integration and customisation.

To learn more about services and solutions from ProStrategy Colman, visit: www.prostrategy-colman.ie

About IBM Business Analytics
IBM Business Analytics software delivers actionable insights decision-makers need to achieve better business performance. IBM offers a comprehensive, unified portfolio of business intelligence, predictive and advanced analytics, financial performance and strategy management, governance, risk and compliance and analytic applications.

With IBM software, companies can spot trends, patterns and anomalies, compare “what if” scenarios, predict potential threats and opportunities, identify and manage key business risks and plan, budget and forecast resources. With these deep analytic capabilities our customers around the world can better understand, anticipate and shape business outcomes.

For more information
For further information or to reach a representative please visit ibm.com/analytics.

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Business Intelligence, Cognos Express, Cognos Express Xcelerator, Cognos TM1

Legal Information

© Copyright IBM Corporation 2011. IBM Ireland Limited, Oldbrook House, 24/32 Pembroke Road, Ballsbridge, Dublin 4. Produced in the the Republic of Ireland. August 2011. All Rights Reserved. IBM, the IBM logo, ibm.com, and Cognos are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at http://www.ibm.com/legal/copytrade.shtml. Other company, product or service names may be trademarks, or service marks of others. IBM and ProStrategy Colman are separate companies and each is responsible for its own products. Neither IBM nor ProStrategy Colman makes any warranties, express or implied, concerning the other’s products. References in this publication to IBM products, programs or services do not imply that IBM intends to make these available in all countries in which IBM operates. Any reference to an IBM product, program or service is not intended to imply that only IBM’s product, program or service may be used. Any functionally equivalent product, program or service may be used instead. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. IBM hardware products are manufactured from new parts, or new and used parts. In some cases, the hardware product may not be new and may have been previously installed. Regardless, IBM warranty terms apply. This publication is for general guidance only. Photographs may show design models.