Columbus Foods discovers a new world of insight

Columbus Foods manufactures and distributes its world-famous Columbus salame and thousands of other specialty food products to discerning consumers across the country through large supermarket chains and local gourmet grocery stores. The company combines leading-edge business practice, old-world family values and unparalleled commitment to supplier excellence to deliver value to grocers and consumers alike. It employs approximately 320 people at three sites in the San Francisco Bay area.

“We have a range of more than 250 products that we manufacture and ship to stores across the USA,” explains Dave Siegfried, CIO at Columbus Foods. “Some of our products can be manufactured quickly, but others need to be matured for up to 90 days before we can send them out, so we need to plan ahead to ensure that we have the right products in stock to meet our customers’ needs. At the same time, we need to be mindful of sell-by dates: if we over-stock our warehouses and don’t sell all our products quickly enough, some items may need to be disposed of. This can create some quite complex challenges in terms of procurement, manufacturing, inventory management and logistics, and the only way to solve these challenges is by making good decisions based on accurate, timely information.”

Unfortunately, Columbus Foods was struggling to obtain the information it needed quickly enough to provide effective decision support. Operational data had to be extracted from several different systems – one for financial accounting, one for supply chain management, and one for forecasting – and manually collated into spreadsheets. It could take up to two days to create a report comparing, for example, current inventory levels and production schedules against customer orders, and by the time the report was ready, the information would be out-of-date.

“We needed to be able to answer operational questions more quickly,” says Dave Siegfried. “For example, if a customer asks whether we can deliver 100 cases of a certain salame by next week, we need to be able to see how much of that product we currently have in stock and how much we can potentially manufacture and ship before the deadline. If we have to wait two days before we can answer these questions, the opportunity to make the sale will probably have vanished.”

For several years, the company has been using IBM Cognos TM1 to analyze its financial data and support planning, budgeting and forecasting processes. Success with the software led the company to consider whether it could be extended to provide insight into operational data.

“We consulted Applied Analytix, who helped us with the initial TM1 implementation, and together we began designing a solution that would enable us to analyze our supply chain, manufacturing, inventory and logistics,” says Dave Siegfried. “The Applied Analytix team is excellent – as well as their technical expertise, they understand the concepts behind manufacturing and the key performance factors that are important to our business, so they can really speak our language.”

Larry Stell, Director of Business Development at Applied Analytix, comments: “The most interesting thing about this project was that it demonstrated how IBM Cognos TM1 can play a very valuable role outside of the office of finance. Most people think of TM1 as a planning and budgeting tool, but it is also an ideal platform for real-time operational analysis. Columbus Foods is blazing a trail here that we expect other businesses to follow in the near future.”

The solution gives decision-makers at Columbus Foods instant, real-time insight into operational data, helping them to make quick, accurate choices about the best way to run the business. Cognos TM1 provides information more than 99 percent faster than previous reporting processes – reducing a two-day cycle to a matter of seconds.

“Going back to the example of one of our salames which takes 90 days to mature; if we don’t have enough of the product in our warehouses to meet customer orders, there’s a considerable lead time on new production,” says Dave Siegfried. “Cognos TM1 helps us avoid inventory shortfalls by forecasting customer demand based on historical analysis of buying patterns and integrating information from our sales teams to predict how much each customer is likely to order in the coming months.

“This feeds back into our production schedules and can even affect labor costs – for example, if we know that we’ll be able to fulfill customer orders from existing stock, we don’t need to schedule as many weekend manufacturing shifts, which reduces our overtime bill!

“Logistics is another good example: some of our customers are all the way over on the east coast, and we used to have to send some of our products by air freight to deliver them on time. TM1 allows us to plan further ahead, so we now have time to make most of these deliveries by truck, which is considerably more cost-efficient.”

One of the most important areas where the solution helps Columbus Foods is customer service.

“A real eye-opener for us was the ability to perform available-to-promise analytics, checking our current inventory and current production together against open customer orders,” says Dave Siegfried. “Our sales team can check up on this while they’re speaking to a customer, which helps them understand what they can promise to deliver and on what schedule. We can ensure that customers have realistic expectations, and give them alternative options to meet their needs. As a result, we have seen improvements in some of our most important customer service metrics: for example, customer fill rate has increased to 99 percent, beating our corporate targets. This means that we are doing a better job of getting products out to the customers who need them, which boosts sales and increases customer satisfaction.”

With a better understanding of demand volumes and production scheduling, the company is also able to optimize its inventory management, reducing the risk of manufacturing surplus products that have to be stored for long periods before they are sold or scrapped.

“Ultimately, the insight we get from Cognos TM1 makes it easier for us to manage our business according to customer demand,” concludes Dave Siegfried. “We have a better understanding of what our customers will want to buy and when they will want to buy it, and this helps us make better decisions about how we purchase raw materials and manufacture, store and deliver products. This not only improves the service we provide to our customers, it also increases efficiencies and reduces costs – helping us deliver excellent value while preserving healthy profit margins in a highly competitive business environment.”

About Applied Analytix

Applied Analytix provides software and consulting services to companies that have exhausted Excel as their main platform for forecasting, reporting and advanced analytics. Clients benefit from its 15 years of experience in applying technology to support the Office of Finance in their overall strategic decision-making processes

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.