Ingredients of a Successful Pricing Project in the Food Industry

Through the 2012 acquisition of two industry leaders and continued business growth, BRF (formerly Brasil Foods) has emerged as the world’s seventh largest food company and number one in its home market, Brazil. With $15 billion of revenue in 2014 across 110 countries, 2000 SKUs and 10 distribution channels.

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Ingredients of a Successful Pricing Project in the Food Industry BRF’s Search and Deployment of a New Pricing Solution UNLOCK YOUR DATA. UNLEASH YOUR SALES CUSTOMER BRIEF Ingredients of a Successful Pricing Project in the Food Industry BRF’s Search and Deployment of a New Pricing Solution SMARTER IS BETTER. CUSTOMER BRIEF „ BRF: Ingredients of a Successful Pricing Project in the Food Industry Growth and Complexity Require Fresh Approach Through the 2012 acquisition of two industry leaders and continued business growth, BRF (formerly Brasil Foods) has emerged as the world’s seventh largest food company and number one in its home market, Brazil. With $15 billion of revenue in 2014 across 110 countries, 2000 SKUs and 10 distribution channels, the leader in frozen and processed foods, chicken and natural foods has generated sales growth from product innovation. However, exciting new products and vast international growth has brought significant business complexity including a global list of over 200 million prices for its 155 branches. And with this complexity, the time to complete price changes grew to exceed two weeks. Adding to BRF’s pricing challenges was an increased urgency to sell products as their expiration dates approached and their value dropped. Fortunately, BRF’s pricing team was experienced, had established processes and ample access to a broad range of data from SAP. But the team relied on aging analytical systems that lacked the flexibility and features to keep pace with their dynamic market. BRF was in need of a fresh approach to pricing and a price optimization solution that could help drive the next wave of business growth. Addressing the Unanswered Questions Since the 2012 merger of Perdigão and Sadia, BRF’s pricing systems had multiplied and now included 10 homegrown solutions, each with unique algorithms. Master data resided in SAP but pricing analysis was commonly performed in spreadsheets. While data access and quality was sufficient, the pricing team was challenged to extract knowledge from the volumes of information available. This left too many unanswered questions: › Are discounts effectively correlated to product age? › How well do retail customers price the product? › Does price reflect brand position and channel? › Which customers are meeting volume goals? „ BRF: Ingredients of a Successful Pricing Project in the Food Industry And most important to BRF’s senior managers, how can the company significantly reduce the time to change prices and embrace a new culture of business agility? Was there one solution that could address all these unanswered questions? The time had come to conduct an extensive search and make a transition from their aging systems to a new price optimization solution that would meet the needs of their complex food manufacturing and go-to- market framework. Immediate Value from Proof of Concept In early 2014, Fabio Freitas, Manager, Pricing, BRF, took charge of the pricing solution search. Because of the project’s importance, he sought best-in-class advice from industry colleagues, analysts and solution vendors across the globe. After dozens of inquiries and interviews to gain knowledge and narrow down the field, Freitas placed the PROS solution on his short list to replace existing systems. After an invitation from PROS to conduct a proof of concept (POC), he headed to their company headquarters in Houston, Texas, with six months of sales data from one BRF product in a single geography. After completing a successful POC, BRF implemented PROS Scientific Analytics. After deployment, the BRF pricing team started receiving valuable knowledge that was previously too complex to achieve from SAP and too large to analyze in spreadsheets. The knowledge BRF received from the price structure optimization analysis alone was immeasurable. From this data, the company has the ability to vastly reduce manual price inputs. “The PROS team of consultants took the time to really learn our business before conducting any analysis. Then once underway, after just one week we had four powerful reports from the data supplied. I actually learned from my own data, because they gave me reports that I could never have before.” – Fabio Freitas, Manager, Pricing, BRF „ BRF: Ingredients of a Successful Pricing Project in the Food Industry 1] Accumulated Commercial Discount (Discount Bin) Description Price discounts by product age Exposed Over 1000 ‘green’ products discounted at more than 50 percent, some as much as 95 percent Benefit Ability to set maximum discounts by product age and improve product margins 2] FIFO Loss Annual Target Description Financial losses through expiration discount (FIFO Sale, First In, First Out) Exposed Large calculation discrepancies versus existing business intelligence systems Benefit Improved accuracy to calculate potential losses from aging products Knowledge gained and expected benefits from the reports generated are as follows: „ BRF: Ingredients of a Successful Pricing Project in the Food Industry 3] Discount Approval Tracking Description Individual tracking of all discounts and promotions granted through their lifecycles Exposed Success of discount and promotion programs that were not previously available Benefit Increased accountability and ability to apply penalties and adjust future allocated discounts 4] Price Structure Optimization Description Analysis of price structures in SAP to determine unused prices lists Exposed 98 percent of prices in SAP are for seldom used quoting scenarios Benefit Reduced SAP price input (from 10 full time staff) due to decreased manual pricing inputs „ BRF: Ingredients of a Successful Pricing Project in the Food Industry Better, Faster Reporting and Research From PROS Scientific Analysis for Pricing, Freitas and his team at BRF have increased the speed, accuracy, and automation of pricing analysis. And they now have a single source of truth underlying these calculations. As a result, the associated benefits are significant. After applying the four reports received from the proof of concept across all products sold in Brazil, BRF has achieved: › Lower Operating Expense – freed up 98 percent of IT capacity for 5 million unique price requests daily › Increased Margins – lower discounts on ‘green’ products › Improved Agility – 70 percent faster pricing cycles › Forecast Accuracy – quick comparisons of plan to actual sales Furthermore, Freitas and his team are now able to quickly and accurately provide critical business analysis to product marketing and sales teams around the company. In a few meetings after the POC, Freitas opened up PROS Science Analytics (SA) on his laptop and provided valuable analysis that really advanced the business discussions. Now leaders from many divisions are coming to ask him for analysis to aid their regional planning. It was becoming very clear that BRF was realizing more than pricing efficiency; the company was gaining valuable business knowledge to improve business outcomes due to their increased pricing agility. While originally envisioned as a pricing project, the intelligence provided made management start seeing it as something with more far-reaching business impact. That is “By modifying our price structure, we’ve reduced price changes from 17 days to three and significantly increased price entry automation. These gains have considerably increased operating efficiency and the ability to move quickly in our dynamic market.” – Fabio Freitas PROS VISUAL STYLE GUIDE 17 ILLUSTRATION Icons are good for encapsulating a concept or activity in a visual metaphor that can add visual interest and reenforcement of ideas. Depending on the design challenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradients, drop shadows or a strong use of dimension. The best icons meet this criteria: • use 2-3 colors. • represent the concept as simply as possible. • use fills rather than strokes where possible. • look solid and cohesive. • should be slightly playful and creative. ICONS $ $ PROS VISUAL STYLE GUIDE 17 ILLUSTRATION Icons are g od for encapsulating a concept or activity in a visual metaphor that can add visual inter st and reenforcement of ideas. Depending on the design challenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradients, drop shadows or a strong use of dimension. The best i ns meet this criteria: use 2-3 colors. • represent the concept as simply a pos ible. • use fills rather than strokes where possible. lo k solid and cohesive. • should be slightly playful and creative. ICONS $ $ PROS VISUAL STYLE GUIDE 17 ILLUSTRATION Icons are good for encapsulating a concept or activity in a visual metaphor that can add visual interest and reenforcement of ideas. Depending on the design challenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradi nts, drop shadows or a strong use of dimension. The best icons meet this criteria: • use 2-3 colors. • represent the concept as simply as p ssible. • use fills rather than strokes where possible. • look solid and cohesive. • should be slightly playful and creative. ICONS $ $ PROS VISUAL STYLE GUIDE 17 ILLUSTRATION Icons are good for ncapsulating a cept or activity in a visual metaphor that can add visual interest and reenforcement of ideas. Depending on the design ch llenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradients, drop shadows or a strong u of dimensi n. Th b t icons meet this criteria: • use 2-3 colors. • represent the concept as simply as possible. • use fills rather than strokes where possible. • look solid and cohesive. • should be slightly playful and creative. ICONS $ $ „ BRF: Ingredients of a Successful Pricing Project in the Food Industry the point when the pricing team received full support to expand the scope of the original deployment. Other expected gains from the PROS Sales Analytics deployment include: › Aligning prices with brand positioning and channel placement › Measuring return on investment from new advertisements › Tracking retailer mark up and price elasticity › Margin visibility that includes investments, costs and discounts As a result of the new price optimization solution, BRF is able make better and faster business decisions from powerful reports and research. Completing the Journey Already, others in the company are asking when the PROS solution will be used for their division or geography. And soon the solution will be available globally for the entire company’s benefit. BRF now plans to expand its PROS Scientific Analytics deployment to include all geographies. And the team will begin use of PROS Price Optimization in mid-2015. In just a short time, BRF has addressed a range of limitations within an extremely important business function in the food industry — pricing. And the results are already positively impacting their bottom line. “It’s amazing how fast and flexible PROS Scientific Analytics is. It’s really made a huge impact on the business. And we look forward to expanding its usage and realizing more benefits.” – Fabio Freitas PROS VISUAL STYLE GUIDE 17 ILLUSTRATION Icons are good for encapsulating a concept or activity in a visual metaphor that can add visual interest and reenforcement of ideas. Depending on the design challenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradients, drop shadows or a strong use of dimension. The best icons meet this criteria: • use 2-3 colors. • represent the concept as simply as possible. • use fills rather than strokes where possible. • look solid and cohesive. • should be slightly playful and creative. ICONS $ $ $ PROS VISUAL STYLE GUIDE 17 ILLUSTRATION Icons are good for encapsulating a concept or activity in a visual metaphor that can add visual interest and reenforcement of ideas. Depending on the design challenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradients, drop shadows or a strong use of dimension. The best icons meet this criteria: • use 2-3 colors. • represent the concept as simply as possible. • use fills rather than strokes where possible. • look solid and cohesive. • should be slightly playful and creative. ICONS $ $ $ PROS VISUAL STYLE GUIDE 17 LLUSTRATION Icons are good for encap l ting a concept or activity in a visual metaphor that can add visual interest and reenforcement of ideas. Depending on the design challenge, icons can be used as a circle with the artwork in the middle or as free- floating artwork above a text label or subhead. Our illustration style in general is “flat” without gradients, drop shadows or a strong use of dimension. The best i ns meet this criteria: use 2-3 colors. represent t concept as simply a pos ible. use fills rather than strokes where possible. lo k solid and cohesive. • should be slightly playful and creative. ICONS $ $ $ PROS VISUAL STYLE GUIDE 17 LLUSTRATION Icons are good for encap l ting a concept or activity in a visual metaphor that can add visual interest and re nforcement of ideas. Depending on the design challenge, icons can be used a a circle with the a twork in the middle or as fr e- floating art ork above a text label or subhead. Our illustration style in general is “flat” without radients, rop shadows or a strong use of dimension. The best icons meet this criteria: • u e 2-3 colors. represent t concept as imply as possible. use fills rather than trokes where possible. • look solid and cohesive. • should be slightly playful and creative. ICONS $ $ $ „ BRF: Ingredients of a Successful Pricing Project in the Food Industry About PROS PROS Holdings, Inc. (NYSE: PRO) is a big data software company that helps customers outperform in their markets by using big data to sell more effectively. We apply years of data science experience to unlock buying patterns and preferences within transaction data to reveal which opportunities are most likely to close, which offers are most likely to sell and which prices are most likely to win. PROS offers cloud solutions to optimize sales, pricing, quoting, rebates and revenue management across more than 40 industries. PROS has completed over 800 implementations of its solutions in more than 55 countries. The PROS team comprises more than 1,000 professionals around the world. To learn more, visit www.pros.com.
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