Farm Frites, a global supplier of French fry products, had a detailed 3-year forecast that provided insights into margins at both the product and customer levels. However, the transition to SAP brought the need to integrate these margin insights within the new system for improved efficiency and data accuracy.
When implementing SAP, Farm Frites saw an opportunity to further improve their margin analysis. The challenge was to ensure that margin insights, down to the product and customer level, could be automated and fully integrated within SAP. In addition, there was a growing need to include fluctuations in raw material costs, such as potatoes, in margin forecasts.
Solution
Together with Finext, Farm Frites developed a detailed roadmap to address these challenges. The approach included:
- Margin Model Redesign:
The existing margin model was redesigned so that margins could be calculated not only at the customer level but also at the item level, taking into account the varying costs of raw materials such as potatoes. - Prediction Based on Sales Prices:
A model was set up where margins were automatically calculated based on current sales price data. - Integration of Costs:
The final stage focused on integrating costs related to various operational activities. This gave Farm Frites a more complete picture of how operational activities affect profitability.
The goal was to automate this process so that controllers only had to enter a few basic assumption(s), such as sales prices and activities, to receive calculated margins instantly. This gave controllers the ability to provide real-time analytical support to the sales organization.
Results
The integration of the 3-year margin forecast into SAP and the new model yielded significant improvements in operational efficiency and financial visibility.
Key achievements:
- Automated margin calculations:
The new model enabled automated calculations of margins based on fluctuating raw material costs and dynamic selling prices, drastically reducing the need for manual interventions. - Improved forecast accuracy:
By basing margins on both selling prices and operating costs, forecast accuracy improved significantly, leading to more informed decisions. - Operational insight:
The model provided deeper insight into margins, which supported better cost control and price optimization.
Thanks to its partnership with Finext, Farm Frites now has a fully automated margin model within SAP. This has transformed the way the company performs margin forecasting and operational analysis.
Controllers now have access to real-time insights, enabling them to support the sales organization with accurate and actionable data.
