More taste through technology

Grandi Salumifici Italiani uses SAS to produce accurate budgets and forecasts

Grandi Salumifici Italiani is a rarity: It's one of the few meat packing companies with both an extensive sales network and a formidable marketing structure. The company's sales and marketing arm leaves no stone unturned when it comes to seeking out new business opportunities. To reach its goals the organization has invested in two primary areas: human resources and technology. Why? Because people who are in daily contact with customers are valuable assets and because the company needs advanced technology to support forecasting processes and manage its complex operations.

Armentano Raco, Trade Marketing Manager for Grandi Salumifici Italiani, spoke with SAS about the path chosen by his company.

With SAS, sales forecasting has become a standardized practice and the staff has been compelled to be responsible and comply with deadlines. We are now using functions that allow us to save time and work more efficiently.

Armentano Raco
Trade Marketing Manager
Grandi Salumifici Italiani

Mr. Raco, would you tell us about the history of your group?

Fragmenting in the sector is caused by the highly regional character of the products and the division between specialized and nonspecialized companies, such as ours, that cover the entire range of delicatessen products. Acquisitions help us increase our market share. For example, our latest acquisition is Fratelli Parmigiani, a company from Parma specializing in cold cuts, which will allow us to handle growing demand for prepackaged products.

How does the company support decision-making and forecasting processes?

Forecasting skills are fundamental. An incorrect projection in September for the demand for precooked products, which peaks during the Christmas holidays, is extremely counterproductive. The same applies for our cured products, which take 24 months to produce. We can't afford to be wrong about projected demand because there are steps in the process that involve sizable costs. That's why we need tools that support the company in simultaneously managing complex issues.

We have approximately 1,350 products, eight different sales channels (retail, wholesale, large-scale distributors, large retail chains, HORECA [hotel/restaurant/cafe], international and catering) and an average of 400-700 products per channel. We have a worldwide presence and are convinced that the international arena represents opportunities for growth. We must also manage the complexity of our sales network, which comprises more than 300 agents and approximately 40 direct sales representatives (area managers, division managers, national account managers and directors). The product-organization matrix makes it complex to manage information of any type.

What is the most significant technology change you've made?

The most important change the company has made over the past 18 months concerns our attempt to shift the responsibility for sales forecasts from marketing to sales. This turned out to a difficult step because it involved a change in company mentality. For this project, we needed a partner that would support us from a technology standpoint and fulfill our needs with new operating tools. We needed to improve the process of managing information, entering it in a system that would prevent it from being manipulated and reduce the margin of error when transferring data.

Two processes started at the same time: forecasting and budgeting.

Our forecasting process was developed over the space of one year and was based on the predicting skills of 15 forecasters who entered customer sales estimates on a monthly basis with the help of data from SAS® Forecast Server. SAS® Financial Management helped manage information organization and flow. Estimates must go through various degrees of validation until they reach production. Every month, forecasts are built out for the next three months.

Next is budgeting, which usually takes place in the September-October time frame. We adopted SAS Financial Management to help us with it. In budgeting, the activity is top-down: Management, which initially uses SAS Forecast Server, reaches an agreement on the objective, which is then passed on to the forecasters so they can adjust the proposal by customer and by individual product. Information becomes transparent, to the point that a self-teaching process is created and the forecaster continuously sharpens his or her forecasting skills.

How long did it take to make the project operational?

The work was carried out over a short period of time. We started in June and completed it on Oct. 31. To date, we have implemented the technology and trained the individuals who are now in charge of sales forecasts. We relied on SAS Financial Management to manage projections and budget and on SAS Forecast Server to forecast future demand.

So, the implementation was a quick one?

Yes, the previous stage was longer. SAS had assured us that the requested time frame was feasible if we committed dedicated resources. They reassured us about implementation and they were right. We appreciated their approach, which leads the client to manage the installed software autonomously, and even carry out some SAS programming.

How did people react to the change?

First, I must say that in the past, marketing had been responsible for sales forecasts; a sales forecast estimate existed, but it was done on Excel worksheets, to which perhaps the forecaster did not pay enough attention. With SAS, this process has become a standardized practice and the staff has been compelled to be responsible and comply with deadlines. Our margin of error has also been reduced: For instance, whoever makes the estimate sees new items automatically highlighted or items in the chain he is estimating listed in decreasing order of importance. We are now using functions that allow us to save time and work more efficiently.

Do you have further training planned?

We have a training program for forecasters that consists of a theoretical portion, followed by examples and hands-on exercises. The interface makes the job easier, since SAS Financial Management is similar to an Excel worksheet and involves a navigation method similar to that of the pivot tables, thus hiding the underlying complexity from the user. For the time being we have 15 forecasters involved in training.

Your market share is 6 percent. The four leading companies in the sector put together don't even total 20 percent. What goals did you set for yourselves with this solution?
Our main goal is to reduce the incidence of slow-moving products from 2 percent to 1 percent (selling off surplus products near their expiration date, which must be sold at low prices, generating losses) and product unavailability from 3 percent to 1 percent (that is, the order is placed, but the product is not available, which translates into a lost sale). Reducing these problems means making the company more efficient and saves money. Another goal we set at the beginning of the project was to prepare the 2009 budget with the new solution.

Have you already thought about extending SAS solutions to other areas?

We are thinking about sustainable draft financial statements, in addition to extending SAS Financial Management to other applications; even if, for the time being, we want to learn to use in the best way possible the solutions we implemented. Another path we would like to follow, by mid-2009, is to forecast raw material costs.

During the opening session of SAS Global Forum, attendees heard how companies should respond in times of crisis through the proper implementation of technology. What do you think?

So far, my company has always done well. We have a solid sales basis, excellent products and equally excellent relationships with clients; we even received an award for the packaging of our Affettuosi cold cuts; the packaging is 40 percent recyclable. Of course, the cold cut market is particularly affected by fluctuations in the costs of raw materials, but the company has developed capabilities for managing them. To meet the challenge of the market, we believe it is important to leave room for innovation. We are members of a trade marketing laboratory at Università Bocconi, which allows us a cyclical comparison with companies from other sectors. Innovation, corporate balance and sustainability within and without the company are the three cornerstones of a philosophy that will make us grow, even in times of crisis.

Article by Chiara Lupi, reprinted from Sistemi & Imprese, January 2009.

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Challenge

Making forecasting capabilities available to the sales department of a leading Italian manufacturer through new operating tools that improve the information management process.

Solution

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.

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