KamLibrary - Sweet Dreams Come True for Toms Confectionery

Everyone but everyone talks about the bottom-line. But how many businesses really understand it beyond profit and loss? Furthermore, too few companies are using the right tools to enable them to actually increase profitability over all, without the need for further investments or far reaching change. This is particularly true of companies that manufacture and distribute multiple products. Since, for them it’s harder to track the granularity of cost at every level of production, through distribution, marketing and trade sales. It is vastly complex, and while they will be benefit from millions of pounds worth of sophisticated technology and total automation, there will still be difficulty in identifying where profits are precisely made. Therefore, it’s easier to look at the bottom-line and not worry about how to increase profitability by focusing upon what exists today.

The truth is that finding out exactly where the profit is made, by customer, by individual product, by event, by promotion - is much more difficult than you may first think. Indeed, it can take an army of analysts and a truckload of data to come close to knowing the who, what, why, where and when of a multi product, multi brand, multi customer business. Throw in an acquisition and merger trail and you’ve got yourself a veritable Rubik’s cube of data. Data drawn from a variety of global systems, with a zillion and one ways available to manipulate it. But never an exact or easy way to break it down by customer and product combination that will satisfy the whole company. What’s more, we all look for something different; from production to finance to marketing – consequently, there needs to be a better way to consolidate the data and serve it up to meet individual management information and decision needs to support a company’s progress for a more profitable and successful future.

Well, according to Toms Confectionery there is a way to do this through effective consolidation of business planning and forecasting. Toms has found a way to provide a variety of reports and views tailored for its decision makers, across the breadth of its organisation, which has enabled Toms to make quality decisions to increase its profitability on a SKU (stock keeping unit) basis. Allowing it to identify flagging brands, which may have been recent cash cows, now Toms has established which product lines need re-engineering and which ones need to go altogether. It now knows which of its customers represent the greatest profitability and also which brands need greater distribution. Because of Toms’ close examination of its products and customers, it has also developed a strategy that will grow its £40 million UK business into a £100 million within a three year period.

By way of a potted history, Toms Confectionery is a wholly owned subsidiary of a Danish parent, it has a number of leading brands across Europe. Here in the UK, much of its business is ‘own label’, it manufactures and distributes some 26,000 tonnes of confectionery per year. It produces candy lines; mint humbugs and sparkling fruits and also specialises in candy foam and chews, which include those old childhood favourites, candy shrimps, bananas, gums and jellies, as well as a range of toffees and marshmallows. Its flagship brands include Anthon Berg - a range of chocolate liqueurs and marzipans to die for; Toms O/ZON a new style mini mint with trendy packaging rarely seen in confectionery; and Taveners which are the bags of sweets you generally pick up at a check out. Also as recently as 2001, the Company integrated its core business with Daintee in Blackpool and acquired Parrs, an independent producer of gums and jellies. Consequently, the product range is diverse, so too are its channels and customers which range from the multiple supermarket chains to small independents and anywhere else you can think of where you would buy sweets!

To enable the Company to achieve rapid growth, in real terms, through increased revenue as well as through acquisition, Toms took a global decision to invest in its management infrastructure. To this end, it recruited a new management team in 2001, when Vispi Birdi joined as financial director. Vispi Birdi hit the ground running; one of the first things he did was to recognise that time was in short supply for the Company, particularly as the new team were brought in to achieve 50% year on year growth. Assessing the situation, Vispi Birdi took immediate action to deploy a business planning and forecasting system; “The truth is that most financial systems are not up to the job of providing management information. However, I came armed, since I had already conducted a beauty parade of software products and knew precisely which solution was right for Toms,” he said. “We were merging with other companies, I needed to know right then, what we were taking on and to be able to merge, not just the business or its people, but the data to support a consolidated view of all brand performance at a SKU level. So I needed something that would deliver an information service to me as finance director and to the rest of the organisation.

“For example, a national account manager relies upon the finance department to provide a detailed and graphical view of a sales trend for a particular stock keeping unit for a specific customer. Then of course, this data needed to be easily available on screen, with the option to compare the customer, or the SKU, across the entire portfolio so that successful, yet tailored, sales strategies can be implemented. In my mind there was only one product on the market that fit the bill. ProAct from Cosmic Solutions. I dispensed with the need for a lengthy procurement cycle and just went right ahead and got the product in,” said Vispi Birdi.

ProAct is a Windows based system that is designed for all types of planning, forecasting, and budgeting applications. It is able to take data from any source, such as internal or external databases, enterprise applications like SAP or any financial or operational package that generates relevant business data. Therefore, it is a data integration platform, providing conclusive information concerning the whole business, its products, services, costs, customers, revenues, and profits. It will clarify the impact of the customer and product mix on the bottom line, enabling profitable strategies for all channels, including the Internet. It is completely customisable and will calculate and allocate costs at all levels of the P&L. Furthermore, ProAct will identify problem areas, movement in customer preferences, brand performance and it will predict performance based upon current trends. Powerful ‘What If’ modelling allows users to visualise and simulate the outcome of planned promotional activity or forecasted changes and test potential strategies against the P&L.

ProAct incorporates ProWeb, which utilises Microsoft’s desktop browser functionality to deliver reports and relevant information across an organisation’s internal and external network infrastructure. This is how Toms’ field sales personnel access information regarding individual customer accounts.

Another critical factor for Vispi Birdi was simply that he needed an easy to use system that would enable everyone on the frontline to understand the contribution they were making. “Typically, sales are driven by turnover not contribution and we needed to change this philosophy, to get everyone driving the bottom-line and recognising how their contribution impacts fixed costs,” he said. “ProAct offers a very clear view and at the moment we are able to offer sales and marketing access to everything to do with the top-line, including customer, product and revenue for past analysis and future forecasting. However, our intention is to enable them to access data up to contribution, easily so they don’t have to worry about formatting the data themselves. Naturally, this is a job well suited to ProAct which is designed for ease of use and access across the Internet.”

From here on in, Toms Confectionery is able to map profitability of an individual brand, SKU and customer in a highly graphical way. “Already we have been able to take a new perspective of certain customers and brands, where using ProAct has enabled us to see clearly that, what at first glance may appear to be a highly profitable piece of business, is in fact a poor performer across the entire range. And it is precisely this level of information that is enabling us to dismantle our bottom-line and look at what it will take for us to realise 50% year on year growth. Without ProAct, I think we would take a lot longer to reach such decisions, but with it we can see quite clearly, forecast accurately and plan effectively. So we know exactly what we need to do to strengthen our growth and broaden our market share,” concluded Vispi Birdi.

Date article published: 12/02/2003

Latest Additions