IBM ConAgra Customer Video Transcript
As Produced Transcript
Interviewees: Mike Neal, President and Founder, SignalDemand
Bill Stoufer, President, ConAgra Mills
TEXT: Smart is.predicting market forces with analytics
TEXT: ConAgra Mills has implemented a margin optimization system
TEXT: To predict and adjust to constantly shifting market forces and gain a better understanding to its production needs
Bill Stoufer: When it comes to innovation, we have to lead the market. In the business 20 years ago, wheat markets would move a dime a day and that was a big move. Today, we move in 50 cents or a dollar range and when you are dealing with that kind of volatility, 5% to 6% of our customers' price is moving each day. They demand more from us to be able to help predict the future as we go forward. Using tools such as SignalDemand, we have a better feel of where we need to be with our business and it helps mitigate the risk for our customers.
We produce over 800 different flour SKUs for our customers, which is pretty amazing and to do that in the 23 facilities, we have to optimize and run it at the right time and the right expectation, right quality for our customers.
Mike Neal: Being able to look into the future and make informed analytical decisions around future behaviors is central to what we do as a company. It's very hard for a human or human with a spreadsheet to figure out where price should be on a given day. But if you can apply econometric models and optimization to the problem and come up with an empirically rigorous recommendation, you can add tremendous value to the business, and that's what we have done.
Bill Stoufer: We operated our facilities on a more random basis as far as capacity was measured in the various facilities. So we tended to always have certain mills that were more full than other mills and we missed the opportunity to maximize the business.
When we were looking at how do we maximize capacity utilization, we had to look outside our own industry. One of the industries we looked at was airline industry. It is very similar to our business. If the plane leaves with empty seats, they miss the opportunity to maximize their business. That is the same within a milling business; we have to optimize and maximize what we run in 24 hours each and every day and missing the opportunity to run meant loss revenue for the business.
Mike Neal: They definitely understood that applying an econometric model and an optimization approach to some of these key decisions could move the needle for them. They got that very, very quickly.
Bill Stoufer: It's extremely important we understand our capacity on the future months as our customers are demanding more price risk management and pricing out forward. Thus, when we make a commitment that we are going to price our customer and execute for the customer, we have to know for sure that capacity can be fulfilled by our facilities.
Bill Stoufer: By utilizing the SignalDemand dashboard for our capacity utilization, we now have the ability to accurately predict for our customers where we have open capacity and meet our forecasted demands for our business as we move forward 12 to 18 months out.
The SignalDemand and IBM solution has allowed us many benefits within ConAgra Mills. 3% to 5% capacity utilization increase, margin increases in our business and increase to accuracy in making daily decisions within our business.
We are empowering our people to make bolder decisions. They are making more accurate decisions, and we are fulfilling our mission to being the preferred highest performing flour brand.
Mike Neal: The principles that made ConAgra successful are pretty universal. So when you have both sides the manufacturer and the ethnology provider working together both believing and insisting on good results you will get those results.
Bill Stoufer: In the commodity market, trying to create value and separation, you have to look at these tools as a way to change your business. They are risky; they are fun; and they definitely can change the game and we have to really look at our business and try to find solutions for customers today, like we have never looked before.
ConAgra Mills now uses up-to-the-minute insights to optimally employ its mill capacity and make sales smarter.
- Instrumented: The solution ingests continuous real-time data from all the key sources-internal and external-that go into configuring the right deal with customers.
- Interconnected: Dashboards provide integrated recommendations that incorporate market forecasts, production capacity conditions, underlying cost parameters and margin.
- Intelligent: Powerful mathematical models enable ConAgra Mills to proactively optimize sales operations by balancing market, production and margin variables in the creation of the "right" deal with customers.