To protect its margins, drinks manufacturer CO-RO aimed to minimize costs—but different ways of measuring key performance indicators across the group made it difficult to monitor brand profitability.
CO-RO worked with IBM Business Partner Kapacity to deploy a centralized, multi-dimensional reporting platform based on IBM® Cognos® TM1®—delivering a single, trusted view of costs across the business.
Highlightsbrand profitability, helping CO-RO optimize its global product portfolio
Reducesrisk by revealing the impact of volatile commodity prices and exchange rates
“One-click”processes save many hours of consolidation and reporting work
Business challenge story
Finding the mix for profitability
Each day, consumers in over 80 countries worldwide enjoy fruit juices, colas and ice pops from soft drinks manufacturer CO-RO A/S. With its family of brands such as Sunquick, Suntop and Suncola, CO-RO aims to keep its customers cool, refreshed and delighted with its products, and provides over 3.5 billion servings each year to customers across the globe.
Michael Emde, Chief Financial Officer at CO-RO, explains: “We operate worldwide through wholly and partially owned subsidiaries, including markets in China, Saudi Arabia and Malaysia. We produce key ingredients such as fruit concentrates in Denmark, and ship them to our subsidiaries to prepare, bottle and market the finished products.
“Operating in the fast-moving consumer goods space means that margins are tight. To deliver strong profitability year after year, we must run lean and keep operational costs under control.
“Ingredients such as sugar, which are added during the bottling process, make up a large proportion of our costs. Each of our subsidiaries purchases these ingredients in their own local market, so fluctuations in commodities prices and exchange rates can have a big impact on the cost of getting our products to market. To make sure all our products are profitable in each market, we need to understand these costs, as well as how each brand is performing in terms of sales.”
He continues: “In the past, we relied on spreadsheet-based processes to consolidate financial results across the group and report on how our subsidiaries were performing—but this approach presented many challenges. Each of our business units delivered their results in different formats, produced by different ERP systems, so reconciling the data at the group level was a complex and time-consuming process.
“More importantly, it was very difficult to drill down into our data to monitor profitability by brand, region and subsidiary. We had developed a prototype model in Excel that gave us some insight, but it was too time-consuming to use it on a regular basis. The risk was that if sales, commodity prices or exchange rates changed and certain brands became unprofitable in particular markets, we would struggle to pinpoint the problems and take action quickly enough.”
Enabling a single source of truth
To deliver in-depth financial reporting and analytics capabilities, CO-RO decided to replace its spreadsheet-based financial consolidation model with an enterprise reporting platform: IBM Cognos TM1. To get up and running fast, the company engaged IBM Premier Business Partner Kapacity A/S to help deploy the solution.
Emde says: “It was important for us to choose the right technology as well as the right partner. We didn’t want to work with consultants who focused solely on the IT side of things, but who understood the challenges we faced as a business. Kapacity came to our offices for meetings, took the time to dig deep into our needs and worked exceptionally hard to complete the implementation in time for our half-year financial reporting.”
Working together with Kapacity, CO-RO designed a centralized financial reporting process, supported by a multi-dimensional data model.
“One of the major stumbling blocks we faced when working with spreadsheets was the level of complexity when integrating data from our subsidiary companies into group-level accounts,” Emde adds. “Kapacity built us a data warehouse that draws all of our local data into a central repository and transforms it into a single, standardized format—streamlining the analytics process.”
Today, each of CO-RO’s local ERP and accounting systems feed forecasts and actuals into the data warehouse, which is based on Microsoft SQL Server. Using Cognos TM1, the finance team can perform rolling monthly profitability analysis and legal consolidations, delivering deeper insight into revenue and cost centers across the organization.
Emde says: “In the past, many parts of the business used subtly different data definitions for similar concepts, which made it difficult to roll up the position at group level, and reduced our confidence in the accuracy of our reports. Today, we have standardized our data definitions across the business, which is opening the door to an unprecedented depth and breadth of analysis.”
Cutting costs and boosting revenues
With Cognos TM1 driving its financial reporting, CO-RO is gaining the insights it needs to contain costs, drive revenues and protect its margins worldwide.
“In the past, one brand might have been performing very well in two markets, but very poorly in another—but because we lacked a granular view of our costs, it was very difficult to recognize where we were losing money,” explains Emde. “We now have a single source of truth, which means that we can have more productive conversations about profitability across the group. Increased transparency enables us to make faster, smarter decisions—for example, to scale up production for a popular brand, or discontinue products in markets where they don’t align with consumer demand.”
He adds: “For many businesses, carrying out monthly profitability reporting and legal consolidations is the kind of activity that requires two separate teams working full time. Thanks to Cognos TM1, we can consolidate data from across our subsidiaries and create the reports we need in just a few clicks—eliminating the need for manual reconciliation.”
Looking to the future, CO-RO plans to start using Cognos TM1 for budgeting and forecasting too, and is interested in harnessing the solution’s scenario planning capabilities.
Emde explains: “Currency exchange rates and commodity prices are changing constantly, and we need to adapt quickly to minimize our exposure. Take Malaysia, one of our biggest markets. In recent months, the local currency has plunged to its lowest value in nearly 20 years, while sugar prices keep surging higher. Scenario planning in Cognos TM1 would help us develop budgets and revenue projections that help us to mitigate our risk in these kinds of volatile market conditions.”
He concludes: “Thanks to IBM Cognos TM1 and Kapacity, we can serve up the brands our customers love most—driving our global revenues and strengthening our margins.”
About CO-RO A/S
Founded in 1942, CO-RO A/S is a world leader in the soft drinks market, manufacturing drinks, ice-lollies and concentrates. Based in Frederickssund in Denmark, CO-RO A/S owns subsidiary companies worldwide. It operates 11 production sites in locations such as China, Saudi Arabia and Malaysia, and works with distribution partners in more than 70 countries to deliver over 3.5 billion servings of fruit-based products every year. The company employs over 1,000 people worldwide, and in 2015 achieved turnover of DKK 2 billion (USD 280 million).
- Cognos TM1
- Consumer Centric Retailing
- Consumer Products: Digital Operations
- Planning Analytics
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IBM Analytics offers one of the world's deepest and broadest analytics platform, domain and industry solutions that deliver new value to businesses, governments and individuals. For more information about how IBM Analytics helps to transform industries and professions with data, visit ibm.com/analytics. Follow us on Twitter at @IBMAnalytics, on our blog at ibmbigdatahub.com and join the conversation #IBMAnalytics.
IBM Premier Business Partner Kapacity A/S is a leading provider of analytics solutions in Denmark and beyond. Kapacity offers consulting, proof-of-concept, implementation and training services, and has offices in Copenhagen, Aarhus and Kolding. To learn more about Kapacity, please visit http://www.kapacity.dk