Commodity Cost Management
A North American food service distributor has over a century of experience in the food service industry. Originally starting as a butter-and-egg delivery service, this organization has grown to become the largest family-owned food service distributor in North America and one of the largest privately held companies in the United States. With a focus on sustainability, integrity, hard work, and a commitment to service, they operate distribution centers and marketplace stores from Michigan to Florida, ensuring convenient locations and delivery options.
Business Challenge
The organization currently uses an Excel-based tool to calculate the Commodity List Cost and Exception List, which is event- and date-triggered. This tool relies on predefined commodity equations and formulas, along with market indicator feeds from sources such as the USDA and Chicago Mercantile Exchange, to derive critical business costs. These formulas are created and maintained in a spreadsheet, with the output used by the cost system for further processing. This extensive customization has resulted in maintenance issues. The organization sought a new system that would be universally adopted, easy to maintain and manage, configurable, and integrated with their existing systems.
JRD Solution
The Commodity Cost Re-engineering project replaced the equation creation, maintenance, and execution functionality from Excel with a Java-based Commodity Cost application. The new system provides a customizable and configurable view of the commodity equations and is fully integrated with legacy systems. This transition led to business benefits such as increased efficiency for cost analysts and enhanced application stability.
Key Benefits
- Improved application supportability, cost data quality, and application scalability.
- Architecture designed to meet mission-critical service level agreements (SLAs).
- Development language aligned with IT standards.
- Implementation of version control and removal of dependency on Microsoft products.
- Consistent and accurate application of formulas to the correct items.
- Reusable standard formulas.
- Expanded the scope of the application by reducing complexity.
- Easier addition of new buyers, vendors, and items.
- Enhanced application functionality, allowing more marketing categories to utilize the system.