Now it all adds up for
Brakes

For 25 years, the stability in global food prices made it relatively easy to manage at consistent margins. It all changed in 2007 with an unexpected spike in the price of dairy products that eventually extended into other categories. The spike created a huge fluctuation in a normally stable raw material commodity which manufacturers had to absorb or pass along to their customers. Across the basket of all food, Brakes experienced new, significant and volatile inflation. In 2011, at a low level of pricing maturity, local decisions were made mainly on a cost-plus basis. A pricing team was established to build and deploy a new commercial pricing model in stages, to cope with and eventually control the ongoing margin challenges.

The first step taken was to forecast the market and create a prediction model. A spreadsheet was created with 9,000 products forecasted by month up to one year ahead. This allowed Brakes to ask customers when and how often they would like pricing to move — for example, schools might prefer 3 price moves per year to coincide with term times, whereas a caterer might prefer one annual move to coincide with budget setting. The longer the price hold, the higher the premium paid. Software could implement this logic in a systematic and controlled way.

Vistex Solutions for SAP provided the support of a pricing tool that structures, increases visibility and allows automation. Simultaneously, Brakes can control data/information from the center and monetize price holds in the process.