Bauli - Case Study
The company: artisan know-how and advanced technology
Bauli was founded in 1922 on the skills of Ruggero Bauli, an artisan with a small bakery and a winning recipe: the secret of Pandoro. Shifting to industrial-scale production in the early 50s, Bauli has grown continuously ever since, most recently with the acquisitions of FBF (a leading Italian producer of buns) in 2004, Doria in 2006, and Motta and Alemagna in 2009.
Today, the Group has sales of 400 million euro, 1,500 employees, facilities extending over 490,000 sq.m., including 166,000 sq.m. of covered space, 4 production locations, 27 production lines and 35 distribution centres; furthermore, 170 types of product supply 1,100 SKUs to the market for baked products and chocolate, with a total annual sales volume in excess of 100,000 tonnes.
These are the statistics that make Bauli great. A family business, in the best traditions of Italian industry, that has managed to earn strong market leadership thanks to its know-how, passion for product quality and technological development: Bauli makes more than one third of the celebration products sold at Christmas and Easter, with a 40% share of the Pandoro segment and over 23% of the market for croissants.
Not by chance, a consumer confidence index of 70% and 97% spontaneous brand recognition (survey by Demoskopea) place Bauli among the most prestigious brands active in the Italian and European food sector.
The strategy: 360 degree search for excellence and quality
"Bauli's secret of success," - states Diego Gueresi, the Groups Control Manager - "was knowing how to meld traditional recipes with advanced technology. Bauli today guarantees top quality assured by the highest standards, unachievable by artisan producers, thanks to the selection of prime raw materials, as well as to the thousands of checks performed throughout the supply chain and on the materials used at every stage in the production process."
For Bauli, quality is not just the most important product characteristic, but also the very foundation of the Groups strategic vision: "Quality is a way of life, confirms Gueresi, a choice that the Group has made. Not content with product excellence, Bauli strives for the excellence of all business processes. Product quality is accompanied by the equally important organisational quality that stems from sharing the Groups vision. The harmony of our processes in every sector, from research to marketing, and from technological development to the professionalism of our personnel, derives from careful explanation of the criteria that underpin Quality and the close involvement of all employees.
Bauli's constant 360 degree pursuit and achievement of quality would not have been possible without the adoption of technologies that enable our people to work together, taking shared and timely decisions backed by access to detailed analysis of the reasons for business events: Board has accompanied us very effectively in this process for over 15 years, adapting with great flexibility to Baulis needs and making a concrete contribution to the way our business is managed."
The selection of Board: data integration, powerful analysis, time to solution
Board was selected more than 15 years ago, in a decision that has been justified over time by offering Bauli a complete Business Intelligence and Performance Management environment that is constantly evolving in technological terms, while always remaining faithful to its underlying philosophy: extreme ease of use and implementation, combined with great power when its comes to the simulation and analysis of data.
From the start, Board was found to be able to adapt in extremely short order to the needs of the business: after an initial analysis of Baulis requirements, a prototype for the management of certain P&L information was produced within just a few days.
This trial application demonstrated the capabilities of Board not only for reporting, but above all for producing real-time simulations: "The test was decisive for the adoption of Board" - recalls Gueresi -, "in hours we were able to obtain an overall budget for the year derived from various sources of input data: an exceptional result. After looking far and wide, we had found just what we needed: a tool that enabled us to supplement and standardize data, analyze it, and generate reports and simulations, all with great simplicity and with an unmatchable time to solution."
The project: optimize business performance via the integration of Profitability Analysis and Planning
"By contrast with businesses in other sectors that can make periodic plans, at Bauli it is fundamental for teams to understand our positioning and activities on a weekly basis," stresses Gueresi:
"Accordingly, for us, it is essential that strategic planning at budgetary level allows us to analyze the situation week by week. In order to manage this speed of response, the adoption of a tool that enables us to keeps costs constantly under control has proved to be of great strategic importance: a tool that flags variances against budget in real time, so that the business can react immediately. All this combined with a great ability to crunch numbers and generate internally consistent forecasts and reports."
Thanks to Board, Bauli has in fact created a modern system for the management of its decision-making processes. By linking profitability analysis with planning, the system not only predicts the economic impact of decisions, but also tracks their consequences on a timely basis.
Using the Data Integration capabilities native to Board, information arriving from the Purchasing Cycle (WAX), the General Ledger and Cost Accounting (Formula), and the Payroll and Agency Commission systems is standardised, supplemented and input to a single, multidimensional environment. This eliminates ambiguity, guaranteeing accuracy and the timely update of information and, therefore, the existence in-house of a single version of the truth.
All analysis and reporting activities have been made faster and easier for every user. "The only part of the system not available to users is the central database" - reveals Mario Cavazza, the IT Manager. Thanks to a system of security passwords, users are not allowed to create databases or modify certain data, but have free access to a series of information that they can manipulate however they like.
In this way, the information gathered at departmental level is combined and consolidated into models for budgeting, management control and integrated simulations at every level throughout the organisation: as an example, Bauli can determine virtually immediately how a change in the product mix sold to an individual customer will affect the annual profitability of the business.
Planning & Budgeting: the product-customer P&L
Commencing from the three-year plan prepared under the supervision of the Strategy Committee, an operational budget is devised with reference to the first year of the plan.
At Bauli, the process of operational budgeting covers all business areas, accurately associating revenues with the related OPEX, HR costs and CAPEX so that planning is truly profitability driven.
Board not only manages variable costs and revenues in an integrated manner, but also handles fixed costs using ABC methodology. This means that a true and proper product-customer P&L can be produced, allowing profitability to be determined at the lowest level of detail.
However "the real strength of the product" - notes Gueresi - "lies in its simulation capabilities: Board enables us to check instantly the likely economic impact of a decision, combining costs and revenues at various levels of detail and presenting us with a multidimensional view of profitability: by customer, individual product, area, agent and product line, each of which can be evaluated in terms of its ability to generate margin. For example, in a difficult business such as ours, with low margin, high volume products alongside high margin, lower volume products, the use of Board by our Area Managers is essential in order to find the product mix that best balances market demand with our own economic performance needs.
Area Managers are able to carry out all the simulations they want. After identifying the best option, they can immediately request approval from the Sales Manager who, in this way, always received well-argued proposals that consider a priori the proper relationship between sales targets and profitability."
Cost Accounting and Profitability analysis: ABC and analysis of variances
Using Board, Bauli is able to perform a customer-product ABC analysis with absolute transparency and full integration with the planning and budgeting processes. Costs can be associated with revenues at the lowest level of detail, resulting in preparation of the P&L not only at company level, but also at customer-product level, with 1,100 SKUs associated with 3,000 customers, 150 agents and 600 sales representatives.
Board receives input directly from Cost Accounting, using the information to manage the multidimensional allocation of data in the following way:
Industrial costs: Product
Fixed costs: analysed by Cost Centre, Expense Caption, Detail of Expense Caption
Transport costs: Product, Customer, Province, Sales outlet
Analysis of Variances
- Variances are analysed for each line of the income statement, considering:
- Volume, Mix, Price variances for Revenues;
- Volume, Mix, Price, Efficiency variances for Production Costs and Logistics;
- Volume, Mix, Price variances for General Costs.
Summary analyses: Management Reporting
"All this work" - comments Gueres i- "not only enhances the efficiency of the operating and tactical decisions taken by clerical staff and middle management, but also finds a natural home on the desks of those who govern and direct the business."
The enormous mass of data and analysis is in fact condensed into a weekly management report, in which results are compared with objectives: a weekly 35-page document that enables executives and the board of directors to obtain an unambiguous and complete view of economic performance, assess the achievement of established objectives and identify on a timely basis any critical areas requiring the attention of senior management.
Work in progress: financial analysis
In addition to the economic aspects, the system also covers certain aspects linked with financial performance, although this area is undergoing further development.
"At present, support for financial analysis is still limited" - notes Gueresi - "but a project currently in progress will soon enable us to establish a complete link between the established planning and control processes and Baulis financial processes."
Advantages: ease of use and effectiveness.
As Diego Gueresi comments,
"Talking about the usefulness of Board to Bauli requires just one statistic: 270 clerical employees, 220 users of Board. And this is not all: the total number of users rises to 270, considering the extension of the system to certain workers in the production and logistics areas. Obviously enough, a Business Intelligence and CPM tool can only become so pervasive when it is easy to use, offers concrete advantages and adapts readily to the various, changing requirements of the business.
The extreme ease of use, not least when building applications, also allows users to easily create their own analyses and reports, without burdening IT with requests of perhaps great short-term urgency but little strategic value. From another standpoint, management has a tool that enables it to delegate with full confidence the operational phases of sourcing, supplementing and organising data, allowing it to concentrate on analysing the resulting information and on making decisions.
In conclusion, if I had to recommend a BI and CPM tool to a business, I would have no doubts, I would advise it to select Board without worries. The tool is easy to use and flexible, but with an ability to guide the management of decision-making processes that we were unable to find in any of the other solutions taken into consideration."