Using powerful models and algorithmic engines, ConAgra Mills is now able to translate a vast array of market and production information into smarter recommendations for its deal makers, enabling higher margins where they’re justified and increasing capacity utilization by five percentage points.
The basics of a deal are that customers need a specific type of flour, in a certain amount, delivered at a specific time. It’s up to ConAgra Mills’ salespeople to size up the production capacity situation, determine whether the company can commit to delivery and, if so, come up with the right price.
In the past, when decision time came, hard facts generally took a backseat to gut instinct. Salespeople lacked the means to transform the available facts into actionable intelligence as quickly as needed. ConAgra Mills’ salespeople may not think of themselves as decision optimizers, but they are. Every agreement they make—or decline to make—has a direct impact on ConAgra Mills’ production utilization as well as its margins.
With the range of variables involved in production planning and pricing, these decisions get complicated fast. Start with 23 plants, running seven days a week, producing any of 800 different kinds of flour. Add in the variability of grain prices on the commodity market, while allowing for the production and supply chain issues that inevitably crop up. The judgment of even the most experienced salespeople was no match for the overwhelming complexity that underpinned selling decisions.
Attending a food industry conference, President Bill Stoufer saw that the animal protein industry had successfully figured out a way to apply decision optimization principles to meat production. From that observation sprang the intuitive leap that “while protein and grain milling may be different industries, we do basically the same thing—which is to disassemble,” Stoufer recalls. “If their [optimization] approach will disassemble a cow, then it can disassemble a kernel of wheat.”
Stoufer developed a solid business case that showed an increase in both capacity utilization and margin using optimization. But what resonated even more strongly was the strategic benefit of giving salespeople the intelligence they need to structure the best possible deal with the customer. Ultimately, Stoufer maintains, it’s a question of confidence. “It was less a question of numbers than the fact that it instills confidence in our people to engage the customer at a different level,” says Stoufer. “For salespeople, having the right intelligence only enhances the value of experience and judgment.”