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- Familiar with the business and projects
- High involvement in projects
Joe Nagel, Director, Financial Planning & Analysis, CF Industries
Founded in 1946 as a fertilizer brokerage, CF Industries has grown to become one of North America’s largest manufacturers and distributors of nitrogen and phosphate fertilizer products that provide essential nutrients to increase the yield and quality of crops.
The company is headquartered in Deerfield, Illinois. Through its CF Industries, Inc. subsidiary, it operates seven nitrogen fertilizer manufacturing complexes in the central U.S. region and Canada, and a network of fertilizer distribution terminals and warehouses, located primarily in major grain-producing states in the U.S. Midwest.
Challenges and Benefits
- Upgrate to Business Planning & Consolidation
- Redesign supply model
- Able to create cost of sales by expense type report in weeks versus months
- Continuity to manage the product on their own
- Allow employees the flexibility to locate and sort through data
- SAP Business Planning and Consolidation (BPC)
About the Project
After interactive meetings, product demos and analyst calls through their search for a unified Enterprise Performance Management (EPM) solution in 2009, CF Industries chose the SAP Business Planning and Consolidation application to give them a consistent view of their business performance across the organization. NTT DATA Business Solutions was selected to do the initial install of SAP Business Planning and Consolidation primarily as a result of their approach of instilling their knowledge and expertise into the business. With the solution in place, CF Industries was able to quickly capture the level of detail needed to determine cost of sales by type and better position themselves to take on extra work after acquiring other companies.
NTT DATA Business Solutions representatives helped CF Industries through a system analysis and showed them where they needed improvement to bridge the gaps. In early 2014, CF Industries officially approved the project. The company started to work from the bottom up, and began to migrate and upgrade their six models used in Business Planning and Consolidation.
Lastly, CF Industries knew the supply model would need to be tackled separately. They put a strong emphasis on the supply model, which was the most complex of the modules as it housed all of the sales data and essential costing logic that translates production cost into cost of sales on the income statement. The supply model receives all production cost details from the department detail model and converts it into cost of sales data by applying the associated production cost to each ton of product sold based on when that ton of product was produced.
In order to accomplish this task, the original logic that was written in BPC was deconstructed and rebuilt to provide improved traceability to each cost component as it moves through inventory layers. This becomes important as variable cost inputs increase or decrease significantly in any given month. Other key improvements to the Supply model include enhanced distribution cost, planning and reporting, and data integration development that enables the Supply model to include actual data in cost of sales and gross margin by product.
“Previously, we couldn’t provide true driver-based planning, and it was a challenge just to create one version of a plan. Now, businesses are modeling all types of scenarios, even within a single forecast cycle, and because they now own it, they have a much clearer understanding of how the data…