Higher margins with Prodacapo
About
The ICA Group is one of the Northern Europe’s leading retail companies, with around 2,200 of its own and retailer-owned stores in Sweden, Norway, Estonia, Latvia and Lithuania. The Group includes ICA Sweden, ICA Norway, Rimi Baltic and Real Estate as well as ICA Bank, which offers financial services to Swedish customers.
Challenge - a more aggresive cost management
The food retail market is highly competitive and the competitors of ICA are continuously sharpening their businesses to lower costs and prices. That is one of the reasons for why ICA decided to reorganize and to focus more on profitability and new store concepts.
The organizational changes demanded a more detailed profitability analysis. ICA needed to find out the net profitability margin for both stores and product categories. The questions to the controllers at ICA became more and more complex and there was a demand for a new system to handle the new data.
ICA started to look for a new system that could be used to control the costs per store, region and district.
"We wanted to extend the controlling from conventional financing to a more aggressive and offensive cost management", says Björn Sjögren, controller at ICA.
Results
ICA integrated Prodacapo's solution for Activity-Based Costing/Management (Prodacapo ABM) with their Oracle solution for sales, logistics, finance and data warehousing. The ABC/M information is updated every quarter.
"Prodacapo ABM enables us to see the aggregated result per month - as if we were one single company. We allocate costs from our large logistic organization with transportations (our largest cost item) to our different business segments", says Björn Sjögren.
ICA uses Prodacapo ABM to manage and measure profitability per product category and store concept. The ABM result is used by 15 controllers and around 50 managers.
The ABM information has also been used for more strategic purposes than first intended. Next step will be to use the information for process improvements.
More information
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