Cereal Winner

Kellogg Company partners with Cashforce to create a smart forecasting solution offering new working capital insights and KPIs

By pairing Cashforce’s Working Capital Insights solution with a newly introduced company-wide data-driven mindset, Kellogg Company has made significant improvements to its forecasting processes, tightened its working capital cycles, and realised huge savings. It’s a project for which the TMI judging panel has no hesitation in declaring Kellogg’s as winner of the 2021 Corporate Recognition Award for Best Working Capital Solution.

Corporate Recognition Awards

Best Working Capital Solution

Kellogg’s

In 2020, the treasury team of American multinational food manufacturing firm Kellogg Company was looking for a smart but resource-lite cash forecasting solution capable of driving noteworthy improvements in its working capital management. It selected Cashforce, a cash-forecasting platform that uses AI to improve accuracy.

In the first three months following the go-live, Kellogg’s has already realised cash savings amounting to several million dollars. Through a data-driven approach that unites multiple SAP instances, Kellogg’s now connects treasury with the business and drives superior decision-making across key teams in the organisation.

Setting goals

Kellogg’s manufactures and markets in more than 180 countries. It has 172 global entities with 733 bank accounts, four main ERPs (and some minor instances), five main cash management banks, 40 currencies, and in 2020, net sales of around $13.77bn.

In setting up the solution, Kellogg’s had three core aims. First, it sought to provide more insights into its working capital metrics. Second, it wanted improved forecasting processes, especially comparing monthly forecast-to-actuals. And third, it planned to use invoice-level transaction data denominated in foreign currency to develop a daily currency hedging position, ultimately looking to implement an 18-month rolling hedge programme.

This demanded better collaboration between Kellogg’s treasury and global receivables and payables teams, a goal which itself called for a cash-forecasting tool that would enable that collaboration. Cashforce was chosen because of its working capital insights, drill-down functionality, AI/ML capabilities, and compatibility with Kellogg’s existing TMS (FIS’ Treasury & Risk Integrity Edition).

With treasury able to use forecasting workflow and working capital insights with the first connected SAP instance in just six weeks, the team gained a rapid insight into how Cashforce’s working capital analytics and cash forecasting solutions would deliver on its expectations.

The solution demonstrated the ability to roll up data into groupings, as well as enable in-depth analysis at transaction level. However, the Kellogg’s team also wanted to leverage Cashforce’s logic and ML capabilities, with the option to make manual adjustments where desired.

Cash in focus

An early, important emphasis for the project was on using Cashforce’s working capital analytics tool to improve both the order-to-cash and purchase-to-pay cycles. Cashforce’s order-to-cash analysis would provide Kellogg’s with both consolidated and granular views of receivables, overdues, billings and credit-note usage. By focusing on certain segments, Kellogg’s could analyse customer behaviours, driving conversations with the receivables team on how to improve invoicing.

Conversely, a global view of payables cycles enabled Kellogg’s to analyse its own behaviour, improving current processes and setting new organisation-wide targets and KPIs. A working capital dashboard also provided 24/7 insight for both AP and AR departments.

Cash flow forecasting was next under the microscope. The goal was to capture and classify forecast data from the ERPs, actuals data from bank statements and GL bookings, and upload that data into Cashforce.

Once populated, the platform could create detailed and accurate forecasting for short-term, medium-term, and long-term horizons. The system’s reporting capabilities, including scenario analysis, variance analysis and forecast-to-actuals comparison, elevated the forecast to the strategic level, powering up Kellogg’s decision-making capabilities.

Finally, potential for integration between Cashforce and one of its primary banks, Citi, enables the Kellogg’s team to begin working on establishing daily currency hedging positions that could be fed from Cashforce to the CitiFX Pulse platform for hedge execution. This is a work in progress, aimed at supporting the 18-month rolling hedge programme.

New thinking and learning

The project has seen Kellogg’s introduce a data-driven mindset across the company that has enabled it to tackle a number of AR and AP issues head-on. It has been instrumental in forging a new collaborative relationship with colleagues in these functions, decreasing working capital levels, while at the same time improving its cash forecasting process.

The system has facilitated the creation of new KPIs and insights into working capital that have already made huge savings. What’s more, Kellogg’s cash forecasting process and accuracy continues to improve through iterative AI/ML learning. In short, it’s a project that deserves to be the outright winner of the 2021 Corporate Recognition Awards for Best Working Capital Solution.