[0:00] Joy Krugel:
So glad to be here. We’re going to start out. Agenda today is, I’m going to talk a little bit about Johnsonville, who we are, our automation journey, our plan for the future. And then if there’s any q&a at the end.
[0:15] Joy Krugel:
About Johnsonville, We are the number one sausage brand in the US. We’re headquartered in Sheboygan Falls, Wisconsin. We say Sheboygan falls, Wisconsin. We’re actually just in the middle of a cornfield. With several plants and so forth. We have other locations throughout the Midwest. We’ve been in business for 75 years, second-generation, run organization, Ralph and Shelly stare. We are about a billion in sales and we have approximately 1600 members. What we do, I had mentioned we’re the number one sausage brand in the US. We hope all of you know Johnsonville, brought Italian sausage, ready to eat Breakfast sausages, snacking sausage. Our brand can be found in over 40 countries. We have offices and we manufacture in Japan, China, Singapore, and just recently we acquired a facility in the Philippines. And we’re actually doing an SAP go-live come April 1 in the Philippines. So how do we do this, we have a very unique culture at Johnsonville. And without reading it that we basically say that we have a moral responsibility to create an environment that requires each one of us to use our God-given talents. And we achieve this by living the Johnsonville way. So our journey started back in 2011 with HighRadius. With an assessment around our AR, credit processes, we actually were really privileged. I was just sharing the story, Sasha and Panca. She actually came to do our assessment, you know, that we were early in the game. And, you know, we talked about that often how he said, “Geez, we’re driving down this country road, and we were thinking, are we almost there?” And there we were.
[2:25] Joy Krugel:
So anyway, a couple of key points. We have one ERP system, we, we originally had no reporting around claims or cash. However, we’ve been able to add and create value with our automation. So again, from 2014 to 2019, we had a 43% increase in claims volume. We did this while also reducing in redeploying resources. We went from six full-time deduction specialists to five and then we went from one full-time Cash App person to a half. And then we redeployed, we created a couple of salaried professional positions to help us. So an A/R coach, which we call also a subject matter expert. So she works with all the HighRadius products and solutions and the team and the detection team and the cash team and then also a credit analyst role.
[3:27] Joy Krugel:
We increased the accuracy of our p&l customer reporting. With reducing our cases to close we actually average 10 days from open to close from the time the deduction is created in cash app to the time it’s settled in our TPM system. And, you know, just to make a comment in that area, when you talk about sales by the end we have salespeople now. The sales teams, the TPM analysts they’re calling us or should say they’re calling the deduction team saying, “Hey, how far out are we? Can we close our accruals?”. They want to know if they can close some of the programs because they know that we’re pretty efficient in the process.
[4:19] Joy Krugel:
So, again, our journey, we did one of the key drivers for Johnsonville is we did have executive support. Our CFO realized that deductions as soon as they become a bottleneck can really have an impact on the bottom line. He came he previously came from a large public CPG company, and he shared stories or deductions outstanding, really at times. could really affect quarterly returns. So when we were venturing down the HighRadius path and we were talking about some of the efficiencies, that efficiencies that we could gain, he was just, he was very supportive and helped from the IT perspective and that this was really directionally where we needed to go.
[5:26] Joy Krugel:
So we believe in the best at what we do. We are always looking for process improvement. With the assessment, the two big areas that came out were cash application and deductions. We were 100% manual. We didn’t even have the bank doing anything for us. I mean, those check remittances came in a big thick envelope, and our cash app person, you know with applying to the accounts. On the claim side, it was difficult and time-consuming we were going to portals ourselves, you know a lot of the same things that many of you are doing. Things were coming in paper and in all different ways. We also had limited visibility, we really didn’t have any reporting for finance leadership and or to our sales teams, as far as deductions outstanding and so forth. Anytime somebody would ask, we were basically looking at aging and we were, you know, just adding things up. So, I want to just share that when I talk about on the deduction side, so we went live with on-premise with the DMS system of HighRadius using the accelerators. We actually started with aggregating claims first, and then we were working on the cash project then we went live with cash and then we came back to the rest of implementing the deduction, the DMS module. So we had, it’s kind of an interesting story. We had our two largest customers, Kroger and Supervalu. And we were building a business case within Johnsonville to figure out how to automatically pull that stuff from the portals. And like, I think somebody said, they met Dan Chapman or I met Dan Chapman at a CRF conference. And we just started chatting and talking about some of our pain points. And he was sharing the POD system. And we’re like, “Well, you know, that’s not something that we really see a benefit. And, you know, it’s really trade-deductions.” and probably about a year later, he had called and he said, “Hey, I want to show you a demo. And keep in mind, we’re talking internally at Johnsonville, how we can automate two customers as far as aggregate claims, and so he showed this demo and I’m just like, oh my gosh. I’m like, “I’m going to schedule a meeting with my IT folks and a couple of other people. And I want you to do the same demo”. And really, that’s where our journey started from there because our IT folks recognized right away. So that’s kind of how things evolved with us back in that was probably late 2010.
[8:26] Joy Krugel:
So what we were looking for our wish list when we started, when we had the assessment with HighRadius, we said we wanted repetitive labor-intense processes automated completely. While we’re not completely there, increased productivity, we wanted to have faster processes with less air. So again, on that quality side, we’re really big into quality – Whether it’s our sausage, as well as what we deliver and make sure we have accurate reporting and then smooth workflow for internal collaboration. During the deduction research, so we wanted the ability to have workflows, send it to our sales folks or our brokers or our internal customer service or within the supply chain team members, and then better visibility for our sales and finance team leadership. So surprise, as we started down that journey, we also were using, we were kind of we had kind of a homegrown collection process. And we also wanted to automate our collections, but it was kind of low hanging fruit at the time, the deductions were our number one in our cash app was both kinds of both number one. So HighRadius actually helped us on the collection side using kind of the whole if you want to call it the worklist functionality, and I can talk a little bit more about that, but again, our goal was improved customer experience, and then also improve with the big box retailers in some of you who were maybe at the Hershey or the Kim. Kim presentation talked about Kroger, kind of similar to us being able to batch stuff. So, at Johnsonville, one of our guiding principles is HICS and HICS stands for Highest Impact and Customer Success. So we had things It was kind of craziness, we had a lot of rework we had a lot of different things going on manually. And again, our goal was to really have the customer experience really be transparent and we didn’t want to have them involved in some of our chaos. So as we said here, we always try to create maximum value for our customers something which HighRadius enables enabled us to do.
[10:58] Joy Krugel:
So as I talk a little bit about just before mass chaos we had a lot of confusion and rework so we had a disintegrated order to cash process. So it led to poor customer experience. For a lot of you that already automated we had claims coming in many different ways – it was we were retreating from portals, it was coming in the mail, it was coming from sales, brokers, all over the place. We also had cash; it wasn’t that it wasn’t acknowledged, it wasn’t being timely applied because they were chasing down remittance advice or some of the reason codes and so forth. So some of that untimely cash posting also created kind of some havoc on the collection side where we were calling customers and past two invoices. And they were telling us- “Oh, they were paying and then we go and look and we’re like oh my gosh, you know, we got that payment yesterday or the day before but we didn’t apply it because we have a remittances issue”. So that was some of the disconnects that we had and we needed to improve that process.
[12:11] Joy Krugel:
And we did. So HIghRadius helped create a better customer experience with an end to end integration. So this really is where we came. We’re doing the aggregation with the claims that are coming into our dispute system. The cases are automatically created, they’re going through a workflow. They’re going to the deduction specialists, they have everything in a dashboard. Our invoices are being paid timely. We’re following up on the past two invoices or the right past two invoices. As I said, we’re not using the collection module, but what we ended up doing is creating a process similar to the cases that we have for deductions So we have those of SAP. So, in FBL five in our cash app, we have a variant. So we have different variants by different customer types or I should say different, you know, different customer types. We were we will create cases for invoices that are X number of days past due. So it was kind of a down and dirty way to capture our past two invoices and have them in a worklist with the invoices and the order with everything attached. Now we don’t have prioritization, we have to do our own prioritization, which is why we’re looking at going to the collection cloud. So again, HighRadius helped us really become more functional as a team, as well as help the customer experience. One other area I’d like to mention is on the cash side, we created many different reason codes and primarily around the non-trade where late fees or you know, we’re all dealing with the transportation stuff where we create a reason code and we’re automatically coating it to a GL cost center. And then that reporting is automatically going to our supply chain for root cause analysis. And those transactions are a hundred percent no-touch. So our philosophy is we are going to process the deductions are taken. And then if the deed has been invalid, then we go through the chargeback process. So the goal is I mean, our intent is we want visibility on the customer PNL as soon as possible. Then working with big-box retailers – You know, similar to some of the stories you may have heard earlier with Kroger, Kroger being our biggest one. Our goal was how could we improve in the productivity with Kroger, lots of claims coming through. We had several challenges around compliance, high cost to serve. And then several challenges in addition to it, depending on the different big-box retailers. So a question out there and I don’t know if this resonates for you, for those of you is, what are your biggest challenges working with big-box retailers? Some of them for Johnsonville are meeting compliance requirements. Our customers are creating all kinds of revenue streams these days. And then we have to figure out whether they’re valid which also then creates a cost to serve. And then a high volume of trade, promotional reductions. And then last time resolving and closing deductions. So many others out there, any other common themes?
[16:41] Joy Krugel:
Our business model is that we have a national price. So list price, and then we do promotions. Then we do promotions with customers in their contract related. Well we know it’s not perfect, but it’s because our customers like to go plus and minus. But that’s pretty much we don’t do a lot of we don’t really do a lot of price changes. The only area we do price changes is on our commodity items.
[17:17] Joy Krugel:
(Audience Inaudible) So it really kind of depends on the customer model. We do have the ability to do a discount but we can still show it as a promo or we can show it as a net. It kind of depends on the customers that the program. So working with big-box retailers, I’m going to probably repeat some of what you heard it hurt with the Hershey and Kim you know, we were receiving a lot volume of deductions from one of the larger retailers. I don’t know why they crossed it off in mind, but everybody else is saying it’s so it’s Kroger. But you know, our 250 are 250 plus the week and I think Kim mentioned some of the clients she’s working with are getting like 850 plus weeks. So, you know, we needed to do something with that. So we are actually the same thing where Kroger has some great information on their backups. So they have contract numbers in our TPM system, we’re also loading the contract numbers. So then what we’re doing is we’re doing a mass consolidation within the dispute management, we’re taking all those cases by contract, and we’re merging into one case, by contract, and then we’re pushing over, maybe just a couple 223 back two to three lump sums into TPM for settlement. That just reduced our manual interface leaps and bounds. So the contracts are by category. So that’s the beauty of it. Yes. So then the contract numbers are on the deduction backup, and then the contracts are in our TPM system.
[19:33] Joy Krugel:
It’s so key that you have a link. (Audience Inaudible) Okay. And there are other fields. So it depends on you know if there’s some type of common you know, what’s on your customers backup paperwork to what is in your accrual or trade promotion management system, there is a way that you could link and or it’s dated or, you know, there’s so there are different and HighRadius certainly can help with that. Because, you know, they have so many different clients and so many different ways that customers are doing this.
[20:22] Joy Krugel:
So the results in numbers of achieved with HighRadius, here’s where we’re at today, we had a 43% increase in claims from 2014 to 2019, while increasing efficiencies, as well as decreasing resources when I say decreasing resources really around the deduction area because when we look at projects we don’t, it’s not about eliminating FTEs. It’s about redeploying resources and how do we work on other value adds. And then total deductions. We were at the close of 2019- 4.4% of our total A/R, from the National deduction group, they pretty much say anything 5% or less is best in class. So we’re pretty much there. And then around cash, our hit rate for dollars received is that 96% and related to checks and electronic payments, our hit rate is at 89%. Our 89% is going to go up because we’re working on automating our wire payments. Right now, we’re actually really close. We’re just kind of working on some reason codes related to the banking fees. And that’s really primarily around our export international customers because they’re sending the wired payments. So our plan for the future – I got to go. He gave me the three-minute rule. So couple things in implementing new technology working with a third party, reducing the cost to serve and then global scalability, investment in new tech and new technology. We’re working on the wire project right now as I speak, we should be live very soon. We are looking at going to the deductions cloud solution in 2021. We’re kind of buttoning up that business case to sell it to the organization, which will include the machine learning and AI component. I talked about the Kroger when we push it over to TPM, we’re still doing keystrokes and TPM. The goal is those keystrokes go away. And then we’re also exploring the collection cloud. Also, have a treasury person here at the conference, and we’re also exploring some of the Treasury functions to see if they might fit into our business model. Working with a third party, we work with a third party today, but we want to continue working with a third party. So setting up SLA is for clear communication around requirements, ensure they understand our specific A/R case and cases properly and maintaining 100% transparency in the partnership. And when I say a hundred percent transparency, they have access to our email, they have an email, that’s a johnsonville.com. They, when they when they’re calling the customer when they’re talking to the salesperson, they’re Diane from Johnsonville. So it’s very transparent. They’re part of our process improvement teams. They’re really working as part of our team.
[23:40] Joy Krugel:
Then reducing costs of services, a huge kind of a huge initiative for us just because of all the different supply chain situations going on. So we’re integrating the direction compliance cases into the cost of services, reporting. We’re doing some root cause analysis and really getting putting strategies around trying To improve, we’ve had some success stories with CNS wholesalers, for those of you that work with the kind of a win for just again, really focusing.
[24:14] Joy Krugel:
Then global scalability – Our goal as an organization, we implement a single source of SAP across global business units. We’re looking at HighRadius to see if any of their automated solutions will work globally. And then we also have one data model for all stakeholders. Now I’m rushing, but I’m at the end. So food for thought – What are you looking forward to maximizing your order to cash efficiencies in 2020?
Let’s take everyone and give Joy a round of applause. Wonderful presentation.
[0:00] Joy Krugel: So glad to be here. We’re going to start out. Agenda today is, I’m going to talk a little bit about Johnsonville, who we are, our automation journey, our plan for the future. And then if there’s any q&a at the end. [0:15] Joy Krugel: About Johnsonville, We are the number one sausage brand in the US. We’re headquartered in Sheboygan Falls, Wisconsin. We say Sheboygan falls, Wisconsin. We’re actually just in the middle of a cornfield. With several plants and so forth. We have other locations throughout the Midwest. We’ve been in business for 75 years, second-generation, run organization, Ralph and Shelly stare. We are about a billion in sales and we have approximately 1600 members. What we do, I had mentioned we’re the number one sausage brand in the US. We hope all of you know Johnsonville, brought Italian sausage, ready to eat Breakfast sausages, snacking sausage. Our brand can be found in over 40 countries. We have offices and we manufacture in Japan, China, Singapore, and just recently we acquired a facility in the Philippines. And we’re actually doing an SAP go-live come April 1 in the Philippines. So how do we do this,…
HighRadius Deductions Software acts as a powerhouse for proactive deduction management to prevent bottom-line erosion. It provides automation, process standardization, and a platform for cross-departmental and customer collaboration. It supports deduction management by providing some key features like back-up document capture which captures deduction data from customers and supplies the information required for resolution; auto-capture proofs of delivery (PODs), bills of lading (BOLs) from carrier portals & emails; structured deduction resolution, collaboration & approval workflows to streamline the communication and approval process; along with automatic deduction correspondence, and automatic data push to customer portals. The result is a proactive deduction management operation that recovers revenue normally lost to invalid deductions.