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Secret Ingredients of a Balanced Breakfast

Customer Snapshot: Overview

It all started with 1 single corn flake

From Corn Flakes to Froot Loops, breakfast wouldn’t be breakfast without Kellogg’s. But margins are tight in the ready-to-eat cereal business. For the Kellogg Company, approximately a third of annual revenue is spent on promotions and trade shows. So every dollar spent on advertising, coupons, sponsorships, and shelf location counts. To keep an eye on trade show spending, Kellogg’s must analyze large volumes of data and run complex simulations to predict which promotional activities will be the most effective.  

By combining the SAP® Accelerated Trade Promotion Planning application powered by SAP HANA® and cloud and storage services from Amazon Web Services (AWS), Kellogg’s can achieve the speed, performance, and agility it needs without making a significant investment in physical hardware. That means reduced expenses and more effective promotions for your favorite breakfast foods.

Company
The Kellogg Company

Revenue
US$14.8 billion

Number of Employees
30,600

Line of Business
Finance

SAP Solutions
SAP HANA, SAP Trade Promotion Management

Headquarters
Battle Creek, Michigan, USA

Customer Website
www.kelloggs.com

Implementation Partners
Amazon Web Services (AWS)

Industry
Consumer Products

Customer Snapshot: History

Dedicated to Well-Being

Customer Snapshot: Business Model

Commitment to Putting People First

As the company continues to grow, their people grow with it. Through a values-based culture, the Kellogg Company creates a stronger future every day — enriching communities and nurturing careers by putting people first in everything they do. At the Kellogg Company, Innovation lives on, the learning never stops, and they’re excited about tomorrow. And it all started simply with a single corn flake and W.K. Kellogg’s belief in better food for all.
 

Kellogg Company is committed to establishing and growing relationships with small and diverse businesses, including Minority, Woman, LGBT owner businesses, as well as businesses that fall under the United States federal certification for Veterans, Service Disabled Veteran, Small Business (SB), Disadvantaged Business Enterprises (DBE), Small Disadvantaged Business (SDB) and HUB Zone.

Customer Snapshot: Success Strategy

A Principled Approach to Delivering Food

The Kellogg Company, headquartered in Battle Creek, Michigan, operates in 180 countries. They manufacture ready-to-eat cereals and other food products. In 2013, Kellogg reported net sales of $14.8 billion. Kellogg’s brands include Froot Loops, Frosted Flakes, Special K, Rice Krispies, Pop Tarts, Eggo Waffles, Nutri-Grain Bars, and of course, Kellogg’s Corn Flakes.

Through integrity, accountability, passion, humility, simplicity and a focus on success, the company has created a vibrant culture where ideas can blossom, people can thrive, and success can flourish.

The Kellogg Company’s vision includes a commitment to act with integrity and respect, accountability for actions and results, passion for the business, brands and food, humility and hunger to learn, simplicity and success.

The Challenge

Staying Competitive in a Tight-Margin Industry
Margins are tight in the ready-to-eat cereal industry. For a company like Kellogg’s, approximately a third of their annual revenue is spent on promotional costs or trade spend: every dollar spent on coupons and special offers, promotions for special pricing, sponsorships, even the location each brand occupies on the grocery-store shelf.
 
The company keeps a close eye on their trade spend, analyzing large volumes of data and running complex simulations to predict which promotional activities will be the most effective. Kellogg had been using a traditional (on premise) relational database for data analysis and modeling, but by 2013, that solution was no longer keeping up with the pace of demand.

Enter SAP

The Aging System Just Can’t Keep Up

Each day, Kellogg needed to run dozens of complex data simulations on things like TV ad spend, digital marketing, coupon campaigns and other promotions, sales commissions, display and shelving costs—but its system only had the capacity to run just one simulation a day.

Enter SAP: The SAP Experience

Confidence To Go with a Trusted Product

Kellogg needed a solution that could accommodate terabytes of data, scale according to infrastructure needs and stay within their budget. The company became interested in an SAP solution called Accelerated Trade Promotion Planning, which is powered by SAP HANA. Amazon Web Services (AWS) offered a fully SAP-certified HANA environment on a public cloud platform. Because SAP works on the cloud, the company knew it could achieve the speed, performance, and agility it required without making a significant investment in physical hardware. Kellogg decided to start immediately with test and development environments for their US operations.

Better Business

Flexibility and Speed Saves Big Money

Kellogg estimates they will save close to a million dollars in software, hardware, and maintenance over the next 5 years. Using this solution saves more than $900,000 and lets Kellogg run dozens of data simulations a day so it can reduce trade spend. The company is also able to be more agile. Instead of having to wait 30 days to make changes to its trade spend analysis system, the company can spin up instances immediately to perform the necessary data simulations (or calculations).

Better Business: Benefits

Familiarity Breeds Success

Kellogg engineers liked the accessibility and familiarity of the platform, which enabled them to easily apply their existing knowledge and infrastructure skills to the Cloud. In addition, the IT team’s internal customers can now self-fund IT projects—saving the IT team from having to budget for projects from other departments and driving more efficient use of resources.

Better Business: Run Simple

Capacity Makes All the Difference
The company is now running the SAP Accelerated Trade Promotion Management (TPM) solution, powered by SAP HANA and leveraging multiple AWS instance types for both the SAP application and HANA database layers. These instances process 16 TB of sales data weekly from promotions in the US, modeling dozens of data simulations a day.
 
Kellogg Company’s data centers are connected directly to allow access to SAP TPM for employees who are on the company network. Amazon Simple Storage Service (Amazon S3) is used for data backups, including HANA, and Amazon Elastic Block Store (Amazon EBS) provisioned IOPS (P-IOPS) volumes for storage.

Journey Ahead

Better Breakfast for the World

Kellogg is using this innovative solution for their US operations, and plan to expand worldwide in 2014 — which should increase the amount of data being processed via HANA from 16 TB to 50 TB.

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