The food industry is a complex landscape, shaped by seasonal demands and ever-changing global markets. Organizations operating in this space face challenges that demand precision, efficiency, and adaptability. For decades, many businesses have relied on outdated tools like Excel spreadsheets for their pricing, quoting, and approvals. Luckily, Configure, Price, Quote (CPQ) software has emerged as a game-changer, empowering food industry players to transform their pricing and selling operations.
This blog explores the critical role of CPQ in food and commodity-driven industries with real-world insights from our Outperform session with leaders at Fonterra and Cargill. Whether you’re a sales or pricing leader, sales operations professional, or an IT and innovation stakeholder, this is your guide to understanding why CPQ matters, how it works, and what results it delivers.
Why the Food Industry Needs CPQ
Overcoming Spreadsheets for Pricing
Outdated manual processes have long hampered efficiency in the food industry. At Fonterra, for instance, pricing was once handled with spreadsheets. While flexible, these tools created significant challenges:
- Different versions existed across teams, leading to inconsistencies.
- Currency exchange rates and pricing data were often outdated.
- Data entry into systems like SAP was manual and prone to errors.
“Everyone had different versions of Excel… CPQ allowed us to standardize those processes,” says Alistair Draper, Head of Strategic Pricing Systems at Fonterra.
The decentralized approach led to inconsistent pricing, limited visibility, and value leakage during the quoting and order entry process. Fonterra operates in a global commodity market, where currency fluctuations and market-linked pricing are critical. The manual process made it difficult for account managers to access accurate, up-to-date pricing data.
By implementing Smart CPQ, Fonterra standardized workflows, reduced errors, and introduced system-driven controls like automated approval workflows. Today, their CPQ system incorporates real-time currency rates provided by their treasury team, ensuring up-to-date and consistent pricing globally. As Draper explains, “everyone, when they’re logged in, would see the same price on the same dates…You were reducing the value leakage when it went into SAP.”
Fonterra also layered additional PROS applications on top of Smart CPQ: Price Management, Price Optimization, supported by real-time pricing capabilities. According to Draper, “having it all on the same platform has been really big for us…We’ve also got the real-time pricing engine.”
Creating a Pricing Division
For Cargill, CPQ was the backbone of creating a structured pricing division in its food division. Investments in business improvements had failed to produce returns, largely due to the absence of clear pricing processes.
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Ryan Ostendorf
Strategic Pricing Operations & Analytics Director  |
Before CPQ, inconsistent spreadsheet management plagued pricing operations, making compliance difficult and onboarding time-consuming. With Smart CPQ, Cargill built a scalable, measurable infrastructure capable of supporting complex product lines and global operations.
CPQ Implementation Journey
Both Fonterra and Cargill started small with their CPQ implementations, proving value in focused areas before scaling.
- Fonterra began with their ingredients business, adding advanced tools like real-time pricing and index-based pricing over time. “We added other PROS products on top of CPQ…real-time pricing engine,” shares Draper.
- Cargill initially implemented Smart CPQ in North America for a single product line. By proving success locally, they expanded regionally and globally, using a templated approach to maintain consistency. “We started small…proved our point…now we’re expanding region by region,” explains Ostendorf.
Standardization Without Sacrifice
One of the biggest challenges at Cargill was avoiding the creation of multiple, inconsistent CPQ versions across divisions. Initially, divisions resisted standardization, believing their processes were unique. Ostendorf explains the decision to standardize, saying, “if you multiply the regions by the divisions in which Cargill sits…there would have been a ton of different versions had we let it go that way.”
After a few implementations, the team took a step back and realized that while specific data points might differ, the underlying data structures and pricing logic were often similar across businesses. This insight led to a strategic shift toward standardization and reuse.
Ostendorf said of Cargill’s various teams, “yes, the very specifics of one piece of data might be different, but that data construct is very similar to this other one.”
By adopting a templated approach, Cargill standardized workflows, data models, and approval processes while preserving flexibility for region-specific needs. It also helped the business streamline operations in surprising new ways. “You don’t need eight data managers for eight businesses…you can have one or two data managers across the eight businesses,” said Ostendorf.
This approach enabled scalability and maintainability while still allowing for regional or business-specific flexibility where necessary.
Implementing a unified template required balancing the needs of pricing teams, who wanted tailored solutions; and IT and digital teams, who needed standardization and control.
“It’s a balance…you’re balancing that with your IT department, your digital department, and data department to figure out what they can provide you and meet their standards.”
Preparation and Change Management
CPQ success depends on aligning processes before implementation. You can have the best CPQ solution in place, but if your teams don’t use it correctly or at all, you won’t see any benefit.
Both companies emphasized the importance of involving end users early in the implementation process. “Ask the end users how they would use the tool,” advises Draper. This step ensures greater adoption and minimizes rework after implementation.
Additionally, aligning processes before implementation is key. According to Ostendorf, “you don’t want to use implementation time to figure out your process. Understand the process before implementing the tool.”
The Importance of Real-Time Pricing
One of the most impactful features of modern CPQ solutions is real-time pricing. This capability allows companies to align pricing closely with market dynamics, improving agility and reducing risk.
Fonterra’s Experience
Fonterra uses futures market data to achieve pricing updates closer to real-time, ensuring alignment with customer expectations. While they don’t require second-by-second updates, access to weekly market data has significantly improved their pricing accuracy.
Cargill’s Approach
Cargill takes pricing a step further by incorporating real-time market inputs like soybean oil prices. Their CPQ system processes this data within a 15-second delay, offering flexibility to tailor pricing by product or sales channel.
The Value of CPQ in the Food Industry
In the food industry, where commodity prices are constantly fluctuating, access to real-time pricing insights is crucial for success. With a CPQ system in place, companies can benefit from:
Standardized Processes and Reduced Errors
Both Fonterra and Cargill have seen dramatic reductions in pricing errors and value leakage since implementing Smart CPQ. Standardized workflows ensure consistent pricing logic and compliance across regions. “We reduced the amount of value leakage…and introduced index-based pricing,” says Draper.
Faster Onboarding and Sales Enablement
By eliminating complex spreadsheets, Smart CPQ simplifies onboarding for new salespeople. New hires no longer need to spend weeks learning outdated tools, allowing them to focus on building customer relationships instead.
Advanced Pricing Models
Smart CPQ enables sophisticated pricing strategies, like index-based and risk-managed pricing, which were previously impossible with manual tools. “Now they’re asking for it because it simplified everything,” said Ostendorf.
Preparing for the Future
Both Fonterra and Cargill continue to innovate within their CPQ frameworks.
- Focused on enhancing performance quoting and achieving seamless integration across tools, Fonterra is also preparing to expand CPQ capabilities to its food service and consumer channels. Their journey began with the most complex and high-volume segment, setting a strong foundation for future growth.
- Cargill, aiming to accelerate deal closures, is exploring Collaborative quoting, a hybrid selling capability, integrated with Smart CPQ, and electronic acceptance solutions to streamline the process and improve efficiency.
Transform Your Pricing with PROS Smart CPQ
The food industry’s unique challenges demand solutions that are both robust and adaptable. PROS Smart CPQ has proven to be a vital tool for standardizing processes, improving pricing accuracy, and driving measurable results.
Are you ready to take your pricing operations to the next level? Reach out today and discover how our CPQ solutions can transform your business.
