When Penny Clark sent her 8-year-old son into the neighborhood with a red wagon full of paper bags filled with her father’s heirloom flapjack mix-and simple instructions written on the bags-Jon Clark returned with an empty wagon and a great business idea. He brought it to fruition in 1995 by launching Kodiak Cakes with its first product: a natural, wholesome pancake mix.
Fast-forward to 2020 and Kodiak Cakes has become a national household brand with a presence in Walmart, Target, Costco, and other major retail outlets. With products ranging from pancake mix to oatmeal packets to baked goods, this fast-growing consumer food company has grown substantially over the last two years.
Fueling the Frontier
On a mission to “fuel the frontier,” Kodiak Cakes started out as a small, specialized brand that ran most its operations on QuickBooks. On the road to becoming a national brand, the company realized that a more robust, feature-rich enterprise resource planning (ERP) solution was in order.
“QuickBooks wasn’t a very robust recordkeeping system for a company with over $20 million in annual revenues, and one that handles a high volume of smaller transactions.”
In early-2019, Kodiak Cakes began exploring its options. Oracle NetSuite and SAP By Design both quickly rose to the top during this search. While it saw the latter as expensive and rigid, the company gravitated towards NetSuite’s fluid design.
“NetSuite attracts a lot of companies due to its level of customization and usability,” said van Duyvendijk. “It also comes with a cheaper price tag.” van Duyvendijk also liked the user similarities between QuickBooks’ and NetSuite’s user interface. “There was almost an instant level of familiarity between using QuickBooks and moving over to NetSuite,” he said.
Understanding the Transaction
As part of its NetSuite implementation, Kodiak Cakes focused on three primary accounting projects: revenue gross-up, sales order validation, and standard cost. After “reviewing the resumes” of about 20 different NetSuite/EDI specialists, the company selected AlphaBOLD to help it implement those projects.
“We needed a consultant that understood the transaction.” said van Duyvendijk, who, by working with AlphaBOLD NetSuite Practice Manager Ilija Budimir, has been able to maximize Kodiak .
Cakes’ technology investment, utilize custom scripting (only when absolutely necessary), and maintain transaction integrity.
For its revenue gross-up project, the food manufacturer has attained economies of scale in a retail environment where project margins get thinner as the size of the retailer increases. For example, a local grocery store may be at X number of dollars per case of product, but Walmart may demand (and get) a lower price. “Not everyone realizes that there’s a pretty wide gap between what you are selling it for to Walmart versus the smaller grocers,” said van Duyvendijk.
Using revenue gross-up in NetSuite, Kodiak Cakes can keep close tabs on the discounts being offered by its sales teams. It also uses the ERP’s SuitePromotions functionality to create internal reports right down to the individual transaction level, and sales order validation to build accurate pricing into its system. A customer that buys 100 units at $1.00 each, for example, receives a legal notice back stating the price, quantity, and other agreement terms.
“Ilija helped us build that logic and scripting into NetSuite so every time we have an order from that customer, we know that they set it at $1.00 and we calculate it at $1.00,” explained van Duyvendijk. “When those two numbers match, the system automatically approves that sales order. That helps me sleep better at night.”
A Move to Standard Cost
Previously using average cost for accounting purposes, Kodiak Cakes switched to standard cost when it implemented NetSuite ERP. “Average cost shows what you’re averaging in your cost to sell a customer goods during a specific month,” said van Duyvendijk, “but that calculation has to take place after every single transaction and is really easy to mess up.” Also, average cost fluctuates throughout the year, depending on buying habits and other factors.
To even out those fluctuations, Kodiak Cakes worked with AlphaBOLD to implement NetSuite’s standard cost functionality. “I gave Ilija the numbers.
He handled a detailed download of all our old SKUs and helped us create new ones,” said van Duyvendijk. “He also helped set up, review, and re-upload all of the data, essentially handling most of the work needed to get the system in place.”
Today, Kodiak Cakes has complete accurate, side-by-side comparisons of its costs and can now make decisions based on that data. “Standard cost is a great reporting tool to see how you’re performing as a company,” said van Duyvendijk, “especially when you’re trying to look at comparable periods and track that growth over a period of time.”Today, Kodiak Cakes has complete accurate, side-by-side comparisons of its costs and can now make decisions based on that data. “Standard cost is a great reporting tool to see how you’re performing as a company,” said van Duyvendijk, “especially when you’re trying to look at comparable periods and track that growth over a period of time.”
Measuring the Benefits
Companies like Kodiak Cakes need enterprise technology systems that can scale up right along with their own operations. “Companies can become very complex, very quickly,” said van Duyvendijk. “You can hit a threshold overnight and suddenly have many more scenarios and issues to consider.”
Thanks to its NetSuite implementation and AlphaBOLD, Kodiak Cakes has been able to continue growing without having to worry about whether its technology infrastructure will be able to keep up. With NetSuite, the company has been able to scale up; access robust reporting at the transaction level; and leverage new financial reporting tools around supply chain, procurement items, sales, and billing.
“It’s much more robust than what QuickBooks offers,” said van Duyvendijk, ” and also integrates very cleanly with other software to create more automated accounting.”
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