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3. Case Studies in Credit Scoring: Sargento Accelerates Credit Approvals With Scoring Solutions

Company name and location: Sargento Foods, Inc.

Description of business: Sargento Foods is a family-owned and operated manufacturer and distributor of dairy products.

Credit executive contact info: Stu Sturzl, Sr. Credit Manager, stu.sturzl@sargento.com

Annual Sales: $550 Million

# of customers: 1000

Customer base characteristics: Sargento has three diverse business segments dealing with businesses of all sizes, from multinationals to one-stop shops. Its recipe-ready shredded cheese blends and sliced cheeses for sandwiches appeal directly to consumers, while its food service product line includes appetizers, cheese ingredients, and sauces. Sargento also sells high-end specialty cheeses via catalog and the Internet.

Challenges: Traditionally, credit-risk assessment at Sargento was a manual, paper-based process that entailed many steps, from sending out the credit application to checking the references and calling D&B to get a credit report. The process ended when all the insights gathered were used to make a decision and communicate to the sales team whether the new customer was approved or not. This arduous process took anywhere from two to three days, a timeframe which was not competitive within the industry. This exposed us to the real possibility of losing customers to competitors pending the credit decision. It also required additional effort from the sales team to keep our customers engaged while credit decisions were being made.

Goals: We wanted to speed up the credit decision-making process in order to remain competitive and ultimately retain more customers.

Type of scoring solution: Automated credit decisioning and portfolio management using a rules-based scorecard

Vendor and Product Chosen: D&B's RAM

Costs: Not available

ROI: Because credit approval decisions now take minutes instead of days, Sargento has been able to increase the number of new customers acquired on a monthly basis and to avoid hiring an additional credit staff member.

Results: We have reduced the credit risk-assessment time frame by at least 97 percent. The efficiencies achieved and time saved have been the most important benefits. We can now look at the whole portfolio in one centralized place and compare risk associated with various segments within minutes. The time saved in research and portfolio analysis is used to focus on the slow-paying customers and then work with sales to figure out ways to get paid faster.

Because the solution is scalable, we can run our risk assessment needs more efficiently. The resources conserved can then be allocated to research & development, new product development and sales initiatives to feed the bottom-line. Another benefit is compliance with auditing standards. Even though Sargento is a privately held company, the software allows us to demonstrate to our auditors a consistent and transparent credit scoring model.