Enabling Efficiency

R.J. Reynolds Tobacco Company (RJRT) is the second-largest tobacco company in the United States, manufacturing about one of every three cigarettes sold in the country, and is an indirect wholly owned subsidiary of Reynolds American Inc. In August 2004, RJRT merged with Brown & Williamson Tobacco Company and, as a result, began to take a look at the two companies across all different functions and divisions. The goal was to identify best practices within each organization and build the best company going forward.

One area RJRT focused on was consumer and trade marketing and its field trade marketing department of nearly 2,100 people, assessing how the company goes to market. Immediately after the merger, the decision was made to adopt the current sales force automation (SFA) solution to "keep the wheels on the bus," according to Peter Hatch, senior director - Trade Marketing Applications & Processes for RJRT. He says, however, "Early on, we recognized opportunity for more efficient and effective processes throughout the organization."

From a previous position, Hatch brought with him some best practices -- one key learning being where to start. "In my past experience, we looked at technology first instead of looking at business processes. Yet, one of the things we wanted to accomplish at RJRT was a clear understanding of our goals as an organization. That meant looking at and defining current business processes, and identifying where and how we could improve."

Rick Ford, senior director - Business Solutions for RJRT, adds, "It was critical to understand our existing process and those areas that brought us competitive advantage. We wanted to make sure we didn't lose sight of what enabled our success in the past." 

In examining the business, Hatch says they found some process gaps; functions and departments were operating in silos with not only disparate systems, but different processes. There were also technology opportunities. Ford says, "We had a 'mature' trade marketing solution that was a homegrown tool. It served us very well for the last 15 years, but we knew there was a huge opportunity for us to move toward the technology of the future - our current main frame platforms weren't cutting it anymore."

Organizational shortfalls were also discovered, as Hatch explains, "In a sense we were a new company and needed a cultural evolution." The obvious challenges after merger were bringing two different organizations together, getting everybody on the same page and working toward the same goals. In addition, it was important to look at the long term not just the short term, he says. A step-by-step evaluation provided a common vision and allowed the company to achieve its goals moving forward.

State of its Industry
The other area in which RJRT was challenged is unique to its product. Regulatory costs have risen, as have smoking bans and state taxes, increasing pressure on not only RJRT, but the tobacco industry as a whole. With the cigarette market in decline, the company sees opportunities in other tobacco products. "These factors ultimately led us to reconsider the company's position in the market place and how it looked at customers and consumers," indicates Hatch.

Consumer experience was not as top of mind as it is today, but in late 2005, RJRT began to ask: "How does the consumer perceive our products and offerings? How do we better engage our customers to ensure a win, win, win scenario?" Hatch says the greatest challenge from a process and technology perspective was enabling the company's greater vision. "This was a big driver for the project. We identified a need and had a business case, but had to be able to translate the vision into an actionable strategy."

RJRT sells directly to its distributors -- termed direct accounts -- and they, in turn, service the company's 300,000 plus retailers in the United States. The company also contracts directly with retailers for different elements within the retail store either for space or signage. Promotions are worked at the outlet level, but delivered through the company's distributor network. Hatch explains, "Basically, we have a two-tier distribution system where we sell wholesale to our direct accounts and they distribute to our retail customers."

Thus, this extra level of sales adds complexity to RJRT's promotional programs. Hatch details that the company needs to sell its wholesale environment first; for example on a new brand, or a new program or promotion. On top of this, promotional demand comes from retailers as well. Success here involves "a lot of collaborative work." Specific role types call on the wholesale environment and other role types call on the retail environment.

Know Your Business
To help them better understand their own business needs and gain more best practices, RJRT decided to look at other consumer packaged goods (CPG) company's implementations.

They soon discovered there was a lot of "baggage" around customer relationship management (CRM) with even a common definition of the essence of CRM lacking. Many implementations had been costly and it was hard to prove benefits. Ford explains, "We saw that generally companies try to implement too much too fast and don't take the time to define what they need. So, rather than go with the standard acronym [CRM], we decided to name our project 'Voyager Connect;' emphasizing our need and desire to 'connect' with our consumers and customers."

Hatch adds, "While we were in discovery, we attended a lot of different industry events and spent a fair amount of time talking to our colleagues in the CPG space to understand some of their pain points and key learnings. I give credit to CGT as its conferences gave us a lot of insight into what other companies had done, how they approached this from a RFP perspective, how they looked at the different vendors, how they did their training and so forth. It was a great resource for us, and learning from each other was key."

The other aspect of failure they were able to ascertain, and thus avoid, was in the area of master data management. "If you brought in bad data from your legacy system into your new solution, you were doomed," observes Ford. So, RJRT set up a specific task force of subject matter experts (SME) throughout the company to go through and clean up the legacy data. Part of the change management process here involved early training of the field on the importance of the data and how it was going to drive their job in the future. "We got way out ahead of that curve before the migration," he notes.

Clearly, another way to understand the needs of the business is to go directly to it. Hatch says during process definition they engaged the entire trade marketing organization. A survey was conducted, which is a common method the company uses to gain internal perspective; yet, it yielded uncommon results. "We conduct many surveys within our trade marketing organization with an average response rate of 40 percent. However, with this particular survey we received a 65 percent response rate." The results helped them clarify real "pain points."

In addition, engaging from a longer term perspective, RJRT made the SMEs part of the extended project team. Hatch says, "We called them our voice of reason. Whenever we worked through something we would bounce ideas off of them, and in turn, they provided a field reality check against it."

Selecting Partners
Also, as part of the self-discovery process, RJRT decided to engage a consulting firm to help. Hatch says they conducted an RFP process around this first. Ford explains, "We intentionally dictated that the initial engagement would be just to help us document our current processes. We did not want our consulting partner involved in the vendor selection or the implementation." Clarkston Consulting was chosen and, in fact, kept on. "We had taught them so much of our business and thought there was such a synergy with them that we used them for our vendor RFP process," he explains.

The next RFP process was "very detailed" according to Ford. "We started with what we considered to be the top players in the market. Then we actually took those vendors out, spent two days with our own field reps and had them watch and observe how the field team works everyday. Then we challenged the vendor to come back and recommend how we could improve our business with their solutions." Hatch says they believed if the vendor could understand RJRT's business better, when the RFP came out, the company would wind up with the best solution for it.

A formal written response to the RFP was required of course, but additionally each vendor came in and demonstrated, business process by business process, how their tool could provide value to the organization and enable its vision. Each vendor was measured across a number of different elements including functionality, its stability and experience in the industry, its willingness to partner and implementation factors such as how long it would take to implement, technical requirements and cost.

The company did not share other vendor information among the vendors to prevent comparisons. IT, trade marketing and Clarkston evaluated the vendors separately and scores were then brought together. But, RJRT evaluations ultimately drove the decision.

Functionality
Ford mentions that the tool had to be intuitive and easy to use, and Hatch says they took for granted many things in regards to their expectations of basic functionality. But, an area critical to the business is around contracts, payments and orders. "This is somewhat unique to our industry and we needed to make sure our new tool could provide this functionality with the least amount of customization and as much out-of-the-box functionality as possible," he notes.

Another thing that carried a lot of weight, according to Ford, was the requirement to have a remote client. He explains, "Most of all of our field trade marketing people operate remotely during the day and communicate in the morning and at night. Their ability to provide the functionality on a remote client and then be able to replicate that information back and forth was incredibly important to us."

CAS is the Choice
CAS met RJRT's requirements with a top consideration, according to Hatch, being that CAS is CPG focused. "Their demand side management tool is 100 percent focused on the consumer products industry, so they very quickly understood our processes and our business because of their experience in the CPG space." He cites another key factor as CAS' "roots" in retail execution, and says this is one of the big areas where RJRT had opportunity to gain efficiency and effectiveness.

"Another critical aspect of the decision was their willingness to partner with us. We believe they have a strong long-term vision which is very much in line with where we want to go longer term as an organization," Hatch adds.

"They have a very flexible user interface, so by the use of templates within the tool we're able to configure rather than customize. This intuitiveness keeps it business as usual in the field, providing some continuity from our prior tool," says Ford. In looking at the total cost of ownership, he points out that CAS is one platform whereas other vendors might have multiple platforms and architectures. Thus, configuration with the tool would only involve making a change one time -- either on the current corporate server, on laptops or tablets and handheld devices. It is one set of code. With regards to ERP integration, Ford says, "It was a non-event because they provide a lot of out-of-the-box integration with SAP."

The timeline of the project began with the kick-off in August of 2006.  The "phased" launch approach was realized with the first key milestone of March 31, 2008. Hatch says their intention was to provide the functionality that was going to give the greatest return to the organization first, and so, phase one concentrated on the retail execution piece -- 85 percent of the functionality that trade marketing was going to have was rolled out at the end of March. Phase two will involve incremental capabilities like activities management and similar functions, and phase three includes a deeper dive into the trade promotion management side of things. Those are scheduled for later this year.

Since retail execution can mean different things to different organizations, Hatch defines it within the context of RJRT. "Everything around what we term 'job and call;' that is making visits out to the market place, the ability for field trade marketing reps to enter into agreement and contracts with the retail environment; payment activities; account planning all falls under the heading of retail execution for our organization."

Project Team
A key success to any project of this magnitude is the project team. Having the right people in the right roles to help deliver on the strategy and lead the transformation was a key step in our success. "We leveraged experience and key talents of individuals from various parts of the organization," Hatch explains. Ford adds, "The diversity of our team, from IT to trade marketing to corporate/home office to field resources at all levels of the organization, created a very dynamic and creative environment. The dedication of our team was incredible to see. They  challenged the status quo and worked to ensure efficiencies were built into every new process. With change comes resistance and the team rose to the occasion. Our people never lost sight of the bigger goal and the objectives we were working towards."

Roll Out
One more thing Hatch says they learned from other CPG colleagues is that when it comes to roll out, "buy in" from management early on is necessary for a win. "Obviously, we have a great internal executive team supporting our approach and vision, but we also needed to make sure we engaged our field managers. We brought all of them on board early as key resources in enabling this significant change." This meant not only from the business process perspective, but in the use of the new technology as well.

Field management was educated about RJRT's vision around the project and Hatch says they set expectations that the field managers would be the main trainers. Ford expands, "We put it into people's performance objectives -- you're going to be a trainer; you're going to be learning a new solution. It became part of their job." A formal training program for the managers was delivered over two weeks through the training company LearnTech, who provided professional trainers to help facilitate the rooms and keep the pace flowing. However, an RJRT team member was always involved to reinforce the new strategy.

Once the trainer was trained, end-user education began. Computer-based training was sent out in advance and helped with navigation and key terminology changes; then a week of face-to-face training was conducted. Again, this was conducted through LearnTech, but now with the trained RJRT managers guiding the sessions. Hatch points out, "Having an RJRT manager standing up in front of colleagues demonstrating the new solution provided instant credibility to trade marketing reps."

With the larger plan in process for two years, there was a huge build-up and a lot of communication about the project in advance. Hatch says they emphasized what the benefits would be and tried to show the field reps a "what's in it for me" scenario. As a result, after the week of training they were excited to begin to use the new tool rather than adverse to it. Hatch says, "This is a huge credit to our organization in how well it did getting people prepared for change."

Benefits
With go-live now only a few months behind, there are numerous anticipated benefits -- primarily in reduced administration time, and better planning and routing for the individual trade marketing reps. From Ford's perspective, there will be less need for IT support and maintenance of applications. Yet, the "big wins" for the organization, according to Hatch, are in being more efficient and effective on a day-to-day basis. "The bottom line is that we're enabling a lot more transparency and visibility throughout the organization by providing one integrated tool. On top of that, this is a strong foundation for future initiatives."

Perhaps, one of the "soft" benefits already realized is a change in the way IT is viewed within RJRT. "This, along with other recent significant technology investments, has positioned IT as enabling the company's strategy. IT is now looked upon as a business partner helping the business reach its objectives," says Ford.

Notes from the Field
The project team manned the helpdesk immediately after go live and thus, heard directly from the field first hand. Users are live, making thousands of visits everyday. All in all, as they manage through this significant change some frustration is expected. But, Hatch credits the up-front work in preparing and training the field for a smooth transition and says the reaction has been "extremely positive." People are also very excited to see future potential of the tool. "Our entire trade marketing organization deserves a lot of credit for how well they have adapted to the new tool and new processes and taken it all in with open arms and a willingness to learn. We haven't had any significant issues yet, which is very good," says Hatch.

Being in IT you generally hear a lot of the complaints, but Ford says, "It has been refreshing from my perspective to see a new attitude and a new culture develop. People are exhibiting great patience and understanding. Change is not an easy thing, but I have been incredibly impressed by the entire field trade marketing team and their ability to adapt to change - all while continuing to perform their jobs to the fullest."

Since they learned from other CPG companies, what would they pass on to peers in return? Ford re-emphasizes this value and suggests reaching out to other companies who have been there. Hatch advises, "Take the time up front to understand the business objectives and what you're trying to accomplish before getting into a technology discussion. Make sure you have a very clear case for action and support from your executive leadership."