Power Users -- July 2003
In a technology landscape littered with disparate systems, faulty deployments and unused modules, there exists an elite crew that CGT is proud to call Power Users. By taking full advantage of current IT systems to produce outstanding results, Power Users are also hungry for upgrades that have the ability to push their systems to the limit and beyond. In addition to scouring the Internet and a mountain of news releases, CGT reached out to the industry at large to find the CG companies that do IT right. Here are their stories.
POWER USER: McCORMICK & COMPANY, a $2.5 billion global entity that retains the leading share of branded spice and seasoning products in numerous markets. McCormick is also the leading supplier of blended snack chip seasonings in the U.S.
CHALLENGE: To ensure the success of a business process overhaul called Beyond 2000 (B2K). Unleashed in late 1999, B2K was designed to optimize the company's supply chain systems, reengineer its back office operations, strengthen its product development process and extend collaboration with trading partners. Most of the B2K transformation was enabled by SAP, according to Jerry Wolfe, vice president and chief information officer at McCormick.
"SAP is giving us a common language, measures and a mechanism to accelerate how we transfer knowledge," says Wolfe. "If we learn to do good things, we can get that understanding around the organization to all of the places that it can help."
After the SAP implementation, it was soon discovered that internal communications within McCormick's business procedures were screaming to be kicked up a notch. In order to acheive internal harmony among its Power Users, Jeff Malat, B2K program director, says a set of metrics were established in order to understand how people were communicating and defining performance levels. The effort grew into a comprehensive sales and operations planning effort that fostered the use of the company's Power Users.
"We created user groups to facilitate the interaction across departments and across business units around the internal supply chain," says Malat. "It helped many people share their knowledge."
By establishing this consistent foundation of metrics, Malat says the company is able to leverage more of the standard content available within the SAP package. The transformation, however, did not come easy.
"Our end users were very comfortable to define very specific requirements and then having solutions custom designed around them," says Malat. "We've been able to get over that hurdle and now we are building a tremendous amount of excitement."
POWER PLAY: Over the years, McCormick has invested heavily in its homegrown data warehouse support solutions, and with SAP, the company endured a painful start in replicating custom analytic performance. Thankfully, McCormick soon realized that 80 to 90 percent of the solution to its requirements was achieved "out of the box" from SAP, which became a valuable piece of information to relay to the company's end users, primarily middle and senior managers. By getting information into end users hands more quickly, it helps them to better define and articulate their true standards and requirements.
"We're delivering things more quickly and at a lower cost," says Malat. "What was a very difficult requirement on the front end turned out to dissipate once we got them the standard information."
According to Wolfe, McCormick has also leveraged easy-to-access analytics to better manage inventory levels where he says the company is seeing tremendous progress toward objectives the company set for inventory turnover.
"It's a night and day difference and really a huge progression for us beyond the baseline transactional efficiency in the business," says Wolf.
BOTTOM LINE: McCormick's B2K initiative also has opened up new responsibilities for the company's Power Users. Wolfe says company users are not only skilled in their individual areas, but they also understand how surrounding activities operate.
"We define Power Users as those people who are able to get the whole picture together and understand how the relationships work," says Wolf. "I think that is what makes a Power User so powerful."
--------------------------------------------------------------------------------POWER USER: CYBEX INTERNATIONAL, a maker of premium-priced strength training and cardiovascular equipment, such as treadmills, stationary bikes and free weights, sold to commercial markets.
CHALLENGE: Cybex is a made-to-order shop with lofty growth and profit targets. To achieve these goals along with boosting customer satisfaction, Cybex needs to increase efficiency in manufacturing and shorten its time to delivery.
POWER PLAY: Cybex chose to migrate to a full-featured PeopleSoft ERP system with 20 modules that range from human resources to enterprise planning to engineering to order management. This IT consolidation completed the merger portion of a merger and acquisition plan that brought together three companies and three ERP systems under a single umbrella. The system is now deployed to 230 users out of 480 company employees.
BOTTOM LINE: Like fitness buffs that use the equipment, Cybex likes to run lean and tie up as few resources as possible, according to Brian Lyman, manager of business systems. "To do this, we wanted to consolidate as much as possible onto a single vendor," says Lyman. "We don't want to manage best of breed. Instead, we want to pick a full-featured vendor that has virtually best-of-breed modules. Then we commit to the vendor and they become a partner in our business."
In 1999, Cybex committed to PeopleSoft and consolidated on its enterprise platform. Over the past few years it has deployed 20 modules that handle everything "from order to cash," says Lyman. The list includes asset management, payables, receivables, benefits administration, payroll interface, billing, bills and routings, cost management, engineering, enterprise planning, general ledger, human resources, inventory, order management, order promising, e-store, purchasing, product configurator, production management and production planning.
"We went with PeopleSoft because we liked its product," Lyman adds. "And its way of doing things fit right in with our business processes. Basically, we felt very strogly that they could help get us to the next level."
Since the ERP system went live, Cybex has cut its lead time in half, moving from a month to two weeks, according to Lyman. And it's raised the on-time shipment rate to a respectable 90 percent.
The lean IT shop at Cybex consists of a director and a dozen people. The primary movers in the ERP migration, aside from Lyman, are Michael Fitzpatrick, programming manager, Deborah McIntosh, database/unix administrator, and John Wigginton, director of IT.
Looking ahead, Lyman plans to expand the ERP system to go "from lead to cash" by upgrading from PeopleSoft 7.5 to 8.0 in the second half of this year and adding new CRM functionality.
Does the Oracle versus PeopleSoft acquisition battle have an effect on Lyman's upgrade decision? "It throws a monkey wrench into it, but we don't think the merger will happen," he observes. "Regardless, we are going forward with the upgrade, because we want -- we need -- the new functionality."
--------------------------------------------------------------------------------POWER USER: SARA LEE HOUSEHOLD & BODY CARE, a $175 million division of the Sara Lee Corporation. Sara Lee H&BC markets household and personal care items like Kiwi shoe polish and Ambi-Pur air freshener.
CHALLENGE: To re-think an outmoded inventory and production planning process.
POWER PLAY: Supply chain planning solutions from Prescient Systems. Before deciding on Prescient, Gary Kahler, director of sales and operations planning at Sara Lee H&BC was on a mission to take forecasting out of the hands of the product managers -- who had neither the time nor the interest to do it effectively -- and make it a corporate priority. After Kahler implemented an MRP system, he then searched for robust demand planning solutions. In 2000, two demand planners were added to the division, but Kahler wasn't satisfied and yearned for more sophistication in his demand planning system.
Kahler looked at the advanced planning and scheduling modules in SAP and JD Edwards and visited Mercia and Prescient customers.
"After we saw the price tags and complexity of SAP and JD Edwards it was down to either Mercia or Prescient," says Kahler. "Prescient was the best fit based on our initial project objectives."
Implementation brought technical hurdles that were addressed in subsequent releases. The specific problems involved group forcing and aggregation issues. The aggregation numbers for different levels of pyramids, for instance, were not accurate. "The support people resolved our issues," says Kahler. "We said 'this is what we want the system to do, and Prescient responded by fixing the logic."
Today, the company uses Prescient to hone its forecast down to the warehouse level so it can communicate with purchasing about where to place inventory. The demand planners forecast at the item level and feed the forecast into another pyramid and let the system forecast the location.
"We challenge the system with the processes and techniques that we use," says Kahler. For this Power User, the challenge has paid off.
BOTTOM LINE: Forecast accuracy increased from 67 percent to 73 percent for the fiscal year ending June 30, 2002. According to Kahler, these results were due to a combination of Prescient software and an increase in demand planning resources in general. In addition, forecast accuracy improvements have enabled Sara Lee H&BC to drastically improve customer service levels. Last year, for instance, Sara Lee's perfect order fill rate was 92 percent. A considerable boost, to say the least, considering that at the onset of the demand planning project two years ago, it was 84 percent.
--------------------------------------------------------------------------------POWER USER: AMERICAN DAIRY BRANDS, maker of various Borden Cheese products.
CHALLENGE: An annual $100 million trade spending budget without a method to track it.
POWER PLAY: American Dairy takes full advantage of a software package from Synectics Group called Account Review. By absorbing Account Review's total closed loop system--including, budgeting, planning, analysis and deduction management--the company is able to reap a mid-seven figure annual return while closely monitoring promotional dollars spent in the volatile cheese category.
BOTTOM LINE: When it comes to the volatile world oftrade spending, American Dairy Brands is no longer "a moving target," according to Brian Rauch, director of trade promotion.
"We can tell on a daily basis exactly where trade spending is going to come in at any given point," says Rauch. "There's less than a handful of CG companies that can monitor trade spending that accurately. Now that we're tracking trade so effectively, we can fix the marketing budget and commit to programs farther out."
Additional functions include integrating the company's forecast plan into its production planning system. All of the deals being offered by American Dairy require a volume and now the company can better manage and track that volume.
"Now we can take all of the sales volumes, integrate them into our demand planning software and plan how much product we need to produce and when we need to produce it," says Bill McCrory, director of IT. "Our integrated sales planning, deduction clearing, shipment tracking system now becomes a forecasting tool as well. The more disparate systems we can feed into Account Review and make them play nice together the better."
American Dairy is also stemming deductions, thanks to the Account Review tool. Previously, the company faced extreme difficulty when attempting to integrate brokers and region managers into the company's system so that they could see the deductions assigned to them. Faxes, copies of reports and hand-written notes were the only way to keep track of why customers were taking deductions. Customer service would then enter hand-written notes into American Dairy's ERP system.
"It wasn't a homogenous system," says Rausch. "Everyone had modified their spreadsheets in order to manage their business more effectively." Before American Dairy managed deductions with Account Review, the company held an outstanding deduction balance that ranged between $6 and 8 million. After one year with Account Review, the balance dropped to $2.5 million.
"The ability to manage that is creating tremendous efficiencies in customer service and volume of paper generated," says Rausch. "This is a single piece of software that does so many different things. In the end, we have a system that integrated far more functions than what we had originally started with."
--------------------------------------------------------------------------------POWER USER: Reflect, a Proctor & Gamble spin-off that manufactures customized skincare, hair care, cosmetics and fragrance products.
CHALLENGE: To support the fulfillment of made-to-order beauty products.
POWER PLAY: Deploy MOVE WMS (warehouse management system) from Optum, Inc.
BOTTOM LINE: Unlike other online vendors of beauty products, Reflect.com is not simply a reseller of products available elsewhere. Each product is made to a customer's specifications which is why Reflect selected Optum's MOVE WMS.
"We were confident that Optum's MOVE WMS was the right product to help Reflect provide the highest levels of service," says Reflect.com COO Alex Zelikovsky. "We were very impressed with Optum's management and technology teams, and their willingness to move fast."
Within two months, MOVE was live and integrated with a proprietary order management system that sends order information from Reflect.com to MOVE for customization at the distribution center.
Reflect users tap into the MOVE application to coordinate each step of the fulfillment process. The system receives order information, directs put-away to prime picking locations and reserve storage locations, automates picking and packing, and integrates with the company's outbound shipping software.
At each step in the process, personalization is required, including the customization of bottles, labels, and usage instructions. In addition to selecting the type of bottle, customers create accents in a variety of colors and with customized text. Reflect assembles each product container using MOVE, to make sure that the Sharon's Best Body Lotion label doesn't end up on the Heather's Calming Conditioner bottle, for instance.
With MOVE, Reflect has also achieved a near-perfect on-time delivery status with its customers.
"We selected Optum's MOVE to ensure we could make and fulfill each order within ten days of the order placement," says Zelikovsky. "It has definitely worked for us as we're meeting our deadlines 99.5 percent of the time."
Not only did Reflect boost on-time order fulfillment, the company nabbed the "Best Customer Service" award from Planet Feedback in 2001 and overall productivity had doubled since the company became Power Users of MOVE.
"Using MOVE has only been a positive experience for Reflect," says Zelikovsky. "We're much more efficient than ever before."