Ripe For Integration

In 1869 Dr. Thomas Bramwell Welch inadvertently gave birth to Welch Foods Inc. while discovering the method to make communion wine from unfermented grapes. Since then, Welch's has blossomed into a $579 million company that sells much more than grape juice. The company's product portfolio today includes some 400 different fruit-based products, ranging from refrigerated juices and cocktails to frozen and shelf-stable concentrates to sparkling juice cocktails and a variety of single-serve products in all shapes and sizes. Clearly, Welch's has outgrown its humble beginnings by leaps and bounds, but the one thing the company has not been able to outrun is its mighty brand name, which actually leads people to believe it is a much bigger company than it actually is. "We're really a small fish in a big pond," says George Jackman, director, customer marketing for Welch's. "However, until about 10 years ago we were viewed by many of our competitors and retailers as that 'sleepy little grape juice company in upstate New York'. Some of them didn't even realize that 20 years ago we relocated to Concord, Massachusetts."

The move to Concord, according to Jackman, allowed Welch's to return to its heritage, since Concord is where the Concord grape was invented. Being near a major metro area where the company could grow and continue to attract quality personnel was also a key driver for the move. There was nothing but upside for Welch's to relocate 20 years ago and according to Jackman, there continues to be nothing but upside. "But we still have to realize that we are not a Kraft, P&G or Nestle. We are a fraction of their size so we need to do what we do, faster, better, more intelligently and efficiently in order to keep up." Jackman points out that his competitors are able to allocate more resources to nearly every business challenge they face with more critical mass to back up those resources than a company of Welch's size. "For a relatively small company, we're playing with the big guys. Technology is one thing we've embraced as a vehicle to do that."

A Vision Begins
Welch's sales vision is simple: To be recognized as a best of class company in the consumer segments and customer formats where it competes. Certainly, this type of lofty aspiration comes with a lot of ramifications, but Jackman says Welch's interacts as well or better with its customers than any other company by bringing more value, consistency and sophisticated business processes to the table. Welch's also approaches and segments its markets in a very methodical and effective manner, always striving to align with customers, as well as market and brand its products as intelligently as possible. All of this could not be possible without proper corporate support, says Jackman. "It comes back to people -- we strive to make sure we have the right people in the right seats. This way we have all of the skill sets and horsepower to do what we need to do." The right amount of horsepower includes better business processes, and all of the cutting edge information that any company of any size has access to in terms of syndicated data, custom research and financials. "We're very adamant about getting the very best people to enable this," says Jackman.

The Strategy Takes Shape
After establishing a clear vision, Welch's aligned its strategy and business process. Currently, the company is in the process of retooling its corporate technology backbone by implementing Oracle (see sidebar) and a suite of tools from Demantra, which Welch's has named 4-Sight. While Jackman says both technologies are critical components to the company's future growth, the true benefit Welch's obtains from a new tech implementation is the opportunity to re-visit all of its business processes. "Technology is a great enabler, but if you are not enabling something that is really good, so what?," says Jackman. "From a sales, marketing and demand planning perspective, which is what 4-Sight addresses, we want to look at where we have best-in-class processes."

Catalyst For Change
Welch's views new tech implementations as a catalyst for change; and change is the one thing that sets the company apart from its competitors. Welch's sales organization, for instance, was totally different five plus years ago than it is today. It was geographically oriented with a mix of various skill sets and talents within the organization with 50 different sales agents conducting business in the field. "Today we are segmented based on the consumer and customers in the marketplace," says Jackman. "We have people with specific talents focusing on those different segments. We're also layering technology under that to help support what they are doing to help drive further efficiency and allow them to focus on what they do best which is working with the customer and driving our business."
Jackman says Welch's has spent the last five years reviewing and enhancing its basic sales processes. During this examination process, a few key questions bubbled to the surface:

• How does the company tie its strategies with its customers to make sure both sides understand the end result and work collaboratively towards win-win outcomes?

• How does the company plan with those customers to best implement its tactics. How does that impact budgeting and volume?

• How does this roll together?

"From a process perspective, we have all of this pretty well figured out, but the executional aspects such as tactical planning, budget management, post-analysis and forecasting were horribly cumbersome in terms of execution," says Jackman. "We were relying too much on Excel spreadsheets and it was administratively burdensome." In addition, Welch's realized it had multiple touch points for every piece of data that was not integrated with anything else in the company. Lack of integration equaled manual handouts and rolled up spreadsheets represented 100 different spreadsheets below it. Trying to integrate this into Welch's financial or volume forecasting systems was inefficient at best as there was no real relevance of where the data came from. "It funnels up, then down and there's no direct tie," says Jackman.

Obviously, Welch's saw huge opportunities within its sales operations, specifically on the front end, to drive efficiency by reducing the administrative burden while integrating marketing, financial and demand planning. According to Jackman, the vision was complete end-to-end integration of these processes.

The key enabler of this integration is The 4-Sight system from Demantra, a set of tools specifically targeted at marketing and sales functionality. 4-Sight rolls together trade promotions, (consumer & TV are not yet incorporated into the system, but will be by the Spring), projected impact on volume, spending, budgets and financial position at any point in time and then determines the impact on Welch's production planning and ultimately the shipment of product to the customer.
"It was that end-to-end integration that we were after," says Jackman. "We will know at any point in time, with more granular detail than ever before, what we are spending, what it is doing for us and what it means in terms of production."

Spring Ahead
By this Spring, Welch's hopes to integrate all of its marketing tactics into 4-Sight in order to get the full spectrum of demand. All of the different factors of demand drive the complete picture of Welch's business. Every one of those areas has costs and budgets associated with it. Facilitating the management of those budgets and those costs, understanding how each action has its equal opposite reaction in terms of volume and profitability and passing that on up through the chain to create a financial picture is the end game for Welch's.

"Trade being the only incremental volume is inaccurate," says Jackman. "Television has an incremental aspect associated with it. Consumer promotions do too. The idea is to decompose all of that so we have a true baseline and the true impact of each of those elements so we can understand what we advertise, what we get for it and how it can be best managed in the context of an entire marketing mix. We want to look at all of the tactics at our disposal and how they fit strategically into what we do to support our products and our brand."

Now, thanks to an integrated end-to-end approach to its business, Welch's will begin to better understand why unexpected spikes in demand occur. If volume went up, Welch's can now find out why and where? Under its prior process, Welch's relied heavily on syndicated data from IRI in order to understand specific sales patterns, and still does to this day, but when the company wanted to truly understand why something was set into motion, an arduous and complex e-mail procedure was unleashed before any information appeared or was processed.

"Now that information will just be there," says Jackman. "We will be able to slice through the information and understand it."
Jackman says IRI is integrated with Welch's new business strategy so now the company can align its shipment and tactical plans right next to what happened with IRI. "We'll be able to see what we planned, what we shipped out of our plants and how much was consumed at the store level. Now we can understand any gaps, lags or leads which ultimately gives us more insight as to what is going on."

And if there is an unexpected spike in demand, instead of relying on the old, complex e-mail routine to figure out what is happening, Welch's can immediately drill down to the root of the concern to quickly determine the key causes of that spike. Learning the cause of the spike means the company might want to try similar sales and marketing tactics elsewhere.

Learning A New Trade
In the trade promotions arena, most consumer goods firms have a tough time figuring out when promotions are under performing versus over performing. Welch's was certainly lumped into this category of uncertainty, but now Welch's can very easily pull up the 50 best events on a specific product, based on ROI, and also the worst. Simple, robust analytics allow Welch's to determine common traits among best and worst promotions.

"We've got all of the data in this particular area that we could ever want," says Jackman. "This includes profitability, what was planned and spent and volume associated with it. All of the info is there to understand what happened. Part of the point of freeing up this administrative time means we can spend that freed up time on the 'why's.' Now I have a system that can tell me what happened in a timely manner and also provide basic analysis without even pushing a button."

End Goal In Sight
So what is the end goal for Welch's? To decrease its forecast error rate in half which will drive incredible cost-savings in the raw materials, finished goods and production efficiency departments. Even though there is a huge mass of information available that is needed to create an accurate forecast, Welch's, like most other manufacturers, still need to tell its plants what day to produce what SKU. Obtaining that level of granular data all the way through the supply chain is hugely challenging. Under its prior process Welch's would roll "buckets" of products up to the national level and send that information down to its plants based on historical averages. It's an antiquated process at best. If an unforeseen sales spike occurs on the West coast, for instance, and that bump in volume is being captured in Welch's national number, which is also based on historical averages, the company would wind up having two plants overproduce and one under produce which leaves the customer in a bind.

"Now we've got information by week, customer and SKU being statistically forecast using an intelligent analytic system to provide the granularity and robustness of information that, at the end of the day, we need to figure out what to produce," says Jackman. "We're re-inventing the entire demand planning process to create one number and to align the entire organization within one streamlined process."

By creating one number, Jackman anticipates that a multitude of supply chain efficiencies in finished goods inventory will be stimulated and the 5,000 to 7,000 hours the company spends per year on manual processes and recombining data will become a thing of the past. "We have embraced technology as a vehicle to remain cutting edge and to leverage our size in an industry of giants."