Sara Lee Attains Total Trade Management
Sara Lee Corporation, the $13.2 billion brand owner of Ball Park, Hillshire Farm, Jimmy Dean and its namesake Sara Lee, among many others, has implemented its fair share of change in order to continue to grow and compete amidst changing consumer and customer needs.After operating as a holding company for many decades, the company began executing a multi-year plan in February 2005 to focus solely on its food, beverage, household and body care businesses. To support that focus, Sara Lee planned to dispose of approximately 40 percent of the company worldwide.
This vision to act as one big company, rather than a collection of medium-sized ones, also required Sara Lee to implement new systems and processes to reduce costs while increasing capabilities and efficiencies.
"Many of our businesses ran on disparate legacy systems and platforms, making consolidation of strategies, activities and basic reporting a Herculean effort," says Bryan Rulli, director, Business Information, Sara Lee.
Thus, a second transformative initiative was launched in 2006 to standardize systems, platforms and processes across all business units. This would, in effect, change the way Sara Lee operated and collaborated with retail customers.
Among the initiative's major focus areas was a need to create a comprehensive trade management strategy for the North American Retail business of Sara Lee. The goal: To drive top-line growth with retail customers by moving to a live accrual trade funding model where money is earned based on performance and is fully disclosed during collaborative business planning.
Finding the Right Tools
Sara Lee focused first on improving its back-office systems by standardizing on SAP ERP, ensuring tight integration with other core applications. One such application used by the North American Retail business is Siebel Trade Promotion Management (TPM), now a component of Oracle Comprehensive Trade Management, which transmits trade allowances and settlement payments/resolutions to SAP for execution.
According to Rulli, one of the overarching design principles during this initiative was to build a systematic "communications" platform to ensure the right information was delivered to the right place at the right time. This was particularly the case with the TPM application design, using it as a central communications "hub" that connects many key business partners such as demand planning, marketing and sales operations.
Demand planning, for example, tightly integrates with Sara Lee's TPM system for tactical forecasting direction and strategic S&OP consensus planning.
Sara Lee also implemented Oracle Siebel Analytics for retail sales reporting, which allows company employees to report all of the key financial measures required for customer planning on a daily basis.
Critical Process Change
Throughout the TPM initiative, Rulli notes that a strong emphasis was placed not only on developing better systems but on improving underlying business processes.
"We recognize that once a process is modeled in a system, it becomes a behavior ingrained into the organization," he says.
Thus, the Customer Growth Fund (CGF) program was born, a trade funding process designed to drive brand and category growth with customers by engaging consumers with promotional events and targeted price points.
"CGF is at the heart of how we align our internal objectives, fund our brand initiatives and collaborate with our customers," affirms Rulli.
Central to enabling the CGF methodology is a custom module within the TPM system called Annual Operating Planning (AOP). This tool acts as the conduit between finance, marketing and sales to ensure customer sales plans are aligned to the company's category and brand objectives.
"Building the custom AOP tool was a huge step forward in bridging the communication gaps," reports Rulli. "We now have full alignment; everyone knows where they stand on any given day, which empowers them to make better investment decisions with our customers."
According to Rulli, the initiative has been a success, resulting in a standardized platform for business operations and planning. During the busy grilling season, for example, Sara Lee can now enable hybrid collaborative planning around hot dog and smoked sausage selling and promotional initiatives. In the past, these two separate business units would operate in silos. Today, however, promotions are doled out on a per category basis but come together in the TPM tool for standard ROI analysis on a total per event basis.
"Ultimately, what this investment supports is our ability to drive continuous improvement of return on investment on our largest spending line -- trade spend," reports Philippe Schaillee, vice president, Marketing, Strategy and Research & Development, Sara Lee.
Just the Beginning
A strong, robust foundation for TPM is a big win for Sara Lee's North American Retail business and an impetus for evolving into the next phase of trade management.
"We now have the launch pad to continue the journey to standardize, consolidate and optimize our information systems and processes further," says Rulli.
Objectives are currently in place at Sara Lee to further the evolution of trade management, including the phase in of a trade promotion optimization (TPO) tool from Oracle Demantra.
Once met, the TPO objective will enable Sara Lee to perform event level pre- and post-analysis to drive more of what works and less of what doesn't; ascertain the "true" performance of promotional events; foster collaborative business planning with customers using "what-if" scenarios and predictive modeling; and improve sales planning accuracy and demand forecasts at the customer/SKU level, among other capabilities.
An Information Democracy
For Sara Lee, key components to enabling any system go-live are master data harmonization, management and governance. This is especially critical for the success of its TPO project.
"With TPO, we are moving to a hybrid model where we manage both internal and external master data and performance data files," explains Rulli. "The blizzard of information -- ranging from retailer and syndicated point-of-sale (POS) data to marketing demographics and retailer location data -- requires a sound data management solution: a Demand Signal Repository (DSR)," or what Rulli refers to as an "information democracy."
Sara Lee is exploring potential solutions for creating a single repository that houses the massive amount of data available. Once in place, the DSR will connect directly to the end-user applications that require POS information and drive core business processes.
Under this approach, users will have immediate use for the POS information -- combined with internal sales data -- with little opportunity to misinterpret or misuse it.
"The ultimate dream is a sales and marketing information system that fully integrates and connects all information streams available to our company. I feel like we are well positioned to be able to deliver against that end state vision earlier than many of our competitors," closes Schaillee.
Sara Lee Fast Facts
- Sales for the Sara Lee brand totaled $1.1 billion in 2008.
- Douwe Egberts is the companyâs oldest brand at more than 250 years old.
- Sara Lee products can be found in approximately 200 countries.
- Jimmy Dean, Hillshire Farm and Senseo sales topped $500 million each in 2008.