Transforming the Recipe

It was February of last year when Sara Lee Corporation, one of the worlds most recognized brand names, turned the industry on its ear by announcing what would constitute an unbelievably bold reorganization strategy aimed at driving long-term growth and performance.

As part of the transformation plan, Sara Lee intends to dispose of approximately 40 percent of its revenues, which includes the sale of its European apparel, European packaged meats, U.S. retail coffee (except for Senseo) and direct selling businesses. In addition, Sara Lee is preparing to spin-off its Branded Apparel, Americas/Asia business, worth some $4.6 billion.

Brenda Barnes, CEO, Sara Lee, focused the company on its food, beverage, and household and body care businesses, which are built upon three pillars: organizing business operations around consumers, customers and geographic markets; achieving operational efficiency to fund growth; and focusing the portfolio.

"A transformed Sara Lee will be better positioned to compete in the ever-changing consumer marketplace, to deliver long-term, top line growth and to improve profitability," says Barnes. "The key to our success will be an intense focus on executing our strategy, and our leadership team is committed to doing just that."

The Strategy Emerges

At the core of the Sara Lee transformation lies the healthy, beating heart of a powerhouse IT system designed to support the execution of an ambitious business strategy. George Chappelle, CIO for Sara Lee, is charged with the unenviable task of making sure the Sara Lee transformation fires on all pistons from an information systems perspective. Consolidation, according to Chappelle, is vital to achieving success.

"The big culture change is that Sara Lee is no longer a collection of many autonomous businesses. We are changing from a holding company mentality to an operating business mentality. We've made a huge portfolio change by divesting 40 percent of our business. In terms of simplification and choosing where to compete, I don't think there are many companies that have made those decisions as boldly and aggressively as we have."

While Chappelle says it is too early to talk about the company's product innovation strategy, he says that there will most definitely be new products and brand extensions, as it relates to the food business. "Innovation is an area we have identified as a value-add process that is going to get a lot of attention. Our process and systems teams have already begun their work. It's a high priority for the company since we recognize product innovation as key to our success."

Emergence of Best In Class

Chappelle says there are many different areas across Sara Lee's information systems where opportunities also exist to implement best-in-class processes; not necessarily designing them but adopting them and supporting those processes with best-in-class systems. The best-in-class technologies that are able to seamlessly integrate into the company's SAP backbone will ultimately win. "When you're looking to centralize a group of semi-autonomous businesses and integrate them into one Sara Lee, the integration and process focus that SAP brings is very attractive because it can be configured around process versus organizational boundaries," says Chappelle. "It supports the use of the shared services, another key part of achieving operational efficiencies."

Chappelle also notes that SAP promotes consolidated reporting, data standards and process consistency. "These are all things coming from our decentralized past that we want to accentuate in the new Sara Lee."

Sara Lee intends to whittle down hundreds of applications into a very small subset, the majority of which will be SAP. In other areas, best of breed will emerge to avoid the compromise of any functionality. While much of the deciding factor for the best-of-breed portion largely depends on who can best integrate with the SAP backbone, it's not the sole reason. "One factor includes analyzing systems we have in place today to determine what is not worth the effort of changing," says Chappelle. "We do anticipate that in some areas it will be a competitive process in the cases where we know SAP is not the leader."

How It All Works

After Sara Lee confirmed an IT strategy that describes the five to six process areas to begin the program, Chappelle and his team realized IS wasn't working like a global engine. "We knew we needed a methodology not only to run a global IS group but to execute the IS transformation," says Chappelle. "We selected Six Sigma as the methodology we were going to follow."

To date, Sara Lee has trained about 20 black belts and some 200 yellow belts who are now wise to the ways of Six Sigma. In the coming months, closer to 250 yellow belts will emerge. Black belts make up core and project leads, a subset of Sara Lee's high-end project managers who have been educated for three full weeks about how to use the tools -- from a statistical analysis and overall methodology. Yellow belts are brought in to participate in the project, understand the methodology and receive three business days of training. Yellow belts are comprised of both business and IS personnel.

"It's all in the name of creating a standard process, standard set of documentation and a standard tool set, which instills continuos improvement and increases operational and project quality," says Chappelle.

It would seem only natural that after a major reorganization, Sara Lee would be privy to a vigorous data cleansing initiative. While there is much work to be done in this area, some areas are performing well. As an original Transora customer (now 1Sync), Sara Lee rarely experiences hiccups in terms of publicly exchanging information with its retailers. And because the company was run as separate business units, data was never consolidated or managed in a consistent way.

"What we've seen so far is that while we have data cleansing issues, we also need to design a standard process for managing data in a consistent fashion and publishing it in a consistent way," explains Chappelle. "We are more focused on data ownership and management processes so we are prepared to tackle data cleansing issues as they arise."

Paying A Compliment

In response, Master Data Management (MDM) and Business Intelligence (BI) will compliment the aforementioned initiatives. BI is designed to provide performance analytics of the business. It standardizes what Sara Lee measures on a daily, weekly and monthly basis with the data provided through one standard tool. BI is also designed to reduce manual work, standardize the definitions of key terms around process, sales and costs. "The idea is to make access to information timely and accurate, while cutting down on a lot of the ad hoc and manual inquiries that occur when those things aren't in place," says Chappelle.

Most BI data comes through SAP as it becomes the core transaction system for the company. The BI strategy and tool must support data from non-SAP systems as well since it is clear some key planning and operational areas will not be using SAP.

"That's why the master data is so important and that's why the BI tool has to be ubiquitous in terms of the data it handles," says Chappelle. For Sara Lee, MDM means a dictionary of sorts where terms and data elements mean the same in every business the company runs. In the ideal situation, the information exists only once, can be modified in only one place and can be reported on from only one source. The reason? To ensure that if someone looks for a particular cost element, their interpretation and view of it is identical to that of what everyone else in he company perceives it to be. "It's very difficult to measure performance against internal and external standards if you don't have good, solid definitions for what the data elements and metrics you're measuring," says Chappelle.

A Bright TPM Future

As for the trade promotions area, there are definitely elements of Project Keystone, a prior project that Chappelle participated in during his time spent as CIO of H.J. Heinz, that applies to Sara Lee's U.S. food and beverage business.

"Certainly some of the concepts in Keystone we'll try and replicate here," says Chappelle.

"The difference here is that there are a different set of requirements since there are more areas of our business that don't operate on a retail trade model, such as direct store delivery (DSD)," says Chappelle. As a result, there are multiple trade models that Sara Lee is going to aggressively pursue, some of which Project Keystone was never designed to address.