National Foods milks SAP, cow to fridge

Three-quarters of the way through a massive consolidation and overhaul of its core business applications, dairy and juice giant National Foods has found that the most difficult parts of the project aren't related to technology, but to processes and the simple challenge of keeping skilled people on track.

Facing an increasingly complex information systems environment built around three separate enterprise resource planning (ERP) systems, National Foods embarked on a major campaign to converge its business — which includes over 4,000 staff at 25 manufacturing sites in Australia, New Zealand, Singapore, Indonesia, and Malaysia — around a single instance of the mySAP business platform.

Consolidating multiple legacy platforms was critical for the company to move past the fragmentation caused by numerous acquisitions and changes of ownership, and to enable continued growth for a company whose products are ubiquitous in Australasia: the AU$2.5 billion National Foods' brands include Big M, Pura, Farmers' Union, Yoplait, Berri, Australian Fresh juices and more.

From the start of the project, the implementation team was aware of the need for a change in business processes to suit the new technology environment.

"We've approached our vision by painting a process view of the world," Brian Keane, CIO and general manager of National Foods, told attendees at the AIIA's recent CxO Forum in Melbourne. "It's not rocket science and it's not new, but it's about how we've applied basic principles in our company and what we've learned from that."

The IT team focused on implementing SAP — modules included ECC6, supply chain management, customer relationship management, business intelligence and HR — to complement national Foods' five fundamental processes: order to cash (including more than one million printed invoices every year), data to decision, procure to pay, hire to retire, and planning to manufacturing.

Process change was excluded from the technical part of the implementation, and left instead for business managers to foster inside their business units as the technology platforms evolved.

A "really rigid timeline" set the pace for the project from the start, says Keane, and this goal was supported by "standard program management" designed to keep the project moving. "A major principle around our design was that we would design to the 90 per cent [of functionality], not the last 10 per cent," Keane says.

The approach has paid off: just two years after the SAP project began, the company is now 75 per cent through the roll-out and expects to bed down its last remaining business unit, its juice operations, by year's end. Desktop PCs, servers, network and other services are managed by HP.

People training
Although it has been successful, the push to maintain momentum forced Keane's team to deal with "enormous highs and lows" — a broad range of issues that sat far outside of the technology sphere but affected the technology roll-out profoundly.

Staff retention — "maintaining the A Team", as he puts it — was a major problem, particularly given that the company had just been taken over by Philippines company San Miguel Corp at the project's start, and went through another change of ownership after Japanese firm Kirin bought National Foods last December.

Such changes, as well as natural attrition, meant a tumult that interrupted Keane's efforts at the continuity of staffing in the project.

His response: to run an "aggressive" training program for employees, suppliers, and customers that would support the rapid implementation of the SAP environment; training that not only involved practical issues such as changing methods for dealing with National Foods, but which also forced the team to reconsider the original project benefits in a way that encouraged outside parties to jump on the bandwagon.

"We had to ensure that both our customers and suppliers see this as an opportunity for them as well," Keane said, "so we have put in place processes and ways of doing business that will help them do business with us in the future. There needs to be a higher emphasis on change around people than maybe we gave credence to at first."

One benefit of the system has been to provide more consistent and useful data across the supply chain — but getting clean data hasn't been easy.

In retrospect, Keane said, the need for data cleansing should have been addressed from the start of the program: "Some areas were left until too late, and therefore had an impact on our ability to go live — and even when we have gone live, in some instances, it has affected the customers."

The hard line
For now, National Foods will complete the project without changing the processes and principles it has used to get this far, with Keane encouraging "the hard line" when it comes to justifying policy change. "We would not change the systems unless it made good sense from a procedure and policy point of view," he adds.

Several other elements are currently underway and due for completion before year's end, including SAP Business Intelligence roll-out to support National Foods' budgeting and planning processes, and a roll-out of systems to support the company's hire-to-retire (human resources) processes.

At the same time, company executives are following up with employees and working on ways to enshrine the business process changes into the company's culture "so they do become the way we do business and we don't easily fall back to the old ways of doing business", Keane said.

"It's an exciting, challenging journey around continuously improving the way we do business. At the end of the day, if we can't deliver from the cow to the fridge in 48 hours, then we're out of business. "