Dan Farber: Marc, thanks for joining me.
Marc Brown: Thanks for having me, Dan.
Dan Farber: Now, Del Monte Foods is a rather ancient organization. It's been around since the Gold Rush in the United States. The brand is well known, but it stands for many things, as I understand.
Marc Brown: That's right. Actually it may be an organization with a rich history, but we have leading brands in a variety of categories, everything from people food, our consumer unit, which is the iconic fruits, vegetables, tomatoes in can and jars with the familiar Del Monte label. But we also sell Star-Kist Tuna. We have pet foods under the label Kibbles 'n' Bits, Gravy Train and Nine Lives. Treats of the type of Pup a roni, and of course Milk Bone, which is celebrating its 100th year, and is a really a pretty solid brand.
Dan Farber: I guess a lot has changed since the company was formed. And obviously IT has got to be an important part of that change. Can you give us a little bit of insight into what your IT strategy is?
Marc Brown: Sure. Our IT strategy really has evolved over the last couple of years. About five years ago, we embarked on a lot of work to consolidate, standardize, streamline, really improve the effectiveness of IT, as well as some of the cost efficiencies in IT. And in the last two years we've really worked much, much focused on the transformation of the business and how we can apply technology to drive improvement I our execution as well as our planning and visibility to what's happening in our business.
Dan Farber: What are some of those specific areas in which you have applied IT to get visibility?
Marc Brown: We spent a fair amount of time on the supply chain side, particularly in product manufacturing, deployment planning and execution, and driving against demand signals we get all the way from the retailer's store shelf, and that we can see the demand flowing all the way back through our business and to our suppliers on the other end.
Dan Farber: So in terms of that demand signal, how does that occur? Are you using RFID or other technologies to get that information into your systems?
Marc Brown: What we're doing, is we're using whatever demand signals we can get. For some retailers we can get point of sale data about what's being sold on a daily basis at the individual stores. For other retailers, we can get warehouse withdrawal information of what they are pulling for their warehouses and sending to their stores. And then from some retailers, frankly, we don't get a lot of demand data. Instead what we use is we use statistical forecasting mechanisms, as well as insight into what our order patterns look like, to get a better feel for where demand is going.
Dan Farber: Now you have a lot of different products in both consumer and in pet food. Do you have a pretty consistent view into the data across those two divisions?
Marc Brown: We do. We pretty much get the same data for all products. It's much, much more localized down to the specific retail partner we're working with. For our largest partners, we have sales teams who are dedicated to those partners, account teams. And those account teams do a fair amount of work in terms of category management and trade promotional planning and execution. And that can give us a lot of demand signals as well as a lot of rich data that we can use to optimize against.
Dan Farber: And on the data mining side, and in terms of data warehousing as well, how are you presenting that data to your end users?
Marc Brown: We really use the data in two different means. One is on the executional level, an in the executional level we bring the data in and we use user interfaces that tend to be much, much more exception based, sense and respond oriented. So we bring in the data, we use optimization engines to understand where the opportunities are, to avoid problems, to deal with problems that may exist today, and to reduce costs. And then we present those on an exception basis to the planners and the other people in our business to execute against. In terms of pure business intelligence or decision support, whatever you want to call it, that's really a separate platform where we're looking at things over a longer horizon, where we can look at trends, analyze activities, look at key performance indicators, and do category management activities and things like that. So it really is two separate platforms.
Dan Farber: Now you've been talking about the retailers, but how do you deal with the sources of foods that you're using to make your products?
Marc Brown: Sure. We really have two different kinds of businesses that our products break into. We have some products that we manufacture on a continuous basis. And for those products, frankly, we're using the same demand signals we're getting downstream on the demand side. We're bringing that back in and translating that into the most efficient way to supply it, and then communicating that with our business suppliers that supply us. For the other part of our business, particularly in the legacy business fruits, vegetables and tomatoes that's a seasonal pack business. So that business, we actually have to predict what the demand is going to look like over a long period of time, over a year, and then we need to manufacture to those quantities, to that demand, during the relatively short pack season that aligns with when those crops come in.
Dan Farber: I'm really interested in that crop side, in terms of what if there is a crop shortage. How do you plan for that? How do you deal with it?
Marc Brown: Well, you really can't plan for a crop shortage, because you don't know you're going to have one in advance. What we try to do is remain flexible in terms of how we promote products at retail, and how we forward deploy them and how we allocate them against the demand, so that when we do have products that have a shortage or that have some sort of a supply break, we can understand which retailers need those products, how to get it to them and where we might have, frankly, problems that we can't overcome, where we've got to work hand in hand with the retail partner and make do with what we have.
Dan Farber: I often hear about performance driven organizations and using IT technologies to really improve performance. And yet on the other hand, I hear about companies that say they spend 70% of their IT budget on integrations issues. Is it pretty much the same for you?
Marc Brown: Five years ago I would say that was true. We probably did spend 70% of our budget on integration related issues. I would say that that really has turned around quite a bit. We've put in platforms and technologies that allow us to, in a cross business manner, to understand and have visibility in our business, and really down to the driver levels so we can understand what kind of things are happening in our marketplaces and with our products and in our manufacturing locations. And then make decisions against it. And we've put in place standardized tools and we have a pretty robust user base that knows how to use those tools, that can on a self service basis do online analyses and scenario planning.
Dan Farber: So what are you doing in the area of collaboration? We often obviously hear about concepts in Web 2.0 such as Wikis and social networking and blogs. Are those part of the toolset you're using?
Marc Brown: We do some of that. Our collaboration tends we're a geographically dispersed business, first of all. Our brands units, our strategic headquarters, our corporate headquarters, are all in San Francisco. And our service and execution, operational execution, is managed out of our service center in Pittsburgh. So we're geographically dispersed and we've put quite a bit of time in terms of base infrastructure and then being able to grow off of that infrastructure. So in terms of base infrastructure, it's things like voiceover IP telephony, instant messaging. We use the Microsoft Office SharePoint Suite, both for portals but also for team sites. We have quite a few team sites that people use for collaboration and sharing. Those tools have been expanded in use, mostly from ground level by our users to drive additional collaboration opportunities and start to get into things like blogs and Wikis and those kind of technologies.
Dan Farber: Another initiative we hear about from CIOs is going green. Is that a big part of what you're managing going forward?
Marc Brown: We really deal with green from two perspectives. One is the obvious perspective, which is how can we reduce resource utilization in the IT area, from everything to power and cooling our data center, to the use of paper and printing supplies throughout the company. So we've had initiatives in both those areas in terms of moving toward things like rack based cooling, and on the paper side, using multi function devices and driving towards standardization of printing characteristics that will reduce the amount of paper and the amount of ink and things like that, and out of color printing.
But then we've expanded it out, and with our engineering partners, we've worked on asset management tools in our factories top monitor energy utilization, to understand maintenance and repair cycles, and how that can affect that energy utilization and the efficiency of some of the equipment. Things like that.
Dan Farber: Marc, thanks so much for speaking with me.
Marc Brown: Thanks for having me, Dan.
Dan Farber: I've been speaking with Marc Brown, who's the CIO of Del Monte Foods. For CIO Sessions, I'm Dan Farber. Thanks for watching.
