Harmonizing Processes and Empowering WorkersBy: J. Ross & C. BeathMIT (2008)Presentation by Silvia FaulstichDec. 7, 2010 BUS 550

2001

CEO; Douglas Conant took overWhat he found:-Company was lagging its competitors

in both financial & market performance

-Consumers were becoming more price and health conscious

-Campbell was competing with giants such as Kraft and Nestle.

Rejuvenation Strategy

Shift Campbell’s portfolio of brands and products to emphasize growth, and driving a quality agenda.

Distinguish core business activities from non-core, then manage non-core for low cost while managing core (sales, marketing, and R&D, trade management, & product lifecycle management-for differentiation and growth).

Project Harmony

Four year effort to create more standardized and integrated business processes

Campbell did not want to experience the performance dip common in companies implementing major new systems

SAP (Systems Applications and Products)

New Governance Design

Allocate ownership of project outcomes to senior executives

Free up top talent to ensure effective process design and smooth implementation

Benefit from the expertise of external partners

Empower stakeholders to learn from one another and drive benefits from new systems and processes

Original Plan

Reduce Operating Costs

Improvements

Supply Chain Accounting Customer Service

Sustained Benefits

Depended more on empowering workforce across functional lines to improve business performance

2007

Campbell was significantly outperforming industry averages.

Shareholders returns of 16.2% vs. industries 7.7%

HOW

First corporate CIO

Had Decentralized IT made IT more standarized and centralized

IS Lite Approach

Centralized shared IT services not unique to business units

Outsource IT responsibilities that did not differentiate the company from its competitors

Focus By outsourcing the non distinctive; IT

leaders could focus on strategic requirements such as relationship management, governance and architecture.

Not necessarily cheaper to out source infrastructure operations and other technical responsibilities; but gained a partner who could deliver best practice, readily available computing capacity, and protection against disasters

Outsourcing

To IBM most IT operations and desktop support

IBM took on more application maintaince IBM ;three in the box management team

An account manager;coordinated IBM sales and services

IBM Business Consulting services; Campbell’s client satisfaction and IBM’s revenue and profits goals

Executive IBM strategic outsourcing

IBM

IBM was the Campbell’s integration partner for the their SAP implementation.

Win-Win for Campbell and IBM

Campbell was driving costs down by outsourcing while IBM was getting Campbell business value projects (SAP) and able to add new requirements into their contract.

IBM $

IBM consistently reduced their annual base charges

The total IBM contract grew between $.5 and $1 million a year because of the new service requirements

2005

Campbell had invested $20 million to make infrastructure “standard and industrial strength”.

Through benchmarking; Campbell was average or above average in technical infrastructure, security control and computer operations reliability

Able to eliminate $4 million in base operating costs

Campbell software

Overtime Campbell had developed multiple software applications to meet specific needs that created nonstandard business processes.

Campbell was like a many different stores ; each one doing business differently .

Confusing for customer

Infrastructure

Clean up its systems and transform it business processes

Not just process improvement; create more competitive and agile company

The Big Change

Have the same software in every unit Reporting everything the same Handling transactions the same Changes to the software would be

centralized

Effects of the big change.. Employees would have more time to

think about how to utilize information to their advantage.

2003

Project Harmony is endorsed

Implementing SAP

4 months for development of a formal business case and implementation plan

2004

$125 million is committed in capital for a three year project

They pulled people from around the world to ask what things had to be the same when they deployed SAP?

Way to engage everyone in the fact that they were going to deploy SAP around the world over time

Global Framework Objectives Utilize standard SAP capabilities Reduce unnecessary touches Maintain/Improve customer service Maintain/Enhance order fulfillment

process Utilize “available to promise” Create customer transparency Drive “easy to do business with” concept Streamline/Improve controls Present a single voice to customer

Project Harmony’s streams Make to Ship Account to Report Order to Cash

These were horizontal business streams. Standardizing and integrating these made them more efficient and improved customer service

One Standard Solution

Not deviating from the process but offering on standard solution, even if it’s not perfect; the standardization benefits will outweigh the loss.-David White SVP GSC

Total Delivered Cost (TDC) New key performance metric to

focus managements attention

End to end cost of producing a product and getting it to the customer

Campbell’s goal; flat TDC

Project Harmony

Implementing SAP Additional system components

(creation of data warehouse) Establishment of a shared services

organization for finance and accounting

Six month planning state to identify key resources and prepare managers

Planning Harmony

Defined the business case Implementation Plan Resource requirements

“Invested all lot of time, but made the difference-”Robert Depani, VP, Project Harmony

Governance Structure

1. A sponsor team of senior executives

2. Operating committee made up of project leaders

3. Three process advisory groups-one for each of the three key processes

The Teams

Senior Management Sponsors Operating Committee Process Advisory Groups Project Team-approximately 60

Campbell people and more than 70 consultants and other external experts

Other Location

Moved the project team into a separate building and focused full time on project implementation

People has their areas back-filled or restructured

Allowed team to stay focused

Peeling the Onion

Peeling the Onion approach starting with broad goals and high level expectations and drilling down to work group and individual level .

Created functional roles, which described the different sets of responsibilities that somebody would need to perform in each process

New Company

“Pretend you have joined a new company, you have to forget everything you’ve been doing for the last however years”

-Nigel Payne

Canadian Pilot Program

2006 Canadian headquarters served as a pilot program

Implemented 75% of the project’s global processess

Prepared employees and customers one year ahead of the implementation

Implementation

Site preparation involved several month period of team building, data cleansing, local configuration tailoring, application interface development and organization design.

Each site received 3-6 weeks of training before going “live”.

After going “live” received at least one-two months..two people doing one job, provide hands on support, resolving problems.

Lessons learned

After each roll-out the lessons learned were captured and passed on to the next site

Savings

By 2007, Campbell reported hard savings in IT from retiring legacy technology and applications and reducing maintenance just under $10 million.

2008-well over $10 million

New Culture

Managers can now identify were they can improve the process

Now there is an infrastructure that encourages and allows process improvements

Future

Going to a full running business using SAP for everything

Supporting and maintaining interfaces to the legacy systems are very expensive

End Results

Customer Care employees could manage by exception; they followed up on fewer order problems while responding more effectively to orders needing their attention.

Supply Chain employees reported the ability to quickly diagnose errors and provide training when errors resulted from people mistakes.

Plant managers claimed significant savings from faster recognition of equipment problems.

Most profound change

The company’s culture.

questions

How old is Campbell Soup Company?141 years

What was the biggest change for the company?

The culture What software program did they

implement?SAP