Case Study: The $3 billion food conglomerate eliminates 100 systems, revises its supply chain and adds VOIP to the mix. Its CIO discovers some surprising benefits.
When two major food companies—select H.J. Heinz food operations and Del Monte—merged a few years ago under the Del Monte umbrella, it forced Del Monte CIO Marc Brown to do some radical consolidation.
Almost 100 systems were eliminated and the combined company standardized on ERP, data warehouse and a very different approach to supply chain. Even telecom advanced, with a huge push for voice over IP.
The moves were intended to cut costs and expedite the integration of the business, but IT got a bonus, Brown said: "It drastically improved system reliability."
How drastic? "Help desk calls are literally 10 percent of what they were two years ago," he said.
The combined products have turned Del Monte into a very diversified edibles empire, from College Inn soups, Contadina and S&W canned goods and StarKist tuna to Natures Goodness baby food to some of the top brands in pet food including 9Lives, Kibbles n Bits, GravyTrain, Cycle, Skippy and Jerky Treats.
The diversified nature of those product lines initially forced supply chain changes due to the very different distribution networks needed.
"Now that were one integrated company, its really going to be much more demand driven in our supply network," said Brown, who had been with the Heinz side for 10 years before the merger. Historically, weve been very production focused, very supply-side focused. Thats the way the industry had worked for years and years."
The difference is mostly in the analysis and what happens when CRM and Point-of-Sale (POS) data is tracked separately from supply chain/inventory.
The first systems might report that a product is not selling well—suggesting that consumers dont like it—but in reality the problem is that the store shelves are empty because of insufficient inventory and the product is actually very popular.
"Were making a lot more use of vendor-managed information to get a better handle on whats on the shelf and whats in the channel," Brown said. "POS information can give us an early indicator of where a product is slowing, but it might just be a supply chain issue because we dont have enough on the shelf."
Part of the challenge is the age-old data analysis conundrum of how much information is enough and how much is too much.
"Where you win the battle of business intelligence with overwhelming volumes of data," its not necessarily the best way to make decisions, Brown said. "The problem is that its overwhelming and out-of-context."
That can also lead to "multiple versions of the truth," where data that comes from different sources says the same thing in different—and sometimes contradictory—ways. Different analytical methods on top of that can compound the problem.
"Were trying a much more defined approach. We have selected particular areas to provide the data in a context where it was useful and easier to manage," Brown said. "We still have the mass of data available when we need to" access that multiple-TByte data warehouse.
Browns team is using Oracle databases with Cognos and Hyperion on top for data and financial analysis.
Although Brown declined to specify the size of Del Montes IT budget, he said that his IT team had among the smallest IT budgets in the industry, given the overall budget size of the company.
"In industry benchmarks, we are very near the lowest in terms of net sales volume spent on IT," Brown said.
His 104-person team supports more than 8,000 Del Monte workers.
One of the methods initially intended to be a cost-cutting move was experimenting with voice over IP, which has been tested since 2003. But like the consolidation, its generated strategic advantages that went well beyond a spreadsheet.
With a company with the expansion flexibility needs of Del Monte, it gave Browns team the ability to move offices without the traditional switchboard infrastructure demands.
Next page: VOIP adds flexibility along with functionality.
Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.