Getting Strategic

By Larry Dignan  |  Posted 2003-12-15 Print this article Print

Progressos encroachment is one reason CEO Doug Conant began to overhaul Campbell nearly three years ago. In July 2001, Conant cut the companys dividend from 90 cents a share to 63 cents a share to partly fund an overhaul of Campbells factories and its technology. The company also launched new products such as Campbells Select in a microwaveable bowl and portable "Soup at Hand" lunch bag containers. Before Conant, Campbell didnt consider information systems strategic, says Roger Berry, a former Campbell chief information officer now in the same post at Walt Disney Co. As evidence of the strategic importance, Wright reports directly to Conant. Berry did not report to David W. Johnson, the prior CEO.
As Berrys successor, Wright moved to shake up a "classic silo-ed company" where every business unit maintained its own computing systems. Campbell had 1,400 different applications and no standard technologies.
Today, standards are set at Campbell headquarters for what e-mail applications, middleware, operating systems and networking gear to use. Wrights team also chose common applications for demand planning (Manugistics) and product-lifecycle management (Formation Systems Optiva.) Internet services are built on IBMs Websphere development platform. Big Blue also manages Campbells data center and communications network and integrates and maintains Campbells applications as well. Next up: consolidating planning systems. Campbell still has about 1,000 applications managing its suppliers. In Campbells North American unit alone, it would shut down about 100 applications just by installing big chunks of SAPs planning system, says Wright. Wrights major goal is to move quickly when a supplier like Wal-Mart mandates something new. For instance, Wright says Campbell was able to synchronize information on prices and availability on all its products with Wal-Mart in about two weeks. Prior to its overhaul, synchronizing with Wal-Mart would have required months of "writing interfaces out the wazoo" to connect its systems with suppliers, says Wright. Now, Campbell uses the eXtensible Markup Language (XML) and other standard protocols to aggregate product data and distribute it via public and private exchanges in days. Moving to radio tags wont be simple. Analysts say Campbell must deal with an immature technology, unclear messages from Wal-Mart and the basic difficulty of adopting a new system to identify all its products, after the decades-long introduction of the UPC system. In Campbells case, bar codes may not go away. The radio tags will provide a clear view of where cases and pallets of soup are, in transit to warehouses. But bar codes will still have to be scanned at checkout, for the retailer and the soup maker to know when a can is actually purchased and leaves the store. Meeting Wal-Marts requirements also is a moving target. Wal-Mart wants suppliers to use Class 1, version 2 tags, which are expected to allow information to be added and altered when the tag is in the range of a reader. The problem: these tags arent yet available. Suppliers must invest in "agile" readers that can handle earlier generations of read-only and programmable radio tags as well as the still-to-come version 2 tags. Romanow says leading consumer goods manufacturers will spend from $13 million to $23 million each in 2004 to comply with Wal-Marts mandate. Thats the way it is. "We realize we are pushing [ahead] with no apologies," says Wal-Mart spokesman Tom Williams. "We cant afford not to do it." According to Williams, radio will make it possible for Wal-Mart to keep products customers want in stock nearly 100 percent of the time, up from 99.3 percent today. The difference isnt huge—except when youre Wal-Mart. The difference between 99 percent in stock and 100 percent in stock is $1 billion in sales. And Wal-Mart isnt lending much of a hand to suppliers such as Campbell. "Wal-Mart has basically said, Here, you guys: Go figure this out," says AMRs Romanow.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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