Cover Story: The Key to Success

Founder Henry John Heinz knew what he was talking about when he proclaimed: "To do a common thing uncommonly well brings success." Since 1869, H. J. Heinz has adhered to its founding mantra--amassing an enviable crop of brands along the way--that have transformed the company into an $8 billion global entity and one of the world's leading marketers of branded foods to retail and foodservice channels. Heinz also boasts number-one or number-two branded businesses in more than 50 world markets. Today, the Heinz vision reflects the company's confidence and commitment to customer service: "The World's Premier Food Company, Offering Nutritious, Superior Tasting Foods to People Everywhere."

Mapping Out the Strategy
In an effort to assure customer satisfaction and ensure that its multiple brands remain competitive, Heinz created a customer relationship model called First Call. First Call is all about offering services and capabilities that makes Heinz its customer's "First Call." One of First Call's core enablers is called Project Keystone. This project is a two-part effort that allows Heinz to transform its trade promotion strategy by tying together all of the elements of its MAPS program (Merchandising, Assortment, Pricing and Shelving) into a growth package.

George Chappelle, chief information officer for Heinz, says that Project Keystone involves much more than just a trade funds initiative.

"It's about driving growth and rewarding efficient customer behavior as it relates to trade promotion as well as creating a new level of productivity across our field sales organization."

The first part of Project Keystone allows Heinz customers to generate trade promotion funds based on the products they buy from Heinz. As customers perform, they are able to earn funds from their accounts. To Heinz, customer performance is defined as merchandising activities, such as temporary price reductions, displays and other traditional promotional tactics. If Heinz ships one hundred cases to a customer, the customer receives trade promotion funds for every case shipped. Funds are spent promoting Heinz products.

The Enabler to Project Keystone
Enter part two of Project Keystone, a second-generation trade promotion system powered by Siebel. At its core is Siebel Consumer Goods 7.5, a robust planning tool that forecasts volume, promotions and spend.

"It is completely integrated with our ERP system, so as orders are processed, it automatically deposits funding into customer accounts," says John Hans, vice president of channel sales, Heinz U.S. Consumer Products.

In addition, Consumer Goods 7.5 updates deductions and payment requests on a daily basis and provides sales people with up-to-the minute shipment and consumption information. Additionally, a series of enhancements have also been built into the Siebel system to monitor post-promotion activity. Cost per incremental case and cost per shipped case are the metrics used to gauge efficiency and effectiveness of promotions.

"Project Keystone drives the ownership of trade promotion management to the right level within our organization. That level is the sales person and customer. Through Siebel, an Account Manager can see if the customer's trade funds are in line with the current plan, based on what's being shipped and spent at the account level." says Chappelle. "The entire process is very dynamic."

Hans likes the simplicity and functionality of Project Keystone because, "Keystone is a consistent methodology across all of our categories that allows customers to be more collaborative with Heinz. Customers now have a stake in buying and selling more products from Heinz as those transactions generate more money for them to spend back on promotional activity, which in turn creates value for consumers."

Tricks of the Trade
Since trade promotion budgets can account for a sizable percent of a company's costs, consumer packaged goods companies need to know how their money is being utilized. Toss in the renewed focus surrounding corporate governance with legislation like Sarbanes-Oxley, and it's no wonder why consumer packaged goods firms are becoming very focused on management of trade promotions.

But does a more structured approach to trade funds yield more resistance from retailers? In the case of Heinz, customers supported Heinz strategy because it provides clear visibility to trade promotion investment and potential opportunity on each and every item in the portfolio. "In addition, it benefits our customer and Heinz in terms of being able to put together a solid plan earlier in the customers planning cycle," says Hans.

The former trade funds model Heinz used was more centrally controlled and subject to change more frequently. Short lead-time was less than desirable for many of Heinz's forward-thinking customers that plan eight to 12 months in advance.

The Siebel Entity
Heinz chose Siebel because of the comprehensive scope of its technology offerings and its tremendous market share within the Customer Relationship Management (CRM) category. "They've had challenges like all technology providers, but most of the players in trade promotion are smaller players and there is a certain amount of risk when partnering with smaller suppliers," says Hans. "Siebel is a big company with resources and they will be around for a while."

Deloitte Consulting also played a significant leadership role in the design, development and implementation process. "They played a key role at guiding us through the design and development process," says Hans. "They told us what we needed to hear with a firm dose of reality."

Deloitte consistently informs Heinz of when something might go awry downstream based on a decision in the design process, which could potentially lead to negative performance and business impact. Since Heinz had no prior Siebel knowledge, the company felt it was in its best interest to partner with Deloitte to design and implement Project Keystone.

"By giving them the development and implementation responsibility, we have one firm that is accountable for the end-to-end solution," says Chappelle. "You want to give the implementation partner the right amount of accountability so that you can balance the delivery of the project with your internal team."

Project Keystone was delivered to the Heinz U.S. Consumer Products organization in two phases over an 11-month timeframe. Each phase was executed on time, within budget and was aligned to critical business cycles and organizational expectations. User acceptance of the Siebel tool has been "unusually high" as Heinz built Project Keystone well in advance of the technology implementation. Thirty percent of the Heinz sales force was involved in the design, testing and piloting of the project. In addition, users received education and training over a 120-day period before receiving the live Siebel system.

Next Generation of CRM
Building the next generation of CRM capabilities is also top of mind with Heinz. Thanks to the breadth of capabilities that are inherent in Project Keystone, Heinz says it plans to deliver on the following in the future:

>Management dashboards or "scoreboarding" analytics that bundles multiple data streams form Heinz systems for Heinz sales personnel.

>Retail tracking and monitoring in the field through the use of hand-held devices.

>Portfolio modeling that empowers the Heinz sales force to manage the business differently than they do today.

Perspective on Success
To put Project Keystone into perspective, it is one of the largest systems/change management initiatives for Heinz U.S. Consumer Products this year and it has captured the attention of just about everyone at the company. The project is clearly designed to help deliver the benefits Heinz desires and to facilitate collaboration with its customers. "In a lot of ways, you want to duplicate the execution of Project Keystone in other projects because it has gone that well," says Chappelle. Still holding true to the words of H. J. Heinz, Project Keystone is helping Heinz do a common thing uncommonly well.