Del Monte Foods Optimizes Trade
At Del Monte we are committed to enriching the lives of today's family -- including pets -- and in order to do this, it is critical to service our retail partners in the most efficient and effective way possible," says Rich Nichols, director of sales strategy and sales operations for Del Monte Foods. He points out this scope ranges all the way from the supply chain to the company's trade promotion management (TPM) efforts. In particular, for the past year, Del Monte has been working on transforming what it considers to be "good" to "great" in its people, processes and systems. "One key area in which we are driving improvement is around Del Monte's sales force and their support functions. We want to better enable sales to focus on strategy and high value work, and less on administrative tasks." In the beginning the decision was made to design, develop and implement a new TPM process and system. This system would serve as the enabler and help the sales force implement more effective trade spending, all while providing "best-in-class service" to Del Monte customers.
Nichols explains, "This meant optimizing our entire TPM system to be the best in the industry. We wanted a TPM system that, of course, had functionality to manage trade funds, but also helped our field sales to accurately plan and forecast customer base and incremental volume." Del Monte was seeking one forecast from sales, eliminating offline spreadsheet-based forecasts, and the solution had to deliver against all fund management needs, including invoicing, deductions, analytical capability and event-level ROI. "Above all, it had to be easier for field sales to use, this meant reducing time spent around administrative complexity and increasing time spent around value add work that will grow our business," he notes.
Business and technology
The TPM initiative is part of a bigger transformation project for Del Monte where the company looked at other capabilities on which it needed to improve such as S&OP, forecasting, supply chain management and so forth. Nichols says that, from "day one," joint effort among multiple functions existed with the business and IT sides working very closely together to determine what the business needs of the company are and what the needs of Del Monte's customers are. The question serving as a catalyst: "How do we use technology to fulfill these needs?"
Andy Wojewodka, director, IT business consulting, Del Monte Foods, points out, "Our CIO Marc Brown has put his vision in place and it's working: IT partners directly with the business. We want to be a trusted partner and understand the business needs, take those learnings and apply technology to whatever those business needs are." Case in point is the TPM initiative. Del Monte was passionate on focusing not only on core functionality, but on a seamless implementation that addresses the guiding principles of the project. Lisa Trapizona, manager, IT solution delivery services, Del Monte Foods, played an essential part in making this happen.
An "old" application of a trade management system was used prior to this project, and Wojewodka says the application was difficult to support from both an end-user and IT perspective. On top of this, it lacked key capabilities within planning analytics and reporting. Field sales, customer marketing and IT really expressed frustration and identified multiple gaps in the solution. They also lacked deep analytical "what if" and post promotion analysis capabilities. The system was slow and it was not intuitive. Thus, it caused a lot of "headaches" in simply keeping it operational.
"We have a defined planning process within Del Monte, however, there was a need for clear and concise sub processes supported by the right system; things like 'what if' planning by quarter, yearly performance reviews, top-down bottom-up field forecasts versus headquarter comparison, post event and pre-event ROI analysis. The current system was very limited in flexibility and difficult to maintain and update," Nichols explains.
Nichols also states that planning was highly labor intensive for the field and resulted in multiple forecasts with no deep analytical capabilities. Wojewodka adds, "It all gets back to the volume of low value work. In the past, sales had to communicate intelligence within the S&OP process by getting information from wherever they could, put it together in spreadsheets and send it over to the demand planners -- essentially manhandling the information from disparate systems." The old system was not integrated into to supply chain either. The new one will be an integral part of the S&OP process (which is also enabled by an application from i2 Technologies).
Solution Search
Del Monte began its due diligence in 2005 and conducted a "very comprehensive search" to first determine who its consulting partner would be. As an implementation partner, Nichols indicates that Deloitte Consulting was chosen, in part, because of the company's breadth of experience with the applications being considered. Nichols says, "They have been an extremely great partner in this whole process; they knew the system and the integration well, and truly helped us to be successful in this entire project."
Nichols continues, "We went through a comprehensive process and held workshops to create our situational analysis in order to document pain points and gaps, and determine what is best in class, where we wanted to be and what our needs were." Del Monte staff from field sales, finance and marketing attended the workshops to ensure a cross-functional view of the current and future state of TPM.
Select software providers presented, not only to Del Monte's core team, but "countless" sales people visited other CPG companies' headquarters as well as joined those sales teams in the field where the solution was live. "We wanted to make absolutely sure that we chose the best application for our needs. With the help of our consulting partner and the input from all of our field sales people and other functions we made the decision to go forward with a Siebel solution [now Oracle/Siebel]," says Wojewodka.
Implementation
The approach taken from an overall design architecture reinforces the guiding principles that Nichols and Brown laid out from the onset. To elaborate, Wojewodka says, "We have integrated TPM with our order-to-cash system, (which triggers the accruals and OI/BB deals), DMS system (triggering deductions into Siebel for resolution with subsequent flow back to our financials) and our Advanced Planning system (leveraging sales intelligence through the S&OP process, which then integrates with our MPS and deployment planning processes/systems)."
Listening to other consumer goods companies that implemented the solution helped Del Monte avoid certain mistakes. Based on that, in conjunction with their own experiences, Nichols and Wojewodka suggest:
- Let the process drive the system, not the other way around. "We didn't want a system to determine how we needed to do things, so we figured out the process and needs and chose a supporting solution."
- Avoid scope creep at all costs. "I have seen and heard that initiatives like this, especially when you're building a TPM solution, can get out of control as things are added on. We defined our scope and held to it."
Other guiding principles include letting the field play a major role in choosing the right TPM solution; "socializing" the initiative every step of the way; communicating progress, success and failure and making sure senior management and peer groups are aware and aligned throughout the process. Nichols also stresses training: "Train, train and train again. It has to be one of the major priorities."
Planning functionality went live in September 2007 so that the field sales people could be trained and plan fiscal 2009 ahead of time. The second go live took place in May and included reporting deductions and analytical functionality. Nichols explains, "This is not a project that ceased on May 1 when we went live; it is ongoing and will continue to evolve, as we enhance and enable the system," he notes. Del Monte has already laid out the enhancements that will happen through the first half of this fiscal year, which began this month and has a blueprint beyond that as well.
What's live now is, and going forward will be "configured" using the standard tool kit supplied by Siebel/Oracle, according to Wojewodka. "We didn't change anything relative to the architecture of the Siebel system, nor build anything into Siebel that would inhibit us from being release-level compliant. What we did though, was push the envelope on streamlining and integration, which I believe is truly unique and advanced within this space," he explains.
Important Functionality
From the business side of it, Nichols cites ROI analysis as a critical functionality. Questions that have to be answered around this include: How did the promotion/event perform last year? What is the planned ROI of an event? What will the post ROI event be? They also made sure to include all of the aspects of an event -- from the spending and shipments to co-marketing dollars cannibalization. According to Nichols, "These are things that often get missed. And it was important that we have one corporate-wide, standard methodology of looking at ROI because you can look at it in countless ways." To do so, they aligned marketing, finance and sales. "Simple planning functionality" is the result he points out.
The need for simplicity came from more than just fixing a complicated old system; the business process itself was streamlined to where everyone is speaking the same language. Another change from Wojewodka's perspective is the management of the process in terms of breaking up the forecast by base and lift. Before, they looked at "promoted and non-promoted."
Prior to the Siebel/Oracle implementation, ROI analysis was performed but through different methodologies with different ways of looking at the business. The company as a whole was "not doing a good job of this" and it is a top priority as they move forward says Nichols. "We're actually shifting to what we're calling proactive reporting versus reactive, putting in process to drive this." Ensuring reports in by slated deadlines is also a critical new step.
With ROI for event level analysis Del Monte will have the ability to look at past events and compare them to the plan for the current year -- visibility into actuals for consumption, shipments and spending should enable better planning. For example, understanding the conditions around the events that may have had a positive or negative impact helps cultivate success going forward.
Another function that is expected to be pivotal is KPI dashboards and drill down capabilities. People will be able to look at volume and spending from a high level, drill down and understand causes to begin to discover the business driver. Nichols says that Wojewodka and his team, in particular, David Eckert, manager, BI and decision support services "have really stepped up" and are putting a tremendous amount of effort into delivering reporting needs. Other key people involved in the project include Pam Brown, director of TPM, and Matt Heinze, director of sales reporting. Both Brown and Heinze helped lead, design and integrate all aspects of the project from planning to analytics to reporting.
With the company in the "ball park" of the industry average of 20 percent of revenue spent on trade, is the goal of the TPM project to spend less or make the current spend more efficient? Nichols says, "We always use the phrase 'spend more efficiently and more effectively.' You can do both. You can either spend the same amount and get more, or you can spend less and get the same amount. At the end of the day we have to do whatever we can do to improve our TPM spending and get more value for the dollar, not only for Del Monte, but for our customers. The process and the systems that we have built will help us do both."
Speaking of Customers
Nichols reiterates that Del Monte's objective is to always service its retail partners in a collaborative manner. "We're constantly striving for on-shelf availability and developing promotional plans that are effective not only for us but for our retailers." This may mean repeating things that have worked in the past, but also continually creating new ways to work together. He points out, that they try hard to "align" Del Monte's capabilities with those of its customers -- not only around TPM but in other areas such as category management and supply chain. "When we design our process and our systems, we incorporate insights from our sales people, as well as customers so that they receive better service from us."
At certain retailers, Del Monte plans at a corporate level, but Nichols says they will have the ability to modify, add or remove plans at the next level down according to that retailer's need. This flexibility enables planning as each store plans rather than blanketing corporate promotions over the entire retailer.
Results
Since the go live was split into two separate phases some results are already apparent. So far, Del Monte is beginning to see the administrative burden of planning reduced, improving functionality.
From the business side, Nichols indicates that event-level ROI visibility is an area of great expectation, enabling action for improvement. "The better visibility for reporting is going to allow us to identify where we're doing well and where our opportunities are much more advanced than before. And things like streamlining the planning process will allow field sales to spend less time on the administrative and more time going out and partnering with our customers to actually build better plans and find efficiency through other capabilities," he concludes.
From an enterprise perspective, Wojewodka sees value in a more accurate forecast, with better sales intelligence to support S&OP and supply chain to store level execution. He says, "Improved forecast, improved visibility means we're shipping the right product, at the right time, to the right place, getting it there in advance of the promotion to meet consumer demand. In addition, one of the key things Del Monte prides itself on is product innovation. Having an integrated system and process in place will help us in achieving bigger wins for our retailer, our consumer and Del Monte as a whole."
Nichols expands on this. "Andy mentioned a key phrase we have used throughout the entire process: 'getting the right product, to the right place at the right time.' This has been vital in helping us understand the importance of a new process and in driving change management." He says while they need to change tactical processes like how they enter information into the system, even more so, they need to change behaviors around how they do things.
This leads to Del Monte's top challenge of change management. Nichols mentions that changing process and systems is the "easy part," but getting people to change behavior, is the toughest part. Successful facilitation depends on allowing the field and other functions to help design the process and take ownership. Making training a priority is also imperative, as is "over communication" on the status of the project.
Del Monte measured change from the beginning; Nichols concludes, "We're going to measure and confirm not only that the initiative itself is driving change and is successful, but that once in place, we have successfully changed the culture within the company."
Healthy Lifestyle
To support its mission, Del Monte Foods features a "Living a Healthy Lifestyle" section on its Web site. Here, consumers can find healthy living tips, including exercise guidance, healthy recipes for family and entertaining, food facts, nutrition news and links, pet health ideas and expert advice from Food Network's Ellie Kreiger and registered dietician Laura Molseed.
Del Monte also often partners with leading organizations to promote health as well. For example, last month the company joined forces with the American Heart Association to promote National Start! Walking Day, which challenged all Americans to walk one million steps and raise $1 million -- all in a day's work on April 16, 2008. This is part of a larger campaign sponsored by the Association called the "2008 National Start! Challenge."
"Del Monte Foods is committed to nourishing families and enriching lives every day, and we are proud to team up with the American Heart Association in the fight against heart disease," said Richard G. Wolford, chairman and chief executive officer of Del Monte Foods, in a press release. "We encourage consumers to get active every day, whether it's a brisk walk with the whole family, including pets, or a lunch-time stroll during the workday. In addition, because Del Monte recognizes the busy lifestyles of today's families, we offer a variety of great tasting, heart-healthy food choices that are nutritious and convenient."