Land O'Lakes Reinforces the Business Through IT

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Land O'Lakes Reinforces the Business Through IT

By Lisa Terry - 10/09/2014
Legacy can be a fine thing, and Land O’Lakes, Inc. has it in spades. Formed in 1921 as a co-op of farmers to sell butter and cheese across the East Coast, the company has continued to stay close to its roots in agriculture and dairy products. Today, Land O’Lakes is a $14-billion multinational success story, serving as an aggregator of products and solutions for farming co-ops and distributors through three subsidiaries focusing on animal nutrition, crop inputs, and perhaps best known among consumers, dairy products. Land O’Lakes is the top seller of butter and Deli American cheese in the United States and the second-largest cooperative in the country as well. Its products sell in more than 60 countries.

But, in the world of technology, legacy has different implications. The various IT systems and platforms deployed at the Arden Hills, Minn.-based, member-owned cooperative, added and amended over time to help the company grow over decades, were becoming an obstacle rather than an enabler of future growth. From 2003 through 2008, Land O’Lakes had enacted a restructuring effort focused on cost reductions and portfolio repositioning. By 2009, many of its core systems hadn’t been upgraded in years.
Land O’Lakes’ legacy IT platform was not able to provide the visibility and accurate, real-time access to information that it would need to meet its strategic growth plans.

The company’s leaders knew they would need to change the very foundation of its systems to get there, and that these investments were only the beginning in enabling an agile and digitally-enabled organization.

Naturally, they called the plans to transform the IT environment “Project Bedrock.”

Taking the First Step

Changing out the underpinning of a Fortune 500 company midstream without interrupting daily business is a significant undertaking. Fortunately, Land O’Lakes had already had a similar, but smaller success story under its belt: A business transformation project called Catalyst that migrated the Dairy Foods business unit from four ERP systems to just one.

“The success of our Catalyst JDE upgrade and implementation in our Dairy business in 2008 provided confidence throughout the organization that IT was ready to take on a much larger program to modernize and upgrade many of its systems,” says Mike Macrie, senior vice president and chief information officer for Land O’Lakes.

Thus, Project Bedrock was born. They decided to execute the transformation through 35 separate projects between 2009 and 2014. This would include consolidating and upgrading many core systems across the company, including ERP, transportation planning, demand planning, and others, as well as introducing new capabilities in market insights, distributor relationship management and customer relationship management that hadn’t been in place before.

At the same time, Land O’Lakes centralized its Supply Chain organization. It was all part of a vision to create a more unified, integrated Land O’Lakes, with a shared IT platform, the ability to seamlessly integrate external and internal data, and the opportunity to identify and replicate best practices across all three subsidiaries.

“Bedrock gave us the forum to hit ‘reset’ on our business processes,” says Jeanine Viani, director of supply chain planning in the company’s Dairy Foods business unit. “It truly was a business process transformation.”

Best of Both Worlds

Once the goals were set, it was time to choose the right IT infrastructure for the job: Should they go with a suite or best of breed? Or should they pursue homegrown or custom-developed applications? Land O’Lakes’ Macrie sees their choice, Oracle, as encompassing all of these characteristics.

“Many of Oracle’s products already represented a best-of-breed approach in many of our targeted functional areas,” Macrie says. “By leveraging the technology and integration pre-built by the vendor, it allowed us to achieve our goals of the program considerably faster and at a fraction of the cost of a pure best-of-breed or custom development approach.”

Land O’Lakes implemented a broad array of products from Oracle’s product stack, including JD Edwards EnterpriseOne, Oracle Endeca Information Discovery, Oracle Transportation Management and Demantra Demand Planning applications. The entire IT environment is now Oracle-based, serving as the foundation of all operations across all subsidiaries — Purina Animal Nutrition, WinField crop inputs business, and LAND O LAKES Dairy Foods.

Clear Skies Ahead

After five years of diligent work, Project Bedrock is slated for completion by the end of 2014. However, it’s already paying dividends, as evidenced by Land O’Lakes’ 2012 acquisition of Kozy Shack, a leading brand of rice pudding, tapioca pudding, bread pudding and flan refrigerated desserts.

“We were able to very easily bring Kozy Shack into our Oracle Demantra Demand Management and JD Edwards EnterpriseOne environments,” says Viani. “We were able to maintain our forecast accuracy and costs without disruption to daily work and kept our high service levels to our customers. Our systems and processes are now scalable, so we can easily account for growth as well as integrate new supply chains from acquisitions.”

Improving Land O’Lakes’ forecast accuracy was, in fact, a key goal for Project Bedrock, and one that has clearly been achieved.

For example, after Purina Animal Nutrition implemented Oracle Demantra, Oracle’s demand management and production distribution and planning solution in 2013, the business unit was able to make significant improvements to its sales and operations planning (S&OP) process.

“It has helped us gain control over our seasonal businesses — we now have the visibility to demand against capacity, and can collaborate with the business to make timely, data-driven decisions,” says Dustin Braun, senior manager, strategic planning and analytics at Land O’Lakes. “It has also helped forecast demand for key retail customers in Purina, just like we do for key retail customers in Dairy Foods — we use the same system and process.”

In the past, Land O’Lakes generated monthly forecasts by item on a national and regional level. The data needed to produce more granular forecasts existed in its various ERP systems, but the demand planning tool they used at the time was not designed to extract it in that way.

Now, Land O’Lakes can view forecasts on a daily/item/customer-ship-to level, and can adapt the forecast in ways that the business operates, such as tying forecasts closely to the customer promotional calendar, which is often in days or weeks.

They partnered with Oracle to configure Oracle Demantra to do some complex, short-term forecasting, called “open order correction” — a simple version of demand sensing. The solution takes the lowest levels of data — item, customer, day, order — and processes it within a small window of time, so Land O’Lakes supply chain managers can see a final demand and supply plan each morning by 5 a.m.

“It is a no-touch, reliable, easy-to-understand process that has brought considerable insight to our supply chain,” says Braun. “It improved our short-term forecast accuracy.”

Such rapid processing of data enables Land O’Lakes to better understand its customers, develop improved processes and forecast and plan in ways that were not possible before. For a seasonal, trade-driven and consumer promotion-focused company, better forecasting means a more accurate picture of demand that Land O’Lakes can use to ensure it is in stock in key seasons while reducing inventory levels and improving manufacturing.

Better forecasting and planning is not only helping improve performance with Land O’Lakes’ current customers and products, but fueling its strategy to grow through new products, acquisitions and international markets.

Moving forward, Land O’Lakes will focus on reaping additional benefits from its newfound capabilities in short-term forecasting, inventory management and S&OP. Currently, for example, it is exploring the incorporation of weather causality and retail point-of-sale information into the forecasts for its agribusinesses.

But improvements won’t stop there. Land O’Lakes has a legacy to live up to, and that’s all about the pursuit of excellence.

“We are always on the lookout for new processes and technologies that will help enable success across all businesses,” closes Braun.

IT: Learning to Lead

Business processes are not the only thing that has changed at Land O’Lakes. To make such a sizeable undertaking work, IT had to change too. As with many large companies, IT has played a supporting role, responding to specific requests for help. To ensure Project Bedrock’s success, IT needed to lead.
“IT had to initially improve its capabilities in business acumen, change management and project management to lead an effort of this magnitude,” says Land O’Lakes SVP and CIO Mike Macrie. “Additionally, IT had to change its internal culture over the term of the effort to become more customer-focused, responsive and agile to our changing business’s needs.” Now, IT has a seat at the boardroom table, bringing ideas and information thanks to the meaningful insights enabled by its business transformation effort.

A Look Inside Land O’Lakes

Land O’Lakes, Inc. is a member-owned cooperative with industry-leading
operations that span the spectrum from farm production to consumer foods:
  • Dairy Foods: The makers of the LAND O LAKES brand – America’s #1 Brand of Butter and Deli American Cheese, an icon in our nation’s kitchens and restaurants.
  • Purina Animal Nutrition: A national organization serving producers, animal owners and their families through more than 4,700 local cooperatives, independent dealers and other large retailers throughout the United States.
  • WinField: A distributor of crop protection products and agricultural seed in the United States. It offers a suite of products and services to help growers, dealers and other industry partners achieve success.