Source of Inspiration

Historically, consumer goods companies have been known to weather the ups and downs of the financial markets better than most. But as the business environment rapidly transforms, consumer goods firms are continuously forced to operate with greater speed and cost-effectiveness. Organizations that pay attention to the changing market conditions are taking action now by relying more on outsourcing and consulting services.

P&G Considers the Source

In September, The Procter & Gamble Company (P&G) and IBM announced a 10-year, $400 million global agreement with IBM Business Consulting Services for Human Resources Business Transformation Outsourcing (BTO) services. Under the agreement, IBM will support nearly 98,000 P&G employees in close to 80 countries, providing services including: payroll processing, benefits administration, compensation planning, expatriate and relocation services, travel and expense management, and human resources data management. IBM will also provide application development and management of P&G's HR systems, leveraging P&G's existing global SAP implementation and employee portal. The agreement was expected to take effect on January 1, 2004 when IBM will take operational responsibility for three HR shared service delivery centers in San Jose, Costa Rica; Newcastle, England; and Manila, Philippines, along with professionals in more than 25 other countries, which will be integrated into IBM's global network of BTO service centers.

Bountiful Benefits

Among other benefits, the IBM agreement will enable P&G to improve services and reduce HR costs through process transformation, technology integration, and best practices; further improve decision making by providing executives real-time access to employee reporting information that is consistent, accurate and standardized; and deliver employee services in a real-time, flexible, on demand manner.

In April, HP signed a $3 billion 10-year managed services contract with P&G to manage the company's IT infrastructure, data centre operations, desktops, end-user support, network management, application development and maintenance for P&G's operations in 160 countries. P&G hopes to save 10 percent to 15 percent of its IT costs by outsourcing them. The deal will see about 2,000 P&G employees from 48 countries move to HP Services.

In December, EDS announced a series of consumer beverage industry contracts in Europe, Latin America and the United States worth more than $300 million. Part of the renewals included Coca-Cola Bottling of Latin America, which added five years to a previous agreement where EDS supported the company's servers, wide-area networks and hand-held terminals.

EDS also landed a major outsourcing deal with The Dial Corp. in 2003. A part of the seven-year, $110 million deal included a $35 million SAP ERP and CRM implementation. Nearly all of Dial's IT staff will become part of EDS, says Evon Jones, CIO, The Dial Corp. but the changeover will be ÒtransparentÓ to company operations. Alas, German adhesives and chemical manufacturer Henkel purchased Dial in July for $2.9 billion, which lends a degree of uncertainty to the EDS outsourcing deal at Dial.

Accenture Tames Tiger

In October, global consulting firm Accenture entered into an agreement with pro golfer Tiger Woods to represent the company as a symbol of its new High Performance Business strategy. The multi-year agreement, Woods' first business-to-business endorsement, also designates Accenture as the exclusive management consulting and technology services partner of both Tiger Woods and the Tiger Woods Foundation. In addition, Accenture will advise The Tiger Woods Learning Center on technology support including the TWLC eLearning system.

Also in October, premium drinks manufacturer Diageo announced a multi-year agreement with Accenture to develop, implement and support Diageo's enterprise resource planning (ERP) systems on a global basis. Accenture will deliver and support a suite of systems, including SAP and Ariba, which underpin Diageo's core back-office processes.

Clarkston Cares for Unilever

In August, Clarkston Consulting, a management and technology consulting firm, announced the completion of a unified, real-time view of the entire order-to-cash process for Unilever Home and Personal Care North America (HPC-NA). The new process will streamline the company's common business processes across the organization through the implementation of appropriate technology solutions. Clarkston helped Unilever HPC-NA replace 15 legacy applications with a fully integrated system and simplified business processes. To increase customer satisfaction and decrease company fees, Clarkston also worked with Coty Inc., a manufacturer of personal fragrances, to develop a scorecard that contained metrics pertinent to its key accounts. Coty can now more effectively manage data to improve order-fill rates, reduce out-of-stocks and eliminate order cancellation due to data errors. Based on these reports, Coty has increased the frequency of Advance Ship Notices (ASNs), which allow more timely visibility to product shipments.