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Defining The Business Value Of Technology
September 27, 1999
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New Recipe For IT Implementation
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Tyson is a classic case in point for the industry's changing IT approach. The poultry products company has spent the last three years implementing a full complement of SAP modules, finishing this year. Tyson is hurrying to roll out an order-entry application that works over the Web, aimed at its smaller customers that can't afford expensive electronic data interchange systems.
Customers such as restaurants will be able to place an order for a shipment of chicken with just a few mouse clicks, rather than handwriting and faxing forms. Cooper says Tyson is considering related E-commerce efforts for facilitating product delivery, as well as improving interaction with Tyson's own suppliers.
The Earthgrains Co. in St. Louis is also completing infrastructure enhancements and moving forward on progressive supply-chain projects. Earthgrains produces breads, cookie dough, pie crusts, and other bakery items in the United States and Europe. It sells its products under more than 100 store brands, managing more than 3,500 company-owned direct-store delivery routes.
In 1995, Earthgrains' parent company, Anheuser-Busch Cos., spun off the ailing subsidiary. CIO Steve Brazile says the new company looked to IT for ways to improve its earnings, reduce administrative costs, and improve business partnering.
This year, Earthgrains is completing an SAP ERP implementation, which began in 1995 as the first step in moving the company from a mainframe to a client-server networked environment. The company has just one SAP module implementation--human resources--left to install this year. The technology has pretty much paid for itself in overall business cost savings, says Brazile, explaining that Earthgrains put its 46 U.S. manufacturing plants under a centralized shared-services environment, eliminating redundant functions such as materials or production planning.
But like many CIOs in the industry, Brazile realizes that SAP is just a foundation. He's looking to build off that first step with innovations within the supply chain. One such project focuses on improving in-store inventory management through scan-based trading. Scan-based trading lets retailers pay for only the items scanned across a register. It's cost effective and efficient since it eliminates the need to pay up front for inventory. Earthgrains benefits with the simplified delivery process, Brazile says.
Since retailers don't have to worry about inventory management, Earthgrains sales personnel can bring products into a store 24 hours a day without having to go through the typical check-in process with a retailer's inventory manager.
Salespeople use handheld computers to track shelf inventories. Such data helps Earthgrains understand sale time and track other valuable retail and product data. The company will use EDI maps for transmitting the information. Most of the IT effort involves establishing transmissions with retailers, Brazile says. After pilot programs with a few retailers, Earthgrains is expanding the service to 1,200 partner stores--about 1% of its total 120,000 U.S. customers.
New Taste For Hershey
Hershey Foods Corp. in Hershey, Pa., is another company in the midst of an IT transition. The 105-year-old manufacturer of well-known candy such as Hershey chocolate bars and Reese's Peanut Butter Cups has spent the last three years shoring up its computing infrastructure with a $100 million-plus initiative called Enterprise 21.
Rick Bentz, VP of IT integration at Hershey, says that before his company started its IT overhaul in 1996, the emphasis was on controlling IT costs. The Grocery Manufacturers of America's benchmark studies of IT spending showed the company was lagging behind most of its peers. Such reports helped Hershey's management recognize IT's increased importance in driving business transactions, Bentz says. The company realized that by replacing its aging mainframe network with a client-server network, employees would not only be able to tap into needed data but share information much more efficiently.
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