Ubiquity Brands is a three-year old company formed to acquire and revive the fortunes of Lincoln Snacks, Jay’s Foods, and Select Snacks to get some synergies across the expanding salty and sweet snack food market.
This is big business. And it’s increasing. An April 30, 2007, Los Angeles Times article quotes a report in Packaged Facts, a leading provider of market research in the CPG industry, which says, “In 2005, Americans spent about $61.4 billion on snack foods – up $3.6 billion over the previous five years.” The sweet and salty snack food market as defined by Nielsen is $10.5 billion up 3.2 percent this past year ending March 2007.
Ubiquity Brands is seizing the opportunity to grow its market share. Some of its products, such as Jay’s potato chips, O-KE-DOKE popcorn, Krunchers! kettle Chips, and Zestidos tortilla chips are regional favorites. Others, such as PoppyCock, Fiddle Faddle, and Screaming Yellow Zonkers already have national appeal.
And it’s in serving the national customers, including Walgreens, Wal-Mart, CVS, and Target, where demand for operational excellence is most sharply defined. Ubiquity management needed to ensure that they had the capabilities to deliver according to their customers’ stringent requirements.
Gary Rietz, VP and CIO at Ubiquity Brands says, “Since acquiring Jay’s, Lincoln Snacks, and, most recently, Select Snacks, we have been working to operate as one company while maintaining the unique identities and standards of excellence each brand has with its customers.” One thing was clear; Ubiquity Brands needed a comprehensive, integrated ERP solution to embrace all three companies. Their goal: find a new way to operate at the lowest possible cost and to prepare for expansion – to double in size, from $260-500M in three to five years.
Food for thought
The problem was that none of the three acquired companies had a platform worth building on to move forward. Ubiquity management knew that they were facing transformation of the organization and the infrastructure simultaneously and they needed somebody to drive these significant changes.
Rietz, with deep experience in CPG, at Quaker Oats, Dean Foods, and several smaller companies, came on board in April 2006 to assume responsibility. The search for a solution had just begun. He says that the CFO and CEO told him, “We need to implement an ERP solution. We don’t know which one, but we know we need one.” This was a breath of fresh air for Rietz. He comments, “So often it’s a difficult task to get management to make a decision like this. Essentially they said, ‘Here are your marching orders; get it done.’”
Initially the Ubiquity team feared they wouldn’t be able to afford an SAP solution. Rietz observes, “While price wasn’t the primary criterion, it was in the top critical criteria in our turnaround situation.”
“In the end, an SAP solution was our choice. With it.CPG, the pre-configured, qualified SAP All-in-One solution, itelligence demonstrated the level of functionality that could meet our needs today and support our future growth” he says.
Still, there were concerns about being able to implement in the timeframe required. The hard date was a result of the acquisition of Select Snacks. Rietz says, “It was a carve-out from another company and we had a temporary services agreement that would allow us to run the carve-outs’ software only until February 2007.” Fortunately they didn’t face a lot of resistance with the Select team because they saw the opportunity to wean themselves off of their previous corporate environment.
Actually, since all three companies were involved in the blueprint process, there was a high degree of buy-in from all parties. Everybody saw the advantage to having a single operating environment with one set of common processes and tools.
Even with the level of enthusiasm each company had for the new solution, however, they knew there was considerable risk to rushing the Select operation to implementation. “Fortunately, the itelligence it.CPG solution is pre-configured with much of the functionality we needed, and has an implementation methodology that met our needs. This increased our confidence in the ability to implement in our timeframe,” he observes.
He also acknowledges that they experienced more disruption for longer than they would have if they hadn’t had the hard deadline. “We could have profited by doing more training, but we didn’t have time to do it,” he says. “We just had to move forward.”
Wisely the team agreed to roll out just the basic modules: Sales and Distribution (SD), Materials Management (MM), Warehouse Management (WM), and Financial Accounting and Controlling (FI/CO). After six to eight weeks, things were running very smoothly. More functionality will be added soon.
…savoring the results
One important measure of Select Snacks’ performance is customer compliance, or order fill rate. “We want to be able to ship everything the customer ordered on time. While we did quite well before SAP, we are now exceeding industry average, which is 98 percent. It’s just easier and more predictable now and we can more readily manage the operation to avoid emergency drills,” says Rietz.
Even greater value will be revealed in a few months when Jay’s Foods goes live and then again with Lincoln Snacks in 2008. Rietz expects that bringing the second and third companies online will be easier because they will be able to leverage all the learning from the Select implementation. They’ll know in advance how to deal with exceptions, how to troubleshoot problems, and how to do analytics. In addition, Rietz expects to do more data conversion earlier in the process.
Rietz has some advice for other companies that need a comprehensive, integrated ERP solution: “Don’t underestimate the impact on your people and your processes,” he says. “Be sure you have full time people dedicated to the project, and commitment from the top down. Do a thorough evaluation. Really understand what’s out there and what you have to do to get it. You’ll see the value of SAP.”
In addition, he observes that, in the beginning of their process, the only people on the team who had SAP experience were the itelligence consultants. “It’s critically important to work with a partner that understands your industry and the operational and management concerns of a medium sized company like Ubiquity Brands,” he advises. You’ll also find that there are many ancillary solutions and firms that are available that can provide support for your SAP system – and that’s not necessarily true for other solutions.”
Rietz concludes, “An ERP solution implementation involves enormous changes for your people, processes, and infrastructure. If you’re in growth mode, it will be worth it. Just don’t take it lightly.”