The Winning Hand for the Consumer Products Industry

Feature Article | January 7, 2004 by admin

Industry trends

Pretko noted that trends in the consumer products industry include:

  • Product focus on core competencies as well as outsourcing
  • Customer focus with visibility to pricing and inventory
  • Logistics focus with more customization and make-to-order manufacturing

Tracy Butler, Vice President of the Kentucky Division at Hawaiian Tropic, illustrated the complex manufacturing processes at her company, the largest manufacturer of private label sun-care products. Hawaiian Tropic uses over 400 ingredients and 125 formulations in its manufacturing processes. Responding to a recent consolidation of manufacturing and distribution systems, Hawaiian Tropic chose mySAP All-in-One for its software and IDS Scheer Sigma as its partner. During implementation, Butler and her team recognized the value of adopting SAP Best Practices to facilitate consolidation and support business processes.
Pretko advised participants to seek out solutions and partners that are aligned with the trends in their industry. For example, SAP offers solutions for NPDI (new product development and innovation) and trade promotion management, which accounts for 60 percent of all sales in the consumer products industry.
Billy Payne, a partner in Gleacher & Co., echoed that thought when he asked attendees, “What happens when ‘your dog catches the car?’ You’ve been chasing success for all these years, and now you’ve achieved it. What do you do with it?” Answering his own question, he responded, “You turn to partners who embrace your goals and objectives.

Time for a change

Speaking under the slogan “The wrong time can be the perfect time,“ Payne noted that today is a critical time for American businesses. Many owners of small and midsize business are asking themselves if this is the right time to change business partners or make investments.
Confusing times lead some business owners to focus on preserving capital and following the lead of others. Fear of failure is inhibiting the ability to take chances and make changes. Whether it’s fear of failure or fear of success, innovation is stymied.
Paraphrasing Hannibal’s command to his generals to either “find a way or make one” through business obstacles, Payne urged the audience to consider what’s possible when you pick the right partner.

People, processes, and technology

Jim Hutchinson, Senior Vice President of supply chain integration at Brown-Forman Beverages, a leading producer and marketer of quality wines and spirits, told business owners: “Focus on people, processes, and technology, in that order.“
Hutchinson wishes that his team had put more emphasis on people issues and managed the change management aspects of a solution implementation more closely. Butler advises involving as many employees as possible through newsletters, informal meetings, testing, and training. But both agree with Payne that the selection of a good partner is often the difference between success and failure
Hutchinson encouraged participants to become intimately familiar with their own business processes. Learn how each person carries out his or her role in each process. Determine what’s working and what isn’t. For example, Hutchinson recommended “the removal of Excel from every PC remotely involved in the planning process.” That statement apparently touched a nerve, as many in the audience nodded in agreement.
While Hutchinson’s organization focused their efforts on its business processes, his partner accenture handled the technology. “That’s their job.” In addition to tending to technology, the partner kept Hutchinson and his team on schedule. “We learned to scale back on our ambitions and desires.”

Benefits of a process orientation

And what were the benefits of a process orientation rather that a technology focus? Hutchinson quickly listed the results for Brown-Forman Beverages.

  • Inventory turns up 30 percent
  • Out-of-stocks down to 0.1 percent
  • Payback in less than 12 months
  • 45 percent return on investment

Continuous improvement

Both Butler and Hutchinson are believers in continuous improvement. First, prioritize what needs to be done. Then examine what’s involved (people and technology) and how much it’s going to cost. Butler is looking at direct store delivery, mobile devices for drivers, and market segment evaluation. Hutchinson’s next project involves opening portals for customers and suppliers. From his experience, integration of business partners in his business processes is possible, necessary, and valuable.

Support for the future

Hawaiian Tropic and Brown-Forman share an industry segment, but they are at opposite ends of the spectrum when it comes to size. However, both companies can rely on solutions and support from SAP: mySAP All-in-One for Hawaiian Tropic and mySAP ERP for Brown-Forman.
Hutchinson agrees with thousands of other SAP customers that SAP delivers the best value proposition for the present and the future – whether you have 20 employees making custom backpacks or 20,000 building airplanes – or somewhere in between. “SAP has the longevity and functions to stay with us to the future.”

Further information:

To find out more about SAP solutions for small and midsize businesses, visit our Web site at www.sap.com/smb. For information about all SAP solutions, go to www.sap.com/solutions.
Other Web sites:
www.hawaiiantropic.com
www.brown-forman.com
www.gleacher.com
www.ids-scheer.com/sigma

Brenda Mackay

Brenda Mackay

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