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Case Study

 

ConAgra Foods Innovates Its SAP Menu

insiderPROFILES

October 1, 2010

ConAgra Foods made the decision to start consolidating its technology years ago — and today its R&D, financial, order management, IT services, data center, and supply chain management operations all run in the same SAP system landscape. So what benefits is ConAgra Foods reaping by moving to a “single version of the truth?” Find out in this deep-dive case study.
 

Growing companies with years of acquisitions behind them often find themselves juggling various and disconnected IT systems. With limited visibility into the daily operations of the business and conflicting legacy data, executives managing multiple legacy systems face challenges when it comes to uncovering supply chain efficiencies or quickly responding to market demands, procurement issues, or regulatory pressures.   

ConAgra Foods, a consumer and commercial food maker with popular brands like Chef Boyardee and Orville Redenbacher’s, has faced this very consolidation challenge head on — with dramatic results. Since 2000, ConAgra Foods has been steadily consolidating its technology with a standards-based SAP environment, centered in the company’s Nebraska headquarters.

After more than 90 years of acquisitions, dramatic growth, and numerous brands with strong identities of their own, the company ended up with an arsenal of different software systems from various research and development, IT, finance, and saless departments.

Today, ConAgra Foods’ data centers, research and development, financial, order management, IT services, and supply chain management operations all run in the same system landscape. By having standard systems and consolidated master data — rather than spreading information across more than 100 legacy systems — ConAgra Foods has been able to respond swiftly to changes in its marketplace, control its production costs from development, minimize risk across its supply chain, and focus more on delivering innovation.

Consolidation: What a “Single Version of the Truth” Really Provides

One clear benefit of standardizing information on ConAgra Foods’ SAP system is the impact it has had on relationships with vendors and retailers. With the earlier overabundance of systems, retail customers such as grocery stores, club stores, and mass merchandisers would deal with various ConAgra Foods brands — and their individual systems. When placing an order, it could seem to the customers that they were really dealing with individual vendors supplying many different products. Now, ConAgra Foods operates more like a single vendor to its major customers. When these customers place orders today, their account representatives can give them a seamless view into all their orders across the entire brand family.

Another area where ConAgra Foods is becoming more innovative is in the supply chain. Consolidating its systems on SAP ERP has sped up the company’s response to risk and safety concerns in this area, says Rod Welsh, IT Director at ConAgra Foods. Referring to the January 2009 Peanut Corporation of America product recall, he reports that ConAgra Foods could respond swiftly — pinpointing its exact suppliers and sources and quickly learning that its own supply chain did not contain any of the recalled peanut products. As a result, ConAgra Foods was able to promptly assure its customers that its products were safe and were not affected by the recall. “In our former world, we could’ve spent days researching to see if we bought any product from the company,” Welsh says of the incident. “In today’s world, in less than an hour, we scoured through all of our data in SAP ERP and confirmed that we bought nothing from that company.”

Finding Hidden Efficiencies in Recipe Management

The rollout of SAP Recipe Management, a major initiative of ConAgra Foods’ SAP Supply Chain Management (SAP SCM) implementation, has also produced quantifiable efficiencies. Recipe management is critical for the company because of the tens of thousands of material and process specifications that go into its lines of consumer and commercial products.

Before system consolidation, the product development team and the procurement team purchased ingredients separately, and recipe management had often been siloed into mainframe software and spreadsheets. Without a way to access this information centrally, the company’s product development centers could wind up duplicating efforts and introducing new raw materials that were similar to existing ones. With easy access, product developers can be more selective and only utilize new raw materials when it provides a significant consumer or cost benefit.

Rectifying this inefficiency is a benefit that emerged from the consolidation, according to Dan Wheeler, PLM Manager at ConAgra Foods. “Why wouldn’t we try to use the same materials across all of our products, give leverage to our procurement department for bigger buys, and become more innovative and strategic in how we partner with vendors?” he asks. “That consolidation of recipes and specifications had a huge impact on the procurement process to really leverage our buying power.”

Integrating SAP Recipe Management

ConAgra Foods’ SAP Recipe Management implementation has so far involved 350 users on the product development side of the business, where formulas for the company’s many food products are created. The application is used to set standards for incoming raw materials and to capture process and quantity data that will be used in the final product. The screenshots below are examples of interfaces that SAP Recipe Management users see.

SAP Recipe Management

A general recipe in SAP Recipe Management displaying specifications, material links, mass quantities, and percentages
SAP Recipe Management

A summary view in SAP Recipe Management that displays rolled-up data about a formula’s diet suitability and allergen information
RM

A tab in SAP Recipe Management that displays the recipe hierarchy -- how a general recipe relates to a master recipe that is approved for production
RM

A view in SAP Recipe Management that displays rolled up nutritional data for a formula

In blueprinting the migration to the SAP software from the previous recipe management practice — which varied from laboratory to laboratory and plant to plant — the project team experienced a major breakthrough. “Initially, the thought was to dump the data out of the five or six different legacy systems, hand that over to product development or the specification team, and manipulate that information to get it into SAP ERP so we can use it in this new world,” recalls Don Jones, Senior Director of Research and Development at ConAgra Foods.

“Then, we had a lightning-bolt moment: We decided that to make certain we captured the most current information, we would go directly to the plants for the desired information.”

This plant-by-plant reconciliation, while it required special teams working in advance, began to dramatically improve the quality of master data when plants went live with SAP software. “The first couple of stages when we went live, we were touching some recipes upwards of 10 to 15 times just to update the data,” says Wheeler. “In our latest set of go-live plants, if we have to touch a recipe at all, it’s only once or twice. The number of recipes that need these data updates has decreased dramatically. We’ve learned as we’ve progressed, and it’s become much more efficient.”

Improved Organizational Communication

Before embarking on the system consolidation project, ConAgra Foods focused on organizational consolidation — that’s what started driving the goal to grow together as one. The different groups in the organization began to look for ways to start talking to each other and use each other’s information — in ways they formerly didn’t think possible because they looked and acted so completely different.

“Previously, when we got a search request, we had to ask five different people to look in their system, and then we would pull all of it together and try to sort it and figure it out,” says Don Jones. “Now, having it all in one system, we can do it more effectively and efficiently.”

Beth Perry, Lead Business Analyst at ConAgra Foods, credits a big piece of that improved organizational communication to the integration that SAP Recipe Management supports. “It enables us to transfer the information that’s created by our R&D groups to the other pieces of the organization through SAP NetWeaver and through SAP ERP to our plants, to our quality people, to our sales people, and to our procurement people,” she says.

Benefits and Roadmap

Integrating recipe management with supply chain management is paying off for ConAgra Foods. Product developers at ConAgra Foods have greater visibility into raw materials already in use when developing new products. As a result, the company can procure food materials more efficiently from fewer sources and control inventory more effectively, thus avoiding unnecessary costs. In the case of food recalls and alerts, SAP Recipe Management allows for greater flexibility and shorter response time. The company is also looking at ways to extend the solution to support the food industry’s comprehensive and highly regulated labeling requirements.

The SAP SCM rollout project for the consumer food business is still ongoing, with a projected completion date in 2010, but procurement via legacy systems has already stopped. Plans are in place to expand consolidation on an SAP NetWeaver landscape to ConAgra Foods’ commercial foods operations, which serve schools and restaurants, and to eventually include its international business as well.

Taking a Standard Approach

Throughout ConAgra Foods’ move to SAP systems, standardization was key. “That goes all the way back to our initial SAP ERP implementation for order-to-cash through SAP Recipe Management and the SAP SCM rollout,” says Dan Jones, VP of IT. “There have been a few areas where we had to customize the functionality, but generally, we’ve either made our business process fit or transformed our business process to align more closely with the SAP process. We have worked very hard to implement standard SAP software and limit customization. Overall, we have truly taken a ‘vanilla’ approach to implementing the technology the way it was built.” 

Creating Master Recipes for Success

Large companies with complex supply chains and rapidly changing product lines need to record and access the formulas for making each product, along with data on the process used to make it and the equipment needed. Managing these recipes efficiently is critical in controlling both cost and risk.

ConAgra Foods maintains three kinds of recipes:

  • A general recipe developed to meet specifications for a product, including its characteristics and price point
  • A site recipe that reflects the equipment or capacity at specific plants for manufacturing the specific product
  • A master recipe used in production once product trials are completed 

The challenge is to maintain recipe data that can be measured against the results of laboratory tests or customer trials, ensure that the recipe that arrives from the laboratory can be moved swiftly and reliably into production, and respond quickly when a product recipe needs to be changed.

chart

The multiple steps ConAgra has devised for its successful approach to recipe management involve master recipes that are fine-tuned with each trial

Prior to integrating SAP Recipe Management as part of its supply chain management system, ConAgra product developers used a variety of software tools and formats to manage recipes. Today, the company has developed a sophisticated process that uses SAP technology to create recipes in RM that can be swiftly reformatted into master recipes. The result is what the PLM team refers to as “production-friendly recipes.” Dan Wheeler, PLM Manager, says, “It’s really about taking the recipes developed by R&D and modifying them to serve the purposes of manufacturing, so product developers can concentrate on actual development.” 

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