Demand for nuts — and for almonds in particular — is on the rise as consumers seek healthy, nutritionally packed options for a variety of uses, from snacking to baking to gluten-free and dairy-free dietary needs. California is the world’s largest producer of almonds, providing about 80% of the global almond supply and 100% of the US commercial supply, and at the heart of the California almond market is Sacramento-based Blue Diamond Growers, Inc. Founded in 1910 as the California Almond Growers Exchange, it has become one of the largest almond suppliers in the world, with a revenue of around $1.5 billion and over 1,500 employees.
Blue Diamond is a cooperative of approximately 3,000 member growers that partner with the company to process and market their almonds. These growers produce and deliver their almonds to one of the organization’s three main California plants — located in Sacramento, Salida, and Turlock — which perform different types of processing, such as slicing and dicing, quality control, and packaging. From there, different business units move the California-grown almonds to market, including to licensed partners in over 80 countries.
With demand for almonds continuing to grow globally and its business growing alongside this demand, the company needed a way to ensure the efficiency and accuracy of its operations, which include the Global Ingredients division, the Global Retail group, and the Research and Development (R&D) department. Its existing processes were mostly manual, and information used by the different groups was stored in disparate systems, which wasn’t sustainable for continued growth. “When an ingredient in one of our products got updated or a recipe was altered, moving the change through all the channels wasn’t seamless — for example, our online store at one point listed an ingredient for a milk product that we hadn’t used for over six months,” says Steve Birgfeld, Blue Diamond’s Vice President of IT. “As a result, our R&D group approached IT to ask for help getting their arms around the recipe change process.”
Weeding Out Inefficiencies
According to Birgfeld, Blue Diamond identified the creation of a consistent, single source of data as the best way to eliminate manual, paper-based efforts. While bill of materials (BOM) data was stored in an SAP ERP system that went live in 2014, other data — such as marketing information, graphics, and recipe data — was stored elsewhere, mainly in documents housed on a web-based document management system that were then accessed by several different groups that were involved in the process.
“Documents were filled in and manually scanned and posted on the document management site, and then our plants would pull the version that they thought was the most current,” says Birgfeld. “In some cases, it wasn’t immediately clear which was the correct version.”
Regulatory compliance was another consideration. “To ensure that our technical information — such as recipe, ingredient, and product label information — is always accurate and up to date, we needed to change the way we managed this information to improve efficiency and minimize process gaps,” says Billy Ng, Senior Manager of Technical and Regulatory Affairs in the R&D department at Blue Diamond.
These factors became the key drivers for an R&D-driven initiative to rework the entire process to minimize errors, to reduce time-to-market for getting products out the door, and to ensure that the most recent version of all recipes, graphics, and materials were available. “Our business case for the initiative showed that if we can prevent one error, an implementation would almost pay for itself,” says Birgfeld.
Sowing the Seeds of Change
In the summer of 2016, the organization began a search for a solution that would meet these needs. Evaluating potential solutions and making a final selection took about three months and involved the R&D group, which initiated the project, the IT organization, and input from the cross-functional team. Since there was an already-existing SAP ERP implementation, SAP Product Lifecycle Management (SAP PLM) was one of three solutions under consideration. After comparing all three, SAP PLM was the final choice.
“We objectively assessed the products, and the leaning factor was that SAP PLM was tightly integrated into SAP ERP, while there would have to be six or seven integration points to SAP ERP if we went with a third party,” says Birgfeld. “That was the compelling reason to expand the SAP ERP suite. We also saw future integration benefits that aligned to our overall strategy, such as integration with SAP Integrated Business Planning and the quality management component in SAP ERP.”
Once the solution was selected, the discussion turned to implementation partners. One of the evaluated companies was SAP partner Linx-AS. “As one of the leading implementers of SAP PLM, Linx-AS had the right qualifications, and that’s what made us move forward with them,” says Birgfeld. “This was a critical partnership, and we could not have gotten far without them by any means.”
While the implementation project was a partnership between Blue Diamond’s business team and its IT organization, Linx-AS led the overall project — the blueprinting, implementing and configuring the solution, assisting with the data migrations and the reporting needs, and every other aspect of the project. Linx-AS also trained both the business users and the IT team on ongoing support and use of the product. (For more information about Linx-AS, see the sidebar at the end of the article.)
SAP PLM Takes Root
The implementation project kicked off in early 2017, and the main configuration of the SAP PLM system was completed by September 2017. The implementation primarily includes the recipe development functionality of SAP PLM, along with the document repository and reporting engine for SAP PLM.
While integrating with the existing SAP ERP system was straightforward, there were a few minor challenges in configuring the integrations with two external databases — one maintained by a third party and another maintained by the US Department of Agriculture (USDA) — that are used to ensure compliance with US Food and Drug Administration (FDA) requirements. “It delayed things a little bit,” says Birgfeld, “but it was no showstopper by any means.”
A bigger challenge turned out to be the data cleanup, which started almost immediately after the blueprint phase and has been ongoing throughout the project. After defining the required fields in SAP PLM, the team needed to gather and clean the data that would be used and tracked by the solution. “Getting the data accurate was a challenge because it was located in multiple places and it wasn’t always ‘data’ — it was PDFs of specs and things like that,” says Birgfeld. And once the data was clean in SAP PLM, it had to be mapped properly to the bills of materials, which the system outputs the recipes to and then sends to the SAP ERP system. Ensuring the initial alignment across the various inputs and outputs, especially given the layered specifications, was crucial.
Due to the data cleanup, the user rollout didn’t begin until early 2018. “Even though we were ready from a system configuration standpoint in September 2017, we wanted to be sure the data was ready, so we waited several months until we were confident it was,” says Birgfeld, “and then we started rolling it out.”
(L to R): Blue Diamond’s Billy Ng, Senior Manager of Technical and Regulatory Affairs; Steve Birgfeld, Vice President of IT; and Molly Giger, Technical and Regulatory Specialist
Users Are Digging In
As of early 2018, the recipe development functionality is being used by the R&D team members, who are the primary users, as well as the finance team, which is responsible for the costing aspect of the bills of materials. “We are now also starting to deploy it to our plants,” says Birgfeld, “and they will start pulling information from it to do the processing piece.” Blue Diamond launched SAP PLM to the plant operations and plant quality control teams in April 2018.
Eventually, the system will touch many different groups within the company. The marketing team will use it for labeling information, for instance, and the corporate quality assurance team will manage its specifications in the new program. Procurement will use it to plan for required packaging and materials, plant operations will use the generated bills of materials to produce the product, and the plant quality control team will use the generated specifications to test the products on the floor. “The core is this whole recipe with ingredients that go into finished goods,” says Birgfeld. “Different people are just touching different fields, essentially.”
Getting used to the SAP PLM system as Blue Diamond’s system of record has been an adjustment for users, but it is a change they are embracing, according to Birgfeld. “As more people continue to get into the system, they are seeing the value,” he says. Leadership support is an important component of managing the change to the new solution, and the project team is taking steps to ensure continued buy-in from management.
We are seeing and anticipating a lot of benefits from the overall SAP PLM implementation, especially how it relates to the overall SAP ecosystem — from the planning, to the quality, to the purchasing, and to the customer product catalog aspects of it. It all ties together and streamlines workflow for the company.
— Steve Birgfeld, Vice President of IT, Blue Diamond Growers
Reaping the Rewards
Even though the rollout is still in its early stages, Blue Diamond is already seeing benefits. The project has served as a catalyst for the review and refinement of processes across several different groups within the company, and streamlining the workflow and centralizing the data has created the potential to get products to market much sooner. “Having a single source of truth has been the biggest plus,” says Birgfeld. “If any item needs updating, you go through this PLM process that has checks and balances so that our different groups can ensure that any change does not negatively impact something else.”
“The new PLM system has drastically improved the tracking of our BOM changes,” adds Molly Giger, Technical and Regulatory Specialist in the R&D department at Blue Diamond. “The new system gives us an interface that actively checks our inputs and outputs, all within a system that’s linked to our specification system.”
The new system will also help to improve overall product quality by ensuring that the same accurate, current information is being used on everything from packaging, to the recipes that are output to the bills of materials, to the company’s website. “The workflow informs us of what we are building and enables us to get this information into the whole demand and supply planning process,” says Birgfeld.
Looking ahead, as the organization continues to grow and new international markets come on board, the ability to quickly run a compliance check on existing recipes across a particular country’s requirements will be invaluable. The ability to tap into the SAP software ecosystem going forward is another key benefit. The organization is in the process of rolling out SAP Integrated Business Planning and the quality management component of SAP ERP, and SAP PLM will feed into both to trigger demand and supply planning and support quality control for products.
“We are seeing and anticipating a lot of benefits from the overall SAP PLM implementation,” says Birgfeld, “especially how it relates to the overall SAP ecosystem — from the planning, to the quality, to the purchasing, and to the customer product catalog aspects of it. It all ties together and streamlines workflow for the company.”