Like retail, the consumer goods industry is vulnerable to the whims of customer behaviour – emerging trends, new fashions and fluctuations in disposable income all impact the success of the brands they produce. But, unlike retail, consumer goods companies, for the most part, are manufacturing companies too.
This brings several challenges. A fall in consumer demand might be damaging regardless of industry, but for consumer goods it can lead to redundant production capacity; a sharp increase in demand can lead to supply shortfall and unhappy clients.
From a technology perspective, therefore, one challenge floats to the surface above all others. In short, how the CIO can provide the type of reliable information on which supply and demand decisions are made.
William Grant & Sonsis one of Scotland’s most famous companies, but its stable of brands – which include the world’s biggest selling single-malt whisky, Glenfiddich – can be found far beyond the Scottish highlands.
“We are approaching turnover of £1bn, have operations in 20 countries and our product is probably sold in 180 or 190 countries,” explains John Brown, IT director and programme director for global change at the group.
Brown was brought in by the company a little over three years ago to help transform the IT systems of the distiller, which, over the past 10 years, had been patched together to meet the rapid growth of the company, the result of which was a fragmented, federated IT environment poorly suited for the demands of a global organisation.
“We don’t have a single set of definitions about the performance of the business, it’s not easy to get a single view of our activities, or a view of where all of our stock sits globally at a single point in time,” says Brown. “It’s not easy to get a comparison between regions about the net sales value or the contribution of our core brands between regions because we have different definitions, local practices and ways of managing and measuring.”
The company does, however, have increasingly lofty ambitions. With annual revenue growth in the region of 10 per cent and a burgeoning footprint in the BRIC (Brazil, Russia, India and China) economies, it won’t be long until that magic £1bn revenue hurdle is overcome. After that, who knows?
“The processes, systems and approaches which have served us so well to date may not serve us in future,” explains Brown. “In fact, given the growth path that we’re on and given the strategic plan that we’ve got for the next five to 10 years, we had clearly reached a stage where we had to do something.”
Core to that has been the deployment of a new, global ERP provided by IFS, closely linked to a Hyperion planning and forecasting system.
But simply deploying a global ERP wasn’t the only challenge Brown faced. Until recently, the company had been using 12 different charts of accounts structures spread across the world which, for a company the size of William Grant, as he concedes, is “tremendously inefficient”.
A large part of his challenge, therefore, was to consolidate working practices – settling on a single set of definitions globally, for example, means that the company can now adopt a common approach to how it manages expenditure, such as advertising and promotional campaigns.
A global ERP system was a necessity, but because Brown was in the midst of such a broad and deep-rooted change programme, he went about things in a slightly different way to the usual large-scale, time consuming installation.
“We made a conscious decision at the outset – and this has served us incredibly well – that we would choose systems and use them out of the box,” he explains. “It means that we have had to change our processes. That was a huge hurdle for me to get other leaders in the business over.”
To help, he established an ‘axe committee’ – a panel to which any proposed deviation from the global model must be put in front of before it gains approval. What is interesting is that the CEO sits on the committee, leaving in no doubt of the seriousness with which the company is taking the new approach.
While the need to simplify its internal processes was an important factor in choosing the out-of-the-box approach, so was risk.
Having “seen, heard and experienced” examples of large-scale programmes that had gone massively over-budget and hadn’t delivered the full scope, Brown felt that the best way to manage that risk was to adapt the company’s approach to suit an existing product.
“Most of our processes have changed, but what we found was that the impact has been much less than we expected,” he says.
“In most cases, it just changes how we do things – in some cases it simplifies things, in some it has made things more complicated. But when you look at the overall business benefit, it’s proved to be excellent for us.
“We spend much more time now analysing information rather than trying to understand whether the information we’ve got is accurate.”
The approach will also help with the group’s rapid expansion. With around 10 new offices being opened, somewhere in the world, every year, serving those new entities with corporate information systems is a major challenge.
The concept Brown has developed is what he calls an ‘office in a box’, where technology, telecoms and infrastructure can be rolled out and brought online quickly and efficiently.
It’s another way of trying to ensure both simplicity of approach and standardisation, through which controls can be maintained and decisions made quicker and more easily.
“One of the things that the programme has done is to act as a catalyst to really get commercial, supply chain and finance round the table and thrash out how we do forecasting and who owns it,” he says. “We’ve got to the stage where we agree that we’ll only have one sales forecast, which sales and commercial own and are which they are measured against.”
Life is rarely perfect, however. While the sales-planning and forecasting capabilities of the group have been radically improved, challenges remain in matching this to manufacturing.
The production side of the business works to demand plans which Brown concedes don’t currently match up with the sales-forecasting tools. And nor are they likely to in future, he concedes. “That’s fine, actually, because with the tools and reporting that we’ve got we can see the differences – they’re visible,” he says.
“Just because the demand plan is different from the forecast doesn’t mean that we’ve lost sight – by nature they will be different, because the demand plan is what manufacturing builds to and that includes other factors, including stock, returns, pipeline stock and so on,” he says. “But now we have a different level of conversation.”
And that conversation soon turns to more business-focused issues, the types of which shareholders – in William Grant’s case, the founding family – are most interested in how to maximise cash flow and working capital and improving the customer experience.
The story of William Grant’s growth has been one of the successes of British business. The past decade has been about rapid growth and overseas expansion (about 90 per cent of sales are outside the UK). To ensure that the company is in a position to take the next step on its journey, however, demands exactly the types investment that Brown is overseeing.
Not only does it improve controls and visibility, but it has the potential to bring the company’s 1500 employees closer together, to pull regional sales teams closer to supply chain, and to provide finance with an overarching view of the entire end-to-end process.
And the exciting thing? It’s a technology-driven transformation.