by Mark Chillingworth

Warburtons mixed ERP improvements into its expansion plans

Feb 21, 2010
CareersIT LeadershipIT Strategy

“Use your loaf”: a rebuke most of us have had thrown our way at some point during our careers. In the case of Damien Ghee, IT leader at bakers Warburtons, it is a daily imperative. Ghee has been with the firm though a period of expansion and Warburtons has been able to rise in part through the impressive mix of ERP use and manufacturing. But IT didn’t become an integral part of the 140-year-old Warburtons recipe without a few challenges. As I write this another stalwart of the British pantry, Cadbury, is being swallowed by US firm Kraft, but Warburtons is still family owned, and now led by three cousins. Based in Bolton, Lancashire the company has also been slicing through the UK market with new bakeries in the south at Bristol and Enfield. “Our customers pay a premium for our freshness and the extra shelf life it gives them,” Ghee says. “The ingredients we use give back to the customer an extra day,” he says of the relationship Warburtons has with farmers. The decade has seen significant growth as Warburtons has built new bakeries. It now has 14 plants that produce over two million loaves of bread a day for national supermarkets like Sainsbury’s. Ghee says the expansion’s success is in part down to the company being very adept at quickly and efficiently expanding its supply chain. Ghee has been with the firm for four years now and first realised how IT could help the business’s manufacturing operations when on his arrival he spent a night working with a production planner. “I’ve been working in manufacturing for a long time and what fascinated me on arriving here is the velocity of the product,” he says of the fast turnaround of goods. Ghee’s first challenge wasn’t technical but promotional, as the bakers and managers had “limited confidence in the role of IT for the business”. That confidence was knocked by the SAP ERP platform that is a staple ingredient of the IT at Warburtons. Its implementation had been prolonged, taking four years from 2000 to 2004. Ghee says Warburtons took a conservative approach to the implementation, which is one reason why the integration took so long.

“They had invested in SAP with a sound business case, but didn’t track the business case, thus key business leaders didn’t think SAP was achieving its goals,” says Ghee. He brought Deloitte in to audit the implementation and assess its benefits. Deloitte found there were still issues, but it was delivering on its original premise. “Introducing SAP is bit like buying a dog for Christmas. It is not just for Christmas, it’s for life.” Ghee says the Deloitte audit was “one of the best things we did” and went a long way towards helping him convince the senior management that IT is not a one off thing and he says that now they understand the true value of technology. That relationship didn’t happen immediately for Ghee, who freely admits he made mistakes on arrival at Warburtons. “I tried to push technology on them that they were not ready for, but now they pull technology from us, which is a nice place to be,” he says. Proof of the pudding is in the eating, and Ghee has had his budget for IT investment increased for the last four years. He says getting his team to work more effectively with the organisation has played a major part in the turnaround. “One of the first opportunities was around data stored and used to run our mixers and dividers [machines which cut the dough into loaves] which were isolated from the ERP. This is essential for a bakery. “The ERP needs to be able to inform the mixers to make 200kg of dough, and the mixer needs to be able to report back that it used 199.677kg of flour to make the batch of dough; the divid-ers also need to report to the ERP that the dough was cut into 370 loaves to keep our central supply chain planner updated.” Devising a strategy for the manufacturing execution system described above was one of the first actions Ghee took, he carried out trials at the Enfield bakery. Warburtons decided not to pursue the project, but Ghee is confident it will reappraise the idea at a later date. “Now the business is more mature, and with continuous improvements in operations it wants more data,” he says.

Supply and demand A more pressing issue was also rising. Warburtons, like many bakeries, struggled to achieve perfect order fulfilment, especially if there was a fluctuation in demand. “Demand for rolls on a good summer’s day can be high, so we have to consider the possibility otherwise it’s a lost opportunity. The baking industry doesn’t have large warehouses, and our vehicles leave at 4am for the 8am shoppers so we have to account for any demand spikes,” Ghee explains. Warburtons needed a production planning system across all of its bakeries. “We take an order today for delivery tomorrow, so timing and forecasts of that order are critical. The baking starts at 4am, and we are baking to forecast for 10 hours before all the order is confirmed at 2pm.” Ghee says Warburtons must be alert to variability and being left short of product. It has to be able to quickly look across all of its bakeries to see if there are opportunities to make up for any shortfall. “Central visibility is critical.” To get that visibility Ghee brought in Wipro, which worked with Warburtons to develop a scheduling management system dubbed the Sub-Daily Production Planning and Scheduling (iSDPS) solution. It is essentially a SOA platform and consumes services from the ERP. “It allows you do to the planning and send an optimised plan back into the ERP so that the appropriate bakeries know what is needed. Ghee adds, “Wipro started off in the vegetable oil business, so they know all the attributes we require.” SAP’s Industry Business Unit took a keen interest in what Wipro were developing and Ghee sees it very much as a three-way development project, with Warburtons defining the best practice required. Now Warburtons can do its scheduling within the SAP environment without site-based planners using local spreadsheets because they were deemed faster. Scheduling is now an hour-long task, which saves time and leads to better decision making. The firm is more efficient as a result and reports that it has drastically cut the levels of bread left at the depot each day. SAP was closely involved in the iSDPS. “We are the UK’s largest baker using SAP. In the SAP world we are really small, but during the development of the system they have been really proactive in listening to us,” says Ghee. “They were opening up the ERP software with their SOA-based technology, so that developers could help other sectors, so it was a great opportunity for SAP.” Ghee arrived at Warburtons having completed a year as an insider at the German ERP specialist. “It was useful experience, but I have worked with SAP software for a long time. Working at SAP I learnt the power of reference customers. Customers want to talk to other customers. By helping SAP out, we hope they will help us out in costs.” With Warburtons now understanding and releasing the value of its SAP investment it is looking to extend the value it derives from the software. In a slower economy bakers rely heavily on their promotions and the planning of these will now harness their experience of the iSDPS. “To do more promotions the supply chain has to be good,” says Ghee. “Now product development is using SAP for collaboration through the SAP enter-prise portal. It was in the software, but until now we never really used it. There are better products out there but SAP is good enough for us. I’ve also implemented e-procurement from SAP so that we are working with the flour producers so that they can manage levels for us and we have put SAP onto BlackBerry devices so that raw material order can be approved in the warehouse.” Ghee, like many IT directors, first came into contact with SAP at Unilever. “I went to Unilever to get experience of managing an IT infrastructure,” he says of his move from Deloitte to the soap -giant after six years with the services company. “I didn’t want to be a Deloitte partner, I wanted to be a CIO. I had little exposure to infrastructure and IT management. “Unilever is a vast organisation and it’s great. Some of the stuff we were working on then on what IT can do for the business is really paying off now. I worked on the first shared services for the company, taking over IT staff globally and managing them as well as regional centres. I learnt a lot from working in IT at Unilever, and also learnt a lot about managing change.”