Case Study Chapter 9: Title- "Clemens food group delivers with new enterprise applications"

QUESTIONS

9-13: Why would supply chain management be so important for clemens food group?

9-14: What problem was the company facing? What factors contributed to this?

9-15: Was SAP S/4HANA a good solution for Clemens Food Group?

9-16: What management, organiztion, & technology issued had to be addresed to implement SAP S/4HANA at Clemens food Group?

READING IS BELOW

. lemens Food Group is known for helping platform for systems to optimize its supply network its customers bring home the bacon, and and improve scheduling, optimization, and margin vis- other products as well. Based in Hatfield, ibility in its multi-business operations. The plan gained Pennsylvania, Clemons Food is a vertically coor- steam in 2014 when Clemens Food announced it would dinated company that includes antibiotic-free hog develop a third pork processing plant comprising farming, food production, logistical services, and 550,000 square feet in Coldwater Township, Michigan. transportation. Using a responsive pork produc- The addition of this facility could significantly increase tion system, the company focuses on supplying the volume and double revenue if it was backed by a more highest-quality products to its partners as well as ad modern IT platform. Clemens Food's existing ERP sys- vanced solutions that simplify partners' operations. tem needed to be replaced by one that could handle The Clemens Food Group family of services and increased volume and multi-plant complexities. brands include pork product producers Hatfield Joshua Rennells, Senior Vice President at Clemens Quality Meats and Nick's Sausage Company, as well Food Group, and his team extensively researched new as logistics and transportation firms (PV Transport), technologies. A key requirement was to use proven and CFC Logistics Country View Family Farms, a hog best technology for what works in the perishable food procurement and production company managing industry. Where there is market volatility and inher over 100 family farms raising hogs under contract. ent risks in selling a perishable product, precise in- Clemons Food Group products are sold by grocers formation on yields and costs is especially important and food service operators in the northeastern Clemens Food believed SAP software was the best so- and mid-Atlantic regions of the United States. The lution for helping the company achieve growth targets Clemens Food Group raises and processes about five and share data across organizational boundaries with million hogs per year, managing procurement, pro a fully integrated state-of-the-art system, and Rennells duction and logistics services from birth to finished believed that the SAP S/4HANA platform would not food products. Clemens has 3,350 employees. require another significant upgrade for 15 years. For a company in the perishable goods industry SAP S/4HANA is a business suite that is based such as Clemens Food to be profitable, it must have a on the SAP HANA in memory computing platform firm grasp on the timeliness and accuracy of orders It features enterprise resource planning software and very precise information about the status of its meant to cover all day-to-day processes of an enter products and warehouse activities throughout its prise and also integrates portions of SAP Business network of farms and production facilities. Accuracy Suite products for customer relationship manage- in determining yields, costs, and prices in a wildly ment, supplier relationship management, and supply fluctuating market can make a difference of millions chain management SAP S/4HANA is available in on- of dollars. Unfortunately, Clemens Food's legacy sys- premises, cloud, and hybrid computing platforms. tems were no longer able to keep up with production Rather than implement the new system incre- and support future growth. Management realized the mentally, Clemens Food chose to implement SAP company needed a new platform to provide better S/4HANA Finance, along with functionality for ma- visibility into production, more efficient planning terials management and production planning in a and tighter control of available-to-promise processes. sweeping 'big-bang approach across the enterprise (Available-to-promise [ATPJ provides a response The new system needed to be operational in time to customer order inquiries, generating available for the opening of the Coldwater plant. According to quantities of the requested product and delivery due Rennells, Clemens Food had used a phased approach dates.) Clemens Food also wanted real-time informa for its previous ERP implementation 15 years ear- tion about plant profitability, including daily profit. lier. That prior rollout ended up taking several years ability margins on an order-by-order basis. and resulted in heavy customization. By the time In 2010 Clemens Food created a five-year plant Clemeny Food mim Taking a big-bang approach was the only way to be Coldwater facility began operations. There were no aap and running before the Coldwater plant went live. business disruptions. To avoid disruption of produc- Being in the perishables industry made it impera- tion or shipping capabilities, the company had built i tive for Clemens Food to have master data in place some planned downtime for production to address an when the new system went live to avoid disruptions issues with shipping or procurement, which are tied to production or shipping capabilities. (Master data to the Coldwater plant's main distribution system. The play a key role in the core operation of a business, planned downtime also ensured that any master data such as data about customers, employees, inventory, flaws potentially discovered through testing would be or suppliers, and are typically shared by multiple cleaned up and master data would be in place before users and groups across an organization.) The master the system actually went live. Management had antici data in Clemens Food's legacy system had quite a pated it would take about six months to stabilize the few flaws that showed up in testing. Clemens Food new system, and that turned out to be accurate. needed a rigorous master data cleansing effort. Sales forecasting in the meat-processing industry Clemens Food selected itelligence Group imple- has unique challenges because of the many variables mentation consultants to help with its master data and from dealing with perishable products, raw material other migration issues, itelligence Group is a global by-products, and seasonality considerations. Every SAP Platinum Partner with over 25 years of experience. Thursday, Clemens Food had run a sales report on its It offers a full range of services from implementation old legacy system that showed the previous week's consulting to managed services for its clients. Clemens sales. Information about actual profitability was delayed Food Group identified itelligence as a partner with deep Now, the company can measure profitability on an SAP food-specific knowledge and experience, includ- invoice-by-invoice basis, and it knows the profitability ing fresh and processed meat itelligence Group had of each order right away. Prices change daily in the per- a proprietary Hog Procurement solution available for ishable food business, so the importance of having real- Clemens that helped deliver an on-time and on-budget time information about profitability can't be overstated. project with minimal disruption to the business Deeper insights and visibility from the new sys- itelligence Group had experience guiding other tem have improved customer service. With available. meat-processing companies through similar large- to-promise processes running on SAP S/4HANA and scale implementations. Rennells wanted itelligence with SAP S/4HANA integrated with the company's to act as business process experts to help Clemens warehouse management system, Clemens Food can Food re-examine the way it did things. Clemens Food assure customers placing a phone order whether followed itelligence's suggestions about modifica there is inventory available. In the pork industry, tions, budget management, the overall testing cycle, this can be an extremely complicated task, since and the philosophy of implementation. a single hog can be broken down into hundreds of One especially valuable piece of project guidance by-products. Before implementing SAP S/4HANA, from itelligence was to encourage project members Clemens Food was able to provide the same assur to see the implementation as being led by the busi- ance only when an order was ready for shipment. ness rather than just an IT project. Clemens Foods Once the new system is fully stabilized. Clemens started out with the project being IT-led, but after Food plans a reporting upgrade, using SAP HANA Live five months assigned internal leaders of the business views with its existing SAP BusinessObjects Business to be the project leads. That switch forced the proj Intelligence suite. The company now has a single ect team to be more objective through all the differ "source of truth and data are integrated, whereas in ent testing phases. After each testing cycle, they had the past it had to deal with similar data spread over objective scoring from the dedicated team leads who multiple systems. With a single source of truth and viewed the project as a business process improve- the ability to put information at people's fingertips, me that had that temavant Claman Fadecanate boards and non