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Case Study Clemens Food Group Delivers with New Enterprise Applications Clemens Food Group is known for helping its customers bring home the bacon, and other

Case Study

Clemens Food Group Delivers with New Enterprise Applications Clemens Food Group is known for helping its customers bring home the bacon, and other products as well. Based in Hatfield, Pennsylvania, Clemons Food is a vertically coordinated company that includes antibiotic-free hog farming, food production, logistical services, and transportation. Using a responsive pork production system, the company focuses on supplying the highest-quality products to its partners as well as advanced solutions that simplify partners' operations. The Clemens Food Group family of services and brands include pork product producers Hatfield Quality Meats and Nick's Sausage Company, as well as logistics and transportation firms (PV Transport), and CFC Logistics Country View Family Farms, a hog procurement and production company managing over 100 family farms raising hogs under contract. Clemons Food Group products are sold by grocers and food service operators in the northeastern and mid-Atlantic regions of the United States. The Clemens Food Group raises and processes about five million hogs per year, managing procurement, production, and logistics services from birth to finished food products. Clemens has 3,350 employees. For a company in the perishable goods industry such as Clemens Food to be profitable, it must have a firm grasp on the timeliness and accuracy of orders and very precise information about the status of its products and warehouse activities throughout its network of farms and production facilities. Accuracy in determining yields, costs, and prices in a wildly fluctuating market can make a difference of millions of dollars. Unfortunately, Clemens Food's legacy systems were no longer able to keep up with production and support future growth. Management realized the company needed a new platform to provide better visibility into production, more efficient planning, and tighter control of available-to-promise processes. (Available-to-promise [ATP] provides a response to customer order inquiries, generating available quantities of the requested product and delivery due dates.) Clemens Food also wanted real-time information about plant profitability, including daily profitability margins on an order-by-order basis. In 2010, Clemens Food created a five-year plan to modernize its IT infrastructure with an integrated platform for systems to optimize its supply network and improve scheduling, optimization, and margin visibility in its multi-business operations. The plan gained steam in 2014 when Clemens Food announced it would develop a third pork processing plant comprising 550,000 square feet in Coldwater Township, Michigan. The addition of this facility could significantly increase volume and double revenue if it was backed by a more modern IT platform. Clemens Food's existing ERP system needed to be replaced by one that could handle increased volume and multi-plant complexities.

Joshua Rennells, Senior Vice President at Clemens Food Group, and his team extensively researched new technologies. A key requirement was to use proven best technology for what works in the perishable food industry. Where there is market volatility and inherent risks in selling a perishable product, precise information on yields and costs is especially important. Clemens Food believed SAP software was the best solution for helping the company achieve growth targets and share data across organizational boundaries with a fully integrated state-of-the-art system, and Rennells believed that the SAP S/4HANA platform would not require another significant upgrade for 15 years.

SAP S/4HANA is a business suite that is based on the SAP HANA in-memory computing platform. It features enterprise resource planning software meant to cover all day-to-day processes of an enterprise and also integrates portions of SAP Business Suite products for customer relationship management, supplier relationship management, and supply chain management. SAP S/4HANA is available in on-premises, cloud, and hybrid computing platforms. Rather than implement the new system incrementally, Clemens Food chose to implement SAP S/4HANA Finance, along with functionality for materials management and production planning in a sweeping "big-bang" approach across the enterprise. The new system needed to be operational in time for the opening of the Coldwater plant. According to Rennells, Clemens Food had used a phased approach for its previous ERP implementation 15 years earlier. That prior rollout ended up taking several years and resulted in heavy customization. By the time Clemens Food migrated to SAP S/4HANA, its legacy ERP system was linked to more than 70 applications. 369 Taking a big-bang approach was the only way to be up and running before the Coldwater plant went live. Being in the perishables industry made it imperative for Clemens Food to have master data in place when the new system went live to avoid disruptions to production or shipping capabilities. (Master data play a key role in the core operation of a business, such as data about customers, employees, inventory, or suppliers, and are typically shared by multiple users and groups across an organization.) The master data in Clemens Food's legacy system had quite a few flaws that showed up in testing. Clemens Food needed a rigorous master data cleansing effort. Clemens Food selected itelligence Group implementation consultants to help with its master data and other migration issues. itelligence Group is a global SAP Platinum Partner with over 25 years of experience. It offers a full range of services from implementation consulting to managed services for its clients. Clemens Food Group identified itelligence as a partner with deep SAP food-specific knowledge and experience, including fresh and processed meat. itelligence Group had a proprietary Hog Procurement solution available for Clemens that helped deliver an on-time and on-budget project with minimal disruption to the business.

itelligence Group had experience guiding other meat-processing companies through similar large-scale implementations. Rennells wanted itelligence to act as business process experts to help Clemens Food re-examine the way it did things. Clemens Food followed itelligence's suggestions about modifications, budget management, the overall testing cycle, and the philosophy of implementation. One especially valuable piece of project guidance from itelligence was to encourage project members to see the implementation as being led by the business rather than just an IT project. Clemens Foods started out with the project being IT-led, but after five months assigned internal leaders of the business to be the project leads. That switch forced the project team to be more objective through all the different testing phases. After each testing cycle, they had objective scoring from the dedicated team leads who viewed the project as a business process improvement. That helped the project team move closer to a finished product, rather than waiting until going live to find out it missed the mark. Including the business as equal partners when updates were instituted helped ensure that customizations were avoided. Two Clemens Food production plants went live on SAP S/4HANA in May 2017, three months before the Coldwater facility began operations. There were no business disruptions. To avoid disruption of production or shipping capabilities, the company had built in some planned downtime for production to address any issues with shipping or procurement, which are tied to the Coldwater plant's main distribution system. The planned downtime also ensured that any master data flaws potentially discovered through testing would be cleaned up and master data would be in place before the system actually went live. Management had anticipated it would take about six months to stabilize the new system, and that turned out to be accurate. Sales forecasting in the meat-processing industry has unique challenges because of the many variables from dealing with perishable products, raw material by-products, and seasonality considerations. Every Thursday, Clemens Food had run a sales report on its old legacy system that showed the previous week's sales. Information about actual profitability was delayed. Now, the company can measure profitability on an invoice-by-invoice basis, and it knows the profitability of each order right away. Prices change daily in the perishable food business, so the importance of having real-time information about profitability can't be overstated.

Deeper insights and visibility from the new system have improved customer service. With available-to-promise processes running on SAP S/4HANA and with SAP S/4HANA integrated with the company's warehouse management system, Clemens Food can assure customers placing a phone order whether there is inventory available. In the pork industry, this can be an extremely complicated task, since a single hog can be broken down into hundreds of by-products. Before implementing SAP S/4HANA, Clemens Food was able to provide the same assurance only when an order was ready for shipment. Once the new system is fully stabilized, Clemens Food plans a reporting upgrade, using SAP HANA Live views with its existing SAP BusinessObjects Business Intelligence suite. The company now has a single "source of truth," and data are integrated, whereas in the past it had to deal with similar data spread over multiple systems. With a single source of truth and the ability to put information at people's fingertips, Clemens Foods can create dashboards and focus on making reporting far simpler than it's ever been.

Question: What problem was the company facing? What management, organization, and technology factors contributed to the problem?

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