The Hillshire Brands Company: Accelerating Innovation with an Optimized Supply Chain

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1 2014 SAP SE or an SAP affiliate company. All rights reserved. The Hillshire Brands Company: Accelerating Innovation with an Optimized Supply Chain The Hillshire Brands Company combines a talent for quality branded food products with a passion for innovation. And Hillshire Brands knows a smooth supply chain is critical to launching new products quickly. With the SAP SNC Supplier Collaboration rapid-deployment solution, Hillshire Brands has improved the efficiency of its supply network while cutting operational costs.

2 Company The Hillshire Brands Company Headquarters Chicago, Illinois Industry Consumer products Products and Services Sausages, lunch meats, hot dogs, and other meat-centric foods Employees 9,000 Revenue US$4 billion Web Site BUSINESS TRANSFORMATION The company s top objectives Support product innovation with the ability to launch new offerings quickly Improve supply network collaboration and visibility Reduce operational costs The resolution SAP SNC Supplier Collaboration rapid-deployment solution for fast time to value Best practices recommended as part of the advanced delivery management methodology from SAP to help ensure a smooth rollout A project completed on time and within budget The key benefits Real-time and automated collaboration with vendors Higher shipping accuracy Greater efficiency in procurement transactions Ongoing savings in direct materials purchases, lower inventory obsolescence, and avoidance of revenue loss due to stock-outs Read more TOP BENEFITS ACHIEVED 14 weeks To roll out key supply network functionality 50 Critical suppliers integrated in the new system $1.5M One-time savings in reduced days in inventory See more metrics The SAP Supply Network Collaboration application helps Hillshire Brands stay even more competitive with the ability to get products to the market much faster while bringing down costs. Procurement Team, The Hillshire Brands Company 2 / 6

3 A fresh look at traditional family fare The Hillshire Brands Company has a very specific recipe for success: combine a talent for producing convenient meals and snacks with a passion for innovating new products. It s working. This formula delivers nearly US$4 billion in annual sales and delicious foods for your family to enjoy at breakfast, lunch, and dinner. Hillshire Brands is justifiably famous for traditional sausages and such iconic brands as Jimmy Dean, Ball Park, and Hillshire Farm. But the company is constantly striving to bring tasty new products to hungry consumers as well. In fact, Hillshire Brands goal is to earn 13% to 15% of its retail sales from new innovations by the end of the fiscal year in Bringing new products to market takes fresh thinking in both a company s product development and its business operations. One of the things we always talk about in our supply chain is how can we get products to the marketplace even faster, says Tina Guider, materials analyst and SNC project manager at Hillshire Brands, especially when we have such competition in our industry around new offerings. Company leaders realized that part of the answer was improving collaboration with the suppliers that provide the ingredients and packaging needed to produce Hillshire Brands products. An optimized supply chain would yield better planning, improved shipping accuracy, and lower operational costs. For Hillshire Brands, the right recipe for innovation in its supply chain was the SAP SNC Supplier Collaboration rapid-deployment solution. The Hillshire Brands procurement strategy is pretty straightforward. It s to utilize our supply base as an enabler to increase our innovation, speed, and capacity while maintaining a flexible and adaptable material supply. Tom Kowalski, Director Procurement, The Hillshire Brands Company 3 / 6

4 The rapid-deployement solution lives up to its name Hillshire Brands heritage of delicious smoked sausages dates back some 80 years, but the current company is actually quite new. In 2012, while still known as Sara Lee Corporation, it separated and spun off two independent companies with D.E MASTER BLENDERS 1753 focused on international coffee and teas, and The Hillshire Brands Company focused on branded, convenient foods. The SAP Supply Network Collaboration (SAP SNC) application was already part of Sara Lee s software landscape. But Hillshire Brands capabilities had not been fully explored. With a new organization and an updated corporate vision, company leaders saw the packaged services and best-practices approach of a rapid-deployment solution as the best way to quickly optimize the SNC environment and gain full value. The accelerators and advanced delivery management methodology made a big difference. As part of the rapid-deployment solution support, SAP provided a project manager and an organizational change manager. SAP consultants that were on-site every day walked the procurement team through the tool s design and guided them along the implementation. The Hillshire Brands team supported the rollout by focusing on training personnel from the company s 13 manufacturing plants and dozens of key suppliers. A three-day employee training session covered each of the three functional areas to be supported: purchase orders, scheduling agreement release processes, and supplier-managed inventory (SMI). The successful project was rolled out in 14 weeks, on time and within budget. Hillshire Brands goal is to get our suppliers more involved with the planning for the materials they provide us. As a result, we can significantly reduce the amount of inventory at our plants. Tina Guider, Materials Analyst and SNC Project Manager, The Hillshire Brands Company 4 / 6

5 Better support for continued innovation About 50 suppliers are currently on board with the revitalized SNC system, and Hillshire Brands is savoring the advantages of real-time and automated collaboration. Improved shipping accuracy is high on the benefits list, says the procurement team. With notifications of inbound shipments, Hillshire Brands now knows in advance exactly what it will receive. Plant managers can catch errors early, better prepare for deliveries, and reduce process cycle times. Suppliers are also no longer limited by weekly demand and forecast reports. Access 24x7 to this information lets vendors plan proactively and respond more quickly to production changes. This collective insight is particularly important to meeting Hillshire Brands goal for innovation. Sales and marketing organizations can work more effectively with plant managers and suppliers to ensure everything is in place to support an upcoming promotion or product launch. KEY BENEFITS 14 weeks To roll out key supply network functionality Up to 50% Improved efficiency in certain processes 50 Critical suppliers integrated into the new system Up to 80% Of targeted inventory to be managed by vendors 13 Manufacturing plants optimizing supply chains 5 / 6

6 The Hillshire Brands Company The next course The focus for the Hillshire Brands procurement team is to ramp up SMI processes over the next two years. They see sharing the responsibility for managing materials with suppliers as critical to reducing the company s overall inventory. The team notes that Hillshire Brands plans to have suppliers themselves manage up to 80% of the inventory in some areas. As a result of reduced days in inventory alone, Hillshire Brands has forecasted a one-time savings of US$1.5 million. Add this to an expected ongoing annual savings of around $500,000 in direct materials expenses, reduced inventory obsolescence, and avoidance of revenue loss due to stock-outs. Innovation runs strong at Hillshire Brands. So for consumers, the company s leaner and more efficient supply chain means we should look for even more new products on the shelves of our neighborhood grocery stores. Hillshire Brands has already brought us pancakes and sausage on a stick. What s next? CMP29926 (14/07) 6 / 6

7 No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an SAP affiliate company. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. Please see for additional trademark information and notices. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP SE or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP SE or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP SE s or its affiliated companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP SE or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.

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