Lion to sense supply chain shifts in real time

Beer and dairy giant Lion has embarked on a large scale transformation that will enable it to sense changes in demand for products and rework its supply chain to respond.

A selection of Lion's brands.

The company - which has operations in Australia, New Zealand and Asia, and is owned by Japanese giant Kirin - is home to a slab of major beer brands like XXXX, Toohey’s, Hahn, James Boag, Little Creatures, White Rabbit and James Squire.

It also owns supermarket fast moving consumer goods (FMCG) milk brands Dairy Farmers and Pura, cheese brands King Island and South Cape, juice brands Berri and Daily Juice, and yoghurt brand Yoplait.

The company is currently undergoing a large business transformation project that spans across its commercial, sales and marketing and supply chain operations.

The leader of the supply chain part of the transformation, George Bearzot, told SAP’s annual SapphireNow conference that the efforts are about “creating visibility and connectedness right across our enterprise”.

“The reason for our transformation is, like many organisations, we’re finding the marketplace is changing very quickly,” Bearzot said.

“If you enjoy a beer, you’ve probably lived through the recent transformation in the industry with the growth of craft beers and the proliferation of the number of beers and SKUs [stock keeping units, or products] that are available at the moment.

“We live in that world. We’ve come from a world where we had a few brands and SKUs to a world now where there’s literally thousands of brands.”

Fit for the future

Bearzot said that the transformation program aims to equip Lion not just for what might happen in the next five or ten years, but “15 to 20 years out”.

Underpinning part of the transformation is the planned implementation of SAP’s integrated business planning (IBP) software.

IBP is typically associated with real-time supply chain management applications - and that is certainly the main projected use case for Lion.

“The IBP solution is essential to get us match fit and be able to compete in that future market [in 15 or 20 years’ time],” Bearzot said.

“Being able to sense demand and respond quickly to changes in demand and to have the whole supply chain aligned around that response is critical for us to compete.

“We’re not allowed to have the lags we had in the past. We have to respond much quicker than we ever have, not just with matching supply to demand, but also in our innovation as well.”

Making innovation visible

Lion also forsees other uses for IBP outside of straight supply chain management.

Bearzot said that it would act as a “key platform to manage and monitor innovation in the business” - essentially a way to manage the company’s product innovation pipeline.

More than that, however, Lion is pushing its finance team to also use IBP, in addition to the supply chain team.

“What we’re [hoping] is to use IBP as the financial planning solution for Lion as well as the demand and supply planning solution,” Bearzot said.

“When we first approached our financial colleagues in the company with that idea, it wasn’t received too well - but as we were able to work together and see the product, I have to say our financial colleagues are now extremely positive and enthusiastic about using the technology.

“Being able to model financial plans, down to a brand profit contribution level [in the tool] is pretty good.

“Being able to model that in close to real time as demand and supply costs and inputs change is a real breakthrough for us.”

Rollout to realisation

The company has been using one IBP module - for sales and operations, called S&OP - “for a bit over two years, so we’ve learned a lot about the product,” Bearzot said.

It is now planning a broader rollout of other modules in the IBP stack - there are five modules in total. It is currently in a test phase, with a pilot due from August and full rollout through 2019.

The focus is initially on deployment to its New Zealand-based operations.

“August 2018 is our go-live in New Zealand,” Bearzot said.

“It’s a big bang go live for that country [with all five modules of IBP], and we’ll be rolling that out to Australia the following year.”

Bearzot said that while Lion would deploy all IBP modules, the company is expecting “a journey to develop the sophistication, skills and capability to really get the best value from the technology”.

“We don’t expect we’re going to turn it on day one and it to be all working at 100 percent,” he said.

IBP is but one SAP technology that forms an interface between customers and the company. Other elements being deployed include SAP’s S/4 HANA enterprise resource planning system; SAP’s manufacturing intelligence, integration and analytics (MII); and Ariba to manage the company’s partner network.