Brewing a better supply chain

Tracking the ROI on IT is not always a quantifiable task.

Michael Smith, vice-president of global shared services in IT, spent his first 17 years at the Montreal-based Molson brewery in finance, where hard numbers held the answers. His next five years spent in human resources taught him that sometimes the answers weren’t so cut and dried.

“And, now, IT truly is a mix of both,” said Smith, who joined the department eight years ago.

Measuring something like improved customer service, he said, presents a challenge because “sometimes it’s quantifiable, sometimes it isn’t.”

Today, Smith applies more than just his technology expertise to help run IT operations at Molson. “Ensuring the business value and return on investment from IT spending is critically important today, more so than ever,” he said, pointing out that his finance and human resources skills have served him well.

This is because IT managers must pose the question, “Are we spending money in the right places?” said Smith, “because, generally speaking, IT is a big-ticket item.”

Standardizing on SAP

One such project at Molson that does have quantifiable results is an SAP implementation about five years ago that replaced legacy applications in an effort to standardize IT operations. “It’s difficult from an application support standpoint,” recalls Smith, “to get the skill set required to keep those legacy applications up and running.”

The biggest challenge, with an implementation of that nature, noted Smith, “is always fitting the business process to the software, rather than the other way around.”

This is because business units were used to applications that had become highly customized over time.

But, that challenge aside, Smith said Molson’s subsequent merger with Coors in 2005 was an easier transition, from an IT perspective, given that Coors was also an SAP shop.

Stocked shelves keep beer drinkers happy

With the new infrastructure in place, Molson runs its finance and supply chain applications using SAP modules, resulting in a significantly improved supply chain process across Canada.

Molson now has the flexibility to service the various supply chain models that different provinces demanded, using a single platform, said Smith.

In Quebec, for instance, beer distributors are mostly independent, while in Ontario, distribution beer stores are industry-owned.

“That’s a whole different challenge than trying to get your beer to 22,000 retail outlets and restaurants in Quebec,” said Smith.

Post-standardization, Molson can more consistently measure and forecast supply across the country, said Smith, and use that forecast to drive brewing, bottling and canning production. The result, according to Smith, is better customer service and lower inventory levels.

“That’s where the cost benefit comes from,” said Smith. “In our business, a lost sale is a lost sale,” said Smith. “People don’t leave the beer store and come back to find Molson Canadian because we happened to be out of Molson Canadian that particular day in that particular store.”

Balancing need with cost

The SAP implementation was not Molson’s only initiative to standardize IT. About six years ago, the brewery’s PC environment consisted of desktops from six different PC vendors. After systematically rationalizing hardware providers, “big dollars” were saved, said Smith.

But standardizing the PC environment also had benefits from a support perspective, and resulted in better volume discounts on the initial purchase, he added.

Smith’s finance skills again proved useful in ascertaining the business value of a PC environment that, as a result of varied user preferences, had become unnecessarily eclectic. There are requests for new technology all the time from within IT, as well as other departments, said Smith, but “our challenge is to invest in the ones that have business value, not just the ones that are cool from an IT standpoint.”

With every new BlackBerry release, requests for the new model will flood in. “It’s amazing how many people lose their current BlackBerry as soon as the new BlackBerry comes out,” he laughed.

Keeping that beer flowing

To keep the brewery’s IT operations up and running at all times, potential infrastructure and application downtime are kept to a minimum.

The servers and networks are maintained through a three-to-five-year hardware refresh cycle and good failover systems, explained Smith.

On the application side, critical response processes monitor the systems and resolve incidents as they emerge.

And, in the event of a disaster that could potentially interrupt systems for a significant period of time, Molson employs disaster recovery plans, which include secondary off-site data centres.

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