A tainted meat scandal that made national headlines. A higher Canadian dollar that costs the company in excess of $130 million a year. A dizzyingly diverse number of products that confuses customers. With these kinds of challenges, you’d wonder why Maple Leaf Foods would want to take on an enterprise resource planning project too.
And yet, almost exactly two years after Maple Leaf Foods announced an ERP system project with SAP Canada, the company has flipped the switch in its frozen foods and poultry business units, and will soon move onto its prepared meats business unit. The entire implementation is expected to be complete by 2013, but in the meantime, modules have been popping out of the company’s IT department with nearly the same regularity as wieners at its plants. There have been 35 "go-lives" in two years, with something new deployed at least once a month. And in that time perhaps key among those new deployments was not a piece of software or changed business process but a new CIO.
"I had an opportunity to go back into consulting for one of the larger strategy firms," says Jeff Hutchinson, an American who joined Maple Leaf Foods about a year ago. "I was just about to sign the agreement when a recruiter asked if I would be interested in interviewing with Maple Leaf Foods. I said, ‘Who?’"
It’s not as though Hutchinson, who was once North American CIO for yogurt maker Dannon/Danone, was unfamiliar with the consumer food industry, but he says that despite its size, Maple Leaf Foods is not as well known in the U.S. What he might have learned at that point was less than positive. In 2008, 23 people died amid 57 confirmed cases of listeriosis, an outbreak that was linked to 191 possibly contaminated meat products that came from a Maple Leaf Foods plant in Toronto. Although the company instituted a voluntary recall before the outbreak was confirmed, the incident led to hundreds of temporary layoffs and cost the firm $37.5 million, $17.5 million more than originally estimated by management during the recall.
The ERP rollout, which has internally been dubbed Project LeapFrog, is not about preventing another outbreak. It’s about dealing with something much more serious, which had led to a restructuring plan at Maple Leaf Foods as early as 2007. As Maple Leaf Foods CEO Michael McCain told the Financial Post last October, the company was put together 15 years ago by a series of 30 acquisitions of meat and baked goods companies, a process that was relatively complete by 2004. Over the next six years, however, the Canadian dollar appreciated by 50 per cent, which has hammered its ability to keep up with U.S. rivals, as Maple Leaf operates at a cost gap of 15 to 25 per cent to its U.S. competitors.
"If it’s going to grow, it can’t rely on the exchange of the U.S. dollar," Hutchinson says. "If it’s going to compete against the U.S. and European players, it needs the right capabilities in house."