Global information sharing at its best

"The PDM [product data management] system has contributed significantly to the shortening of the product change cycle, which now represents less than a quarter of the time previously taken,” says Diageo’s global IS programme manager Robin Miller. “For example, in the UK, our bill of materials accuracy now exceeds 98% and part data accuracy is also now in the high 90s.” The story really is quite an unusual one as most firms that introduce PDM are discrete or hybrid manufacturers with complex, large products or assemblies. That means they have to deal with complex, multi-layered bills of material (BOMs), lots of change control and the need to share this information with other downstream departments, remote sites and suppliers. This is where PDM software originated from, and so most applications to date have been developed with large discrete manufacturers in mind. But the fact is, process manufacturers can also benefit from PDM. Diageo is one of the world’s major alcoholic drinks manufacturers with production, sales and distribution sites world-wide. Formed in December 1997 through the merger of Guinness and GrandMetropolitan, the company is famous for immense brands such as Smirnoff Ice, Baileys, Guinness and Johnnie Walker Black Label. There are more than 28,000 employees world-wide and the group turnover was around £13 billion last year. Back in 1996, Miller explains that the UK operation needed software to support brand change. “In 1994, it took us 10 months to do a major brand re-design of our Johnnie Walker Red Label brand. We’ve cut this time by about two-thirds now.” The company had been running a number of legacy workflow and ERP (enterprise resource planning) systems to control any product-related changes. These could range from bottle size to screw cap changes or label amendments. Miller says the system routed any product changes to the relevant parties, but as time to market pressures increased, the processes and systems simply couldn’t cope. So in 1997, the company decided to re-engineer the brand change process and look for a suitable PDM system that could handle this on a global basis. “We didn’t want to develop another bespoke system. We wanted a low-risk investment and opted for SherpaWorks [originally supplied by Sherpa, now EDS]. The important thing for us was that the chosen vendor recognised that our issues were business issues not technical ones.” And the Guinness-GrandMetro merger only added to the complexity. It meant there were multiple ERP systems in the company and fractured data warehouses. “The crucial deliverable was the use of a common coding system for all products across the merged business. Common SKUs [stock keeping units] were an essential foundation for PDM,” says Miller. Relatively simple BOMs Diageo typically has BOMs with a maximum of four levels and 15 components. Although BOMs are relatively simple, the average life of an SKU is only two to three years because of re-designs or market changes and seasonal promotions. There are more than 14,000 active SKUs globally within the compan, and, of these, 85% are now managed by SherpaWorks. “We’re looking at how best to incorporate the remaining 15%, which include Guinness Beers,” says Miller. PDM software consultancy firm and Sherpa specialist Solass became involved with the project in 2000, having been involved with the project from the start as part of the former Sherpa business. Miller says help was needed at this time in how to actually distribute product information globally with other Diageo sites in the US and Europe. “Phase one was UK-centric with lots of business process re-engineering. We had to agree on one single business process for brand change globally.” So how does it all work now? Diageo’s global PDM manager Derek Strange explains: “There is one central Unix database and server based in the UK which is accessed by 600 global users. Brand change [the people in charge of product and component specifications] are the heavy users; then there’s order management, procurement and finance. Each of the 15 Diageo sites has a local Sherpa client which helps cut down traffic over the WAN [wide area network].” The PDM system uses common IDs and global descriptions of components and products as its foundation, but Strange warns that achieving this wasn’t easy. “We had to gain acceptance first. We spent a lot of time gaining a concensus across the business that this was the way forward and incorporating the different business requirements,” he says. The system maximises the number of pick lists for information such as brand, alcohol type, packaging, market data, product shelf life, costs, primary routing information, etc. There’s engineering change control, sign-off and every category of part within a BOM has a details tab containing a description of the component and specific information for that particular category. And because the PDM software is a true global system, when a change is made by a user anywhere in the world, all systems are updated and the change is documented and recorded in SherpaWorks for traceability of end product (it used to be recorded on paper). “I’d say we’ve invested £2.5m to £3m in PDM to date,” says Strange. “About a third of that was internal: people, training, etc. A third was spent on hardware, software and upgrading our infrastructure, and the rest on consultancy and software development.” The biggest single benefit from PDM has been having product changes reflected immediately on a global basis. Andy Robertson, UK brand change case manager says: “Before SherpaWorks, other people were blind to the impact our changes were having on other areas of the business. Brands were discontinued but local sites were still taking orders without knowing this.” Alex Sneddon, UK brand change data manager says the UK brand change department has now used PDM to cut the number of live SKU items over the last 18 months from 8,500 to 4,800 and the number of components from 21,500 to 8,000. “And we’ve also championed the use of application integration (AI) technology throughout the company which will minimise change to interfaces as customer needs evolve. There are now AI links to all nine UK downstream systems requiring PDM data.” Dave Bickerstaff is the IS business manager for the UK brand technical centre. His PDM benefits perspective: “We have 25 users responsible for creating product data for UK-produced brands from three bottling plants. We needed a mechanism for tracking change through the business. Before SherpaWorks, we were using a bookmarking system [called Staffware] to track change. It took us 40 to 60 days for a minor product change to get sign off. We initially introduced a workflow system within Lotus Notes to complement it. This functionality has now been incorporated into Sherpa Works and the time is now down to about 12 days. Communication is better now as we are all looking at the same data on-screen. And the people who own the data key it in themselves and to one system only.” Product visualisation solved The PDM system also gave Diageo unexpected benefits in customer order management. Robertson explains: “Our Amsterdam site had a major problem visualising the packaging for brand changes. They wanted to send a picture of the shipping case and labelled bottle to our Brazilian warehouse with dimensions, weights, etc. We can now get all this information using PDM.” And there’s more. Miller: “Lufthansa [the German Airline] de-listed two of our products because they didn’t fit into the drinks tray. With PDM, we won’t have problems like this in the future.” There are benefits to manufacturing too. PDM has improved data integrity to the shopfloor systems. “Stores receive packs of labels and can check on-screen in SherpaWorks if the supplier has sent us the correct label. Our product quality has improved as a result.” Brand registration, also a thorn in the firm’s side, has been solved by PDM. “Many markets we export to charge registration fees to ship a brand. The license has an expiry date and PDM helps by notifying us before it expires. It also tells us what documentation we require for each market,” says Strange. Altogether very impressive. Diageo is now standardising on IT globally. For ERP (enterprise resource planning), the firm had a mixture of systems from suppliers: SAP, Cincom, JD Edwards, JBA (Geac) and others. It’s standardising on SAP over the next four years, while for supply chain planning, its rolling out Manugistics. EDS’ PDM is supplying product, component and BOM data to the ERP and supply chain systems, and proving its value in getting the business to perform well in what is a fast-changing global market.