Arnott's

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Fujitsu Services Plus - Helping Arnott’s to transform its business

As Australia’s favourite biscuit maker for more than 135 years Arnott’s is a local icon. The company is the largest producer of biscuits in Australia and the nation’s second largest supplier of snack food. It is also a growing exporter to the Asia Pacific and, since being acquired by the Campbell Soup Company in 2001, has been the Asia Pacific headquarters of one of the world’s largest food manufacturers.

In recent years, Arnott’s has faced cutthroat competition in the Australian grocery market, including a margin squeeze and intense pressure to retain its products as top national brands in their categories. The company has also had to respond to major changes in its distribution relationships with Australian supermarkets, which are the main retailers of its products. In addition, it is unrolling a challenging growth strategy for the Asia Pacific, including building or launching operations in major markets such as China and Indonesia.

Arnott’s has responded to these challenges by embarking wholeheartedly on business transformation. To improve its competitive position, the company is moving to reduce IT costs and improve its ability to launch new products with more flexible business processes.

Simultaneously, it is deploying new business-to-business systems that align with the supermarkets’ new distribution strategies. This involves a major shift from direct store deliveries to factory gate pricing/primary freight models, including outsourcing some warehousing, distribution and logistics functions. At the same time, Arnott’s has moved to streamline business processes so they can be used as a model for operations launched in growth markets like China.

The company began its relationship with Fujitsu in 2002 as part of its drive to cut IT costs through outsourcing. The success of that arrangement meant Arnott’s soon deepened its partnership with Fujitsu to help fulfil other technology goals, including rolling out a new SAP enterprise resource planning system and customer relationship management and business-to-business platforms.

A recipe for success

Fujitsu has managed a major outsourcing contract covering data operations and applications portfolio management since 2002, helping Arnott’s improve service delivery, manage baseline costs and drive more value from its IT assets. Under the five-year, $20 million agreement, Fujitsu manages critical business applications, a data centre and dual site disaster recovery services for Arnott’s in Australia and the regional operations of Campbell Soup.

Fujitsu’s provides full lifecycle management for Arnott’s portfolio of business applications. These include BPCS, CAS, Manugistics, Oracle and Tibco, as well as a host of off-the-shelf and bespoke applications. Fujitsu hosts Arnott’s AS/400, AIX, HPUX, Sun Microsystems and Microsoft Windows servers at its Sydney Internet Data Centre. It also provides database administration, system administration, system software maintenance, applications software maintenance and 24-hour help desk services.

In 2004, Fujitsu began assisting Arnott’s and the company’s partner, IBM Business Consulting Services, to roll out an SAP platform and improve business intelligence capabilities. The new platform will enable Arnott’s to slash costs by replacing a complex patchwork of back-end applications that support core business processes and will speed up reporting and improve decision-making. The fully integrated system will also allow Arnott’s to leverage global business models, which will reduce the time required to launch new products and improve access to export markets. These new streamlined systems and business processes will form templates for Arnott’s to use when it opens new offices in the Asia Pacific region.

Another plank in Arnott’s business transformation is improving marketing, including improved merchandising and trade promotion management. Fujitsu is assisting in a range of these projects. Deployment of customer relationship management software from CAS will provide Arnott’s with greater responsiveness to changing customer sales patterns with real-time market data. Previously the company depended on data provided by market research companies, which took three to four months to collect.

Fujitsu is also assisting Arnott’s to bed down its B2B platform, which will link the food giant’s systems with those of supermarkets, third-party logistics providers and other customers. Fujitsu’s role includes helping to implement and develop middleware layers. When completed, the system will enable Arnott’s to move from simply processing supermarket orders to linking directly to their automated forecasting and replenishment systems. This will enable Arnott’s to match production runs closely to the rhythms of supermarket sales and gain the benefits of faster manufacturing cycles, including reduced inventory holding costs.