General Mills: Five Lessons in Successful SAP APO

Implementation
Thursday, December 08, 2005
Lora Cecere

When General Mills and Pillsbury merged in 2001, it was imperative that multiple demand and supply planning
systems be consolidated. The General Mills team chose a single instance of SAP’s APO 4.0 to meet this need and
plan North American operations.

In the past year, AMR Research has spoken to more than 60 clients using SAP APO, with General Mills being one
of SAP’s most successful implementations.

Project background

In 2002, the General Mills team first tackled common North America planning systems by successfully
implementing SAP APO Demand Planning (DP) 3.1. This implementation was upgraded to 4.0 in 2004 to run a
monthly plan of 1.5 million characteristic combinations. Throughout the implementation of SAP APO DP, the
team evaluated SAP APO Supply Network Planning (SNP) and built strategic relationships with SAP development
personnel at its headquarters in Walldorf, Germany.

While the General Mills team wanted SAP APO SNP as a common system for supply planning, they waited for the
SAP APO product to mature to support their requirements, and worked with SAP as a ramp-up customer in the
4.0 release.

The focus for SAP APO SNP was rough-cut capacity planning and finished goods interfacility deployment
planning. The team’s requirements were aggressive: to optimize the manufacturing supply plan for less cost over
a two-year horizon, and also to calculate finished goods deployment requirements for a three-month planning
horizon given downstream warehouse space constraints.

The SAP APO SNP project was started in January 2003, piloted in December 2004, and implemented in four
waves between December 2004 and June 2005, reaching 50 plants and 100 distribution centers. Each wave
consisted of two weeks of data cleansing and testing, and a two-week startup and stabilization period.

At project completion, 140 planners used a common system with real-time visibility to inventory, production
status information, and customer demand. SAP APO DP integrated with SAP APO SNP daily, while the latter
integrated real time with a single SAP ERP 2004 instance. The team launched both APO modules on time and
12% below estimates.

Here we share five important lessons General Mills learned to make this implementation a success. They are
lessons that can be applied to most industries.

1. Use different models for different businesses

While the group wanted to run one optimization model for the entire North American business, the optimizer in
SAP APO SNP was far more effective in optimizing products with like manufacturing and distribution
characteristics.

In pilot testing, the team discovered that grouping products by temperature channel—frozen, refrigerated, and
dry grocery products—would effectively model the entire product portfolio (30 SNP models). The optimizers were
organized to run in a weekly batch job to plan 60% of the items and daily for critical items (30% of the finished
goods).

2. Clean data is critical

A significant implementation hurdle was having clean master data. While the plant bill-of-materials information,
plant routings, and product basic data accuracy were in place and adequate for ERP operations, the tight
integration of SAP APO redefined the requirements.

Don’t assume current ERP data maintenance practices and quality will be acceptable for tight integration with
SAP APO. Put time in the project schedule for data review and cleansing. The requirements for planning master
data are very different than transactional master data.

3. Work closely with the SAP team

General Mills is one of the most advanced SAP APO customers. In working directly with SAP development
personnel through ramp-up, the two organizations were able to resolve optimizer runtime performance concerns
through creative model definition and parallel model processing.

SAP is a leader in software ramp-up processes and deployment. Customers that take advantage of this early
adoption program will get closer access to the SAP development team, creating a system that distinguishes them
from competitors.

4. Have the right mix of business and technical expertise

The General Mills team had equal numbers of full-time IT and business professionals dedicated to the team. The
project was managed by the internal team with one full-time SAP resource.

Don’t underestimate the importance of the right mix of business and IT professionals and the need to dedicate
resources full time to the project. If you cannot dedicate critical resources to implement a project like this one, it
is the wrong time to consider an implementation.

5. Change management is a far greater challenge than the technical issues

In the words of the team, “Don’t underestimate the impact of moving from a manual scheduling process to a
common supply chain planning system.”

Address change management issues head on and early in the project. Prepare for training and ramp-up of
planning personnel by defining and clarifying role definitions for plant and central planners.

Copyright © 2005 AMR Research, Inc.