The Sorbent paper trail

Paper waste is no laughing matter for a tissue maker, as the makers of Sorbent found.

If there ever was a company that would know the value of getting rid of paper, it would be one in the business of cutting down trees. Carter Holt Harvey, the forest and fibre products company based in New Zealand, most famous for the Sorbent tissue brand, has annual sales of $NZ400 billion with 4,000 employees in Australia alone.

Gerard Guinane, IT manager at Carter Holt Harvey, said the company’s fast moving consumer goods arm moved to the SAP enterprise resource planning (ERP) suite in the year 2000, after migrating from a custom-built data warehouse application using Cognos.

While the migration had suffered from “technical problems”, Mr Guinane said all systems had been converted by January 2001. The new system meant that a new business intelligence solution had to be chosen to collate data from the SAP data stores, which in the case of Carter Holt Harvey would be primarily used for sales analysis and planning.

”Because we already had Cognos in place, we needed a reasonable reason to change,” said Mr Guinane. “Just because it didn’t work, that was my problem.”

Mr Guinane gave two examples of return on investment from the project, coming from two separate parts of the company.

”We had an issue with supply of products in early 2002 to supermarkets. They trade normally with a very large upfront cost. They had committed millions of dollars to our program, only to find out six weeks beforehand that we were not able to provide our product. Because of our vision, we were able to go back and check, and we had spent the same amount of money. Had we spent it in February, we would only have sold half as much,” he said.

The vision Mr Guinane talked about was the ability to take a high-level view of the data, and the ability to drill down “when you see a number out of whack”. He said it was equally important for the company to alert its business to the low level detail of the data, so that it could highlight low-performing clients. The second piece of hard evidence of return on investment came from a market-based analysis.

”We had been analysing data out of SAP for two years, but we performed a one-off exercise about our ‘route to market’, which was to do with market segmentation. We completely changed our route to market, and it saved us $500,000 per month in EBIT six months later,” he said.

The new system raises many questions for the way Carter Holt Harvey performs market analysis. The increased sophistication of the business intelligence reporting tools has almost removed the need for analysts who sit as a buffer between the raw data and line managers who make the decisions.

”We are moving away from analysts as much as we can,” Mr Guinane admitted. “If we can present the information to the line managers, they have all the experience and knowledge to turn that around into a cost saving or revenue opportunity. Analysts tend to be the middle man, where if they are given a question, they come back with an answer later.”

Mr Guinane is now preparing to expand the user base of the application past the 60 analysts of the first stage to 500 employees, most importantly including all the line managers. This shift is symptomatic of the “culture” problem of knowledge management, where employees feel threatened by disintermediation and technological obsolescence. Mr Guinane said that rather than refusing to co-operate fully, as some knowledge workers are wont to do, Carter Holt Harvey’s analysts have enjoyed the chance to remove mundane tasks from their workload.

”At times there has been a view that what the system automates is the drudgery part of the job. If the analysts have that knowledge, and we can present the five per cent of the data they can do something with, then they can do that rather than the monotonous work,” he said.

”We are seeing, across all vendors now, the trend of selling value-add where analytics are a part of the product. They still need to be customised, but now we have access to a lot more powerful tools in statistical analysis. It is far enough under the covers that line managers don’t need to see it.”

Many analysts have been promoted to the position of category analyst as a result, which Mr Guinane said was the “sexy side” of the job. While the project is not over, the new system has not taken any scalps as yet.

”I don’t think I can lay claim to having directly removed people. People’s jobs have changed,” he said.

The next phase of the project, as with many of this type, is planned to include external companies, so that they can be integrated into a transparently managed supply chain where all parties know the same information.

”We will push it out to the outside world,” said Mr Guinane. “In our case, that means half a dozen key suppliers and a number of customers, where we would see it as a competitive advantage to provide that information to them.”