Navigating the Pandemic: Technology and the CPG Supply Chain
(34 minute podcast)
In this Hug the Curve podcast, host Steve Niesman chats with Ron Gilson, CIO at Johnsonville Sausage, and a member of the SAP America’s User Group Board of Directors.
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(Steve Niesman) Welcome, everyone, and thanks for joining our Hug the Curve podcast, where we talk with business leaders and discuss the intersection of technology and business. Today my guest is Ron Gilson. Ron is the VP and CIO at Johnsonville and a member of the SAP America’s User Group Board of Directors. Ron, thank you so much for joining us today on the Hug the Curve podcast.
(Ron Gilson) Hey, my pleasure. I’m looking forward to the conversation.
(Steve Niesman) Me, too. Very much, Ron. If you wouldn’t mind, maybe let’s start with our audience and give a little bit of the history in the story about Johnsonville. It’s a great story going back all the way to 1945, and Ralph and Alice kind of beginning the company. Share, if you would, with our audience a little bit of the Johnsonville story.
(Ron Gilson) Yeah, Johnsonville at this time today is still a family-held, family-run company. We’re entering our third, and in some cases fourth generation of family members in the business. As you mentioned, Johnsonville started as a small meat market in the unincorporated town of Johnsonville. Through the 1980s and early 90s we really focused on growing our business domestically here in the U.S. in retail, and beginning in the mid-90s, really started to push into international markets. You know, today we distribute our product in well over 40 countries, a lot of that [through] export, but we have in-country manufacturing and operations within Singapore, Manila and the Philippines, China and Japan. So international growth has been driving the business for the last few years, as well as some significant progress and growth within the food service area. So again, yeah, it’s still very much a Johnsonville family.
(Steve Niesman) Very cool, Ron. And you’ve been there a little while. How long have you been at Johnsonville now?
(Ron Gilson) Yeah, over 29 years, so I’ve pretty much grown up at Johnsonville. So my blood runs thick with sausage.
(Steve Niesman) Which is a good way to live life; I’m right there with you. So it’s interesting. Ron, if you could maybe talk a little bit about your 29 years there and have you seen a change or has the relationship between business and IT changed over those years?
(Ron Gilson) Yeah, a great question. You know, it has. What we’ve seen over the past few years, I think it really parallels the growth of SaaS solutions, and cloud is really the focus on a line of business as being the primary entry point for technology into the organization. And that’s good, but it really challenges the way that we as an IT organization partner with our internal business partners and how we can add value and continue to add value in a different way than maybe we have in the past.
(Steve Niesman) So it’s been a good journey; it’s great to hear, Ron. I’m thinking back — and I want to put maybe one of the elephants in the room early here in our conversation — so think back to mid-March when COVID first hit the U.S. and all over the world and all the countries you’re in, what’s the first thing that you saw? Maybe an impact or a way that you guys needed to change the way you did business and how IT served the business?
(Ron Gilson) Yeah, I think the first thing, first and foremost, mid-March comes around and on a Thursday or Friday, we made the decision to send everybody home and work from home. So immediately you’re making sure that you have the infrastructure and the systems and capabilities to support all of a sudden 300-400 people working in a remote nature. So that was the immediate impact from an IT perspective.
I think the other big impact was, our number one priority, first and foremost for Johnsonville is the safety and well-being of all of our members, whether they be back-office headquarters members or members on the line. So beyond making sure we got people working from home, we had to make sure that we could put our manufacturing production members in a safe situation and within the manufacturing environment. So a significant focus on member health and well-being and safety.
You know, I don’t want to sound flip, but I think we were in a good spot going into COVID. From an infrastructure perspective, we spent the last 3-4 years making some significant investments in security and network infrastructure, things like virtual desktops and communication platforms, so I think from that technology perspective, we were set. Really there were not a number of significant issues from a core transactional systems perspective. I think SAP and our other solutions continue to run and support the business as they always have.
I think the one area that did get challenged, Steve, as COVID continued to play out — and as we started to see some disruptions in supply chain, as we saw customer and consumer demand skyrocket for our products through the retail channels — what became very evident was the lack of scenario planning; agile scenario planning capabilities within our platform of tools. So I think if there’s anything that we’ve learned or exposed as a gap in our current capabilities, it’s our ability to support rapid planning and re-planning and scenario planning. And we always knew that it was a topic that we wanted to focus on and invest in, but just given the day-to-day situational changes that occur, having planning processes that take weeks to turn the cranks on just are no longer viable alternatives for the business.
(Steve Niesman) Ron, you hit a couple of good points. One, I first want to pay a compliment. Just the culture of your organization and how you’ve always treated members as family, I think is a great testament to your leadership, your organization, and maybe a blueprint for companies in the future. So thank you for showing many people that.
The second piece you just hit on is really interesting to me, and that’s the disruption in your supply chain and the need for planning. And I’m going to broadly frame this question, Ron. People talk about digital transformation, and sometimes people don’t understand it, but one of the things many people write about — Fortune, Forbes, The Economist — about how every business since COVID has essentially been disrupted in their supply chain, and this need for planning and the acceleration of technology, some say in the last five months you’ve seen five years of transformation. And I’m interpreting what you’re saying is a little bit of a hint that it’s still continuing.
Can you talk about maybe this acceleration and need for technology in your example of supply chain planning is difficult and forecasting much more rapid. What do you see happening in the food industry, Johnsonville, and maybe more broadly in the SAP ecosystem? How do you see that technology accelerating and maybe how do companies keep up with that?
(Ron Gilson) So I think in my mind it’s a couple of areas that, to your point, have been challenged or are accelerating moving forward. Supply chain planning is something that is going to be a focus for many organizations, Johnsonville as well. So not only is it scenario planning, but if you think about the demand planning side of the house, everybody’s demand plan going back 50 years has been based on historical movement of product through the supply chain. Well, what history do you base future forecasts on? Because the history that we’ve created over the last nine months is not going to be the future that we have once we return to some level of normalcy, right? So, I think there’s going to be this investment and need for technology solutions that help us get a better understanding of demand when our historical demand streams have been so disrupted. So I think that’s a key area.
You’ve got this whole conversation around, many of our supply chains have been built for just-in-time delivery, right, minimize inventories and such. And so the question moving forward is, is that the right strategy moving forward? At what point in time do you start looking at inventory differently based on the way we have in the past? And then getting back to that scenario planning and how do you start running scenarios and doing inventory optimization when your assumptions and when your understanding of the environment have been so dramatically disrupted. So, yeah, I think that whole side of the house, whether it be on the supply chain side or the financial planning side or even the human capital planning side of the house, we’ve got to find ways to become much more agile and nimble and be able to understand the impacts of scenarios all the way through the business into the P&L. So I think that’s a critical area.
You know, I think you’ve talked about, I think we’re really seeing, the acceleration of technology or where technology is going to have a play. I think where it’s most visible is obviously this whole work from home and remote-work area of our business. So we’ve probably seen the acceleration of the work from home, the gig economy, to your point, 5-7 years of change compressed into an eight-month period. So we’re going to be challenged as organizations to figure out how do we continue to advance the ball, maintain our culture when 60%, 70%, 80% of our members are working from distributed locations. So I think we’re going to see a lot of focus on technology and solutions to enable those water-cooler chats and those types of things that are so difficult in today’s world. So I hope I answered your question.
(Steve Niesman) It sure did, and stimulated a number of things maybe we could chat about quickly, Ron.
The first thing I commented on is, you talked about this acceleration of tech, and just yesterday, Alan Murray, the CEO of Fortune magazine, interviewed Julie Sweet from Accenture, and she said she sees some major trends happening all over business. And one of them she hit on I’d like you to comment on, see if you agree or disagree. What Julie said is that COVID-19 and sort of this acceleration has changed the discussion around technology or IT in a company. It’s no longer, is it good or bad or IT versus the business, but rather the discussion now is how tech is needed and how can we leverage tech to react to the supply chain or maintaining our culture in a work from home. What do you think of her statement — you agree with that? It sounds like a lot of what you just said might be right in concert with Julie’s postulate there.
(Ron Gilson) Yeah, I agree. I think, as an example of that, we were just wrapping up our five-year strategic planning, and this is probably the first time that I have seen technology embedded within the strategic imperatives or priorities of the business. I mean, you’ve always got a hit of 1-2 here or there, but fundamentally this year was the first time I saw across every line of business, across every functional unit, some level of technology, whether it be automation — so RPA and hyper automation or the need to leverage data and data science and analytics, and AI now. It’s really the first time I started to see that level of technology embedded within strategy. So, yeah, 100% I agree with the comment.
(Steve Niesman) That’s interesting; thank you for sharing that. And that triggers another thought in my mind. I want to back up a little bit, if I could, Ron. You talked about sort of the change in inventory and just-in-time and planning, both from a supply inventory and human capital management. One of the things I read recently about your business — meaning your end customer, selling to the supermarket and so forth — that there’s a real national trend going on in America. I’ll call it, in my simple words, Ron, the bifurcation of food, meaning that what COVID does when people start to hoard food and they panic, and the grocery store tries to make more money, they limit their SKUs and they’re selling a lot more box food and they’re changing their product mix so that they can maintain service to customers and so forth. I’m just curious, when you look at Johnsonville, are you affected by that? Does it change your need for technology? And can you guys kind of thrive in that chaos, so to speak?
(Ron Gilson) Yeah, it’s a great question. I think all of the food manufacturers, just given the reality you are in today and the purchasing behaviors of not just consumers, but customers, we’ve had to take a look at SKUs and SKU rationalization. You’ve had to take a look at how can we best in a highly constrained supply network, how can you best meet the needs of the customer? So, yeah, it’s had an impact. Do you continue to sell your strategically important but low-volume items, or do you focus on the products that make up the bulk of your volume and just make sure you are the most efficient at getting those out the door? So, 100%.
You know, what’s interesting here is, I think you’ve also seen articles where, in periods of high stress — which I can arguably say we’re in a period of high stress — folks move back to comfort foods. You know, all of a sudden the focus on health and wellness takes a backseat to just finding a way to de-stress, and a lot of times that is done through food and comfort foods. So for us, obviously we never proposed to be a health-food company, so we’re definitely a comfort food and an experiential food, so it’s been good for us. And we’re doing everything we possibly can to keep product on the shelf, and every day I tip my hat to every member we have in the plant. I mean, our members, during this whole experience, showing up every day, have put in long hours and weekends and worked over holidays to ensure that we have a consistent flow of food to our customers and consumers. So, just hats off to those folks, because they probably have the most difficult job of anybody.
(Steve Niesman) And in many ways they are the heroes of our pandemic that don’t get enough recognition, so I want to thank them, too. And just as a consumer and a big fan for years of your product, I can tell you that in our life, my personal life, we spend more time at home; we don’t go out as much. So it might be a Friday night and we’re going to get some brats and have a fry and just sit around and have a couple of beers with that and just enjoy your product. So definitely I think it matters, and the work that your folks do is really important and very appreciated.
And it triggers a question I had for you. So let’s link it back to technology, a little bit a theme of the show today, and that is you guys have just introduced some new product, the Sausage Strips, so to speak. How does that happen during a pandemic? Or maybe a better question, Ron, would be what’s the role of technology in launching new products, getting into new markets? Is it the same as it has always been? Do you see it different today?
(Ron Gilson) Yeah, I can’t honestly say that we’ve had a significant change in how we’re using technology for new product launches. What COVID has forced us to do organizationally is to focus on the critical priorities, right? So in the past we may have been chasing 10-12 innovations or introductions. Just given where we are today with availability of human resources and being able to keep things moving and having to focus on the ‘critical few’ has probably been the biggest change, not necessarily a technology.
I think the other area, as I reflect on that question a little bit here, is where pricing is and what we are seeing. You talk about the acceleration of technology. What you’re seeing is probably five years of growth of e-commerce compressed into eight months. So as soon as COVID hit, everybody started doing the ‘click and pick’ or delivery. So from a technology perspective, things like making sure that we have PIM systems that are going to provide high-quality data to our retailers to drive their websites have been critical and things that we need to invest in to continue that. Because I don’t think that whole e-commerce or online buying is going away, even if we get back to normal. Folks have found a new, better, convenient way to shop.
(Steve Niesman) Interesting. Thank you for those comments. I want to ask another question kind of related to an earlier point that you made, and I want to ask you this, going back to what I told you about Julie Sweet in her interview with Alan Murray. One of the things that she raised that is, I think, more getting some airplay, so to speak, in the market today, is that public companies need to have more of a purpose and they need to be more concerned with sustainability than just profit, per se.
Now, you guys have been a family company since day one, and you can see right on your website how you support sustainability and are committed to animal well-being, great products to people, and so forth. But what would you advise listeners today, whether they’re public or private, at least from the eyes of you, as a CIO? Where does sustainability play, and where do you see it going in the future?
(Ron Gilson) Yeah, great question, Steve. Sustainability is such a broad topic, right? So I think every organization has to kind of figure out — we can’t all do everything, right? So we’ve got to figure out where should we focus on sustainability, where can we have the biggest impact, what’s most crucial and critical to our members, to our customers, to our consumers and the communities that we live in? So I think we’re still maturing in that area, Steve.
So animal welfare, obviously core to what we do, critical to what we do. Human safety, whether that be the members in our plants working every day or the safety of our food going out the door every day is critical to who we are. So, then again, I think it’s kind of starting to peel back the layers of the onion and say, so what are those next big sustainable — whether it be environmental or energy or other things. And it’s something that we’re still maturing in and we’ll keep working on.
(Steve Niesman) Awesome. Thanks, Ron. Another thought that came to my mind — just a couple more questions. One, from afar and sometimes on the inside, I’ve admired just the culture, if you will, of Johnsonville. It’s what you’ve made a special place since 1945.
Putting your CIO hat on, and then I’ll ask for your leadership hat, because I know about you and how you care for people. And when you look at a company culture, how do you sustain that culture when you’re going to be working from home; you talked about it earlier in the broadcast. But as a business leader, would you have any advice for companies out there? How do we maintain that culture? How do we connect our people when they are working from home, either through technology or not? Any practical advice you could give the leaders who are listening today, what they should be aware of, maybe work on?
(Ron Gilson) My feedback is to double down on what you’ve been doing in the past. If you’ve had a great culture, if you’ve had processes or systems, not necessarily technology systems, but systems in place that drive culture and reinforce culture, you’ve just got to focus on those. I think the worst time to introduce a significant change or try and do something you haven’t done in the past is in the middle of a pandemic, when everybody is just trying to figure out how the heck to get the work done every day. So I think it’s just doubling down and focusing on your core strengths and the things that you’ve been doing in the past.
A couple of examples. Communication, I think Johnsonville has always been a team-based organization, a member-led organization, highly collaborative. So it requires tons of communication up, down, sideways, cross functionally. You know, that’s challenging in the in the world we live in today. So we’ve had to double down on communication, to even more communication, and even be more transparent with members. As a privately held organization, we can be very open with our members about everything, from financials to priorities to opportunities. And I think that amping up the quantity and the transparency helps to relieve stress, because a lot of times stress within an organization or in an individual is just due to not knowing. So I think that’s one.
So the other things that we’ve done is, we have our mission and we have the Johnsonville Way, which really kind of is a paragraph, and everybody has it. Ours is the Johnsonville Way. It kind of lays out what does superlative look like for Johnson as a whole and members, and really focusing on the Johnsonville Way. And we’ve really amped up our ask of our leaders to focus on Johnsonville Way stories. So when you open up a team meeting, open up with, share with us some examples of the Johnsonville Way in action. So that may be somebody going above and beyond, that may be somebody being able to complete an MBA degree while continuing to deal with the current situation. So just those types of things, making sure that you’re continually focusing on the culture and not letting the current situation be an excuse for not maintaining a focus on culture.
(Steve Niesman) The culture, it makes perfect sense, focus on culture, focus on your values, focus on people and don’t use COVID or the pandemic as an excuse. Really good advice, Ron.
Maybe two more questions. One would be, in your role beyond Johnsonville you’ve been a leader in the SAP ecosystem and your involvement with ASUG, and now you’re on the board. One of the things that I’ve been talking to a lot of people about is leadership today has to be more and more about empathy. So my angle on empathy, Ron, would be, what would you tell the broader SAP community — meaning SAP partners in the SAP ecosystem, and their other technology providers — if a software or a services company would be more empathetic to a customer like Johnsonville. Are there any big thoughts or nuggets that come to mind about how to be more empathetic, or said another way, more purposeful to serve customers going forward?
(Ron Gilson) Oh, boy. At Johnsonville — I can’t speak for other customers — but I think what we’re being challenged with right now is the fact that we have to be much, much more agile as an IT organization. The days of 6-8 month project implementations with an army of consultants and internal FTEs are gone. We just can’t continue to do that, and for a number of reasons.
One, especially with COVID in the environment we are in today, is that we never know what priority is going to come around the curve tomorrow. We don’t know if we have to deal with a supply chain disruption or if we have to deal with a new request from a customer for something that just came out. And these large projects are very difficult to start and stop or shift resources when we have to address changes in the environment that become new priorities for us.
So, and it’s something that I’ve struggled with for a long time specifically within SAP and specifically in the core S/4HANA, ECC or ERP realm, is how do we become more agile? How do we break these things up into smaller deliverables that, if I have to pivot, I can show that I’ve delivered value, move on to the thing I’ve got to address, and then come back and keep these things going without a significant impact on cost or scope. So that’s the one, I think, from an empathy perspective, is understanding that. It is getting very hard as a customer of enterprise solutions to commit to these large, long-running projects, and we’ve got to find ways to become more agile with quicker, cheaper, faster deployments.
(Steve Niesman) Great stuff, great information. Final question, Ron; today you’ve just been awesome. I want to flip the table a little bit and frame it this way: if you were the CEO of Johnsonville, if you were the CEO of another company, what would you tell IT to focus on? What would be their mission?
(Ron Gilson) What we have to focus on is really understanding what is the role of IT and what role does the organization want IT to play, and figure out the ways to most effectively and efficiently deliver those services to the organization.
I was just in a strategy team meeting the other day, our executive leadership team meeting, and going through strategy and trying to lay out an IT strategy. One of our VPs, basically as we go through the conversation, said, you guys probably have the hardest job of anyone in the room when it comes to trying laying out a strategy, because everyone in this room thinks they’re a technologist. And everybody knows what technology they want and thinks they can implement it.
So I think, in my mind, if I was the CEO, coaching me, and coaching that I have gotten, is the role that you played 5-6 years ago may not be the role that you play in the future, and you’ve got to be OK with that. And we got to find ways to become a value-added and maintain being a value-added player, but that value may have shifted to different roles. So I guess that would be my convoluted answer to that question.
(Steve Niesman) I don’t think it’s convoluted at all, Ron, if I just put your points together here. Incredible insights you’ve given. You talked about how IT needs to be much more agile. It’s about speed, it’s about smaller projects, and it’s about being empathetic and listening to your people, taking care of your people and the role of IT and business are aligned. You gave us an example of the strategic plan, where everything had an IT bent to it now, which would have never been the case.
So what I would summarize and just say, the role of IT, the role of tech, is an integral part of all businesses. You have to move fast, and you have to focus on people. So thank you for those insights, Ron. That’s awesome.
And if you wouldn’t mind, I’d like to pay you and Johnsonville a compliment. The other takeaway that I got today on our Hug the Curve podcast is the Johnsonville Way. And I think what makes your company so special since 1945 is its focus on members. You put people first and the Johnsonville Way, even in a pandemic, you don’t stray from your core values, whether it’s sustainability of people, of animals. But just the focus and drive you have on treating people fairly and being a family, I think can be every organization, whether you’re public or private. So fantastic insights, Ron. I really appreciate you being with us today. Thank you very much.
(Ron Gilson) Well, thank you. I’m glad to be a part of it.