Achieving Operational Excellence By Implementing ERP

1. Achieving Operational Excellence By Implementing ERP

2. Agenda • My Background • Saladino’s Overview • The ERP Decision • Current Systems Landscape • The SAP Decision • Success To Date • Road Map • What an Executive Should Know About ERP Projects A Premiere Foodservice Distributor

3. Background • Education • Bachelor of Information Technology / Telecommunications • Master of Information Systems Management • Master of Business Administration (Cohort 5) • Experience • 4 years U.S. Coast Guard • 5 years consulting (systems engineering) • 6 years corporate IS, including 2 years as CIO A Premiere Foodservice Distributor

4. Saladino’s Overview • Over 3,700 deliveries per week across California, Nevada, and Idaho to over 2,300 customer accounts • 394,000 cases shipped per week between both Dist. Centers • Expected 2008 Revenues of $395 million • Extensive growth in last three years, added Ontario distribution center in April of 2007 • Two Distribution Centers • Fresno, CA ~109,000 sq. feet • Ontario, CA ~100,000 sq. feet A Premiere Foodservice Distributor

5. The ERP Decision • Why Saladino’s needed a Tier-1 ERP system • Reduce IS software and hardware maintenance costs • Reduce the time and resources required to close accounting periods • Improve integration of business processes and access to real-time business data across functional areas • Improve warehouse management capabilities • Improve management of vendor rebates & charge-backs • Adapt to growing customer needs (e.g. improved reporting, B2C integration, etc.) • Ensure that our system capabilities will scale to future growth and needs A Premiere Foodservice Distributor

6. Current Systems Landscape • AS/400 Based Legacy System (ERP) • Multiple batch interfaces needed for online sales, order entry, and analytics • Inflexible platform for companies growth • Inability to keep up with new customer demands and requirements (new requirements usually require custom AS/400 development) • Costly to maintain • Insufficient accounting system A Premiere Foodservice Distributor

7. Current Systems Landscape • Accounting System • Detached accounting system that requires journal balances to be transferred between systems • Decentralized AP payments, (expense vendors are paid through external accounting system, inventory vendors are paid through legacy system) • Insufficient managerial accounting capabilities • No concept of cost/profit centers or budget control A Premiere Foodservice Distributor

8. Current Systems Landscape A Premiere Foodservice Distributor

9. The SAP Decision • Quick SAP Facts • Over 38,000 companies run SAP software • $1.7 Billion invested into R&D in 2006 • Currently holds over half of all Fortune 500 • 44,500 installations world wide • More than 2,200 SAP partners including IFDA • More than 13,000 developers A Premiere Foodservice Distributor

10. The SAP Decision • SAP Business Drivers • Single Integrated Solution • Real-time business process automation for operational speed and accuracy • Improve decision making with better visibility across the entire enterprise • Platform for Growth • Rock-solid platform with proven scalability • Reduce TCO with modular deployment A Premiere Foodservice Distributor

11. The SAP Decision • SAP Business Drivers • Embedded Wholesale Distribution Best Practices • Optimize business processes with industry-specific, preconfigured solutions • Leverage best practices for successful business transformation • Configured for rapid implementation and time to value • Ability to recruit associates that have SAP experience which allows shorter training period A Premiere Foodservice Distributor

12. Retirement Systems Landscape A Premiere Foodservice Distributor

13. Future Systems Landscape A Premiere Foodservice Distributor

14. The SAP Decision • The Selection Process • Started evaluating ERP software January 2007 • Only evaluated Tier One Software Solutions • Made Decision to move forward with SAP October 2007 • Signed SAP contracts December 2007 • Selected Consulting Partner January 2008 • Partner had specific knowledge and capabilities within Wholesale Distribution and Foodservice. Partner was very flexible and has experience with implementing catch weight management • Cost of installation was a major concern, our partner was able to overcome any cost concerns and deliver a complete solution A Premiere Foodservice Distributor

15. Current SAP Success • Phase One • Go-Live completed May 12, 2008 • Eight week implementation of SAP Development, Quality Assurance, Solution Manager, and Production Systems • Eight week implementation of Accounts Payable, Expense Purchase Orders, General Ledger, Asset Accounting, and Full Financials • Typical SAP financials implementation is 6-8 months • Utilizing SAP “New GL” in ECC 6.0 • Utilizing Profit and Cost Center Structure • Not one code modification was required (SAP is highly configurable) A Premiere Foodservice Distributor

16. Road Map • Phase Two • Started phase two of the project June 2, 2008 • Phase two will consist of order to cash, completion of procure to pay, and warehouse operations • Fujitsu Consulting will continue the implementation of this project • Implementation of Vistex Rebate and Chargeback module • Anticipated go-live for phase two is January 31, 2009 A Premiere Foodservice Distributor

17. Road Map • Phase Three • Starting phase three early 2009 • Phase three will focus on the advanced Warehouse Management System (WMS) • Voice Picking is being considered • Phase Four • Starting phase four the middle of 2009 • Human Resource Management (HRM) module • Payroll and Employee Self-Service A Premiere Foodservice Distributor

18. What an MBA Should Know • Clearly document ERP requirements and goals • This will ensure project confusion is avoided • Make sure all vendor research is completed prior to committing to a vendor • This will take out the possibility of bias to a single vendor • Speak with the vendor in specifics and not general terms • Doing so will eliminate the possibility of capability gaps during implementation A Premiere Foodservice Distributor

19. What an MBA Should Know • Clearly define what partner qualifications are required for the project • The matching process will not become a popularity contest • For project success • Work with the ERP vendor and partner to establish trust and open communication. This will promote flexibility • Be careful with partner pricing schemes • Remind the partner who the customer is, and that the project will be completed your way. Explore out of the box pricing models such as a modified fixed bid, and shared risk A Premiere Foodservice Distributor

20. What an MBA Should Know • Formulate your own ROI for the project • Many partners will show huge gains in ROI to justify their consulting fee • If the ROI is not high enough for the project, don’t discount the intangibles • Don’t discount the capabilities that can’t be quantified, for example customer satisfaction and attracting new customers • For an ERP project to be approved a leader must show where the value will be derived • ERP projects should not be considered “technical projects”, ERP systems are for business users. The leader of the system may not be the CIO but a business executive that see’s the overall vision and competitive advantage A Premiere Foodservice Distributor

21. What an MBA Should Know • Don’t allow the project team to focus on a solution, focus on the problem or business case • When ERP projects are implemented, many times there are cost overruns related to loosing focus of the goal (business case) • Send in an experienced negotiator • Software and consulting firms negotiate deals everyday, make sure to do your homework when preparing. Make sure your representative has had a chance to get to know the negotiator on the other side • Make sure you are very conservative when doing financial calculations • DO NOT make any assumptions related to the cost of the project, it will come back to haunt you A Premiere Foodservice Distributor

22. What an MBA Should Know • Do your due diligence and create a solid scope of work (SOW) • This is directly related to the financial impact of the project. If a fixed bid is negotiated, the SOW is the only guarantee you have the project will be completed to your specifications • Build flexibility into your project scope (SOW) • Work on negotiating a flexible project scope and project plan with your partner, no matter how well the SOW is put together changes will need to be made • If as an Executive you want the project to go well…. • DO NOT underestimate the organizational change management (OCM), and training requirements. The project can not only be a technical success, but needs to be an enterprise success A Premiere Foodservice Distributor

23. What an MBA Should Know • Don’t forget to market your accomplishments along the way • An ERP project is a major undertaking, probably the largest any IS Department will ever take on. Market your accomplishments internally and externally • Become a technology market leader • Think outside the box, don’t keep business processes the same and hope the new ERP will be the “magic bullet”, do things differently and make sure you involve all level of associates to find better ways to complete the process • If the budget starts to get away from you…. And it will • Don't be afraid to stop the project and make the best decisions / changes for moving forward. The original project plan will not always work the way you thought it would. It will cost the company more to continue to make the same mistakes A Premiere Foodservice Distributor

24. What an MBA Should Know • Run as a textbook project… • This is always what project teams strive for, unfortunately this is not always possible and adjustments need to be made. The business will always want the solution faster than what the textbook approach and budget will allow • Find a unique style for running the project that conforms to YOUR organizations culture • Consulting firms will always try and get YOU to adapt to their culture, project management style, and pace. Make them move at your pace, using your style A Premiere Foodservice Distributor

25. What an MBA Should Know • Learn to manage conflict • There will be several different stakeholders involved in your project, you need to identify them and formulate their stake (what they want to get out of the project), each stakeholder has a different priority your job is to figure out what it is and how to manage it • The CEO • The CIO • The CFO • The various VP’s • The consulting firm • The business users • The software company • Your customers A Premiere Foodservice Distributor

26. Contact Information • GOOD LUCK WITH YOUR PROGRAM! • Craig Urrizola • currizola@saladinos.com A Premiere Foodservice Distributor