Groupe DANONE: Global Business Process Transformation

Accenture helped Group DANONE design and implement a groupwide, SAP-based transformation program to harmonize common practices and processes, enabling it to better respond to, and manage, a wealth of business opportunities across the globe, contributing to 6.7 percent annual organic sales growth over the last five years.

Groupe DANONE is the world leader in fresh dairy products, and also boasts an impressive number two position in the beverages and baby food market worldwide. In its mission to “bring health through food to as many people as possible,” the foods leader employs 90,000 people, operates more than 200 plants globally and commercializes its products in more than 120 countries. Groupe DANONE reported €14 billion (over US$18 billion) in total sales for 2006, and posted 13.6 percent operating margin.

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At the end of 1996, Groupe DANONE began moving assertively to further grow its business globally, disposing of non-core activities while refocusing its portfolio on high-growth, high-margin, core businesses (such as dairy products and beverages). Though the strategic refocus yielded a one percent growth in operating margin to 10 percent over 12 months, senior leadership at Groupe DANONE sought ways to achieve and maintain much stronger margin growth over a sustained period. They acknowledged that having many small business units with their own processes, working independently, caused inefficiency and control issues that were threatening margin growth. The company needed to create a highly integrated and flexible operation with more insight, speed, efficiency and seamless execution. This would provide what Accenture terms “distinctive capability,” an organization’s unique formula for business success aimed at outperforming the competition and one of three building blocks that Accenture research identified underpin high performance.[1]

Groupe DANONE has consistently turned to Accenture for support during its transformation journey. ”Accenture brought the level of consumer goods industry expertise, experience in delivering large scale ERP implementation that we believed valuable to our effort. Based on the results of the ERP value review and selection, we chose Accenture to help us to build the system and deploy it worldwide,” said Jacques Vincent, vice chairman and chief operating officer, Groupe DANONE.

[1] Accenture’s three building blocks of high performance are distinctive capability, market focus and position and performance anatomy.

As a first step, Groupe DANONE undertook a preliminary study with Accenture to determine how a group-wide enterprise resource planning (ERP) transformation program could help to drive a single corporate strategy across the company’s three core businesses, generate new and streamlined operational synergies and ensure more even investment across the organization to benefit both large and small business units. Based on this study and collaborating with Accenture, Groupe DANONE began in 1999 to define how it could redesign global operations. By January 2000, Groupe DANONE and Accenture conceived an ambitious initiative named THEMIS to transform global operations from a cluster of disparate small- and medium-sized business units into one, integrated enterprise with common global processes. Accenture identified that a new ERP solution, based on SAP software, would harmonize common practices and processes. With a value-driven approach, Groupe DANONE and Accenture confirmed the business case, analyzing and quantifying the value of the proposed solution, such as process improvements to enable on-demand manufacturing and a more than 10 percent reduction in inventory. In September 2000, drawing on Accenture’s industry and functional experts, its global Global delivery Delivery network Network resources and close alliance with SAP, the joint team designed, customized and built the scalable, transportable solution which provides real-time visibility into key processes, including finance, sales and distribution, production planning, materials management, e-procurement and inventory management, plant maintenance, quality management and supply chain planning. After rigorous system tests and pilot implementations in four country business units, the team began an ambitious roll-out plan to deploy the solution at more than 30 business units. At the end of 2007, the solution supports close to 8,000 users, some 350,000 customers and 70 percent of Groupe DANONE’s business (total turnover). Accenture is now helping Groupe DANONE to roll out the solution to 30 more companies under THEMIS One, a project dedicated to providing SAP ERP to units with less than 60 users, so satisfying a core business objective of the program, to ensure that both large and small businesses benefit. According to Jean-Marc Lagoutte, chief information officer for Groupe DANONE, “the approach developed together with Accenture is delivering tremendous results. We have been successful in connecting the major companies within Groupe DANONE and effective in delivering value to our business units. We now have the foundation in place to enable our IT organization to bring meaningful proposals to the executive team while Groupe DANONE is further growing its business.”

Now with a single core system to run its global business operations across its different products businesses worldwide, Groupe DANONE has created a stronger business foundation and the ability to reach new, appetizing levels of growth on its journey to achieve high performance. Additionally, THEMIS was successful in generating new and streamlined operational synergies and organizational benefits. For example, improvements helped reduce end-of-month overdue receivables by 75 percent in some country business units. Likewise, better visibility into integrated sales and logistics networks allowed Groupe DANONE to significantly reduce finished goods inventory and finished goods losses, sometimes by as much as 50 percent. In some of the largest country business units, customer service satisfaction rose from 95 to 99 percent. The company has also uncovered more than €100 million in operating financial cash flow over the past two years. THEMIS played a role in the company’s success and contributed to achieving 19 percent growth in group operating margin. Groupe DANONE can better respond to and manage a wealth of business opportunities across the globe, which over the last five years has contributed to 6.7 percent annual, organic sales growth. Jean-Marc Lagoutte comments, “THEMIS was extremely important in delivering our financial results over the past five years. Looking forward, it will be absolutely essential as the foundation for supporting Groupe DANONE’s market innovation and helping us meet our future business development goals. Having implemented the core solution, we are able to react very swiftly to business needs and, thereby, grow our business.”

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