IT refresh readies Vigor for pastures new
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IT refresh readies Vigor for pastures new

Angelica Mari — September 2017
Brazilian dairy products company Vigor has been on a journey to modernize its technology capabilities — a move that can only have sharpened its appeal for acquisition-hungry industry peers.

When Brazilian dairy foods company Vigor made the decision to expand beyond the country’s largest consumer market in the São Paulo area it needed to make sure its core IT environment was capable of supporting its ambitions.

To meet predicted demand, the company — whose yogurt, cheese and other milk-based products generate around R$5 billion ($1.6bn) in revenue annually — launched new production facilities near Rio de Janeiro while also acquiring several smaller brands with a strong presence in other regions of the country. But all these strategic moves had to be accompanied by a modernization of the entire technology estate.

As Vigor CIO Sérgio Bambace outlines, the nature of its industry means the technology refresh was never going to be an insignificant challenge. “The production of dairy items is incredibly agile. We buy milk from rural producers, bring it to the factory to process and then distribute the manufactured products — almost all of which have a very short lifespan. This means we work on 24/7 environments, and it is crucially important that all core production systems are constantly monitored and available 100% of the time.”

But as it expanded its manufacturing, Vigor had to take a cold, hard look at all of its supporting technology, from cabling right through to information security, says Bambace.

Over the past four years, the IT team has been working on fundamentally changing the company’s IT, from the foundations upwards. And as Bambace says, “We are now in expansion mode and very much focused on innovation” — a profile that has attracted some attention.

In fact, after reported overtures by PepsiCo in early 2017, Vigor was acquired in early August by Mexico-based food processing giant Grupo Lala for R$5.7 billion ($1.8bn).
Driving sales with analytics

For Bambace, Vigor’s reputation for technology innovation is closely tied to its mobile strategy. The company’s implementation of cloud-based salesforce automation from Spring Mobile Solutions and SOTI’s mobility management system has enabled its 600 salespeople to take and place orders directly through smartphones and mobile devices. The software also determines optimal routes for agents on field sales calls and provides the company with visibility into customer visits.

The information drawn from the workforce’s devices is analyzed using the business intelligence software QlikView to generate insights into areas such as sales targets, client order patterns and the product mix on offer.

Sérgio Bambace, CIO of Vigor
The depth of information allows Vigor sales teams to make smarter deals with customers and ultimately improve performance. As Bambace explains: “Our staff now have a whole lot of options to negotiate margins, product prices and reimbursements. They manage their KPIs as well as aspects of the client portfolio such as the end-to-end journey of orders, from placement to delivery.”

According to Bambace, the insights delivered by the BI platform, which is integrated to the company’s ERP systems, are now crucial to daily operations — but also to strategic decision making at a senior management level.

“We can get information at both a macro level, such as whether sales goals within a specific segment are being met, and at a micro level, such as product margins within a geographic region for an individual salesperson. It’s a capability we put to use every day,” the CIO says.

This year, additional functionality is being introduced to the QlikView system to support order planning against production capacity. Bambace says that this will result in something very close to on-demand dairy production. “As the market reacts to a new product, production facilities can be adapted quickly to ensure availability — but without creating unprofitable over-production. The idea is to bring the same level of granularity and insight we have in the commercial area to the factory floor.”
Building on an IoT foundation

Vigor’s factories are also participating of another revolution: the application of Internet of Things (IoT) technology. The company started looking at capturing data on the efficiency of equipment in its production lines as far back as 2014, with sensors on 70 devices across five factories feeding a platform supplied by Brazilian production management systems specialist Prodwin Tecnologias.

According to Bambace, the ramp up of the IoT program holds the potential to dramatically enhance Vigor’s competitiveness and internal efficiency.  Areas for IoT application range from inventory control, product tracking and tracing, and generally controlling the movements of items right across production chains. “This traceability can bring major storage and manpower efficiencies, as you are then able to track crucial data such as the expiry dates of different products,” he says. “So technology that enables sensors to talk to each other is very promising for us in product storage and distribution.”

Another IoT-related initiative at Vigor involves monitoring its fleet of vehicles, tracking pick-up and delivery times, route deviations and the climatic conditions of each load. “One of our main concerns is that products are delivered to retailers in compliance with all the industry standards regarding temperature control and exposure, so we need full monitoring at all times,” explains Bambace. “If there is any change in temperature or route, the cabin sensors will trigger an alert in an application dashboard so that the logistics department can intervene during the delivery process. This is really IoT communication in action.”

“Today, technology is not just a way for companies to differentiate themselves: it is what defines success for the next 10-20 years.”

Vigor has a long history of developing its own systems, including core ERP applications. This, says Bambace, has traditionally been an advantage in the fast-moving foods market in Brazil. “The in-house development model has been very helpful when IT needs to be agile to respond for specific business needs. But implementing modules from the commercial software market can be done in areas where not much customization is needed.”

For example, the company is migrating to an Oracle suite for finance and accounting. “We could have started replacing some ERP modules sooner and achieved better integration overall but [the bespoke systems] gave us agility on many projects that were relevant to the company,” he says.

Those specifics aside, Bambace says that his core challenge remains demonstrating the strategic value that IT brings to the business — and that could not be more immediate. “There is a lot of talk about digital disruption but even traditional businesses like ours, producing and selling goods, have much to gain from transformational technology. Being able to identify and test opportunities within your business needs to be part of the corporate culture. That is something that has to be on the agenda of not just the CIO but all company board directors. Technology is not just a way for companies to differentiate themselves: it is what defines whether or not they will succeed for the next 10-20 years.”
First published September 2017
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