European manufacturer McBride set to clean up its data and processes with SAP S/4HANA

Derek du Preez Profile picture for user ddpreez November 27, 2023
Summary:
A private label manufacturer of cleaning products, McBride is undergoing a major back-end transformation that aims to make data flow across its operations.

An image of someone putting a McBride dishwasher tablet into a dishwasher
(Image sourced via McBride website)

Being a business that’s almost 100 years old, with 12 factories across Europe, McBride has a lot of legacy that it has to contend with. And faced with an onslaught of challenges over the past few years - COVID-19, a war in Ukraine, and the cost of living crisis - the manufacturer of private label cleaning products is thinking about what it has to do differently to excel over the next century. A big part of this involves a huge backend system overhaul, moving to S/4HANA - opting for RISE with SAP - to rethink its processes and to integrate data across the organization. 

The change management programme to do this successfully should not be underestimated. Especially as the ERP system upgrade is providing the backbone to a broader transformation programme that includes seven other priorities. These are: upskilling McBride’s commercial team; a focus on service excellence; becoming more productive as a business; being able to meet a double digit increase in customer demand; a HR digital transformation; and achieving net zero by 2045. 

The executive leadership team is fully committed to the changes, but the business is also aware that it needs to bring people with it to make them successful. 

We got the chance to speak with Chris Ward, Chief Transformation Officer at McBride, at this week’s UK & Ireland SAP User Group event in Birmingham, where he talked through how the organization is tackling the project and its change requirements. Commenting on the challenges McBride has been facing, Ward said: 

As you can imagine, we've been suffering the same challenges as many other manufacturers. We had COVID-19, we had Ukraine and we’ve had the cost of living impact. And over the last three years, we’ve had an enormous amount of cost price inflation. 

We source our raw materials from the world's biggest manufacturers and raw material providers. We sell to Europe's biggest retailers. In our business model you take all the cost price increase on day one. And then because you're trying to pass on that cost price increase to the likes of Tesco and Carrefour, that’s a tricky gig. What that means from an economic model point of view, is that it's been really challenging. 

And whilst McBride has had to refinance as a result of this mix of challenges, it’s not all doom and gloom. The business’ revenues are up significantly in recent years, as customers opt for private label products over branded products, likely as a result of consumers facing similar price inflation pressures. As Ward noted, private label products perform similarly when it comes to quality, but are often half the price. He added: 

We are here to democratize health and hygiene for millions of hardworking European families. 

Against this backdrop, McBride asked its biggest customers: what do you love about McBride and what frustrates you about McBride? The general consensus from responses was that its customers love the quality of the products and the fact that they’re a trusted partner. But what frustrates them is that McBride can be slow to respond to upticks in forecasts and it takes them too long to meet increases in demand. Ward said: 

When you're as old as we are, and because we are distributed across Europe, it's fair to say that the left arm doesn't always know what the right arm is doing. We're not an integrated organization. 

We have two versions of SAP, for example - we have one in the UK and one in Europe. And we've got data everywhere, but it's not connected. 

The strategy

As such, McBride has a new strategy. Its plan is to continue to drive quality and innovation, but become faster and more joined up. This is where SAP’s S/4HANA comes into play. Ward said: 

S/4HANA is the one priority. In every conversation about finite resources and money and bandwidth, HANA wins. 

A key ambition for the project is to officially establish an operating model for the organization, one that’s based on S/4HANA standardized processes. Ward explained that, at present, McBride effectively doesn’t have an operating model, given that if you asked any of the business process owners to write down their processes, they wouldn’t be able to. McBride currently runs two versions of ECC that are over 20 years old, with over 2,000 customizations. Ward said: 

I don't have an operating model. S/4 for us is a proxy operating model. Whatever is in the global template for S4/HANA, that’s the model. We're going to adopt what S/4 does, because if it works for AstraZeneca, it can work for little McBride. 

However, Ward also noted that with this approach there will be significant change management challenges. He added: 

The road to get there is harder, because you're having to give up everything that you do today and move to a world class product. Everyone's customized way of doing their job is now under pressure. 

That's where the change management kicks in. We are a European factory workforce and we're heavily unionized, so that is something you have to be fairly thoughtful about.

However, there is good reason for taking this approach. McBride’s ambition is to have an unencumbered data flow through its organization. Ward said that this is more of a priority in terms of outcomes than the improved functionality that S/4HANA will provide. He said: 

Data does not flow unencumbered through McBride and it needs to. And when you're operating in multiple European entities, if you don't have a seamless flow of data, it's an issue because you could have four or five entities that serve one customer. 

If we are serving Carrefour, there's a lot of work behind the scenes to serve up tendering, new business, innovation, quality, ideas. And that is only as good as our ability to flow data behind the scenes to serve it up as one. So that's our number one goal. And that's the one that we're furthest away from. 

However, second to this, the S/4HANA programme is aimed at allowing people to move away from doing the menial parts of their jobs and focus on work that is value add. S/4 should provide the foundation and employees should be looking for insights that allow McBride to do things differently. Ward said: 

This is not something to be feared, though I'm sure it inevitably will be. This is a great opportunity for you to be even better at your job, wherever you are in McBride. 

What you do today, the application will be able to do for you, and you're able to sit on top of that. I think that for 90% of people, that will be welcome. But of course, some people will quite enjoy just sort of crunching the numbers, so I think there'll be a small minority, as in every change programme, that struggles with that change. 

The change management challenge

Although McBride is at the beginning of this transformation programme, Ward has worked on a number of SAP implementations and believes that the manufacturer has the right recipe for success. There’s an alignment on business priorities, there’s an executive team that’s advocating for the transformation of their teams, and there is a sense of dissatisfaction in the business that it’s too difficult to get the easy things done at McBride. 

However, the change won’t be easy. Ward said: 

So, for me, I've got most of the raw ingredients that I need for transformation, but we don't have a great track record of change. Even smaller pieces of change, we've not done particularly well. We've not always taken people with us. 

You have to assess the organization's capability for change, and I would say it's medium to low. So now, we've got an ambitious transformation, that's well supported by the exec team, but we've got a varying level of ability to make change happen. 

As such, McBride is taking change management incredibly seriously, from the get go. And there’s some interesting elements to this. First of all, the organization has created a PMO - a Programme Management Office. This has been put in place to ensure that prioritization is in focus. Ward explained: 

The way I describe it is to imagine loads of hot air balloons coming up into the air, and each programme is a hot air balloon. And the role of the PMO is to ensure that they don't collide with each other. 

Also, we've got loads of other things going on in McBride that aren't in the transformation agenda. So the skies are pretty busy already. The PMO is like an air traffic controller to make sure that we are prioritizing change, we are resourcing it and we're not knocking out factories by having too much change going into them at the same time. 

However, second to this, McBride isn’t running the programme out of the UK, where it is headquartered. The company has recognized that although it is based in the UK, much of the change will be happening in its European regions, which may have some aversion to being told what to do out of England. He explained: 

This whole project needs to feel European. One of the challenges we have is we have a UK Head Office, but our operations are in Europe. And my observation is some of the other big programmes that haven't done quite so well, have come out of the UK. 

So if you're in France or Luxembourg or Denmark, it feels like a British project. It might be the best thing since sliced bread, but it's a British project. So we've completely recentered this programme to be in Belgium. 

The S/4 team sits in Belgium. Over half of the programme team are non-Brits. It's multi-language. The PMO is also based in Belgium, as well for the transformation. So the epicenter, if you like, comes out from Belgium. 

We've built a team of business process owners, and they're supported by subject matter experts. And again, over half of that team is not non-British as well. So the experts that own the process and contribute to the knowledge of that process are not Brits.  

McBride is also adopting a sales approach to educating the organization, focused on repeating the benefits and priorities of the programme. It carries out a monthly cadence on S/4HANA explaining why it is doing the project, why it is helpful, and where it’s going next. However, Ward is also careful to not overwhelm. He said: 

Because this is a multi-wave implementation, where we start design in January, the first factory is the UK in Spring 2025, and then we're off into six monthly rollouts across counties, what we are careful not to do is talk too quickly about all the stuff that's coming to those that are at the other end of the project. If you're not getting it till 2027, it’s just frustrating. So we're having to be very, very careful. 

And whilst the project is still in its early phases of development, McBride is focused on the outcomes. Ward said: 

I think there’s the financial reason, and then there’s the real reason. There is no doubt there are costs to serve opportunities by having a world class product. Undoubtedly, speed to market will drive sales and margin efficiency will drive all sorts of productivity gains. 

They're strong enough to validate the investment. That's not really where I think McBride clients will most benefit. I think it will be in that unencumbered flow of data. And the fact that we must be quicker and more responsive in the way that we partner with the world's biggest retailers. That's primarily a business case.

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