The California and Hawaiian Sugar Refining Co. set up shop in 1906 in the town of Crockett, Calif., occupying a 19th century refinery that would become the headquarters of C&H Sugar. In those days, the refinery's 490 employees produced about 67,000 tons of refined cane sugar. Today, although C&H produces 700,000 tons annually and supplies about 8 percent of the U.S. market for refined sugar, the company still runs its business out of its headquarters at that same refinery building in Crockett, located on an inlet in the San Francisco Bay. But as the company prepares to mark the 100th anniversary of its founding, it has also been working to bring its information technology infrastructure into the 21st century by implementing enterprise resource planning and B2B integration technology that will ensure another 100 years of sweet success.
Looking for Scalable EDI
The heart of C&H's IT infrastructure, until recently, was a legacy mainframe system, along with an add-on application for electronic data interchange (EDI) with the company's customers through a value-added network (VAN). The mainframe's manufacturer had long since stopped providing maintenance for the system, and C&H relied on a single employee to support the equipment. A second employee supported the company's EDI messaging, doing a considerable amount of manual processing to keep the transactions running because of message failures and other hiccups in the system. In short, the legacy platform was "unsupported, unstable and very difficult to manage," according to Gary Walden, chief information officer at C&H.
The sugar company originally brought in Walden at the end of 2002 to evaluate C&H's options for replacing the mainframe system with an up-to-date enterprise resource planning (ERP) system. C&H wanted not only to gain better visibility into its production and inventory by deploying a new system but also to be better able to collaborate with its trading partners and to be more responsive to its customers. After evaluating various systems, in early 2003 C&H selected a hosted version of mySAP ERP system from German enterprise solution provider SAP, and the company asked Walden to stay on to run the project.
With the decision made to go with SAP, C&H began looking at options to update its EDI network, too. Electronic data interchange is mission-critical for C&H, particularly on the retail side of the business, where as much as 70 percent of incoming orders are transmitted electronically via EDI. In addition, outside warehouses that receive and ship C&H products on the company's behalf also wanted to begin using EDI to communicate, so the sugar company needed a solution that would allow it to scale up its EDI usage over time.
The Value of a Relationship
After evaluating the different vendors offering B2B connectivity solutions and services, C&H ultimately tapped SEEBURGER, a company founded in 1986 and with U.S. headquarters in Atlanta. Walden says that the choice fell to SEEBURGER to an extent based on a side-by-side comparison of features with the one other provider that C&H considered. But what closed the deal in SEEBURGER's favor, Walden says, was the solution provider's close relationship with SAP. "Technically there were differences between the two products, and there were some pros and cons," Walden explains. "But when you look at third-party products you look at a couple of business factors that are beyond the technology, regarding the longevity of the company as well as their relationships with your other technology vendors."
On the first point, C&H eliminated several vendors out of the gate because their customer bases were still small and their long-term survival looked uncertain. On the second point, Walden says, "From everything I could see, SEEBURGER had a much closer and better working relationship with SAP." SEEBURGER, in fact, has been working with SAP for more than 10 years and has more than 1,500 joint customers with SAP as integration vendor.
C&H wound up implementing SEEBURGER's Business Integration Server (BIS) in conjunction with its SAP implementation. BIS comes with application adapters, a conversion engine for handling various message formats, 60 different communications protocols and, importantly, pre-defined SAP workflows. The SAP implementation initially was to take five months and go live in mid-2003, but about three months into the project C&H decided to extend the scope of the implementation by five months to encompass warehouse management as well to provide better visibility into the company's warehouse facilities and boost inventory control. As a result, the project went live at the start of October 2004.
The changeover to the new ERP system was relatively painless, Walden says, explaining that C&H's approach in implementing the project was to keep the scope as limited as practical and focus on moving away from the company's legacy system. "We knew that there were lots of other capabilities we could do, but our philosophy was to define the scope around what it took to get off the mainframe," he says. Not that the deployment was without its challenges. For instance, in the midst of the SAP/SEEBURGER implementation, one of C&H's major retail customers — which include the likes of Wal-Mart and Costco, as well as supermarket chains such as Safeway and Albertsons — requested that the sugar company start using AS2, a protocol for the secure transport of EDI documents over the Internet. C&H was able to jury-rig a solution based on the old mainframe before the new ERP system went live and then switch over to using the new solutions once the implementation was completed. Since then, as various other major customers have expressed interest in moving away from using VANs to communicating via AS2, C&H has been able to buy additional AS2 licenses from SEEBURGER to accommodate those customers.
Moving forward, C&H is considering ways to extend the use of its new EDI capabilities to its supply base, perhaps trading purchase orders and receiving notices with some of its key suppliers. Currently, the sugar company is looking to link with its outside contracted warehouses directly via EDI. To date, C&H has simply provided the warehouses with PCs and printers at their locations, and the warehouse staff provides the "sneaker-ware," entering transactions for receiving and shipping C&H's products in both their own systems and directly into the sugar company's SAP system. C&H currently is in the process of establishing those EDI links with a handful of its larger warehouses so that these facilities systems can send transactions directly into C&H's ERP, and the company is considering additional projects in this regard as it sees the benefits of reduced labor at the warehouses and increased inventory accuracy from the direct, system-to-system transactions.
The return on investment in moving to the SAP/SEEBURGER solution has come in several forms. For instance, the completion of the project has freed up employees previously occupied with supporting the mainframe and EDI traffic, allowing these resources to be devoted to other projects, including implementing EDI with additional customers. This will, of course, result in some cost savings as C&H is able to move more of its business off of fee-based VANs. And the company is seeing improved customer satisfaction just because of the reliability of the transactions, the visibility of the transactions and the reduction in transaction errors. But Walden says that the most significant payoff has been just moving away from the old mainframe system. "The legacy system was near collapse, so our goal was basically to ensure that we could continue to support our customers as well or better than we were able to before," he says, concluding, "Basically the choice was either we do this or we don't run the business with an ERP system."