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          How software from SAP helps candy giant Ferrara cut development time by 50% and consolidate billion-dollar acquisitions in just 7 days

          Nerds candy Nerds candy
          Software from the German tech giant SAP is helping Ferrara cut development timelines and integrate data post-merger.
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          • Consumer packaged goods companies are rapidly turning to digital technologies to help capitalize on fast-changing customer preferences.
          • Ferrara Candy Co., for example, tapped SAP to more quickly integrate data from multibillion-dollar mergers.
          • And software from the German tech giant also helps inform the research process, cutting the development timeline by as much as 50% for new innovations.
          • "Every CPG company is facing the challenge of consumers getting really bored really quick," Chief Information Officer George Lesko told sunbet. "The appetite to wait another six months to get it to market is just not going to be there."
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          The consumer packaged goods industry is in a state of upheaval.

          Heavyweights like Frito-Lay and the Kellogg Co. are quickly pivoting to digital to respond faster to changing customer demand and fight off competition from direct-to-consumer upstarts. The coronavirus pandemic has only accelerated many of those changes.

          Ferrara Candy Co. is no different. 

          The owner of brands like Nerds and Jujyfruits started its digital overhaul in 2014 with a goal of using new technology to accelerate decision-making and get new products to customers quicker.

          But as more of the growth in the CPG industry is driven by small incumbents — presenting the opportunity for mergers among legacy players — Ferrara's journey also shows how tech transformations can help to quickly integrate companies after an acquisition.

          "Every CPG company is facing the challenge of consumers getting really bored really quick," Chief Information Officer George Lesko told sunbet. "The appetite to wait another six months to get it to market is just not going to be there."

          Ferrara was formed in 2012 after a merger between Illinois-headquartered Ferrara Pan Candy Co. and Minnesota-based Farley's & Sathers Candy Co. In 2017, the company was purchased by the Ferrero Group, a conglomerate of brands such as Nutella that's owned by the billionaire Giovanni Ferrero, Italy's richest man.

          The Ferrero Group then acquired Nestlé's US confectionery business in 2018, along with Kellogg's cookies and fruit-snacks businesses in 2019. Those deals gave Ferrara access to well-known product lines like Keebler, Famous Amos, and Laffy Taffy.

          "We're bringing in brands that in some cases were neglected," Lesko said. "We need to breathe new life into those brands. So our ability to very quickly unify the way we manage those businesses and the way that our analytics and salespeople manage those portfolios is really important."

          From 2 years to 7 days

          Among other tools, Ferrara tapped a platform from SAP known as HANA that helps the company gain deeper insight into day-to-day operations. This adoption allowed Ferrara to unify acquired data very early on in its mergers, instead of waiting for all the back-end systems to eventually integrate.

          Last year, for example, the company was working through two acquisitions: the Nestlé and Kellogg's purchases. On top of a slew of other hurdles, Ferrara didn't want to force its employees to review three separate sales reports outlining performance in key retailers such as Walmart and Amazon.

          In the past, data-integration efforts like that would have taken over two years. But with the SAP investment, it took just one week after the Kellogg's merger closed. 

          The platform let it easily "take information from those sources and create one dashboard where our management team can see our daily sales in one place," Lesko said.

          Getting products to market quicker

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          "The cost is dramatically lower, so we can get feedback on smaller initiatives or perhaps smaller, less important design decisions economically, so it really helps us squeeze out every little bit of optimization before we go to market," Daniel Hunt, Ferrara's director of insights and analytics, said.

          Snack packages, for example, used to change very rarely. Now products are revamped every two weeks, according to Lesko. Digitizing operations like formula management, regulatory adherence, and packaging allowed Ferrara to move much quicker to adjust packaging and bring new products to market.

          The overhaul, for example, helped inform the launch of a Sweetarts product — the Twisted Rainbow Punch Ropes, a multicolored fruit-punch-flavored candy — in March that the company said quickly became one of the top nonchocolate products sold at convenience stores.

          "[Competitors] come up with a new flavor, and they put it in the same old, tired packaging. And it looks exactly the same. It just feels like a weak effort to me," Lesko said. "We're just in a different place when it comes to the passion that we have about these brands."

          To assist in the overhaul, the company hired data scientists and created several new leadership roles in IT that coordinate closely with specific business units — including supply chain, innovation, digital e-commerce, and finance. 

          "We aligned our IT leadership roles very closely with the way the business was aligned," Lesko said. 

          Such a step is increasingly common as businesses increasingly look to make the IT department more central to the overall mission of the company — a switch that firms like FedEx helped pioneer.

          SEE ALSO: How Fidelity spurred a 147% productivity increase during the coronavirus pandemic, setting it up to hire thousands more workers

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