As a 120-year-old institution, the salad dressing manufacturer Marzetti had survived many of the ups and downs of the ever-changing food industry. By 2017, however, it was clear that something needed to change. Consumers were moving towards healthier brands, and the company wasn’t innovating new products fast enough to adapt to the shift in consumer expectations. In addition, the company was having a difficult time planning its capacity with the long-term in mind — a major point of frustration for many of its staff. Bit by bit, Marzetti was seeing its market share erode.
Enter Dave Ciesinski, a food industry veteran with a vision in mind. Ciesinski took the helm as president and chief executive officer of Marzetti’s parent company, Lancaster Colony Corporation, and rapidly began work to revitalize the company. One of the first actions he took as president and CEO was implementing Integrated Business Planning (IBP) with the help of Oliver Wight.
What is Integrated Business Planning?
Integrated Business Planning is a decision-making process that aligns strategy, portfolio, demand, supply, and resulting financials through a focused and exception-driven monthly re-planning process. The result is a single operating plan, over a 24+-month rolling horizon, which senior executives hold themselves and their teams accountable for achieving. Done well, it is the formal way that the business is managed, and strategy is connected to execution.
Companies that utilize IBP well align their strategic goals with short-to-mid-term planning and make timely decisions that ensure the company is meeting business goals and objectives to improve overall performance and profitability. In this case, Marzetti was able to improve all three.
Marzetti’s IBP journey began with discussions and an assessment by a team of Oliver Wight business advisors led by Tom Strohl. The team provided education and observed the review meetings during the early monthly cycles of IBP. They provided feedback and guidance on how to improve the process during each cycle.
Very quickly, Strohl and the team focused on a few primary needs. Marzetti was able to revamp its innovation process — including developing a new stage-gate process from scratch. The company also became more skillful in using a data-driven capacity planning process to determine how to best flex capacity and make the right capital improvements. Finally, leadership developed a demand planning structure to consistently produce a trustworthy demand plan in support of IBP. Prior to IBP, use of different and sometimes conflicting reports meant that different parts of the company could easily become misaligned. Through IBP, the executives were able to build connectivity and confidence that plans based on consistent and connected information would be carried out.
The implementation of IBP paid substantial financial dividends quickly. Through the second quarter of 2020, $24 million in increased sales revenue was attributed to Integrated Business Planning. By successfully aligning its innovation, demand, supply, and financial plans, Marzetti also cut costs in many areas. Around $900,000 of expedited shipping costs were slashed, and unplanned internal transfer costs were reduced by $100,000. In total, cost savings attributed to IBP exceeded $6.8 million.
Ultimately, Marzetti earned an Oliver Wight Class A certification for its Integrated Business Planning process. A Class A certification means that Marzetti’s process met or exceeded the standards defined for IBP in The Oliver Wight Class A Standard for Business Excellence. Companies that achieve Class A are typically among the very top performers in their industries — and Marzetti is no exception.
Responding to the challenges of the COVID-19 pandemic
IBP was instrumental in how Marzetti was able to respond when the COVID-19 pandemic turned the world on its head seemingly overnight. Without knowing how long the global pandemic would persist, long-term plans were not affected. Having IBP in place, the executive teams could address the more immediate business planning and execution issues keeping the business on course during a time of immense business disruption. IBP allowed Marzetti to be much more prepared for this type of unforeseen situation.
Before IBP, the Marzetti executive team might not have responded quickly enough to the changes caused by the pandemic. IBP provided a reliable and sound approach to nimbly handle the disruption. The trustworthy IBP process utilized assumption-driven scenarios to stay on plan.
While unprecedented shifts did occur — foodservice demand dropped while grocery demand skyrocketed — Marzetti had the infrastructure in place to meet the moment. Before the pandemic even reached the U.S., Marzetti had already discussed alternative scenarios for sourcing ingredients supplied from China. Marzetti was equally agile in responding to shifts in demand and minimizing potential losses.
Positioning for the future
Ultimately, IBP gave Ciensinski, and the rest of the executive team, the ability to craft a forward-thinking business management approach and be prepared for both good and bad times. With the 24-month rolling horizon, Marzetti was able to stay flexible and still prepare to serve customers and satisfy shareholders over the long term. The enterprise is now safely on the other side of the early pandemic’s market shakeups and has its eyes set on the future — no matter what comes next.
“IBP provides the gauges to fly in all sorts of conditions when weather is nice or not nice,” said Ciensinski.
Change is hard, especially if your company is an industry leader with more than a century of success already in the rearview. Under the leadership of Ciensinski, and with the assistance of the Oliver Wight team, Marzetti was able to use Integrated Business Planning to build upon its formidable strengths and continue its enviable streak of increasing cash dividends for 57 straight years.
To learn more about how Integrated Business Planning helped Marzetti and see if it can offer similar results for your enterprise, download our case study Navigating Good and Bad “Weather” With Class A Integrated Business Planning today.