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A Beeline for IT

A Beeline for IT

Roger Masters gets a buzz out of being at the helm of Australia's largest honey producer. The 42-year-old managing director of Capilano Honey Ltd sees a vast field of golden opportunities blossoming in front of him. What's generating the buzz for him is the challenge of reshaping Capilano into a more nimble vehicle to harvest those opportunities.

With a claimed 70 per cent of the domestic market, Capilano Honey is already floating above its domestic rivals. But Masters, headhunted by Capilano's board 12 months ago, is busily putting some extra sting in the company's tail. He's rolling out a $10 million rebuilding program embracing everything from the company's information systems to its plant and equipment in a bid to double revenues to $120 million within five years.

On the bricks and mortar side, Masters is bulldozing the company's geriatric brick headquarters building in Brisbane to make way for a two-story, tilt slab complex that will integrate administration and factory facilities. Less visible but possibly more spectacular is the transformation Masters is triggering in Capilano's manufacturing, office and marketing information systems. Armed with hard-won knowledge of how information technology can serve business goals, Masters is leapfrogging Capilano 15 years up the IS ladder.

Masters personifies a changing of the guard among managers of the small-to-medium companies making up the backbone of Australia's manufacturing sector. He stands between the older generation for whom information technology was a closed book and a new wave for whom tracking technology is an automatic business reflex.

"At my age, I regard myself on the cusp of those managers that either know something about computers or missed the boat," he says. To catch that boat, he went to Hong Kong where he came face to face with Lotus 1-2-3 and PCs for the first time while working for one of the Big Six management consultants in 1984.

"I recall making a conscious decision to go out, buy one of these beasts and sit down and teach myself Lotus," says Masters. On returning to Australia, he found his new skill set had vaulted him four years ahead of a peer group who hadn't yet come to grips with the new technology. "I remember one of the partners in my firm saying to me: 'In the land of the blind, the one-eyed man is king'," says Masters. "I really believe there is an age cut-off. Past a certain age, it is easy to say: 'I don't want to learn. Let someone else do it and I'll just manage it.'"If I hadn't made a conscious decision at the time, I'd be one of those who lets the IT department worry about the technology and hopes to hell it works."Masters added some higher IT education to his self-taught skills after he moved out of accounting into industry and joined natural health products company Bullivants as finance director. His five-year stint with the manufacturing and packaging operation coincided with a sea change in its IT architecture as it moved to a new generation of integrated software running on minicomputers.

Ringside seat

At Bullivants, Masters had a ringside seat during the evaluation and selection process which eventually settled on JD Edwards manufacturing software and IBM AS/400 systems linking remote warehouses.

The new technology injection helped lift the company's annual growth to 20 per cent, an eye-opener for Masters. He cross-pollinated the experience to Capilano, which is similar both in size and in terms of its need for good information systems to back up its manufacturing and marketing. "There is no doubt that having some experience of what the technology can do helps you to manage it," says Masters.

The arrival of an MD whose business strategies are informed by first-hand experience with IT by itself guaranteed a revolution in the way Capilano used information systems to further its business goals. But Masters' impact on Capilano was magnified because its corporate culture straddles the intersection of agriculture and small manufacturing - two of Australia's most conservative IT constituencies.

Technology is neither understood nor well used in the small-to-medium businesses that make up the heartland of Australia's manufacturing sector.

About 80 per cent of Australian manufacturers turn over less than $30 million to $50 million yearly, according to Richard Kirby, executive officer for the Australian Production Inventory Control Society (APICS).

"When we go out and talk to these people, we find in many cases they don't have any manufacturing software," says Kirby. "They have 20 to 50 employees, they use MYOB or Attaché for their financials and everything else is done on the back of an envelope by the owner.

"The owner knows his inventory is too high and he is not meeting customer requirements but he is too busy to investigate the manufacturing package market and do something about it."Before Masters, Capilano bore a painfully close resemblance to that profile, even though it had evolved over 44 years from a family company into the Queen Bee of the country's honey industry.

Each year, some 18,000 tonnes of honey from hives dotted across eastern Australia are funnelled into Capilano plants in three states for purification and packaging. Out the other side flow consumer-sized pots of honey headed for domestic supermarket shelves and bulk containers destined for export wharves. A public unlisted company with a strong cooperative flavour, its shareholders number 600 beekeeper/ suppliers who also dominate Capilano's board where they hold five of eight directors' seats.

Its revenues last year were about $55 million of which nearly half were generated by exports to Europe and the UK, South Africa, South-East Asia and Latin America.

Steam driven

Underpinning those business structures was a steam-driven information system built around technology decades out of date, including an aged IBM RT Unix platform and Pick database, and a network consisting of 48 serial lines linking the RT to about 30 users in its three plants. The depth and pace of change that Masters' arrival triggered in Capilano's IS environment may be possible only in companies who enjoy chief executives armed with their own vision of how information technology should be harnessed to business goals.

Masters consigned the RT and Pick manufacturing systems to the dustbin of history, jerked Capilano's office systems into the era of networks and electronic mail, and separated the MIS section from the accounting department.

"In terms of the manufacturing process, the idea of a computer system is to give us more information about how our processing is going," says Masters. "But in common with a lot of older businesses, what this company had was a very old database system supported by a myriad of spreadsheets.

"The problem with spreadsheets is they multiply and become increasingly cumbersome and very difficult to update. The result is a lot of time and work to get accurate information when you need it instead of two months after you need it."In pursuit of a new manufacturing system, Capilano's MIS manager, Steve Milton, was given the opportunity to enlist outside consulting expertise, time to consider a wide spectrum of options and the budget to bring home the bacon.

"Roger came in, said this was no way to run an IS department, told us to put in a network and then go and look at manufacturing software," says Milton.

"In the old days, I couldn't even report directly to the board and there was little understanding of technology among the managers I did report to," he recalls. "Suggestions we put up weren't understood and nothing was acted on.

Roger has completely turned the company on its head and given me the opportunity to achieve things."At Bullivants, Masters helped implement a minicomputer-based solution but he knew that the technology clock had continued ticking in favour of the power and reliability of PCs.

"There are a lot of PC-based manufacturing software packages which in my opinion are now as good or better [than mid-range packages] and we eventually decided on QAD's MFG/ Pro software," says Masters. That package plus Capilano's office systems will all be supported on integrated networks driven by Pentium-class PC servers and Microsoft's Windows NT operating system.

Capilano kept its eyes locked on the bottom line when selecting its IT systems.

"MFG/Pro fits this business beautifully because it has an accounting, pricing and promotions information module which tells us how to get the best discounts and deals out of the big supermarket chains we negotiate with," says Masters.

In justifying the business advantages flowing from improved IS systems, that's the type of benefit that drops right to the bottom line.

"You can bean count the productivity improvement that e-mail gives or the difference an integrated system makes from hunting through a maze of spreadsheets," says Masters. "Or you can move away from looking at the number of hours you save on processing information and simply get down to a very basic business rule of thumb. If MFG/Pro lets us improve our supermarket terms of trade by one per cent of sales revenues, that is worth $300,000 in domestic sales alone."It is this type of message that corporate general managers want to hear from their IS managers, Masters says. "Rather than talking gigabytes and buzzwords, they have to demonstrate clear examples of how the business can benefit from specific hardware or software. They'd better be able to say how it will improve production forecasting or get better handle on discounts. Those are the things that can make or break you.

"The amount of money spent on software these days is pretty cheap compared with the amount we might give away in trading terms with the supermarkets."According to Masters, the advantages of today's integrated packages over Capilano's former multiple spreadsheet approach are undeniable. "There is no doubt this will provide a lot of information for us to monitor our business much better than we've ever done before, so we know where we have problems and can forecast our requirements much better.

"The old spreadsheet days sucked up huge amounts of time. If you have a new product on the marketplace, trying to juggle on a spreadsheet what promotions you have on, what your demand is, what sales are going through and how it is going to fit in with production schedules was a pretty hard job."Culture changeFor Capilano's 150 staff, possibly the most dramatic change associated with Masters' new broom has been the forging of e-mail links via local and wide area networks.

"We had a cultural problem here because the old building has been added to at least six times, so it has become a rabbit warren of offices and people found it hard to communicate," says Masters. The Brisbane head office now sports a local area network as do Capilano's packing plants in Maryborough, Victoria and Sydney. All three are linked by a wide area network.

"E-mail has been a real revelation to employees because they don't have to walk around the corner and down the stairs just to say hello," says Masters.

According to Milton, "It has reduced the paperchase, speeded up response to memos and generally shown itself to be a very efficient tool." In more concrete terms, e-mail has chopped the average time needed to circulate a memo through the Brisbane headquarters from three days to 20 minutes, he says.

One manager, Bill Winner, who heads up Capilano's beekeeper services, estimated the introduction of e-mail has lifted his personal productivity by 200 per cent.

Information systems are only a means to an end for Masters. The huge turnover boost he's seeking to stimulate at Capilano will come through creating value-added products and shifting its export sales from bulk shipments to retail packed products. But heading into a growth cycle with a technology-literate MD able to tap the business benefits of IS is proving a golden advantage for Capilano Honey.

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