Midrange Stuff, OS/400 Edition

To stay in business and grow, a company needs an edge. For Applegate Farms, that edge is selling natural and organic meat products, which have been a big hit with health-conscious consumers. But the lack of preservatives means that Applegate's products don't last as long on the shelves as their nitrate-laden rivals. To address this logistical problem, and to bring other parts of the business together, Applegate is installing Geac's System21 Aurora ERP suite, marking the first Aurora installation in the United States.

Applegate Farms was founded in 1987, when two self-described "conscientious carnivores," Stephen McDonnell and Chris Ely, teamed up to buy the Jugtown Mountain Smokehouse in Branchburg, New Jersey. The two set out manufacturing deli meats, cheeses, and frozen chicken products that adhered to ethical animal husbandry practices and organic standards, which means not using antibiotics, nitrates, phosphates, MSG, or growth hormones.

The company's timing couldn't have been better. A resurgence in healthy lifestyles in the early 1990s sent Americans to health clubs in droves, while at the same time people began reading food labels more closely and questioning the source of their food, particularly meats and vegetables. Applegate Farms' message of kinder, gentler, tastier meat products hit the right note, and the company grew quickly. Today, its meat products, raised and processed on farms in New Jersey and Pennsylvania, can be found in more than 250 retail chains across the country, including Wegman's and Whole Foods. The company is growing its sales, which were about $15 million last year, at about 15 percent per year.

Applegate has outgrown its current IT system, which is based in IBM Lotus Notes and Domino. The company uses its Notes system, running on a Windows NT server, for just about every company process, including order entry, inventory management, purchasing, financials, e-mail, and for maintaining its all-important recipes. In many cases, Notes serves as a data repository, while humans do the sorting and math by hand.

One of the biggest drawbacks with the current Lotus system is that the different applications are not connected. For order entry, this means employees must enter every bit of information twice, sometimes three times, which is a major draw on the productivity of a company whose 40 employees belies its size.

"Their systems are modern, in that they're written in Lotus Notes," says Carol Ertwine, a 20-year midrange veteran who was brought in by Applegate IT director Robin Heinzer to oversee the System21 implementation as the company's new chief information officer. "But because they're disconnected, there's not a lot of visibility into the overall business."

Geac has quite a bit of experience in the food business, and its System21 Food ERP package is a well-rounded base package for Applegate, says Ertwine, who has 10 years of experience in implementing System21. "Applegate is a perfect candidate because the systems they have are so disconnected; this will provide a welcome change," she says. "Everybody is excited about this project. The buy-in is from the top down."

Ertwine is taking a hybrid approach to the rip-and-replace technique with the System21 implementation, which began this summer. While System21 Food will replace many Notes applications, as well as provide new functionality (such as barcode scanning), the Notes system will continue to reside, alongside System21. In this way, Applegate can reuse the workflow that was developed in Notes, and augment it with things such as e-mail notification of important events detected by the ERP system, such as a customer being over the credit limit or a truck not arriving at a dock on time.

Purchasing and inventory management will be a key driver of return-on-investment for Applegate with System21 Aurora, Ertwine says. These processes are now handled manually, with Notes serving as a data repository. It is up to a manager to decide which batches of product need to ship first, to avoid spoilage. But because Applegate doesn't use preservatives in its meat, like other companies do, its products have a shorter shelf-life, making efficient inventory management all the more important.

"Timing is everything, getting it in faster, away faster, and tracking which product goes in first and out first," Ertwine says. "Our product can't sit on the shelf for very long."

With Applegate's current system, there's a tremendous amount of inventory adjustment and missing inventory, Ertwine says. That problem should go away once System21 starts managing the inventory and warehouse workers start moving the product with help from the new wireless barcode scanning network.

Ertwine predicts that the new system will take inventory turns down from once every 11 days, to once every four to five days. "I believe the accuracy of the inventory will go up tremendously," she says. In fact, as a result of the increased visibility into its inventory, Ertwine expects Applegate to exceed the 40-to-50 percent increase in revenue the company is anticipating. The system should pay for itself within a year, she says.

In phase one, which is scheduled to go live on January 1, 2004, Applegate will install the System21 financials, inventory, requisitions, pricing, advanced financial integrator, and advanced order entry components. Phase two involves the manufacturing and shipping components of the suite. The software runs on an iSeries Model 810.

Although this is Ertwine's first System21 Aurora implementation (it is, after all, the first Aurora implementation in the United States), she isn't exceedingly worried about it. Geac is providing the company with a special liaison who will offer Applegate's four-person IT staff access to the System21 Aurora developers in Studley, England, if required. "That's an enormous benefit," Ertwine says.

System21 Aurora is Geac's next-generation, OS/400-based ERP suite. With this release, the company rewrote the ERP suite's source code in RPG IV, it developed a closer integration with IBM's WebSphere Application Server, it created a new thin-client interface, and it developed a new business process modeler, among other enhancements. For more information about System21, go to Geac's System21 Web page. For more information about Applegate Farms, go to www.applegatefarms.com.