Four major international organisations presented their business success stories to an audience of senior executives from nearly 50 companies at this monthís Oliver Wight EAME Proven Path Club.

75 directors and managers were at the F1 Williams conference centre in Oxfordshire to hear business improvement case studies of the highest quality from Abbott International, R J Reynolds, Farm Frites and Smith and Nephew, with presenters from the US, Holland, Ireland, as well as the UK.

Abbott International

The International Division of Healthcare giant, Abbott Laboratories, is the world's biggest ever Class A implementation - all 103 of the company's targeted sites have achieved Class A status. Abbott International has annual revenues of $7 billion and employs 30,000 people. Inspirational director of operations, Damian Halloran, has been the heart of the Class A project since it began in 2002 - having worked extensively in the US, he is now heading up operations at the Vascular Division (AVD) in Galway. He says that fundamental to the success of a Class A implementation is the strength of its steering committee. "The steering team has to be led from the very top and without any question, your core team has to have your best people on it. The biggest challenge for a Class A project is establishing the right culture in the business and to do that you need passion, energy, commitment and belief - you can't light a fire with a damp match," he says. Halloran also makes the point that education is vital - it has to be planned, personalised and cascaded down through the organisation and at the Galway operation alone, Ä530,000 was invested in training last year (an average Ä1,000 per employee). This culture of people development and learning, championed by Halloran, received independent recognition in 2006 with a prestigious award from the Irish Institute of Training and Development. Halloran again: "Companies are very fond of saying 'people are our greatest asset' and if that's true, your business strategy has to reflect it." Abbott International has received significant savings from its global Oliver Wight programme.

Smith and Nephew

Like Abbott International, Smith and Nephew has also been awarded for the success of its business improvement programme, picking up the 'Logistics and Supply Chain Award' at Manufacturer Live 2006. Smith & Nephew employs over 8,500 people worldwide and generates annual revenues of $2.6 billion. Its Wound Management Division, headquartered in Hull, in the UK supplies dressings, pharmaceutical products and electronic devices to 38,000 customers in 124 markets around the world.

The company's mission statement is 'to help people regain their lives' and the effective supply of product is critical. In October 2002, 180 people were killed and many others injured in the Bali Bombings; the day after, Smith & Nephew's burns products were already received and helping patients. Nearly one quarter of all advanced wound products were donated by Smith & Nephew. The company embarked on its Oliver Wight programme in 2003 (Smith and Nephew calls it 'integrated business planning' - IBP) and supply chain director, Paul Adams says high performance can be gained by designing the supply chain for the customers: "It's a classic problem in many big organisations; if the supply chain is poorly designed, there will be a negative impact on profit. If your business objective is to push top line revenue growth, you risk high costs and poor service - you release sales people into the market and you will probably get a whole set of new accounts all generating small orders which cost you more to fulfil than the revenue they generate, so the more you sell, the more you lose." IBP enabled Smith and Nephew to align its sales strategy with its operational capability and supply chain design; it changed its business model completely (introducing channel intermediaries to service small orders. Implementation has enabled a 20% increase in manufacturing capacity and added 3 margin points in net profit in one European market alone, whilst maintaining sales growth. Inventory has dropped and Smith & Nephew offices now supply fewer delivery locations with larger orders - in fact average order size in some Smith & Nephewís markets has increased by up to 60%, whilst SKUs have been reduced by 50% following consolidation. Customer delivery time is also faster, with pan-European warehousing delivering to customers within 24 hours. "Forecast accuracy has risen from 60 percent to 80 percent for 70 percent of products and every day people look at better ways to serve our customers," says Adams.

Farm Frites

Farm Frites has been a family-owned business since it was established in 1971. It is the world's third largest potato processing company, with offices in 13 European countries; it has 1,700 employees across eight manufacturing facilities. With the objective of increasing the scale of its business whilst reducing the cost of production, Farm Frites began an integrated business management with Oliver Wight in April 2005 - Farm Frites calls it integrated business operations (IBO). The company made rapid progress through the establishment of integrated supply, demand and product management reviews and is now heading for Class A status. Pieter Kruithof, supply chain director (and responsible for the design of the IBO programme), says "Our dual strategy was to introduce operational excellence at the same time as delivering a value-added proposition around improved customer service. Ours is a commodity product in a complex industry with a volatile supply chain - our raw materials come from the land and are subject to the vagaries of the weather." Nonetheless the company identified the potential for Ä1.5 million of savings and is already half way towards achieving them. Geert Jackers, integrated reconciliation manager, with overall responsibility for running the programme, says the transparency delivered by IBO has 'pulled the walls down' between departments and dramatically improved forecasting accuracy: "In two years there has been a 33 percent uplift in forecast accuracy." In 2006 a bad potato crop put pressure on short-term profits but the company didn't abandon its Class A principles, focusing instead on innovation rather than cost cutting; it devised a brand new pricing structure which is now being imitated by its competitors. Farm Frites is 18 months away from Class A and the focus is now on 'people and behaviours' with clear targets for the business. "We want to increase the involvement of our middle management, so that routine things begin to happen routinely, improving the sub processes that feed the demand, supply and product management reviews."

R. J. Reynolds

Andrew Gilchrist is senior vice president and chief financial officer of R. J. Reynolds Tobacco Company, the USA's second largest cigarette manufacturer. Three years ago it acquired a competitor - Brown and Williamson; the market's third largest cigarette manufacturer at that time. R. J. Reynolds employs about 6,000 people and turns over $7.7 billion. The principle objective for its integrated business management what Gilchrist calls the company's "Fast Forward" programme was to make the organisation more forward-looking: "We now have a 24-month business horizon and a ten year strategic roadmap which includes every level of the business." A substantial technology upgrade has supported the Fast Forward programme; SAP was implemented in mid-2006 and performance metrics are visible via Microsoft SharePoint. Gilchrist says the company continually reviews its performance against the Oliver Wight 6th edition checklist, as well as its own internal audits and progress has been widespread: "Understanding of the core processes and communication have improved dramatically and we've eliminated 1,000 monthly meeting hours," he says.

The next Proven Path Club meeting is in Brussels on Thursday 29th November, 2007.