Welch Foods Overhauls IT, Puts In First ERP System

Welch Foods Inc. knows its grapes. Now it's using IT to improve hundreds of business processes. In January 2004, the century-old, $600 million-a-year icon of grape juice and jelly set out to install an updated IT infrastructure that includes its first enterprise-resource-planning system.

The IT overhaul meant ripping out an antiquated IBM AS400 and mainframe data center and replacing it with a system built on Dell PowerEdge servers, a 15-terabyte Dell/EMC storage area network, VMWare software for partitioning, and Oracle's ERP platform and databases. "As we continue to grow, the data expands, too--at about 30% annually--and has for the past six years," says Jacob Matusevich, lead IT analyst at Welch's.

Welch's has 200 Dell PowerEdge servers that run either Windows 2000 or the Linux Red Hat operating system. They link through Fibre Channel adapters and cable to EMC's storage area network, the central repository for data.

Oracle's ERP platform and databases now provide one data source for information, streamline and automate processes, and provide integration between Welch's four production facilities in Kennewick/Grandview, Wash.; Lawton, Mich.; North East, Pa.; and Westfield, N.Y. The suite ties into Oracle's warehouse-management system, which is in the process of being installed. Payroll is scheduled for production in January 2006, and supply-chain apps will follow.

The overhaul affects several hundred subprocesses that feed off seven core processes: procure to pay, plan to produce, order to cash, product-life-cycle management, demand generation, financial planning, and human resources to payroll. "One of the first things we did is redesign business processes," says Larry Renchen, VP of information services at Welch's.

Procurement for maintenance of its production facilities, for example, is now centralized. Before installing Oracle Enterprise Asset Management, each site was responsible for procuring parts, even though they often buy from the same vendors. Sourcing is now aggregated through corporate headquarters in Concord, Mass.

EMC's VMWare lets Welch's operate between 10 and 14 virtual machines on one physical server, eliminating the need for individual power sources and additional floor or rack space. Having the ability to allocate space when required is much quicker than waiting more than three weeks for Dell to manufacturer, ship, and install the operating system and applications on a new server, Matusevich says.

As for the IT investment, Welch's executives declined to provide details but say annual IT spending with the overhaul is running at about 2.5% of annual revenue, nearly 40% higher than the consumer-goods industry's average annual rate of 1.8%, according to the Grocer's Manufacturers Association. Welch's expects to fall back in line with the average after the deployment is complete.