At the outset of 2001, life at Imperial Sugar was about to turn bitter. As sugar prices collapsed, so did the Sugar Land, Texas, company, filing for bankruptcy protection.
But that’s exactly what CIO George Muller undertook. Before the phrase “Web services” had sunk into the information system lexicon, he took the bankruptcy as a demarcation point to use technology to improve the company’s business. His first project: Give customers direct access to information about the status of their orders via the Web. This “customer-facing extranet” would be the first step in a move toward integrating Imperial directly into its customers’ supply chains.
With sugar prices doubling to 11 cents a pound in 2000, then falling throughout 2001 to under 5.5 cents a pound at the end of February 2002, this would be a strategic pursuit on a shoestring. Imperial set out to do what in the past would have likely cost $3 million, using outside resources.
The tools were cutting edge: a server from SilverStream that transferred data from mainframes to Web pages using the elixir of the eXtensible Markup Language (XML) and Sun’s Java 2 Enterprise Edition software technology, and desktop software that created those connections without users having to write a line of code. The approach would be to spend a few hundred thousand on internal development, with a modicum of coaching from the outside.
“I wanted to make an investment in our own people,” Muller says.
As it turned out, the biggest hurdle the project had to clear wasn’t technical or financial; it was the company’s culture. “The choke point was overcoming the social issues,” says Mark Clemmons, Imperial’s Web and database manager.
Translation: Imperial’s 20 customer service representatives had to buy in. Imperial’s reps work with 40 large customers and brokers, who, in turn, represent more than 800 different customer offices. The self-service application would change the relationship with those customers.
“They’ve been doing business with their customers for a long time and were just unsure about how the changes would be accepted,” says Clemmons.
Yet the company had to change. Imperial Sugar is the largest sugar refiner in the U.S., with $1.6 billion in sales in 2001double that of its closest American rivals, Florida Crystals and American Crystal Sugar. But the company has been in the red for the last two years, with losses totaling more than $372 million.
With $250 million in bonds and more than $400 million in bank loans, Imperial pre-negotiated the terms of a bankruptcy with its creditors. In the midst of this, Muller and Clemmons started looking for ways to take the company’s sales process onto the Web.
By giving customers a direct connection to the company’s sales systems, Muller and Imperial’s executives hoped to reduce the cost of selling to them, as well as getting a bigger share of their customers’ business.
In the long term, Imperial wants to do collaborative forecasting of demand with its customers. That would lower its inventory costs. By making the purchasing process easier, Imperial hopes it can spend more of its sales calories getting a better understanding of the customer’s needs. That would boost revenue, overall.
“In a commodity business like this,” Muller says, “you have to add value to differentiate yourself.”
Putting order-tracking online would give customers 24-hour access to information about coming shipments, helping them to plan their production better.
Muller began looking for a company that could supply the right tools to develop Web services, but would cut Imperial some slack on pricing during its capital crunch. “We were looking for a business partner, not someone who just wanted to sell us software,” he says.