JM Smucker Company Essay

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JM Smucker Company

The history of the J.M. Smucker Company is reviewed and demonstrates the evolution of the company. Business strategies and the importance of business intelligence systems are examined, concerning how the company conducts business. The company’s growth processes resulting from acquisitions and brand awareness are reviewed. Innovative plans implemented continually within the company are mentioned. The importance of people is stressed throughout the company and in the public eye. The J.M. Smucker Company continues to hold fast to the same values that the company began with over one hundred years ago.

The J.M. Smucker Company Although the J.M. Smucker Company (SJM) began by selling its apple cider, for many years now it has been well known for its jams and jellies. Today, however, the company has expanded into several other markets within the food industry. They have continued to grow through acquisitions and name brand awareness. The company has a strong vision and holds to its moral ideals and values throughout its business activities. Smucker’s continually develops new product ideas to expand its peanut butter and jelly market. Additionally, the J.M. Smucker Company remains the leading producer of jam and jellies and is known for its quality products. History

Jerome Monroe Smucker established the J.M. Smucker Company in 1897 as a cider mill in a small community in Orrville, Ohio about an hour south of Cleveland. Interestingly, Smucker’s apples used for cider came from an orchard that had been originally planted by Johnny Appleseed (John Chapman) himself. However, due to the cyclical nature of apples, Jerome needed to find another source of revenue that would enable earnings throughout the year; thus, he decided to sell apple butter that he made using his grandfather’s recipe. His grandfather’s recipe provided him with a competitive advantage that no one else at the time seemed to have. The recipe used a secret method that captured the vapors typically lost in the process that permeated into the apple butter introducing a unique flavor drawing many customers to his mill and creamery (CEO, 2001). As a result of his unique apple butter, Smucker earned a positive reputation, took pride in his work, and began stamping his name on every crock of apple butter sold. The Smucker name continues to be a part of their packaging symbolizing a guarantee in quality that has spanned five generations of the Smucker’s family.

The Smucker’s company continued to flourish as Jerome’s eldest son, Willard, delivered twenty-five cent, half-gallon crocks to customers using a wagon and was producing revenues of almost $60,000 as early as 1915 with a net profit of nearly $3,000 per year. In 1921, the J.M. Smucker Company became incorporated and already had an extensive line of quality preserves and jellies made from whole fruit and/or pure fruit juice. The company remained privately owned by Jerome and all of his children, sons and daughters. Its products were distributed throughout Ohio, Pennsylvania, and Indiana by way of the railroad and due to the large scale of volume, the Pennsylvania Railroad built a special siding to the Smucker plant in 1928 (History, n.d.). A railroad siding is an additional piece of track usually designated for specific usage, for the J.M. Smucker company for example, that runs alongside and connects to a main track at either end (Railroad, n.d.). The company was well on its way to expanding into the successful business it is today. Business Activities

Packaging From the earliest of times, SJM strategized on how to improve its business activities to increase revenues while maintaining its quaint image reflecting the family’s strong conservative beliefs, which it holds onto dearly. Upon analyzing its packaging in 1938, the company realized there must be a better way to package its goods as opposed to its familiar crocks that were cumbersome and heavy to ship. Willard came up with the idea to use glass jars with an image of a pioneer woman boiling apple butter on the front that upheld Smucker’s reputation of old-fashioned quality (History, n.d.). Customers loved the new packaging, sales exceeded one million dollars in 1939, and the National Packaging Show awarded the organization for best packaging design success. Management

The business survived the depression and war years reaching its fiftieth anniversary in 1947 and Jerome Smucker lived just long enough to see it before passing away at ninety years old. His sons, Willard and Paul, continued managing the company and sought methods to promote growth and diversification. Today, Jerome’s great-grandsons, Tim and Richard Smucker, manage the company by working together as a team and sharing the duties. Five other Smucker family members work for the company as well and the brothers’ hope is that one of them has what it takes to become the Chief Executive Officer of the J.M. Smucker Company in the future (Andrejczak, 2009). Over one hundred years later, the J.M. Smucker Company still exists as a family organization with the Smucker’s family maintaining partial ownership of the company. Products and Brand Names

The Smucker boys, as they are commonly referred to, have increased sales sevenfold over the last decade through recent acquisitions boosting SJM into the number one market share position in ten different categories in America’s grocery stores and becoming a power player within the food industry (Andrejczak, 2009). Besides peanut butter and jelly, its products include shortening and oils, dessert toppings, syrups, fruit and vegetable juices, waffles, and coffee. Smucker obtained many of its products via acquisitions to expand its product line while focusing on major brands. Through the process, some of its brand names now include Crisco, Crosse & Blackwell, Eagle Brand, Folgers, Pillsbury, R.W. Knudsen Family, and Dunkin’ Donuts. Most of these brands and products probably seem quite familiar to the everyday person since SJM’s primary focus is on its consumer business. However, according to Tim Smucker, the business is divided into six areas: consumer, foodservice (restaurants and hotels), specialty foods (specialty gourmet products), industrial (proprietary fruit ingredients), beverages (health and natural foods beverages), and international (fruit spreads, fruit ingredients, juices and marinades) (CEO, 2001). In addition to having well known brand products, customers have come to recognize SJM’s tag lines such as, “Choosy mothers choose Jif,” “With a name like Smucker’s it has to be good,” and “The best part of waking up is Folgers in your cup” directly associated with the products. Business Strategy

Although J.M. Smucker sells its products internationally, its primary growth strategy as of the mid-1990s and still today is to acquire the number one food brands in North America that sell in the center of grocery stores. Its new strategy was determined by collaborating with many people that not only included executive level employees, but also listened to the ideas and thoughts from managerial and operational level factory workers in the decision-making process (Gunther, 2010). Smucker’s formed a simple and straightforward business strategy using a repeat business model that is geographically focused (Agramonte, 2008). The company decided to reach its goals by diversifying its products via multi-branding stemming from acquisitions. The Smucker family and managers met with analysts to examine their new growth strategy planning how to achieve their goals (J.M. Smucker, n.d.). The J.M. Smucker Company moved forward with its plans acquiring three major brands and several smaller ones.

Acquisitions.The top three Smucker’s acquisitions were Jif and Crisco from Procter & Gamble, International Multifoods (IMC), and Folgers. However as SJM expanded their horizons, they knew necessary technological improvements must take place to align their new acquisitions within the company, which prides itself in quality and integrity. Making use of today’s modern computer technologies and services, the company hired Edgewater Technology, an organization that specializes in mergers and acquisitions integration, to assist SJM in building a common support system involving business processes, data requirements, and implementing a common set of tools while addressing risk management (LeBaron, 2007, June). Unfortunately at the time, SJM was still undergoing an enterprise resource planning (ERP) implementation that slowed the progression of integrating the two organizations. Additionally, the two companies contained massive amounts of data in dissimilar source formats and structures that needed to be transferred. Edgewater overcame the challenges due to its familiarity with SJM and knowledgeable approach successfully completing the project meeting budget and time constraints.

The J.M. Smucker Company pleased with Edgewater’s previous performance, hired them again to integrate IMC plants and contract manufacturers with SJM’s Canadian production plant. Edgewater set ought to transfer IMC onto Smucker’s U.S. systems and business processes and integrate IMC’s supply chain using a cross-border strategy (Lebaron, 2007, May). The project entailed the collaboration of eleven teams and SJM created an executive-level on-line forum for identifying, reviewing, planning, and resolving any issues. The integration was completed successfully producing substantial financial benefits that Smucker’s had hoped to achieve by acquiring IMC. Information Systems

SJM not only employed information technology (IT) for its acquisitions, moreover it has always sought methods to achieve improvements throughout its business processes and has invested considerable amounts of money in new technologies. For example, Smucker’s chose Oracle for several of its information system needs. Oracle is one of the better-known companies that offer numerous services in business software providing customers with the flexibility they want to match their individual IT infrastructure needs. Furthermore, Oracle’s products contain benefits such as energy efficiency, outstanding availability, superb performance, and scalability. In 2008, SJM began utilizing Oracle’s Application Integration Architecture (AIA) and Oracle’s Siebel Customer Relationship Management (CRM) Integration Pack for Oracle Trade Promotion Management (Oracle, 2008). In fact, Oracle stated the J.M. Smucker Company was the first customer to deploy its new AIA with its CRM Integration Pack in 2008.

AIA benefits Smucker’s by managing data flows and data synchronizations; thereby, optimizing business processes across enterprise applications. AIA is an integration structure that supplies a basis on which to build business process flows with pre-built integrations (Application, 2010). CRM, however, is a strategy designed to generate and sustain customer relationships by concentrating on downstream information flows via dependable systems and procedures (Valacich & Schneider, 2010). Many advantages such as individualized service, expeditious problem recognition and resolution, enhanced information, and better product development as a result of tracking customer behavior over time stem from CRM. Lastly, trade promotion management, enables sales and margin improvements, improves account and category management, and enhances collaboration and productivity between external and internal functions (Hand, 2008). Oracle’s Trade Promotion Management, CRM, and AIA together significantly decrease IT expenses when installing and maintaining integrations.

Furthermore, SJM has implemented Oracle’s Service-oriented Architecture, Identity Management, Business Intelligence Publisher, E-business Suite, and WebCenter Suite and has increased its business intelligence usage. Smucker’s Chief Information Officer (CIO) has the knowledge and leadership skills to execute enterprise-wide information systems to achieve the benefits that continue to move a company forward and sustain a technological competitive advantage. Every year the Oracle Magazine editors grant an award to people who demonstrate such leadership, commitment, and vision in managing Oracle technology (Kelly, 2009). Smucker’s CIO and Vice President of Information Services, Andy Platt, earned Oracle’s CIO of the year in North America award in 2009.

Smucker’s also makes use of other technologies such as Retail Solutions Incorporated’s Promotion Execution Solution and Terra Technology’s Demand Sensing Solution adding value to SMJ’s supply chain. Demand sensing is the interpretation of downstream data with minimal delay for understanding what is being sold, who is purchasing the product, and the impact of demand shaping (Cecere & Bois, 2007). Demand shaping is a customer centric method of planning and execution aligning processes with customer demand at strategic and tactical levels (Dey & Singh, 2007). Basically, demand sensing may be thought of as a type of inventory optimization providing an effective use of resources that reduces inventory, lowers costs, and significantly lessens forecasting error by forty percent. According to the J.M. Smucker Company, it chose the demand sensing solution because the product could improve forecasting accuracy within the supply chain area (Gale Group, 2007). Furthermore, Terra Technology’s Demand Sensing Solution is completely compatible with Oracle products.

Whereas the demand sensing solution optimizes inventory processes, Retail Solutions Incorporated’s Promotion Execution Solution enhances retail applications used within the consumer product goods (CPG) industry. Retail applications further promotional strategies by improving store level execution, reducing out-of-stocks, and maximizing the efficiency of merchandisers (Guyot, 2008). SJM selected the promotion execution solution as a supplement to its Radio Frequency Identification Tag (RFID) Analytics and On-Shelf Management already in use. The goal was to streamline J.M. Smucker’s supply chain and expand its Electronic Product Code (EPC), a family of coding schemes for Gen 2 RFID tags across multiple processes. The successful implementation of the promotion execution solution for SJM built better relationships with its retail customers. Moreover, SJM has obtained a logical decision making framework that aids in making complex promotional decisions. Electronic Commerce

The Internet and World Wide Web have also fostered the J.M. Smucker Company’s use of technology. The company has utilized the Web by entering into the world of electronic commerce (e-commerce) in many sectors. The general term “electronic business” basically encompasses any use of technology to provide support to a business. On the other hand, e-commerce generally covers the technological aspects that aid in producing revenue either by directly selling goods to customers or by allowing a company, such as Smucker’s, to do business with other related companies within the food industry, for example.

The company’s Web site types consist of business-to-consumer (B2C) and business-to-business (B2B). SJM has a click-and-mortar strategy whereby the majority of its products sell at physical locations such as grocery stores with its B2C Web site following a traditional sales model where consumers are able to buy products directly from its Web site. Consumers may choose to view the Smucker’s U.S., Canada, or Mexico Web site. The Canada Web site allows the consumer to choose English or French as the displayed language and has a link connecting to the U.S. Website. The Mexico Website uses only Spanish for its language and has a different slogan than the other two, “Tu vida es más rica con Smucker’s.” The slogan translates as, “Your life is more rich with Smucker’s” or “Your life is richer with Smucker’s.” However, the U.S. Web site contains a greater amount of information, product choices, and Web pages compared to the Canadian and Mexican versions.

A stakeholder can gain much knowledge about the J.M. Smucker Company simply by examining its Web site. The Web site consists of six main pages titled Products, Recipes, Sensibly Sweet, What’s New, Our Company, and Shop Smucker’s. Within each Web page are additional pages and links. For example, the Sensibly Sweet Web page was designed with the health conscientious in mind and provides information about SJM’s reduced sugar and sugar free products with links that give tips on how to eat better and exercise. People merely wanting to learn about Smucker’s may click on the Our Company tab that supplies another list to choose from, including the history of the company, a list of its family brands, newsroom, and investor relations. Shareholders

The Smucker’s Web site is one way technology has provided for stakeholders as well as shareholders to communicate with and attain information about the company. Shareholders may want to click on the Investor Relations tab that redirects a user to the Smucker’s Investors Web site that reports current stock information, financial news releases, analyst coverage, and a list of shareholder services to name a few. Furthermore, the site offers answers to frequently asked questions and provides a list of contacts for those who would like supplementary information. Lastly, investors may review SJM’s latest financial results, quarterly and annually, in comprehensive, detailed reports or Webcast presentations (another use of today’s technology) that explain future strategies and goals of the company.

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