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Leaping into the Fourth Industrial Revolution

Ethan Watters | January 11, 2022

Impact

Project Orion puts the company at the forefront of the Big Data era

Hormel Foods began keeping its business records in 1891 with fountain pens and handwritten double-entry ledgers. Since then, the company has stood at the forefront of several major technological transitions, tracking its shipments through methods ranging from telegraphy to IBM mainframes to connected computers on every desk. Each generation of Hormel Foods team members has adapted accordingly to new information technologies. But it’s unlikely that any of those transitions will have been as significant as Project Orion, the company-wide data reboot that kicked into full gear last year.

Officially launched in early 2020, Project Orion is revamping the company’s data management infrastructure across finance, supply chain, human resources and other departments. The Oracle Cloud–based system will change internal protocols as well as the way retail and food service customers interact with the company.

The amount of analytics that we are getting, and the scope of information that we now have to operate the business, has expanded dramatically.

Jim Sheehan, Hormel Foods executive VP and chief financial officer

“Project Orion is so much more than just IT or computers,” says Jim Snee, president and CEO of Hormel Foods. “It’s a project that’s going to touch every team member in the company in some way. It will change the way we do business and set us up for future success. We could have continued to improve our old systems. But Project Orion was our opportunity to make a significant change across the whole organization.”

A company as large as Hormel Foods is what computer scientists call a “data-rich environment.” Money, resources, equipment and team members are in constant motion, producing terabytes of fresh information on a daily basis — and the promise of this new era of Big Data goes well beyond just capturing and storing it. In order to help decision makers, the data must be structured, visible and accessible to everyone who needs it. The speed of modern business favors companies that can organize information into a clear connection between strategy, business goals and day-to-day performance.

But that’s just the beginning. This investment in Project Orion positions Hormel Foods to become a leader in the emergent era of Big Data, machine learning, and artificial intelligence. Once it’s fully operational, it will put Hormel Foods at the front of what many are referring to as “the fourth industrial revolution.”

Why Now?

A massive amount of time and effort has gone into Project Orion, which has been four years in the making in partnership with a large team of specialized consultants from the accounting firm KPMG. Unifying the information system across multiple areas of the company increased the difficulty of the undertaking, but also the positive impact the change stands to have in the future.

Indeed, it’s a testament to the significance of the initiative that company leadership pushed ahead with the launch just as the 2020 COVID crisis was beginning to disrupt the food system. “We saw a lot of our peers canceling information technology initiatives or putting them on hold during the crisis,” says Jana Haynes, vice president and controller at Hormel Foods. “The fact that we went live with Project Orion during COVID is remarkable and speaks to the importance of the project. Once fully implemented, this new data system will help us become more agile and quicker to react to whatever the next crisis might be.”

Given the historical success of Hormel Foods, it’s worth asking why the company needed to take on this multiyear, multimillion dollar project in the first place.

One reason involves the company’s growth over the years. Each business the company has acquired or partnered with has come with its own ways of tracking sales, inventory, supply lines and employees — a patchwork of different accounting methods that required Hormel Foods leadership to master not one data system but many. “We had various systems for various companies that did not interface well together,” says Jim Sheehan, Hormel Foods executive VP and chief financial officer. “They did not provide us with a clear view of the company’s performance, were difficult to maintain, and honestly, had become a burden to our competitiveness.”

Jim Sheehan

Jim Sheehan, Hormel Foods executive VP and chief financial officer

To wit, it wasn’t uncommon in years past for a customer to get multiple communications from different divisions of Hormel Foods, or to have orders show up on different trucks just hours apart. Unifying communication and fulfillment saves time and resources, and makes for a better customer experience.

Internally, the patchwork worked well for employees with two or three decades of experience at the company, who knew the ins and outs of each business. But for new hires it was another matter. “If you didn’t grow up at Hormel you might struggle navigating in our multiple systems for a solid year as you learned the secret knocks and the various places you would have to go to get good information,” says Haynes, who has seen several IT systems come and go in her 23 years with the company. “There was rarely a single place to go and get the data you needed. If a new hire was asked to analyze some aspect of our business, it could take them days just to find where the critical data existed.”

Making information more accessible to new hires is just one of the advantages of Project Orion, which is intended to democratize data both across the businesses and throughout the company’s org chart. Data will no longer be siloed on servers in IT departments, nor will employees need specialized computer programming skills to find and use the information they need. With such gatekeepers and bottlenecks removed, team members at all levels of responsibility will have access to a new tool set — a centralized data system and the means to track and analyze it — that enables them to reduce waste, increase efficiency, and spot problems before they become critical.

“Project Orion is really about empowering our people,” says Eldon Quam, assistant controller at Hormel Foods. “Our team members are our greatest asset and the new system will help them make insightful decisions quicker and with more certainty.”

Hormel Foods is already seeing the value of a unified data platform across its brands. “We finally have visibility into every business from the same point of view,” says Sheehan. “When our brands report, whether it’s their cash flow, their income statement, or their balance sheet items, it’s all presented the same way. When we look at our employee base, we now see the totality, not just 70 percent of employees, with different information on the other 30 percent.”

The new system also proved its worth when Hormel Foods purchased the snack food brand Planters® for $3.35 billion in February. “Moving Planters onto Oracle Cloud is much easier than moving it onto a home-built system, especially from an HR and payroll perspective,” says Mark Vaupel, vice president of IT at Hormel Foods. “With all the data in one place, we all speak the same language, which helps as we move and integrate data, add people to payroll, get benefits information, set up accounts, and so forth. Now we have a proven playbook.”

Other advantages are adding up, too. Company leaders now have a satellite view of global procurement data, allowing them to analyze vendors, compare prices, and explore alternative sourcing. “The amount of analytics that we are getting, and the scope of information that we now have to operate the business, has expanded dramatically,” says Sheehan.

The Future of AI and Big Data

In truth, this year’s Project Orion implementation is only the beginning of the story. Businesses around the world are working actively toward Industry 4.0, envisioned as a seamless collaboration between the physical and digital worlds. Project Orion is the foundation upon which Hormel Foods will compete in this new business landscape.

The promise of this data revolution can get lost in the lexicon. Coinages like artificial intelligence and metaphors like the cloud do little to help the non-expert understand this new world. Fortunately, as with most advanced technology, you don’t need a degree in computer science to put it to use.

Indeed, if you’re concerned about whether you’ll be able to use advanced machine learning algorithms, you needn’t worry — you probably already do. For instance, the map application on your smartphone that chooses the best route and predicts your arrival time is a cloud-based data system that continuously pulls information from hundreds of sources to instantly provide an answer specific to your needs. The amount of data behind the functionality is mind-bogglingly large, but the simple, clear, actionable information it can produce for an individual is self-evident.

Once Project Orion has organized, structured and migrated the company’s data to a cloud-based system, similar analytics programs can be created for individual tasks or teams. These systems, sometimes called “smart data discovery” or “augmented analytics,” automatically highlight relationships and patterns in data. Just as Google Maps can give you the fastest route to the grocery store and alert you if you’ve gone off course, these new tools instantly turn data into actionable business insights.

Project Orion is really about empowering our people. Our team members are our greatest asset and the new system will help them make insightful decisions quicker and with more certainty.

Eldon Quam, Assistant controller of Hormel Foods

Say you’re trying to understand a recent downturn in a product’s sales. An expert data analyst might develop a hypothesis, then look for data to either confirm or contradict it. If the data doesn’t support that idea, they’ll develop another hypothesis and go back to the numbers. The process is slow and iterative, with no guarantee that you’ll find the right answers: you’ll always be limited by the hypotheses you make at the outset.

Artificial intelligence is probably the least understood concept in this paradigm shift, one that can conjure images of futuristic dystopias even though it’s simply a tool that becomes increasingly useful as it’s exposed to more data and feedback. Machine learning, a subset of artificial intelligence, is a technique in which the system looks for patterns across huge amounts of information, hunting day and night, unencumbered by the need for a hypothesis. The pattern is all that matters. And as AI gets ever better at finding meaningful patterns, it may begin to uncover “butterfly effects,” those elusive small changes in complex systems that will ultimately turn out to have huge impacts.

Simply put, with traditional data analytics you won’t find a pattern unless you’re already looking for it. But a machine learning system might give you an insight, a cause-and-effect relationship, that you never even considered.

The other major difference between AI and traditional data analysis is the type of data that gets utilized. For most day-to-day reports and tracking, businesses rely on an internal “data warehouse” that keeps neat and tidy records of production output, sales, resources, money and time. But what if the problem — or the solution — lies outside of the data sets stored within the warehouse? Businesses are no less affected by the larger world than the rest of us; as AI analytics takes in more “unstructured” data, it will be able to see the future of that larger world with greater accuracy.

To visualize the near-term future of Industry 4.0, we need only imagine how many useful patterns and insights might exist within the vast amount of data Hormel Foods generates through its internal processes and its interactions with suppliers, customers and consumers at large. New analytics tools will lead to meaningful discoveries about consumer trends, preferences and feelings about Hormel Foods products. For those monitoring the supply chain or transportation services, AI could mean having advance knowledge of future bottlenecks or equipment breakdowns. It could reduce waste on all fronts by increasing just-in-time delivery and eliminating insufficient or excessive inputs.

Maintaining a Sense of Scale

Like any new technology, AI’s hype has at times outpaced its usefulness. A decade ago, after its Watson computer system famously defeated two Jeopardy! champions, IBM declared its plan to apply its new AI technology to human health care, particularly cancer care.

A few years in, the company called it their “moon shot,” noting the project’s complexity and suggesting that it wouldn’t be easy. And after ten years, many of IBM’s cancer projects have since been shelved or shut down. This was a case, some experts say, of applying an immature technology to a problem it wasn’t ready to solve. Now, after investing billions — along with its reputation — and having little to show for the effort, IBM is taking a noticeably humbler tack in advertising its technologies. Watson, says one ad, will help businesses “automate the little things so they can focus on the next big thing.”

“Automating the little things” is a pretty reasonable promise for AI and Big Data at present. The upside is that automating enough of those “little things” can still substantially change a business and its bottom line.

The last couple of years have seen more and more companies making big investments in Big Data and machine learning technology. One in three large companies is implementing AI systems, with many already seeing the benefits. This summer, Walmart announced that it had successfully deployed a deep-learning AI algorithm to analyze data from its five thousand stores and 200 million customers to predict consumer behavior, preferences and needs. When you order something online that’s out of stock and get a suggestion for another product, for instance, that’s AI doing the recommending. Walmart’s new algorithm gets it right 98 percent of the time, a far better performance than the previous system. It’s a “little thing” — but one that demonstrably adds value.

Nobody who is alive today has witnessed a change like the one AI will bring. As electricity did more than a hundred years ago, there is likely no part of our daily lives that AI won’t affect in some way.

Cliff Justice, principal and U.S. leader, digital capabilities at KPMG

In another case, one mobile network provider is now able to predict outages at least seven days in advance, allowing it to prevent its systems from crashing — and thus saving revenue, ensuring that maintenance costs are put to the best use, and keeping customers happy. AI systems are also being used to automate loan approvals and to help doctors read medical imagery.

Just how much more this new technology will unlock is anyone’s guess. Research by the business consultancy McKinsey & Company suggests that AI and advanced analytics have the potential to free up $10 to $15 trillion in value across businesses globally — that’s ten to fifteen times the value of the American agricultural and food industry.

“Nobody who is alive today has witnessed a change like the one AI will bring,” says Cliff Justice, principal and U.S. leader, digital capabilities at KPMG. “As electricity did more than a hundred years ago, there is likely no part of our daily lives that AI won’t affect in some way.”

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