Hallmark’s Process

Structure and Its SAP COE

Key Discussion Points for Today’s Webinar • The “Business” must lead transformation of their process

• Large initiatives can provide foundation for process focus and change management

• Formal process roles need to be right-sized and emphasized

• Process integration failures shine the light on criticality of process

• Sustainment takes constant effort and subordination of silo agendas

• An engaged process leadership team and center of excellence jointly help to prevent retrenchment to siloed thinking and operation

President & CEO: Don Hall Jr.

NA President: Dave Hall

Founded: 1910 by J.C. Hall

Headquarters: Kansas City

Ownership: Private

Revenues: $3.9 billion in 2013

Employees: 11,300 full-time + 20,500 part-time worldwide

(Hallmark and subsidiaries)

Creative talent: 500+ artists, designers, stylists, writers, editors, web

designers, and photographers

Products: 10,000 new & redesigned cards/yr

Available products: 49,000 at any time

U.S. distribution: 40,000 retail outlets

Gold Crown stores: 2,800

U.S. subsidiaries: 8 related businesses in Hallmark family of companies,

including Crayola LLC

Hallmark facts

Everything begins and ends with Process

5 Process is rarely Linear

2006 Multiple-Initiatives Business Transformation

Why? 1. Changing Consumer/ Changing Expectation

2. Better Innovation Capability

3. End-to-End Supply Chain Process Streamlining to Enable 1 and 2

4. Better Integrated Planning and Execution

Two Significant Enablement Initiatives

• Extend Lean to all facilities

• Project Horizon – SAP ERP

• Wave 1 – STP/RTR • Wave 2 – DP/SCP/MTI • Wave 3 – OTC

Enterprise Performance Support

Consumer

& Customer

Engagement

Produce & Ship

Value Creation

Vision to Strategy

Core Processes

North America

Governing Processes

Enabling Processes

Demand Planning & Forecast

Sales & Operations Planning

Supply Chain Planning

Source to Pay

Materials to Inventory

Order to Cash

Master Data Management

Business Performance Management

People Management

Corporate Operations Management

Information Systems & Technology Management

Record to Report

Level 1

Hallmark’s Enterprise Process Model

Sample Migration Map

(STP E2E Process)

• Suppliers using multiple processes and technologies to interact with Hallmark

• SAP ECC MM module has been implemented

• Key metrics are measuring and driving the efficiency of the STP process;.

Current State

1-2 years

Completed

Future State

3-5 years

Future

Waypoint 2

Waypoint 3

Improve order visibility

throughout the supply chain

Waypoint 2

Drive financial benefits

Waypoint 4

Cross-Process Metrics

Waypoint 2

STP process

expertise

Waypoint 1

Establish connections to

industry groups

Waypoint 3

Waypoint 4

Cross-process

succession planning

Waypoint 1

Waypoint 3

Optimize cross-process

roles & procedures

Waypoint 4

Lean vision implemented

Waypoint 5

Maintain STP Consideration

to any Supply Chain / SAP

design changes

Waypoint 1

Waypoint 2

Waypoint 4

Leverage technology

solutions across STP,

including subsidiaries

Waypoint 1

Waypoint 3

Enable spend reduction

Waypoint 6

Optimize connections to

future SAP modules Waypoint 6

Metrics

Waypoint 5

1. Round One – Too Many Cooks, Inedible Stew

2. Round Two – Fewer Cooks, Better Stew, Better Line Prep

3. Round Three – LEAN out Line Prep, Only Use Healthy Ingredients

Process Structure

Round One – Too Many Cooks, Inedible Stew

10 Process Leads

5-10 IT Leadership

Formal Process Roles

• Process Champion (senior executive level)

• Process Owner (senior manager - business) • Process Lead (middle-manager business) • Sub-process Owner (business) • Portfolio Owner (IT) • Process Catalysts

Round Two – Fewer Cooks, Better Stew, Better Line Prep

Process Council: 6 SAP-enabled Process Owners 1 Non-SAP-enabled Process Owner 3-5 IT/Process Leaders

Primary Objective: Final funding decision-making for technology projects

Process Office: 6 SAP-enabled Process Leads 5-6 IT/Process Leaders

Primary Objective: Recommend prioritization of technology projects and funding Secondary Objective: Educate members on process issues and tee-up for Process Council

Strategic Fit

Scoring

1 = No Strategies impacted by this project.

4 = 1-2 Strategies impacted by project.

7 = 3-4 Strategies impacted by project.

10 = All Strategies impacted by project.

COST

1 = > $2MM

2 = $1.5 to $1.9MM

3 = $1.0 to $1.4MM

4 = $750 to $999K

5 = $500 to $749K

6 = $300 to $499K

7 = $100 to $299K

8 = $50 to $99K

9 < $50K

BENEFIT

1 < $50K.

2 = $50 to $149K

3 = $150 to 299K

4 = $300 to 449K

5 = $450 to 599K

6 = $600 to 749K

7 = $750 to 899K

8 = $900K to 1MM

9 > $1MM

13

RISK OF DOING

1 = Serious concerns about feasability, expertise, etc.

2 =

3 =

4 =

5 =Moderate concerns about feasability, expertise, etc.

6 =

7 =

8 =

9 = Could program in your sleep.

PENALTY OF NOT DOING

1 = No Penalty

2 =

3 =

4 =

5 = Moderate Penalty—process is requiring manual effort,

customer is in jeopardy.

6 =

7 =

8 =

9 = Very serious penalty—process is shut down, loss of

customer, etc.

Prioritization Criteria— CBRPS

Round Three – LEAN out Line Prep, Only Use Healthy Ingredients

Supply Chain & Corporate Process Monthly Meeting: 6 SAP-enabled Process Owners 2 Non-SAP-enabled Process Owner (HTR, OTC) 8 Process Leads 7 SAP COE/IT Leaders

Primary Objective: Final funding decision-making for technology projects and re-prioritization

Process Leadership Monthly Forum: 6 SAP-enabled Process Owners 1 Non-SAP-enabled Process Owner 7 Process Leads 6 SAP COE/IT Leaders

Primary Objective: Cross-process education, issue resolution, evaluation

Process Leader Bi-weekly Working Forum: 6 Process Leads 3 SAP COE Leaders

Primary Objective: Operational continuous improvement discussion and joint process resolution

SAP Center of Excellence • Originally proposed as Process Integration Center

• True end-to-end process thinkers and business integrators who possess deep technical/ process knowledge needed now and in the future to work up-down-across processes.

• The charge of this team would be to: 1. Intentionally create opportunities to increase employee efficiency 2. Optimize the “entire” end-to-end process by leveraging SAP knowledge and using Lean tools 3. Ensure guardrails around data, process, and technology standardization are rigorously (and

continuously) applied with “limited to no” customization of software. 4. Simplify, clarify, and execute our integrated business process design

• Only special ingredient or “special sauce” is cross-process problem solving and ideation

• This is the company’s “brain trust” of technical business and process knowledge - most importantly, they understand how the process is connected and integrated

• Splitting the brain trust back into previous areas is like severing the connection in the human brain; what keeps these blades sharp is the mutual interaction and learning to understand the entire system

• They are the guardians of the overall design – advocating for simplification and clarification in the design and resisting creating a patchwork quilt of non-integrated and disparate systems

Frontiers and Challenges • How to best use the process catalysts, since change management resources are no

longer able to facilitate training for these important process agents

• Keeping the process flame alive, as inexperienced leaders or process advocates move into or out of SAP-enabled areas

• Creating better rotation opportunities both into and out of the SAP COE

• As the SAP landscape increases past the supply chain area into other functional silos, how should the COE be maintained so that this unique integrated ideation and cross-process problem solving does not become just another pool of technology analysts?

• Ensuring linkage of strategic goals to end-to end process continues to be understood and incorporated in both planning and execution – drivers still the same as during business transformation efforts

Let the Dialogue Begin!