CIO Canada Article from April 2005

2. by David Carey
coverstory
a supply-chain
Geoff George
When CIOs belly up to the bar to swap stories
about their supply chain, John Henry Larsen
can hold his own with the best of them. The
tale of his supply chain is a yarn well worth
listening to. So grab yourself a stool.
think
your supply chain is complicated? Try wear-
ing John Henry Larsen’s hip waders for a
You see, in order for that Valentine’s Day
salmon to arrive on your plate so that you
can enjoy it and Stolt can make a profit on
it, a great many things have to be taken
day. Larsen is the Toronto-based CIO of into consideration. It’s not just a matter of
Stolt Sea Farm Inc, North America’s largest throwing a bunch of fish in the water and
producer of farmed salmon, and the world’s harvesting them whenever needed. The
fourth largest aquaculture company. margins in this business are razor thin, and
Larsen has to ensure that Stolt’s IT every step in the process has to be man-
systems are capable of orchestrating the aged to the optimum.
firm’s supply chain several years in ad- First of all, the fish have to be put in the
vance. If that sounds improbable, reflect water at just the right time — three years
for a moment on that delicious Atlantic is just about perfect for Atlantic salmon
salmon you treated your special someone — but it’s not quite as simple as it sounds.
to on Valentine’s Day. Without meticulous Because of such things as storms, algae
planning, you might just as easily have and temperature, there is a very narrow
been swapping dreamy glances over a slab window in which the fish can be stocked.
of beef. And in the three years leading up to har-
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3. stor y
John Henry Larsen (right) and Kirk Southcott get intimate
with a tilapia at Stolt Sea Farm operations in Lindsay, Ont.
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4. vest, a lot of things have to be done cor- of the eggs is just right, the consistency is
coverstory
rectly to ensure that the fish reach their just right, the colour is just the right shade
optimum size at just the right time. For of gold. And that’s all part of John Henry
example, the feed has to be precisely Larsen’s supply chain too.
regulated; if not, there goes the profit, Like I said: think your supply chain is
since feed is the main cost driver in this complicated?
business, and once farmed fish attain a
certain size they don’t grow any larger. In changing directions
you
other words, they literally start eating up In the mid-1990s, Larsen was a consultant
the profits. for Ernst & Young, living in Minneapolis,
“ And then of course there are those
Valentine flowers you presented to your
sweetheart. They have to be figured into
Minnesota, about as far away from the
ocean as one can live in North America.
But his roots were much closer to the sea.
all this as well. His family was Norwegian, and his goal
Huh??!! What the heck do flowers have was to live in Norway for a few years. In
can have accurate
to do with the price of fish? A lot, as it 1998 he got his chance, signing on with
turns out. Stolt in Oslo as Group Business Systems
inventory one day,
A great many flowers shipped to North Manager. Eventually that title was changed
America during the winter months come to CIO, and after four years in Oslo, Larsen
but then it’s all gone from Chile. And because of its excellent moved to Toronto, where he continues to
salmon-farming waters, Chile also happens helm Stolt’s worldwide IT operations.
the next and a to be a huge supplier of salmon to the Larsen’s first two assignments were to
North American market. During peak de- complete the company’s JD Edwards ERP
whole new set of mand periods, such as Valentine’s Day, implementation on a global basis and to
there isn’t enough excess airline shipping upgrade from CC Mail to Lotus Mail. He
problems may be capacity for both flowers and fish. Because admits wryly that he completely failed to
flowers are so light they are more profitable implement both of those assignments.
heading your way” to ship, and thus they get the extra space. So “I did just the opposite,” he recalled. “I
in order for Stolt to make sure it has enough ended up taking both JD Edwards and
— John Henry Larsen salmon to meet the Valentine’s Day demand, Lotus out and I replaced them with Navi-
the company must plan in advance for alter- sion and Microsoft Exchange.”
native farms to be running at full harvest- Larsen is quick to point out that these
ing capacity when the big day approaches. moves had nothing to do with the quality
Pretty unbelievable, eh? Well, we warned of the products involved. Both JD Edwards
you this was a fish story. and Lotus were favoured by parent firm
Now if you had trouble swallowing that Stolt-Nielsen A.S., a publicly traded global
one, try this one on for size. The three- transportation service company, but they
year planning cycle described above ap- simply weren’t right for Stolt’s aquaculture
plies only to Atlantic salmon. And in this business. It was too small and operation-
business there are plenty of other fish to ally dispersed.
fry — like sturgeon, for example. The decision to move off the JD Edwards
Okay, okay, maybe you don’t fry stur- platform was not an easy one for Larsen.
geon, but you do farm them for their eggs, He had to weigh his desire for having a
which of course make caviar. If you’re in nice controlled IT environment, which the
the caviar game, like Stolt, you want to parent firm was offering, against users’
make sure you produce the highest grade needs for local support and flexibility. Stolt
product possible — after all, a lot of money Sea Farm is a US$400 million a year com-
is at stake. And the time it takes for a fe- pany, but it doesn’t operate like one. The
male sturgeon to reach its prime egg-pro- company is segmented into four main re-
ducing age, when it is harvested for its gions — North America, Europe, Asia-
eggs, is ten years. That’s ten years of care- Pacific, and Chile — each with its own
fully husbanding the fish so that the texture unique operating characteristics. The busi-
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5. ness consists of the sea farms themselves, expectations initially between what we
coverstory
primary processing facilities (which kill and expected a Navision partner to provide us
do basic preparation of the fish), secondary and what they actually provided us in terms
processing facilities (which turn the fish of documentation, testing and support. We
into fillets and other value-added products), started working with a solution centre that
and sales and administrative offices. was bought out by somebody else, and
“We employ 3,000 people worldwide, things got very convoluted after that.”
about 540 of whom are knowledge work- Although the initial implementation had
ers. But no facility has more than 30 people gone well, trouble arose during the up-
in it, with the exception of some of the grade phase. Lack of proper testing re-
larger factories, where there aren’t many sulted in a year in which things started
end-users,” explained Larsen. “Many of getting out of whack. To get back on track,
our facilities are in remote areas, so a big Toronto consulting firm Axentia Solutions
part of our challenge is to make sure that was brought in to implement Navision in
we can support them without incurring a North America. Kirk Southcott, Business
lot of IT costs and hiring a lot of staff.” Application Manager for Stolt, shared
project manager duties on the implementa-
need for local support tion with an Axentia consultant. This turned
Larsen and his IT team needed an ERP out to be a good approach.
system that was very strong on the local “We had two matching people working
support side, which they would then deploy together, which turned out really well,”
with few ‘bells and whistles’, in order to said Southcott. “We didn’t want to have all
keep things as easy to maintain as possible. of the knowledge sitting with our consult-
“What we needed was a system that we ant group so we included three of our own
could customize to meet our local require- employees on the project team: a dedi-
ments around the globe,” said Larsen. cated person from sales, from finance, and
“Instead of having one big IT department from the processing, logistics and inven-
and maintaining a single common set of tory side. Once we went live they became
code, we wanted to push that responsibil- super-users of the system in their area,
ity out to the regions, which would then responsible for supporting their group.”
have the responsibility of implementing
the application in the most suitable way for managing the harvest
their respective markets.” One of the advantages of Navision is that
Luckily, the company didn’t have to look it’s a generic ERP package, and various
very far. When approval came to move off the vertical applications can be added onto it.
JD Edwards platform, Stolt Sea Farm’s op- That made it a good fit for Stolt.
erations in Spain quickly put a plan together In the fish farming business, it’s extreme-
and got a Navision ERP system up and run- ly important to have visibility of what’s in
ning. It was a perfect fit for them because the supply chain at all times. Fish are
it was implemented in Spanish and there was typically bought in terms of size ranges,
a solutions centre just down the road. and if they are not in the predicted range
The implementation proved quite suc- when they are harvested, the supplier
cessful, and as Navision appeared to have must do a lot of negotiating with the buyer
the kind of flexibility and local-support to provide substitutions. And that’s only
strength the company was looking for, the part of the problem. As Larsen noted, “Fish
decision was made to make it Stolt Sea need to get to their buyers when they are
Farm’s primary ERP package. fresh, which means they’re shipped im-
The company-wide switchover began in mediately. So you can have accurate inven-
late 1999, but it didn’t go off without a few tory one day, but then it’s all gone the next,
snags. For example, there was a problem and a whole new set of problems may be
finding the right solution partners. Said heading your way later in the week.”
Larsen, “There was a misalignment of A key for Stolt in managing its inven-
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6. cally, processing them in the most efficient software without the IT department in
coverstory
what
and cost-effective way possible. To help it Toronto knowing about it. And the hard-
do that, the company uses WiseFish, an- ware is very robust. A typical thin client
other module that sits on top of Navision. will last seven years, whereas a typical PC
Developed by an Icelandic company might need to be replaced after about three
called Maritech, WiseFish captures data years. And to install the thin client, you
on the fish as they progress through Stolt’s just have to plug it in, put it onto the net-
the heck do flowers processing facilities. A top-grade 10- to work, do a couple of quick configurations,
12-pound fish, for example, goes in whole and tell it which server to connect to.
have to do with the at one end and comes out the other as a Another big benefit, Larsen explained,
value-added product. The fish is processed is that when people get used to using the
price of fish? A lot, in stages — from skin-on fillet, to skin-off terminal server, they start thinking in
fillet, to portions, to seasoned portions terms of file-sharing. “We set up a folder
as it turns out. — and at any stage it can be turned into a structure that is consistent from all loca-
finished product. The fish is continually tions. When I go into a server in Europe
weighed in and weighed out, and a product I’ll see common folders where people can
code — with several attributes tied to it, share information,” he said. “For example,
such as size and quality — follows it I’ll see a folder for accounting, and that’s
through the system. where accounting people put their business-
WiseFish enables Stolt to maximize the critical information. And we try to distin-
yield from its products. For example, it guish that from a person’s personal direc-
monitors the equipment and machines to tory. Regardless of whether the informa-
make sure they are as efficient as possible. tion is personal or corporate, if something
tory is a system called AquaPlanner, which If the blade on the skinning machine is happens to a person, we know where these
has hooks into the Navision ERP system. calibrated incorrectly, too much flesh will files are located. It’s very, very important.”
Stolt developed this system itself, but sold be lost. The WiseFish system identifies There are about 30 people in the Toronto
the rights to a Norwegian company called the problem and the calibration can be office, all connected via a terminal server,
Mercatus, which now markets it to other adjusted before too much wastage occurs. and that entire application is administered
firms. AquaPlanner handles the manage- Wise Fish also has a logistics module by a small group of people in Norway.
ment of data at the farm sites. Most impor- that facilitates shipping and ties back to the “We have two full-time administrators
tantly, it is a forecasting tool that tracks ERP system for invoicing — just one of many that do this for us globally. If you go to Oslo
information around the growth rates of the interfaces between the two systems. or Belgium or Campbell River, B.C., you’ll
fish, enabling Stolt to optimize harvest find basically the same set-up, controlled
dates and coordinate them with the sales using thin-client technology entirely by three guys in Norway,” said
organization. Another key aspect of Stolt’s IT makeover Larsen. “By being very strict in what we
“AquaPlanner is great for managing our was the use of thin-client technology allow people to do, we’re able to reduce
business because our inventory is in the wherever possible. Helping it accomplish the complexity and maintain control over
water for about two years, from the hatch- this task was Norway-based consulting the system, which is spread out in a lot of
ery all the way through to marine site, and firm ReNet, Stolt’s technical infrastructure remote areas with very few resources.”
there are a lot of costs that go against the outsourcing partner. With his IT resources now under control,
fish as it grows,” said Southcott. “Aqua- “The biggest challenge, from an IT the supply chain well monitored, and the
Planner enables us to capture all of that: perspective, was just getting our arms big ERP swap behind him, Larsen can
such things as feed and diving expenses; around all these different locations,” said perhaps take life a little easier now than
environmental variables like temperature, Larsen. “A personal computer is a lot of he did a couple of years back. Maybe he’ll
oxygenation and salinity; even our vaccina- work from an IT standpoint. If you’ve got even have time to do a little fishing. We’re
tions. By monitoring all these things we a PC sitting in a remote office — and most pretty sure he knows a few good places to
can manage trends and growth patterns.” of them are pretty remote — it’s difficult to throw his line in. 056231
get out there to help those people fix it.”
optimizing plant processes Thin-client technology solves the prob-
Of course growing the fish is only part of lem. By using a terminal server with thin David Carey is a veteran journalist specializing
Stolt’s business. Processing them is also clients Stolt is now able to keep a firm hand in information technology and IT management.
critical to the company’s success — specifi- on its desktops. Local staff can’t install Based in Toronto, he is editor of CIO Canada.
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