Lessons From Campbell Experience With Plastigon one page paper single spaced 12 point font on the question What can the firm learn from its experience with

Lessons From Campbell Experience With Plastigon one page paper single spaced 12 point font on the question What can the firm learn from its experience with Plastigon?the case is attached below For the exclusive use of A. GRAY, 2019.
Harvard Business School
9-690-051
Rev. August 6, 1990
Campbell Soup Company
On 9 March 1988, Jim Elsner, vice president of engineering systems at Campbell Soup
Company, sighed as he began to review John Gardner’s report on the status of the Plastigon program.
In January 1988, Elsner had asked Gardner to evaluate the status of engineering systems’ Plastigon
program and to develop his best plan for getting the Plastigon production line up and running as
soon as possible. The Plastigon program was Campbell’s first production-scale attempt at a
microwavable soup, a product area that was considered key to Campbell’s future success. Although
the equipment for the line had been installed in Maxton, North Carolina, one of Campbell’s five
regional soup plants, over a year and a half earlier, it still was nowhere near ready to be turned over
to production for regular operation.
Having been hired away from General Electric less than a year earlier, Elsner knew his boss
was counting on him not only to resolve Plastigon’s technical problems, but to strengthen Campbell’s
engineering effectiveness and efficiency. As Elsner saw it, the Plastigon program brought to light two
broad issues that he and his technical group needed to address. One was the project management
approach used within the engineering systems group. The Plastigon program clearly had suffered
because of limits in the group’s traditional approach. The second issue raised by Plastigon was what
role engineering systems should take in Campbell’s push into nontraditional packaging systems
(such as non-metal cans for microwavability). Elsner was not at all sure that the current organization
structure and management practices of engineering systems, and its interaction and alignment with
marketing and the plants, could support the variety and volume of projects already on the horizon.
Campbell Soup Company
Headquartered in Camden, New Jersey, Campbell Soup Company was a diversified food
processor known for its strong brands and product quality. Its 1987 sales of $4.5 billion (75% U.S. and
Canada and 25% overseas) came from soup products (where Campbell’s U.S. market share was
approximately 60%), spaghetti products (the Franco-American and Prego lines), canned vegetable
juices (primarily V8 and tomato juice), frozen dinners (through Le Menu, Swanson, and Mrs. Paul’s),
bakery products (Pepperidge Farm), and new enterprises (food service and Godiva Chocolates). With
$1.6 billion of its 1987 revenues coming from soup products, Campbell dominated two of the three
primary segments of that market—condensed soups (what Campbell people referred to as “red and
white,” from the color of their labels), and ready-to-serve soups (which Campbell addressed through
its Chunky and Home Cookin’ brands). The third segment was dry soup, which included instant dry
Geoffrey K. Gill prepared this case under the supervision of Professor Steven C. Wheelwright as the basis for class
discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Proprietary cost
data have been disguised.
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Campbell Soup Company
soup and the rapidly growing Ramen Noodle subsegments. The U.S. division, under Herb Baum,
was further subdivided into major product categories and a functionally organized U.S.
manufacturing arm. (See Exhibit 1 for details.)
The food market and Campbell’s competitive response changed rapidly during the 1980s.
Consumers were demanding greater quality and freshness as well as convenience (through portion
control and microwavability). Hence, Campbell’s customer base—direct retailers (for example,
supermarket chains) and distributors (who re-sold Campbell’s products to independent stores)—was
experiencing significant change. Convenience stores were increasing their share of the total food
market, and supermarket chains were focusing on the periphery of their stores, where produce,
dairy, baked goods, meat, and deli departments were gaining importance. Within the interior areas of
food stores, private label and generic products were competing with branded products. In addition,
Campbell was also witnessing sweeping changes among its competition, such as the consolidation of
small competitors and the entry of foreign food processors into the U.S. market. Japanese firms
recently had created a new market segment, dry ramen noodle “soups,” suggesting a low-end
Japanese entry strategy into food processing not unlike that observed in many other U.S. industries.
With Gordon McGovern, Campbell’s chief executive officer, as a prime driver, the Campbell
Soup Company took dramatic steps in response to these new challenges. In the 1980s, McGovern
decentralized the U.S. business units and sales force into five regions to strengthen links with
customers and consumers. Coming from a marketing and manufacturing background (he had been a
plant manager, a marketing manager, and CEO of Pepperidge Farms), he pressed for development of
world-class manufacturing and strong technical expertise, bringing in additional leadership and
focusing resources. McGovern also championed Campbell’s move into new products and markets—
especially microwavable products. While the total market for such products in the U.S. was only $650
million in 1987, it was expected to be over $3 billion by 1992. Although Campbell’s initial push in the
early 1980s was into the frozen segment of this market (with Le Menu frozen dinners), McGovern felt
strongly that developing microwavable shelf-stable soups 1 was not only a major opportunity but a
necessity if Campbell were to retain its leadership of the soup business.
Developing and Applying Technology at Campbell
While Campbell Soup Company had always supported its business strategy of superior
quality through strong technical competence, in the early 1980s McGovern saw opportunity and
advantage in strengthening its technical expertise at three levels—in research and product
development, in engineering and packaging, and in the factories. McGovern strengthened the
factories primarily through reorganizing into regional centers that could support the market regions,
develop a critical mass of supporting engineering disciplines, and integrate a broad set of activities
under each of five regional manufacturing vice presidents. By having more resources available to the
regional manufacturing operations, McGovern hoped to enable them to become more self-sufficient
and to require less engineering support from the corporate technical functions. The corporate
research and development organization comprised three groups: the Campbell Institute for Research
and Technology (CIRT) and two departments under the Containers and Capital Improvements
Division (CCID).
McGovern charged the senior leadership of the corporate engineering functions to use the
resources that had been released from the factory support tasks to achieve significant improvements
in technical capabilities. Those improvements were to be applied to differentiate further Campbell’s
products and processes and to add significantly to its competitive advantage.
1 Shelf-stable products were products like canned goods, that needed no refrigeration until opened.
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Campbell Soup Company
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Campbell Institute for Research and Technology (CIRT)
In 1983, Dr. Jim Kirk was recruited from the University of Florida to head the Campbell
Institute for Research and Technology. At Florida, Kirk had run an extensive R&D program and was
an accomplished researcher himself. At Campbell, CIRT was responsible for both long and short term
research and product development, including process concept development. In early 1988, CIRT
employed over 300 professionals, 30% of whom were Ph.D.s.
CIRT was divided into three primary operating departments: agricultural research, process
R&D (microbiology and the pilot plant), and product development. (See Exhibit 2 for an organization
chart.) The agricultural research department was directed primarily toward improving key ingredients,
like tomatoes, and improving Campbell’s farming operations, which included poultry and
mushroom production—two critical inputs to its overall business. The process R&D department had
responsibility for microbiology—researching the causes of food spoilage and improving product
safety—and doing process development. Through its pilot plant section, CIRT did the initial work on
process development before turning it over to engineering systems for scaleup and installation of full
plant production lines. The product development department employed food engineers, scientists, and
chefs to create new recipes and entirely new products. In addition, this department was expending
considerable efforts in developing low-salt recipes as substitutes for existing products.
Containers and Capital Improvements Division (CCID)
In 1984, McGovern had hired Al Austin to head the Containers and Capital Improvements
Division. Austin’s experience included several decades in the packaging industry, working with a
variety of marketing, sales, and engineering disciplines. Most recently, he had been a senior executive
at a major packaging firm. The focus of COD was on engineering and packaging development across
a broad range of activities. These fell naturally into three departments: real estate, packaging, and
engineering systems. (See Exhibit 3 for the 1988 organization chart.) Real estate was responsible for
the acquisition of Campbell’s real estate and plant facilities.
Austin brought in Dr. Mel Druin in 1985 to manage the second department, packaging, which
developed packaging for all of Campbell’s products. While most of the group’s resources historically
focused on metal can technology, the emphasis had shifted in recent years to plastic containers for
microwavability and other non-metal packages. (Druin had been with Celanese, a plastics and
synthetic fibers firm.) In early 1988, this group employed over 50 professionals.
Engineering systems, under Jim Elsner, consisted of over 200 engineers and was responsible
for developing advanced manufacturing processes for new food products and providing more
traditional efficiency improvements in existing processes for all of Campbell’s divisions. It also
developed and/or purchased the plant equipment for new lines and provided special engineering
support to the regional manufacturing plants. Engineering systems was viewed throughout the
Campbell organization as a service group—responding to requests for support and initiatives from
the line functions.
Within the engineering systems department, people were organized either by disciplines or
by areas of project focus. For example, the advanced engineering systems group, which represented
almost a third of Elsner’s department, had subgroups that focused on advanced control systems
(sensors and computerized manufacturing control), in-house equipment development, entirely new
processes (working closely with CIRT), next-generation plant engineering, and advanced mechanical
systems (filling, closing, sterilizing, etc.). The engineering services group provided traditional
engineering services (drafting, civil, electrical, etc.) as well as environmental services.
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Campbell Soup Company
Because of engineering systems’ broad responsibilities, many diverse programs/projects
were underway simultaneously (in early 1988, there were over 500). Programs (called projects if they
were relatively small and could be handled largely within engineering) ranged from simple soup line
extensions (taking two weeks of a single engineer’s time), to long-term development efforts such as
the development of new production processes or of an entirely new production line like Plastigon.
Historically, the large number of simultaneous programs had meant that engineers typically divided
their time among three or four projects or more during any given calendar period. Recently, Elsner
had set up a special engineering programs group, which at this point included the effort Gardner was
heading up in connection with Plastigon, and had responsibility for business unit liaisons and
program prioritization.
The engineers in the containers and capital improvements division often worked closely with
the professionals in CIRT, at senior as well as lower levels in the organization. As management liked
to describe it, CIRT had primary responsibility for product, packaging had primary responsibility for
the package, and engineering systems had primary responsibility for the production process. These
three tasks were often referred to internally as P3 (P-cubed).
The Management of Engineering Programs
With engineering systems as a centralized functional support group, a major management
challenge was allocating that resource across a decentralized, diversified corporation. In 1988, the
basic procedure had been in place for over a decade. The engineering systems department would first
project aggregate demand for its services on an annual basis, and then use those projections during
the budgeting cycle to negotiate modest increases to accommodate growing demands. Subsequently,
those resources would be allocated on a program or project basis as individual opportunities were
identified, reviewed, and approved.
A request for an engineering program or project could be initiated from anywhere within
Campbell (see Exhibit 4). However, the primary sources (and those traditionally with a higher
probability of success) were initiated either by the manufacturing plants or by the business units.
Once a request was initiated, engineering systems would review its scope and technical content, and
write a brief but formal proposal. Often there was little work done at this stage on design issues or
feasibility of concepts, in part because so many of the projects were simply extensions or
enhancements of an existing operating activity.
Once prepared, the brief proposal was sent to manufacturing engineering (a subgroup within
Campbell US manufacturing) for review. Following predetermined guidelines, manufacturing
engineering identified the organizational units that needed to give preliminary approval. This signoff ensured that all the parties affected by the project agreed with the project’s purpose and need, and
were willing to support its eventual implementation. Next, resources were allocated by the
appropriate engineering directors within Elsner’s department. Any conflicting requests (such as for a
scarce functional specialty or because of conflicting priorities) were resolved by the functional
manager, if possible. If not, they were resolved by negotiating at the vice president level.
Each technical program or project within engineering systems or packaging was assigned a
program coordinator. (A coordinator could have literally dozens of projects, but probably only one
sizable program.) As a practical matter, if a project needed someone from packaging to do a week or
two of work, the program coordinator would either talk directly with the desired engineer or with
the manager of the appropriate packaging group. Generally speaking, the directors within packaging
and engineering systems would determine and agree on priority, and the managers working for them
would do the actual people selection and staff assignments for individual tasks and projects.
If a program could be handled primarily by engineering systems and/or packaging, then the
program coordinator would take initial responsibility for the entire activity until it was handed over
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Campbell Soup Company
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to one of the operating plants. If, however, a program required ongoing input from other groups—
such as CIRT or marketing within a business unit, or even a manufacturing plant (because of
transition issues)—then a program or project task force would be organized. This task force would
have representatives from each of the primary organizational units involved and would meet weekly
or biweekly to review the program and to make sure that technical inputs were provided and
received.
Campbell had used task forces, particularly in the management of new product
introductions, for a long time. The procedures, however, had become more complicated as the
company grew and decentralized. As the marketing manager for red and white described it:
We’ve had the task force concept for 30 or 40 years. Historically, these groups were
small and centrally located because the company was small and more centralized.
Thus everybody knew each other, and everybody could attend every meeting.
Today, however, there are so many functional groups, which are so dispersed
geographically, you need a score card to know who they are, and missing one of the
weekly or biweekly meetings is no big deal.
When a task force was established, the leadership role generally fell to the person from the
business unit (marketing), who was in some sense a customer for the new product development
effort. As a practical matter, however, since those doing the bulk of the work did not report to that
person, the day-to-day project leadership usually fell to a CIRT, engineering, or packaging
coordinator and was passed to the manufacturing plant production line manager later on.
Pursuing Microwavable Soups2
In response to McGovern’s mandate, several marketing groups within Campbell U.S. began
exploring possible microwavable products and alternative packages. For the U.S. convenience meals
group (see Exhibit 1), who had long been in the “TV dinner” business, this was simply another
incremental step. Their efforts focused on developing microwavable entrées (under the Le Menu or
Swanson brands) that could be prepared frozen and then cooked in the consumer’s microwave oven.
Since the product was stored in frozen form, the technical requirements for shelf stability were not
nearly as great as they would be for a product stored at room temperature. In addition, the frozen
dinners were high-value products whose ingredients were a significant proportion of their cost.
For the soup business units, microwavable shelf-stable products represented a much bigger
step. In the early 1980s, the ready-to-serve (RTS) business unit responded by looking for the ideal
container for such a product. Focus groups and consumer surveys revealed that the container should
have several characteristics: (1) the consumer should be able to eat the soup directly from the
container; (2) the top of the container should be easy to open without…
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