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Unique Planning Environment

Unique Supply Challenges

 Food manufacturing companies have unique challenges because they often have to plan for demand within available supply. For example, food cooperatives are sometimes limited by the seasonal crop yield; meat packers must forecast demand that adds up to whole cattle or whole animals. Sequential planning systems cannot account for capacity and material restrictions simultaneously.

Eroding Margins

 As retailers consolidate, there is increasing pressure on manufacturers to reduce margins, and also provide products that require less preparation at the wholesale/retail end.

Available Data

 The availability of point of sale data has created an expectation that this will be translated to supply chain savings. However, the data cannot be readily used if the planning systems themselves are not set up to analyse the data.



Unique Opportunities in Food Manufacturing (some examples)

Quantitative Framework for Evaluating Sales Opportunities.



Opportunities are often evaluated using rough estimates of profitability and costs, without taking into account current constraints and conditions.

Up to a 2% improvement in margin

Realistic Demand Projections



Many forecasting processes concentrate on individual SKU's and don't take into account the relationships at the category level.

2 to 5% improvement in forecast accuracy

Integrating shipments with plant schedules



Inventories can be reduced by tightly integrating the transport movements with the production at the plant

Up to a 5% reduction in finished inventory

Optimized DRP



Often, the distribution of the products is in response to an automated Distribution Planning System (DRP) which ignores network capacity and overall inventory constraints. Modern techniques are able to look across the required replenishment globally.

5-10% reduction in pipeline inventory



The first step towards addressing these opportunities, is by creating a quantitative and disciplined basis for a tactical plan - This is usually referred to as a Sales and Operations Plan which then becomes the framework for identifying opportunities, and measuring the effect of supply chain improvements.