Supply chain Management

Case Study

Challenge :

When the leadership at Street food investigated the company’s production cost issues, recognition soon dawned that the distribution network was at least partly behind the problems. As a result, the company looked at how it could redesign the network to take out some of the production costs.

Later, it became apparent that although a redesign would yield some benefits, one of the most significant issues was in the approach to demand forecasting. Street food was using a manual forecasting approach, with spreadsheets being the only technology involved.

The inefficiencies of this approach proved not only to hamper effective forecasting and production planning, but the knock-effect was an excess of warehouses in the network—so forecasting proved to be both a driver of production cost, and a key to improving the distribution network.

Solution :

As in several the studies we’ve explored here, technology played a large part in solving Steet food’s problems. After evaluating some 30 different software solutions, the company finally settled on a supply chain planning suite and planned its improvement program to make use of each of the solution’s modules in sequence, allowing ROI to be realized in phases as each module was implemented and leveraged.

At the same time, Street food implemented a sales and operations planning program (S&OP) that once established, enabled plant resource requirements to be anticipated months—rather than weeks—in advance. As the overall improvement plan passed through its five phases, positive results accumulated and as hoped, software ROI reached 100% even before the company completed its full implementation.

Results :

The objective of Steet food’s improvement program was not merely to achieve a 100% return on investment in its supply chain planning platform. The aim was to reduce production costs, and although the company hasn’t published hard figures to quantify the total financial gain, it has claimed the following wins:

  • A 15 to 20% increase in forecasting accuracy
  • A reduction in overtime from 25% to 8% in production facilities
  • A 30% reduction in finished-goods spoilage
  • Number of warehouses in the United States cut from 28 to just eight
  • A transportation cost-per-unit that remained static for two years despite increased utilization of costly refrigerated transport and rising fuel costs from the achievements documented above, and highlighted in several industry publications and articles, you don’t need to be too much of a mathematician to deduce that cost savings would have been considerable.
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