Since the mid-90s, the growth of one of Australia’s largest suppliers of snack foods has been truly impressive. The snack foods supplier, whose portfolio includes some of the nation’s favorite chips, has seen production increase from 15 million packets per year in 1996, to over 200 million today, and with a planned expansion into Asian markets, there’s no sign of any slowdown.
Key Challenges: Rapid Growth and the Pressures of Production Planning
Back in 2014, the snack foods supplier was starting to feel the squeeze, as the existing Excel-based planning approach was showing its limitations. Planning was simply too time-consuming and didn’t offer any real decision-making support.
The company’s planning manager explains, “When we first started out, we wanted a rough cut capacity planner that would provide us with a medium-term view on production loads and key raw material requirements. We needed a way to balance the factory load and increase our operational efficiency, including a reduction in overtime.”
New product introductions, frequent updates to flavors and packaging, and regular product deletions are constant features. Short order lead times of circa 48 hours add to the pressure.
The company’s planning manager continues, “One of the keys to our production is the synchronization of the packaging machines with the fryers. These critical resources are shared across multiple product groups, and packaging must be available to draw from the fryers as product becomes available.”
Navigating the Complexities: A Quest for an Advanced Planning Solution
It was clear that any solution the company would consider needed to offer a breadth of capabilities. The planning manager says, “The demand we have to support is heavily impacted by short SKU lifecycles, seasonality and shut-down periods. Add to that the complexities of our production, and the numerous resource constraints we need to account for. We quickly understood that we needed a solution that went beyond the capabilities of a traditional planning tool.”
He continues, “Our ERP application partner suggested RELEX as a potential supplier. Their supply chain optimization solution offered the right depth of capabilities, with the benefit of an already available interface to our Microsoft Dynamics AX system.”
The planning manager and his team went to work. The decision was made to run a pilot on one of the key production resources. “We ran a pilot model for one of the fryers. It took us quite a bit of time to understand how to drive the system to get the outputs we needed. But this was always going to be time well spent. We knew we had to really understand how each individual manufacturing operation worked and interrelated to define this in our ERP system and to subsequently drive RELEX. This was the hardest part of the project. Once we did it, it opened up unlimited possibilities for us to develop planning scenarios and look at our production from completely new angles.”
The solution was rolled out to the rest of the production. From the start of the pilot to the go-live, the whole process took one year.
Harnessing RELEX: Revolutionizing Production and Enhancing Efficiency
Today, RELEX provides up-to-date, optimize production plans every week, covering two factories and twelve separate resource operations. The snack foods supplier uses RELEX to sequence like products, and products that use the same equipment. The software also optimizes production around shutdowns and planned maintenance to ensure the right amount of stock is built to service customers while these essential works take place.
The company’s planning manager says, “The tool is very intuitive to work with. This was one of the things we really liked about it. And the speed at which optimized plans and scenarios can be generated is invaluable. It’s a real decision-support tool. It is so fundamentally different from our old Excel approach.”
Any initial concerns regarding the interaction with existing systems have also been removed. All master data is drawn directly from MS Dynamics, so the information is always up-to-date. This includes material activation dates, a critical piece of information for a company that so frequently updates its packaging.
The introduction of RELEX supply chain optimization solution has given the snack foods supplier an ideal tool to support the continuing growth of its business. Plan generation times have been cut in half and alternative scenarios can now be generated to support various business decisions.
RELEX’s ability to optimize based on total cost to the business has also helped the company strike a better balance between supply and demand. As a result, the number of SKUs that are run each week has gone down significantly. The company’s planning manager explains, “We’ve been able to reduce the number of SKUs we run each week for one specific brand from around 40, down to about 15. This is a huge saving, as we require far fewer changeovers than before”, says the planning manager. “RELEX makes sure we run all products in a group at the same time to ensure maximum efficiency.”