From farm to table: The complex journey of Tegel’s cage-free chickens
Tegel has provided New Zealanders with chicken since 1961. While a lot has changed over the years, the producer has remained true to their promise of providing healthy, cage-free chicken to their customers. Today, the company commands more than 50% of the New Zealand market and offers a wide range of products, from nuggets and nibbles to core cuts and whole roasts, all sourced from Tegel farms.
While most of Tegel’s products are easy to prepare in the kitchen, the journey from hatchery to dinner table is far more complex.
The fundamental problem with spreadsheet planning
Like many companies, Tegel did all of their planning in Excel, with complicated spreadsheets driving their entire S&OP process. Arijit Saha, General Manager of Supply Chain at Tegel, describes how this impacted the business: “We had a lot of data, but the quality was questionable. The planning capabilities were limited, and we had neither the time nor the tools to analyze our plans properly. It wasn’t sustainable for a company our size. We needed something to help us make better business decisions—both in the short and long term.”
With over 50 million birds processed annually at three separate production facilities, a new supply chain planning solution was the only way forward.
Forecasting: The key to profitability
Tegel implemented RELEX in parallel with a major ERP upgrade—a demanding task, but the business couldn’t wait. Having established how RELEX could best support the company, the team moved forward with the implementation.
Data preparation was one of Tegel’s main challenges. Every bird is different, and managing input and yield variability is critical to planning a poultry supply chain. Aware of this, the team invested a significant effort into capturing the processes and accounting for their inherent variability.
One of Tegel’s main goals with RELEX was to improve demand visibility, so forecasting was the obvious place to start.
“To make a profit in our industry, you must use all parts of the chicken in the best way possible,” says Saha, explaining why forecasting is so important to the business. “We needed a longer planning horizon and more accurate forecasting to ‘balance the bird’ better.”
Tegel is now generating a monthly statistical forecast in RELEX that is fully aligned with the company’s S&OP cycle. After the monthly run, the forecasting system remains open, allowing the sales team to adjust the numbers should new information become available.
Tegel’s corporate planning team then uses the RELEX supply chain optimization solution to generate weekly production targets for the three plants. Each production site can also see a daily breakdown of the demand forecast, further informing their day-to-day line scheduling decisions.
A unified planning platform
The RELEX solution has allowed Tegel to retire most of their planning spreadsheets, and everyone is now looking at the same set of numbers. Internal communication has improved as a result, and with better analysis from the planning team, the company’s S&OP process is running much more smoothly.
“I’ve always said that demand planning is the key,” says Saha. “It sets the pace for our supply chain and prepares the ground for everything else – strategically, tactically, and operationally. Thanks to the AI-powered forecasting capabilities of RELEX, our demand planning process is now automated. Not only does this save valuable time, but we’re also getting much better forecast accuracy. The entire organization now trusts the forecast.”
The improved visibility of demand and capacity means the planning team is better positioned to identify shortages and address surplus situations. Crucially, it’s given them more time to work proactively with sales to leverage promotions and substitutions. On the production side, line sequencing can be better optimized to increase throughput and yields. All this helps Tegel meet demand in the best possible way while keeping inventory, waste, and margin erosion to a minimum.
On the medium to long-term horizon, RELEX enables the company’s supply planners to make better decisions about the future. They can see what can be done with existing capacity, but they can also use the system’s simulation capabilities to evaluate different investment scenarios.
The project has also positively impacted the bird-growing side of the business. The company no longer raises birds just in case they get a sale. They are grown because there’s a reliable forecast for them and with the knowledge that all parts of the bird will be sold.
Central planning, local ownership
Today, the central planning team generates demand forecasts and weekly production plans for the entire business. However, the sales team is still the ultimate owner of the forecasts. Similarly, each production facility remains in charge of detailed scheduling – and the upcoming rollout of the RELEX production scheduling solution is unlikely to change this.
Saha points out that the organization views the RELEX system as a decision-aid rather than a decision-maker. “We didn’t build our business case around saving a certain amount of money. RELEX is a tool that allows us to run the business better. If you consistently make better business decisions, the financial side will take care of itself. In our case, it certainly has.”