With savings from quick and accurate production planning, a Canadian beverage company may never again have to cry over spilled coffee.
Mississauga, Ont.-based coffee manufacturer Mother Parkers just recently completed the rollout of a new inventory planning and demand planning system, and already the company is calculating savings of up to $800,000 just from safety stocks alone, according to Glenn Nicodemus, manager of supply chain planning at Mother Parkers.
A safety stock is a threshold that indicates the point at which to replenish a stock item. It is ideally updated every three months to reflect prevailing trends such as seasonal considerations and market demands, explained Nicodemus.
Under the old system, the safety stocks were calculated and determined manually and are only updated twice a year – instead of every three months – because of the length of time it took to gather data from thousands of production skus, Nicodemus said.
“What (the new system) does now is it goes through the math of doing the safety stock calculation and what it does for us now is instead of carrying 1,000 cases (of an item) it will say, ‘you know what, you only need to carry 400 cases of that because the actual trend is this and the deviation is this,’” Nicodemus said.
Mother Parkers bought inventory planning and demand planning software from the Voyager Solutions suite of Atlanta-based supply chain software vendor Logility.
The coffee manufacturer, which operates two other plants in Ajax, Ont. and Fort Worth, Texas, wanted a system that will automate the entire process of inventory reporting and forecasting, which has been largely manual and tedious in the past, said Nicodemus.
The company also wanted a system that can provide decision makers with data analysis and reporting that will aid business decision making and production planning, he added.
It also didn’t help that the company has disparate sources of data, some coming from its ERP system and some from its production system, all vital to the development of sound inventory reporting and demand forecasting.
“Aggregation has always been an issue. In our line of business it is important that we’re able to aggregate (our data) so that the vice-president responsible for that division (for instance) would know (what the trends are) so they can actually do some action,” said Nicodemus.
Logility’s ability to integrate with Mother Parkers’ ERP platform, BPCS (business planning and control system), was a huge factor in the decision to opt for the software firm, Nicodemus said.
The Logility system, which went live in the beginning of September, serves as a common repository of data coming from Mother Parkers’ various database platforms, including its BPCS system, a Cognos-based system and its production database called MIMI, said Nicodemus.
The system now does quick data aggregation for Nicodemus for capacity planning, a process that previously took him two-and-a-half weeks to accomplish.
“(Previously) I was using Access and Excel just to generate that; it sounds simple, but it actually comes from five different sources to fill up the database,” he said, adding that the new system cut the timeframe for capacity planning down to two days.
The Logility solution employs a pyramid-type product planning hierarchy, which allows a customer to get both “very granular” and high level in their planning process, explained Karin Bursa, vice-president for marketing at Logility.
“One of the goals that Mother Parkers had was they would like to get down to customer-level planning process so they know which items, which products are sold to specific customers,” said Bursa.
It was this pyramid model for product planning, however, that proved challenging for Mother Parkers’ Nicodemus, who said he consulted with various divisions of the company, prior to deployment, to develop the reporting hierarchies that the company required.
“Once we developed the hierarchy, one of the challenges was that we developed 12 different hierarchies, but the pyramid that Logility could accommodate is only five,” said Nicodemus, adding that after further deliberations with the other departments, the hierarchies were trimmed down to seven.
That was still two over the five hierarchy limit, but a feature in the Logility application allowed Mother Parkers to create virtual pyramids two create two more hierarchies.
Overall, though, Nicodemus said the new system allowed his company to quickly and accurately generate the reporting, analysis and forecasting it needed to do.
Less than a month after the system went live, the coffee manufacturer is showing higher inventory turns as a result of effective inventory cost management, he said. “Because of good forecast and inventory policy in place, our inventory turns increased, compared to last year.”
He said the inventory turns for this month was 14.7 per cent, an increase from the 12.9 per cent in the same month last year.