Seasonal demand and supply chain planning for the confectionery industry
Provide a supply chain planning & scheduling system (finite capacity) and an integrated MES system
Secondo Vergani S.p.a. is a leading company in the confectionery business for the production of nougat, chocolate, marron glacés and mustard. The manufacturing process of the company, in the historical plant in Cremona, is based on automatic production and packaging lines. The Italian large-scale retail trade is the main market, but all products are expanding into foreign markets. In 2006 the company joins Gruppo Lameri,
strengthening the process of industrialization, accomplishing new sales&marketing strategies and investments to improve all business processes. To further strengthen this strategy Vergani decides to implement a new supply chain planning & scheduling software and a MES system to track and control production processes and the project is entrusted to Plannet.
The main challenge of the food business is to manage seasonal demand. In the Vergani case for instance, 20% of the annual sales of nougat and mustard are achieved in the period January/March and the remaining 80% between September and December. Also chocolate products are affected by seasonal demand, in September and during Easter, but with a less variable trend.
Before Compass project, production planning was managed by the sales team on the basis of forecast data calculated considering the past years trends and trusting planners experience.
The first orders of the season were already planned in a pre-season period (March/August); during the peak season (September/December) planning process frequency used to be increased frantically, trying to chase sales data patterns. Forecast data were managed on the ERP system, but made available with remarkable delay compared to the actual needs (purchasing and production campaign were already
launched); moreover such data were not reviewed promptly and consistently. Production and purchase planning processes were filled with incorrect information on quantities to purchase/produce. As a result, the high level of uncertainty led planners to increase safety stock level , to be able tofulfill market demand during the peak season. The mentioned contest became more and more critical, considering the increase rate in annual sales ( +15% on last year turnover), in production volumes ( +20% on last year) and in the production mix (600 to 900 items during the last 3 seasons). The most relevant issues Vergani wanted to address are summarised below:
Compass implementation led Vergani to obtain an integrated management (on one single system) of sales, production and purchase spreading up-to-date information within the company. Using COMPASS Vergani generates
a Master Production Plan (MPS) on finished items, issues finite capacity production plans, releases purchase plans and collects the necessary production data (MES).
The introduction of the new planning & scheduling system achieved the reduction of:
The finite capacity scheduling also led to: