Ahead of the Game -- February 2004

As the largest producer and marketer of fresh fruit, vegetables and fresh-cut flowers in the world, with more than $5 billion in annual revenue, Dole Food Company recognized that it needed to generate a precise forecast of its product to avoid inventory obsolescence in its North American supply chain. At the same time, the company wanted to reduce its inventory levels to better manage its assets. In response, Dole embarked upon a comprehensive planning strategy across its North American supply chain in order to achieve superior results. This ripe IT initiative earned Dole the Supply Chain Planning Performance Award at the 2003 Consumer Goods Technology conference.

Sweet and Sour Challenge

Founded in Hawaii in 1851, it's no surprise that Dole's core product is the pineapple. While its sweet flavor is not lost on consumers, its high order lead-time can quickly turn sour if not monitored carefully. Pineapples are planted two years prior to harvest and it takes about another six to eight weeks of shipping time before they land on North American soil.

Dole also faced another problem with the introduction of plastic packaging in addition to the aluminum cans already in rotation. This significant packaging change increased demand volatility and the number of SKU's while decreasing shelf life. At this stage in the game, forecast accuracy becomes critical.

The Plan Emerges

To address its demand and forecast issues, Dole implemented an integrated planning solution from i2 that stretches across demand, master, factory and deployment planning in order to reap a least total cost solution with minimum inventory while still taking into account a number of factors unique to its context.

Dole's core product, for instance, produces a line of co-products. A sliced pineapple produces juice but the amount of juice produced is dependent on the season. This opens up a level of "push manufacturing" as Dole needs to process pineapples, whether or not demand exists. Now a level of "pull distribution" emerges as Dole's product is only sent to the right distribution center based upon demand signals.

Proper Design is Key

Before implementing i2, Dole took numerous cautionary steps in order to achieve the desired benefits.

The company conducted on-site, hands-on training in the production environment with data transfer automation implemented by the Dole IT department. The company also underwent three cycles of parallel runs with on-shore/off-shore support from Siemens. This level of support allowed functional and technical users to be very comfortable with the process as it went live.

Database size was closely monitored through the design phase with hierarchy deep enough for demand planning versus actual selling. Attention was also focused on controlled automation, as custom-tailored automated messaging was available for end users in case of failures. The new Dole system was also designed with causal modeling in mind to incorporate seasonality issues specific to its products.

Benefits

With i2, Dole now holds the ability to manage the complexity of its supply chain. The integrated solution provides a base solution, and the planners focus on the exceptions to achieve superior results that include improved inventory turns of approximately 15 percent. Amazingly, Dole was also able to maintain its already high customer service levels in spite of the increased variety that accompanied the introduction of plastic packaging.