Butterball's Recipe for Forecasting Success
As the most recognized name in turkey, Butterball produces a billion pounds of products every year. The company ships these products to the 98 percent of American grocers that carry part of the Butterball line, as well as retailers in more than 30 other countries. According to Dean Lisenby, director of Demand and Supply Planning at Butterball, the business has established a 50-year reputation for excellence based on three key strengths:“From a marketing perspective, we’re focused on meeting consumer needs through consumer insights, product innovation and outstanding quality. From a sales perspective, we’re focused on building the right relationships with the right customers and becoming the category driver. From an operations perspective, we’re focused on optimizing product delivery to our customers — providing them with what they want, when they want it, in an efficient and effective manner.”
Because of the seasonal and promotion-driven nature of many of its products, as well as the fact that every product is date-sensitive, Butterball faced a number of significant supply chain challenges. In order to delight customers, preserve product freshness and minimize obsolete inventory, the company needed to forecast at a very high level of accuracy, as well as improve its date-sensitive inventory management.
Butterball enlisted JDA Software Group for help in managing complex forecasting and replenishment challenges. Since implementing JDA Demand and JDA Fulfillment, Butterball achieved a dramatic transformation in its foundational approach to forecasting and inventory management.
“Our planning processes prior to the JDA implementation were focused on the short term, and required a lot of manual data manipulation, which wasn’t a productive use of our planners’ time,” Lisenby notes. “After going live… our processes are more focused on exception monitoring, longer-range planning and demand shaping.”
The implementation also helped Butterball address product perishability, an important factor in the company’s planning processes. From a date-sensitive inventory management perspective, planners can now modify Butterball’s forward-looking plans to minimize any excess product and ensure customer satisfaction. The JDA tools also address both product seasonality and promotional effects. Planners can now be more proactive in addressing seasonal capacity requirements, which improved customer service levels.
Lisenby says Butterball achieved significant day-to-day performance benefits as a direct result of the implementation: “The measurable benefits include a 28 percent reduction in our distressed obsolescent inventory, a 2 percent improvement in our short-term forecast and a 50 percent reduction in our long-term forecast bias.”
Performance enhancements resulted in real financial savings for the company. In fact, at the beginning of the project Butterball estimated the cost savings it would achieve in the first year, which it has since exceeded by 75 percent.
Less tangible, but equally important, is Butterball’s improved competitive stance. Butterball expanded vertically and is better positioned to anticipate and respond quickly when market dynamics change. Today, the company can proactively plan capacity, manage inventory, balance inventory risks, shape demand, and allow its resources to expand horizontally to perform above and beyond their basic supply chain management tasks.
The technology implementation supports a vendor managed inventory (VMI) model, which can be used by Butterball to provide value-added services — such as differentiated offerings or improved collaboration — to retailers. The company has already leveraged this technology to create a VMI replenishment model with a key customer.
Lisenby notes that this increased level of retailer collaboration is also providing the building blocks to further expand Butterball’s demand network.
FAST FACTS
Company at a Glance
Headquartered in Garner, N.C., Butterball is the largest vertically integrated turkey producer in the United States, accounting for 20 percent of total turkey production.
Cooking Up Results
After going live with JDA Demand and JDA Fulfillment, Butterball’s supply chain processes are more focused on exception monitoring, longer-range planning and demand shaping. The project exceeded the year-one cost savings estimate by 75 percent.
In Need of a New View
Butterball wanted to shift from short-term demand and replenishment planning to a longer-term view, while also considering product perishability, demand
seasonality and the effect of promotions.