Moo-ving To The Next Level
With an annual turnover of 840 million euro (more than $1 billion U.S. ), Granarolo is a leading European manufacturer and distributor of fresh dairy products. Goods produced by the company include fresh milk, UHT milk, yogurt and cheese.
At Granarolo, inventory planning was not centralized, but left entirely up to individual branches. Moreover, no inventory optimization functionality was available to determine the correct balance between fulfillment levels, stock levels and product freshness.
"We were lacking a clear forecasting methodology, an established demand planning methodology for peripheral warehouses and a control or planning system for the distribution network," says Silvano Zucchini, demand planning manager, Granarolo. He explains, "In the fresh food sector, these problems have a profound impact on distribution and the effects can be disastrous."
THE PLAN
The company also wanted to increase residual shelf life at the point of sale and reduce transportation costs resulting from urgent deliveries. Granarolo looked for a supply chain planning solution able to provide integrated demand planning, inventory management and replenishment planning over the entire distribution network. Zucchini says, "Granarolo holds an ever-increasing market share in its sector, so we are obliged to guarantee an excellent service level to the market and to plan and optimize our complex supply chain. We therefore sought a solution that could satisfy all these requirements."
The company also wanted to increase residual shelf life at the point of sale and reduce transportation costs resulting from urgent deliveries. Granarolo looked for a supply chain planning solution able to provide integrated demand planning, inventory management and replenishment planning over the entire distribution network. Zucchini says, "Granarolo holds an ever-increasing market share in its sector, so we are obliged to guarantee an excellent service level to the market and to plan and optimize our complex supply chain. We therefore sought a solution that could satisfy all these requirements."
The company chose ToolsGroup DPM to plan service and stocks in a complex distribution network consisting of 38 direct distribution plants, 1,000 refrigerated trucks and 55,000 sales points serving the full product range. The strategy for the project will be to use the same system and software tool for managing forecasting, stock calculation and the determination of net requirements across all central and peripheral structures. It will require an active involvement of resources, including easy and quick access to operative information (sales and logistics data); the evaluation of the "talent" within the resources involved throughout the overall process (sales, logistics, production) via the use of a shared decisional tool; information control; monitoring of operative functions; architectural coherence with existing systems; and historical and one-off data.
RESULTS
The DPM solution manages 1,650 SKU locations over the entire distribution network directly controlled by Granarolo, including one first level warehouse and six second-level warehouses. The ToolsGroup team carried out the Granarolo project in just three months with what Zucchini calls "amazing" results. The company reduced stockouts, thereby increasing customer service levels and sales, and reducing transportation costs. It reduced stock levels by up to 50 percent, cutting the working capital tied up in finished products and the total time spent in the pipeline. By reducing time-to-market, there was dramatic improvement in product freshness and obsolescence problems were reduced to a minimum.
The DPM solution manages 1,650 SKU locations over the entire distribution network directly controlled by Granarolo, including one first level warehouse and six second-level warehouses. The ToolsGroup team carried out the Granarolo project in just three months with what Zucchini calls "amazing" results. The company reduced stockouts, thereby increasing customer service levels and sales, and reducing transportation costs. It reduced stock levels by up to 50 percent, cutting the working capital tied up in finished products and the total time spent in the pipeline. By reducing time-to-market, there was dramatic improvement in product freshness and obsolescence problems were reduced to a minimum.
"Granarolo is the fastest growing firm in Italy, in a sector which is not expanding at all. Since part of this growth is coming from acquisitions and geographical expansion, which causes frequent modifications in the distribution network structure, DPM is becoming a vital tool for us, thanks to its ability to support decisions at strategic, tactical and operational levels with the same basic data," states Zucchini. He also noted that various business analysts have recently outlined the improvements Granarolo has achieved in the last few years in term of operations efficiency. //