Columns

Field Reports: Juice maker squeezes more out of its inventory

June 6, 2003
/ Print / Reprints /
ShareMore
/ Text Size+
By installing demand planning software, Tropicana gains forecasting accuracy, fewer out of stocks.



TROPICANA, A $2 BILLION BUSINESS UNIT OF PepsiCo, is the third biggest-selling brand in grocery stores today, accounting for about 25% of all orange juice sold in the US. Headquartered in Bradenton, FL, Tropicana maintains several company-owned manufacturing facilities and distribution centers, a regional center operated by a third party, and a number of co-pack locations across the U.S. These facilities can process more than 50 million oranges a day.

Getting the forecast right means hitting targets and keeping customers happy. Getting it wrong can be expensive and embarrassing. If shortages occur, Tropicana is forced to ship by truck, increasing the cost of each case by 50 cents.

Tropicana developed weekly forecasts for about 1,500 line items. With highly perishable product and sales volume that varied by day, Tropicana analysts couldn’t simply forecast on a weekly basis, and then divide evenly. “We needed to look at it on a daily basis,” says Bob Burroughs, manager of electronic data interchange and customer replenishment planning. “For example, we had to know that 30% should go on Thursday, 40% on Friday.”

Tropicana wanted to work with individual customers to both improve forecast accuracy and provide meaningful information to the customers. Because the juice processor was driving customer-specific replenishment plans, Burroughs says that Tropicana analysts had to learn the ins and outs of each individual customer. Burroughs says that the analysts became “almost an employee” of their customers. “We took the time to do that. Everybody’s different; you really had to understand how your customers operated.”

A key to improving forecast accuracy was Tropicana’s ability to improve exception management. After establishing its objectives and evaluating alternatives, Tropicana selected Prescient Systems’ Demand Planning Solution.

The solution let Tropicana’s planners do their work based on user-defined exceptions: when the actuals come in and planners spot anomalies, they can still manage their forecasts.

For individual customers, Tropicana wanted reports offering an unprecedented level of forecast detail. “You could report in many different ways,” says Burroughs, “either by cases or by dollar value.”

“In addition to better forecasts and fewer product dumps, the results include reduced inventory, maintenance of high customer service levels, greater stability in manufacturing schedules, and reduced transportation costs, said Rosanne Megrath, Tropicana’s director of customer logistics.

Tropicana measured its results for individual key customers and in total. For Tropicana, significant improvements included:

  • Average absolute weekly forecast error rates dropped from 40-45% to 18-23%

  • Inventory turn increased by 27%

  • Weekly inventory was reduced by 20%

  • Service level increased 3%

  • Lead time reduced 35%

  • Product dumps were reduced from tens of millions to hundreds of thousands.
The results were even more compelling considering that the percentage improvements are averaged across all customers. “Each customer had a different way of measuring inventories,” says Burroughs. “With 30 different customers; there might have been 30 different variations.” For Tropicana, better forecasting means better customer relationships, fewer out-of-stocks, overall better quality product for customers, increased customer satisfaction, and improved deployment planning.

For more information:

Kelly Vizzini, (610) 719-1600, kvizzini@prescientsystems.com. Write in 400

Did you enjoy this article? Click here to subscribe to Food Engineering Magazine.

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

Fabulous Food Plant: Paramount Citrus

Learn more about this fabulous food plant in Food Engineering's article, found here.

Podcasts

Burns & McDonnell project manager RJ Hope and senior project engineer Justin Hamilton discuss the distinctions between Food Safety and Food Defense as well as the implications for food manufacturers of the Food Safety Modernization Act.
More Podcasts

THE MAGAZINE

Food Engineering Magazine

Food engineering magazine 2014 april cover

2014 April

Catch a preview of the Powder and Bulk Show in this April 2014 edition of Food Engineering. Also, be sure to check out a coffee stick making a real stir and a major advancement in the the pet food industry.
Table Of Contents Subscribe

THE FOOD ENGINEERING STORE

Food-Authentication-Flyer-(.gif
Food Authentication Using Bioorganic Molecules

This text provides critical tools and data needed to augment routine food analysis and enhance food safety by aiding in the detection of counterfeit, and potentially deleterious, foods.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Food Master

Food Master Cover 2014Food Master 2014 is now available!

 

Where the buying process begins in the food and beverage manufacturing market. 

Visit www.foodmaster.com to learn more.

STAY CONNECTED

FE recent tweets

facebook_40.pngtwitter_40px.pngyoutube_40px.pnglinkedin_40px.png