- THE MAGAZINE
- FOOD MASTER
Forecasting and scheduling software are two modules usually found in enterprise resource planning (ERP) packages that help extend supply chain capabilities. Often these modules also exist in manufacturing execution systems (MES) used on the shop floor and, occasionally, as standalone packages. Whether the top-down approach (using ERP software) or the bottoms-up approach (using the shop-floor MES package extensions) will work the best has been an on-going discussion. Which route you pick should be chosen with a lot of forethought, research and involvement of key employees.
Forecasting, according to Nitesh Verma, senior project manager at Batchmaster, helps to identify and quantify the annual, weekly and daily seasonality of sales volumes, material prices, etc. The goal is to satisfy the customer without facility overstaffing. Forecasting helps managers understand what is likely to occur and builds a consensus. The benefits of a forecasting process go far beyond a series of historical reports and data. A formal process enables managers to understand the nature, duration and volume of sales and handle organizational resources and, ultimately, costs.
Forecasting software helps processors get a grip on customer demands and sales, but as Autumn Bayles, senior vice president of strategic operations and technology at Tasty Baking Company says, “No tool is psychic.” Don’t expect a forecasting tool to protect against grain shortages, for example. “You can choose to hedge for disasters with inventory, but this is costly and, in the case of short shelf life ingredients, not as desirable, says Bayles.”
Forecasting software can project what may happen to grain or beef prices in the event of a shortage. According to Oracle Senior Product Strategy Manager Todd Jamison, forecasting software captures changes to harvest estimates and archives them over time for subsequent analysis. This assumes that the software has been primed with the correct data in the first place, which means processors must know their market and their entire supply chain.
It’s not unreasonable, however, to expect some knowledge-based help from forecasting software when it comes to disasters. Associated Grocers of Florida was using a dated forecasting tool that was based in a batch system. With more than 33,000 food products shipping and 1.3 million sq. ft. of distribution space across three centers in Florida, the wholesaler updated to a Logility package that helps the company cope with hurricanes. “The goals of our hurricane planning within Logility are to build up extra inventory quickly prior to a hurricane, change the mix of items that sell well before or after a hurricane has hit, protect next year’s forecast from spikes or valleys, maintain extra inventory on key items during the hurricane season and incorporate what we learn from each storm as part of our future plan,” says Mitch Herman, forecaster for Associated Growers.
Scheduling software helps managers get manufacturing to produce according to projection forecasts. Production scheduling, according to Jamison, can be performed across the full spectrum of industry offerings; that is, via pull mechanisms on one end and finite and constraint-based production schedulers on the other. Scheduling systems should also support mixed-mode execution, which covers co- and by-products, batch bills of materials (BOMs) and routings. A scheduling system, says Jamison, should also support the introduction of recipe ingredients at any point in production.
While scheduling software is usually considered an ERP or business module, “Don’t ignore the shop floor,” warns Greg Schmidt, Rockwell Automation MES business development manager. “When choosing a scheduling system, food processors should carefully define all the “constraints” on the plant floor that could have an impact on production.”
According to Logility VP of Marketing, Karin Bursa, “a constraint-based production planning and scheduling solution is necessary to predict and minimize the impacts of equipment, material constraints and changeovers to maximize existing manufacturing capacity.”
Schmidt says many processors limit their scheduling capabilities to a solution that spans their supply chain. “While an ERP system’s scheduling module can provide supply chain scheduling demands, it is limited in its visibility into the management of production schedules.” Schmidt contends that a MES finite capacity scheduler can take into account production constraints and current plant-floor status, which help manufacturers proactively plan production rather than only react to it.
Tools for the food industry
Besides integrating well, scheduling tools should conform to the special needs of the food industry. According to Evan Garber, president of Escape Velocity Systems, food manufacturers should plan for issues such as lot expiration, scheduling priority (e.g., producing non-allergen products before products with allergens), item substitution options and machine constraints-such as Product A can run on blender 1 or 2, but not 3. Meetesh Shah, CIO of Harris Tea, discovered that the integration of a specialized shop floor system lets his company trace down to lot numbers. The Sage MAS 500 system also has a level of simplicity that makes it easy to use. “Many of the larger systems made users go through several screens to complete a single transaction. Ease of use, easy maintenance and a short learning curve are all major factors when your operations are as large and complicated as ours,” says Shah.
Do the homework
“Investigate alternatives, visit sites that have a system (or the system you are looking at) and understand what it can do for you,” adds Peter Migchels, director of engineering at Maple Leaf Foods. “Get performance guarantees from the supplier. Ensure you know what you are buying and why!”
For food processors without forecasting or scheduling systems, GE Fanuc’s Brandon Henning, global industry leader (food & beverage) recommends starting with an ERP-level production planning and scheduling system that examines business trends, customer demands and market influencers. These insights will help processors decide when to run specific products and how much raw material and finished product inventory is needed to meet sales demand. From this point, Henning recommends growing the systems to implement automated execution schedules that can achieve greater visibility into the right product mixes for specific plants and lines, allowing for further enhancement and cost savings in just-in-time production.
Rebecca Gill, vice president of Technology Group International, suggests that processors decide on the “pain points” driving new software before looking for a specific package. Many companies start with a major pain point such as forecasting only to realize they desperately need other functionality such as customer relationship management (CRM) and better financials. They end up rescaling their project midway through-or worse-buying the wrong package. A full needs assessment prior to project kick-off must be done to assure success.
Software has limitations
The ability to upgrade incrementally can be an issue for large processors such as Pilgrim’s Pride. At Pilgrim’s Pride VP planning, Mike Fisk, advises that software must be able to grow as the procesor grows. With the recent acquisition of Gold Kist, Pilgrim’s earlier forecasting package couldn’t keep up with the number of additional records and iterations the software had to process plus the increased number of plant locations and production lines. The solution was an ERP-based forecasting product capable of handling the operations’ increased size.
A lot of users put high expectations on a forecasting system because they don’t approach forecasting with full understanding, says Patrick Pilz, CEO of CSB-System International. There are two issues that need to be addressed to get a reliable forecast. First, Pilz points out, “A forecast gets more reliable if you get closer to the point of primary consumption.” For example, a forecast based on point of sale consumption is probably 80% more accurate than a forecast based on a processor’s sales. This, says Pilz, is what makes Wal-Mart’s supply chain so incredibly effective. Second, Pilz says the closer the forecast timeline is related to the actual consumption timeline, the more accurate the forecast becomes. For example, a forecast for next week might be as good as 95% accurate, for next month this drops to 85%, and the next quarter may be down to 70% accuracy. Pilz’s advice: Concentrate 100% on the data you really need to drive your business and don’t waste too much time on unpredictable forecasts.
A taller order, according to Fisk, is the ability to deal with new product introductions and test products that really aren’t “products” yet-products that aren’t yet completely in the system. Forecasting and scheduling systems should be flexible to provide producers with “what-if” models and reports as they design new products and test the marketplace. Unfortunately, Fisk contends, too many packages today don’t place enough emphasis on reporting such as a “forecast vs. actual” report. And in some cases, reports are only available by feeding this data into a separate reporting package.
Lots of issues unique to the food industry make the choice of forecasting and scheduling software tricky, but these products yield results that can save money, says Gill. A good planning system can help food processors with expiration dates for raw materials and ensure that they receive the materials when they need them and in the right quantities. Allergens and organics can be better managed. A good ERP system can handle formula management in real time. In addition, an ERP system should easily be able to handle private labeling and multiple packaging sizes.
Can't control the weather
According to Bartolome, if raw materials are susceptible to weather, food manufacturers take defensive measures-perhaps purchasing and stocking/processing materials ahead of time. Or at the first signs of, say, a cherry shortage, the producer should look for alternative suppliers or use a non-fresh substitute. Another viable strategy is to reduce demand for cherry products with other similar fruit jam by running promotions until adequate cherry supplies are back on the market.
Forecasting and scheduling software-whether ERP or shop floor level-should be integrated across the complete supply chain, says Jamison. The software must support the modeling of process variables (e.g., yield, scrap, potency and grade) and tracking and tracing of all lots. Processors will want the software to capture the quality attributes of their product and production process, produce a certificate of analysis and support FDA regulatory compliance. In addition to shelf life and expiration deadlines, the software should support foreign languages, currencies, units of measure and landed costs and customs. But keep in mind, as Schmidt points out, forecasting and scheduling software must react to real-time issues on the shop floor as well.
For more information:
Karin Bursa, Logility, 404-238-8338, email@example.com
Scot McLeod, CDC Software, 678-259-8625, firstname.lastname@example.org
Brandon Henning, GE Fanuc, 434-978-6139, email@example.com
Nitesh Verma, Batchmaster, firstname.lastname@example.org
Patrick Pilz, CSB-System Int’l., 619-640-0436 (x203), email@example.com
Rebecca Gill, Technology Group Int’l., 800-837-0028, firstname.lastname@example.org
Greg O’ Neal, Junction Systems Inc., 770-443-2768, email@example.com
Daniel Oh, Sage Software, 949-790-2041, firstname.lastname@example.org
Todd Jamison, Oracle, 303-334-1810, email@example.com
Evan Garber, Escape Velocity Systems, 303-494-1765 (x114), firstname.lastname@example.org
Rory Granros, Infor, 800-260-2640, email@example.com
Greg Schmidt, Rockwell, 314-518-1054, firstname.lastname@example.org
Forecasting/scheduling software considerations
Look for suppliers with whom you are comfortable and have demonstrated success in your industry.
Define your essential requirements carefully. Choose a package that meets your needs but be wary of being sold overly complex solutions. More is not always better.
Define your key success criteria and revisit them during and after implementation to measure how well you are doing against your targets.
Define and implement the business process so everyone is clear of their roles and responsibilities.
Provide adequate training so end users are comfortable with the system.
Use a piloting approach involving the end users. This helps keep the project on track and provides great hands-on experience early in the implementation.
Do not be too ambitious too quickly. Get some quick wins early in the project. Build on these in later stages.
Tasty Baking's Success Story to be Featured at Food Automation Conference
Tasty Baking had seen a drop in operating margin from 7.9% in 2000 to 4.9% in 2002. With a new CEO and management team poised to turn the operation around, a new plant scheduling and ERP system was seen as way to lower finished goods inventories and decrease returns. The new system provides a better connection between production and demand by considering current and future inventories before manufacturing is planned. The installed SAP system has increased order fill rates by 2%, reduced returns 4% and cut days in inventory by 10%.
For more information on the conference visit www.bnpevents.com/FE/FAM/.