Effective planning in food processing doesn’t have to be chaotic. The right digital tool will help food manufacturers bring order to their operations by calculating the cost for any number of decisions. Emile Bassil from Relex explains how bringing every team to the same source of data provides full visibility across the company.
Push and Pull
Food manufacturers, whether dairy farmers, meat or fruit producers, often struggle to balance a shifting supply with fluctuating customer demand. In a push model (or “make-to-stock” model), companies produce goods based on demand forecasts. Companies manufacture products ahead of time, allowing them to fulfil customer orders without delay. This model works well for frozen items and shelf-stable products, but for Australia’s over 4,000 dairy farmers, maintaining high levels of inventory increase the risk of spoilage.
Pull models (or “make-to-order” models) work when demand is stable. Manufacturers order and make raw materials based on order-based forecasts as actual customer requests often come in weeks or months before the fulfilment deadline. Put simply, products are effectively made to order. Forecasts allow manufacturers to buy only as many raw materials as needed which reduces storing costs, yet this model falls short when demand spikes and may lead to missed orders and poor customer experience.
Fresh food won’t stay fresh for long and can’t wait in storage forever, but companies still need staple items ready to go when demand changes. To balance this, many manufacturers use hybrid push-pull models. Unfortunately, most of them rarely have a system for determining which mix of push and pull methodologies maximises operational efficiency and profitability.
Profit-optimised push-pull models
A good planning platform can balance demand forecasts and customer orders with constrained supply, but the best ones will do you one better. Instead of considering outcomes in terms of “push” and “pull”, advanced platforms simulate every possible combination to identify the most cost-effective one.
That’s still not enough, though. What is cost-optimal for a manufacturer may not be what’s best for their customers. Without guidance, optimisation software may determine it’s cheaper to ignore one customer’s orders to complete the orders of another. That’s why a truly effective planning platform will allow companies to add their own business objectives and rules into the calculations.
One System to Rule Them All - Synchronise Planning Across Teams
The only siloes a farmer should have are the physical ones to store their goods in. A planning platform resolves more than the risk of spoilage: it helps teams work better together by serving as the single source of truth.
Many manufacturers have several systems used by different teams. Lack of visibility into the different parts of the process leads to desynchronisation, unclarity, and unnecessary delays.
A unified planning system allows manufacturers to create a new forecast that’s instantly visible to every team. This allows teams to work on several tasks simultaneously instead of completing them sequentially. When every team uses the same real-time data, they will make decisions that are aligned, from purchasing to production to sales. In addition, a unified planning system helps teams synchronise planning across time horizons and planning layers. Scheduling plans that span weeks can be aligned with plans implemented over the course of months — and with sales and operations planning initiatives that span years.
End-to-end planning solution to overcome food manufacturing challenges
Real optimisation of the food processing supply chain requires a comprehensive understanding of supply and demand, and a way to visualise the flow of goods from source to supermarket. The technology to accomplish this already exists, but many planning solutions still address only a fraction of manufacturers’ needs. When choosing the planning tool for your supply chain, ensure that it gives you the visibility and collaborative capabilities needed for a truly efficient and cost-effective process.
