Case study: Capacity Planning and Inventory Optimization

A Food Company which produces snacks in different forms including potato chips, potato crisps, potato skins, pellet snacks, kettle chips, and extruded product.

Project Objectives:

• Optimizing the demand delivery performance by improving the demand generation process
• Developing capabilities to achieve holistic Inventory management
• Improve the overall supply chain operations

Challenges faced by the client:

• Disconnected planning processes- Forecasting, Procurement & Plant Scheduling
• High Inventories and obsolescence
• Lack of proper tools - Mostly excel driven
• Lack of demand visibility creates a reactionary environment towards both raw material procurement and Plant efficiency through short-runs and frequent changeovers
• Inability to leverage potential market opportunities
• High Working Capital

DPLLC project approach –

• Diagnostics of the current system
• Specifying the areas of improvement
• Demand and Inventory Segmentation
• Inventory modeling
• System-wide optimization Analysis for Shifting production across locations
• Final Process and tool Recommendations

Some of the final recommendations included –

• To change the process & ERP system to recalculate the LIFR & OTIF
• To discontinue 400+ SKUs based on inventory and SKU profitability analysis
• To implement a different stocking strategy by SKU based on the optimization analysis
• To review the plan at the right level
• To shift some of the production volumes to other plants to have better customer service for small format customers who order out of that plant