Capacity Planning and Inventory Optimization for a Food Company

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