The Challenge
Our client requires a large, ongoing supply of beef products to produce the millions of hamburgers and other beef-based items it sells daily. Given its purchase volume, the company sources beef trims from multiple suppliers, processes the trims and then ships these to distribution centers. Volatility in beef-trim costs, region-specific demand, production capacity, and processing/distribution costs makes it
SCA Planner drives 3-5% in savings through:
- Optimized beef-supply mix and raw material sourcing
- Improved plant utilization/efficiency
- Identified impactful capital investment opportunities
- Increased freight savings
The Solution
SCA worked closely with our client using a business process approach coupled with SCA PlannerTM software. The team developed a sourcing planning process for the client’s complete supply chain. With SCA Planner the team embedded the capability to simultaneously optimize raw material sourcing, manufacturing operations, and distribution costs. Through activity-based costing, and optimization of sourcing, processing, beef-product-mix and distribution assignments the team identified the lowest-cost scenarios for procurement, and distribution for every planning cycle. The activity-based-costing method, for example, combines financial and operational modeling to capture the true cost of manufacturing activities and calculate the real costs of multiple projected scenarios.
The Result
The result yields the optimal sourcing, processing, and distribution strategy for a given product using time windows within defined business constraints. Our client’s new analytic capabilities for supply chain and processing drove significant savings realized over two years, with additional ongoing savings for continuous supply planning through SCA Planner. Using SCA Planner enabled our client to both develop strategies for forward-looking supply chain scenarios in response to shifting market features and to respond to near-term supply needs in a dynamic, cost-optimal manner.