Visibility in the Supply Chain
Presenters Andrew Lam Vice President of Global Planning has been with the company for fourteen years working in multiple areas of the supply chain ranging from procurement, sourcing, deployment, planning, and new system implementations. Jill Donoghue - Vice President of Logistics has been with the company for twelve years. Prior to Bumble Bee, Jill held various supply chain roles at Keebler Foods, Pechiney Plastic Packaging and Kraft Foods, all based in Chicago. Ruby Popp - Vice President of Sales Support Services has been with the company for fifteen years. Prior to Bumble Bee, Ruby worked in new product development for Hanson Beverage Company and Don Miguel Mexican Foods, both in Southern California.
Agenda Overview of Bumble Bee Seafoods Supply Chain Optimization Global Transportation Management Solution (TMS) Vendor Managed Inventory (VMI)
Overview of Bumble Bee Seafoods
CORPORATE VISION Improving our consumers quality of life by providing sustainable, nutritious, convenient and affordable seafood products North America s largest branded seafood company with #1 or #2 position in virtually every segment of U.S. and Canadian shelf stable seafood Bumble Bee was originally founded in 1899 We are a now a private, domestically owned company and one of the last North American processors of tuna, sardines and clams We process more than 60% of our requirements and maintain strategic co-pack relationships in 20 countries Over $1B in annual sales
Supply Chain Optimization Project
Supply Chain Optimization Project Real-time visibility to supply plan and procurement Activate Supply Network Planning in APO DRP (Distribution Resource Planning) MRP (Manufacturing Resource Planning) Rough-Cut Capacity Planning Deployment / Transport Load Builder Formalization of information = One source of data Increased efficiency Enhanced understanding of supply drivers Focus on optimizing and reducing safety stock
Before Supply Chain Project
After Supply Chain Project
Sales Demand Data and System Flow Example Loining Facility Data Feeds SAP APO Supply Network Planning Data Load Rounds Loins Reqmts Deploy Loins Reqmts Brites Reqmts Finished Goods Reqmts Deploy Finished Goods Manual Adjustments SAP ECC Material Requirements Planning Rescheduling Loining Facility Manufacturing Plants DC s
Safety Stock Methodology Safety Stock = (Safety Factor) x (Uncertainty Factor) x (Lead Time) Data Drivers Safety Factor Uncertainty Factor Lead Time Safety Stock Element Service Level (Product Availability Target) Demand Variability (Forecast Accuracy) Supply Variability (On-time production, and delivery of finished goods) Lead Time (Supplier, manufacturing, and delivery lead time) Bumble Bee Data Element 98.5% Forecast Accuracy Item-Location MAPE Produced Schedule Adherence Purchased On Time Deliveries Production Frequency Interval Production Leadtime Transit Lead Time NORMSINV Cycle Service Level Forecast Mape 2 + (Supply Variability) 2 Total Lead Time
Variable Sensitivity Variable Reduction Bumble Bee Inventory Reduction Service Level (In terms of Fill Rate) 1% 10-15% Demand Variability 10% 5% Supply Variability 10% 1%
Safety Stock Reduction Example $65,000,000 100.0% $60,000,000 $55,000,000 99.5% $50,000,000 $45,000,000 69 Days 99.0% $40,000,000 $35,000,000 98.5% $30,000,000 44 Days $25,000,000 98.0% Inventory Fill Rate
Global TMS
International Freight Situation All crucial aspects of Import orders were manual Critical dates in SAP were not always accurate Entered manually by variety of people and process was not consistent Updates were not always accurate or timely No opportunity to identify and address obstacles to on-time delivery Purchase Orders were managed via e-mail and telephone Vendors did not consistently notify BB when delays occurred Notifications were not always timely No database for Vendor KPI reporting Uncertainty surrounding delivery led to increased inventory Employees were manually closing POs in SAP
International Freight Situation Regulatory compliance was not system supported Missing or delayed documents were not managed pro-actively Shipments were delayed as a result of late or incomplete documentation Documents sent via e-mail and courier and retained by multiple parties Carrier Management Carrier rates and contracts were managed in spreadsheets Tracking was done via multiple carrier websites No database for Carrier KPI reporting No mechanism for ensuring Routing Guide compliance Response: Implement an International TMS solution Better quality information equates to more efficient management, which leads to cost reduction.
Global TMS Review RFP Process 11 Participants Variety of solution types (SaaS and License Install) CargoSmart Selected CargoSmart provides global shipment management software solutions that enable shippers, logistics service providers, and ocean carriers to improve planning and on-time deliveries Connected to over 30 ocean carriers, CargoSmart leverages big data sources and a cloud-based platform to offer sailing schedules, visibility, documentation, contract management, compliance, and benchmarking solutions Launched in 2000, CargoSmart helps over 130,000 transportation and logistics professionals to increase delivery reliability, lower transportation costs, and streamline operations
Phase 1 Booking, visibility and document management Beta Partnered with Two Suppliers in December 2013 Methodically rolled out remaining packers Jan Dec 2014 Packers with similar implementation characteristics identified and scheduled accordingly Intense auditing of data from multiple sources Packers, Ocean Carriers, Brokers, Dray Carriers, etc. Standardized Packer Operating Environment Ongoing Packer Training Phased Implementation Phase 2 PO Management and KPI reporting starting in 2015
Global TMS Solution - Benefits Supports goals and data requirements of Supply Chain Optimization project Improved visibility and accuracy of dates in SAP Inventory reduction through reliable and consistent milestone management Manual processes become automated and timely Closure of SAP POs is automated via EDI SAP dates updated via EDI for critical milestones, from PO creation through final delivery Packer compliance to routing guides enforced at time of booking International Freight Savings Routing guide compliance optimal carrier selection Reduction in container demurrage ISF filing brought in house
Global TMS Solution - Benefits Supports regulatory compliance Single repository for documentation Centralization of regulatory control Standardization of processes Packers notified via system to upload missing documents Protection from costly penalties Management by exception Improved Reporting KPI reporting for Vendors KPI reporting for Carriers Centralized database of rates Transit analysis by lane Centralized Global Visibility to Movement of Product
Learnings Complex playing field: International Logistics Multitude of providers and hand offs (packer, carrier, agent, broker, dray carrier) Lower levels of standardization than experienced domestically Complex implementation environment Languages, time zone, change management, unique packer operating environment (business drive, cultural) Data inconsistent from carrier to carrier While the Phased rollout was required to protect the business, timing of savings were delayed
VMI
Why VMI? VMI is a means of optimizing end-to-end Supply Chain and Sales performance by increasing collaboration with customers through shared data. Our goal is to align business objectives and optimize Supply Chain operations for both Bumble Bee and its strategic partners. Bumble Bee is responsible for maintaining the customer s inventory levels and for generating the customer s purchase orders guided by mutually agreed upon objectives and measures. Bumble Bee receives data electronically that advises a customer s sales and stock levels allowing us to view every item carried and potentially true pointof-sale data. Detailed data of the entire supply chain of both partners allows for collaboration at multiple levels in order to drive the success of the brand. Opportunities for Bumble Bee to have traditional collaboration with customers is limited with priority going to larger partners. VMI is the way for Bumble Bee to open the door to partnerships that will be beneficial for all.
Limited collaboration Current Situation Little to no visibility of customer s inventory resulting in additional safety stock required Limited control over customer s buying behavior Customers rush orders for promotional events impacting future sales and promotions Warehousing and transportation services are at the customer s request and not optimized Rebills and lump sums created to capture funding missed during promotional periods resulting in financial hits that are in future months rather than the period the activity actually took place Response: Implement VMI with strategic partners
VMI Benefits Collaboration/Communication Preferred Vendor/Strategic Partner status Improves forecasting for both partners Streamlines new item intros / exit of items Improves promotion execution Aligns with customer s scorecard to achieve KPI targets Increases sales Inventory Control Prevents out of stocks Improves fill rate Improves turns Reduces periods of supply for both partners Improves on-time delivery Order Smoothing Case picking to full layers or pallets to expedite the shipping/receiving process Load leveling opportunities/smooth dock activity Co-loading collaboration opportunities Improves order/load planning for promotions Potential opportunity to shorten order cycle times
VMI Review Bumble Bee implemented SAP in 2008 which streamlined operations and provided the platform for a successful VMI program Bumble Bee conducted extensive research into VMI solutions Collaborated with other CPG companies RFPs with four of the top VMI software suppliers Variety of solution types (SaaS and License Install) Bumble Bee selected Datalliance Leading provider of VMI and related services Manages more SKUs/locations than any other independent VMI system in the world No software installed, fully hosted SaaS Solution is always current with three updates per year All Customer Care support services are included
Implementation Build VMI solution with Fred s, Inc. Dollar store customer that is favorable to VMI Customer is focused on best practices and continuous improvement initiatives Customer willing to train new suppliers Provides Bumble Bee team the opportunity to learn VMI in a controlled environment Datalliance software Customer KPI review and reporting Buyer weekly conference calls Process flow for internal departments Next Steps Build on success of pilot Focus on strategic partnerships
Learnings Clean Data Item Master synchronization between parties TI x HI accuracy for proper ordering patterns Forecasting Customer On Hand/On Order inventory status Customer s required safety stock days Base vs. Event (promotional) sales Customer s system forecast vs Bumble Bee s Lead-Time Components Customer s lead-time from PO generation to PO receipt into warehouse Customer appointment scheduling days Transit time from Bumble Bee warehouse to customer warehouse Customer s fiscal calendar People Commitment throughout your organization Experienced people are key to success
Conclusion Visibility in the Supply Chain Supply Chain Optimization Project Global TMS VMI Visibility in the Supply Chain leads to faster data, faster product movement which = Customer Satisfaction + Cost Effectiveness
Thank You! Andrew Lam, Vice President Global Planning Andrew.Lam@bumblebee.com Jill Donoghue, Vice President Logistics Jill.Donoghue@bumblebee.com Ruby Popp, Vice President Sales Support Services Ruby.Popp@bumblebee.com