Information Technology and Logistics Integration
Information Technology and Logistics Integration
Information technology can help logistics integration by simplifying complex processes within the company or organization. Through simplification, long processes are streamlined thus creating more opportunities to improve the quality of services and goods. It can also make a company more productive and be very flexible to any business demands. Information technology has helped Sunsweet Growers meet their logistics needs on both the supply and demand sides by integrating and updating the company’s processes, simplifying them and offering a reliable feedback system to sustain the rewards of a successful sales and operation planning (S&OP).
Sunsweet faces challenges where both supply and demand are constraints due to factors that the company cannot control like weather and crop yield among other variables. It faced the challenge on how to deliver products to customers and fill the store-shelf space that the company had purchased in advance. Recent retail consolidation had increased buyers’ clout at the expense of suppliers putting additional pressure to its profit margin. Another constant challenge is the scheduling and line utilization of the company.
It has also been working for a number of years to advance the efficiency of its supply chain, including the reduction of inventory and reducing transportation costs as well as improving order lead time. The final challenge is the sophistication of scheduling and planning in the packaging of its products due to its wide variety. Sunsweet for years of its operations has used paper-based spreadsheet system to manage its supply chain. It has limitations though, since as the company business becomes more complex, so as the complexity of using such spreadsheets based on Excel.
Corporate data using Excel based spreadsheets are not systemized and synchronized. Data can be easily lost. Complex planning and scheduling issues were often encountered. Continuity of work was also a concern because many of the business rules embedded in the spreadsheets are lost when a planner leaves his or her job. Excel lacks the required optimization, simulation, and statistical tools needed to model the business. It is not a flexible tool especially when business becomes complex.
When formats are changed, considerable manual effort is required to resynchronize the spreadsheets when they are passed from one person to another. It is also a very slow and manual process for the company when making changes in the fruit-crop forecast and how the crop would be processed and packaged. Mistakes in the sales forecast could result in too many changes to the set-up of the processing line as well as production overruns. Finally, planners were spending a great deal of time managing the spreadsheets, and most of the work was repetitive and could be eliminated.
Elimination or streamlining then the unnecessary and repetitive works within the Sunsweet operations was a key for development through the integration of information technology to its S&OP. With the above mentioned challenges, Sunsweet realized that there’s a need for a viable, simple and repeatable supply chain planning. It recognized the importance of S&OP as the heart of this supply chain planning. For an optimized supply chain that can reap profitable rewards, it has considered to implement an S&OP program backed -up by an excellent communication facility integrated by advance technological tools as provided by a supply chain consultant.
For this purpose, Sunsweet has tapped the services of Supply Chain Consultants’ Zemeter S&OP supply chain planning suite to replace its Excel-based planning system. The system basically integrates all the aspects affecting the company’s operations. The tools and processes provided up-to-date information in sales, production, and inventory that allowed the entire planning team to meet on a weekly basis instead of on a monthly one. This then resulted to an increase of the company’s ability to meet customer demands while continuing to improve production efficiencies with smooth, long term requirements.
The company has successfully integrated its S&OP processes concentrating on 5 well–defined process steps namely demand visibility, demand planning, inventory planning, supply planning and finite scheduling. Implementation of these steps is realized through the tools introduced by Zemeter. It made the needed data available to all departments through direct access on the same data or information. Better understanding on the other departments’ goals and challenges synchronized the company’s operations.
Decision making also now becomes faster in each of the department allowing more flexibility in allocating the company’s resources. Under demand visibility, planners were immediately able to access data and create detailed, automated reports. In demand planning, Zemeter’s Demand Planner provided a complete forecasting solution. It provided Sunsweet’s planners to accurately create and update statistical forecasts; plan for price changes and promotions; and analyze demand data, such as orders and shipments.
With this, the company now uses historical data to manage items that are either dropped or discontinued. An early warning system that can trigger e-mail alerts to planners will prompt them to review immediately appropriate matrix in the system specifically when significant orders are coming in from new customers. In inventory planning, the company can now be able to use volume loss to manage inventory beyond stock levels to effectively identify slow-moving items and reduce product loss that results from outdated or obsolete products.
With the Supply Planner module, the company has now a 15-month rolling forecast of all production and supply chain restrictions. Long term production requirements are then built smoothly like the maintenance of a uniform labor force throughout the year. Lastly, the Finite Scheduling tool developed for Sunsweet handles slightly different size constraints on each of the company’s three manufacturing lines. Details about the finite schedule, daily production, and inventory levels are updated daily through this system so that all of the planning processes are using the most up-to-date information.
Without the new technology provided by Supply Chain Consultants’ Zemeter S&OP supply chain planning suite, the company will eventually cannot compete well due to higher operational costs and cannot increase its sales by capturing the majority of the market demand. With such an information technology tool, better understanding of how to work together to reduce production costs and improves order lead time is achieved. This then is how information technology can help integrate logistics of a company like Sunsweet Growers.
Subject: Information technology,
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 25 September 2016
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