Johnsonville Sausage Ensures Demand and Supply Chain Visibility
For more than 50 years, Wisconsin's Johnsonville Sausage ("Big Taste from a Small Town") has purveyed gourmet sausages to independent and chain grocers across the United States and, more recently, to more than 39 countries, including China, France, Japan and Mexico. The company boasts well-known brands of bratwurst, Italian sausage, and breakfast links, among other varieties.
However, manufacturing and distributing a large mix of perishable products serves up its own set of challenges. Ability to forecast demand correctly in such an environment is critical. In addition, Johnsonville's customers would place orders based on their estimates of demand in the past. Now, however, these customers were increasingly asking Johnsonville to assume that burden -- and the risk of significant losses. Johnsonville needed to ensure that it could support Vendor Managed Inventory (VMI) relationships with its customers and meet and/or exceed its on-time delivery and order fulfillment metrics.
As a result, the company needed to address issues in its planning environment including: Accurately forecast demand on a weekly basis to support the VMI model; manage supply planning for six production facilities with clear visibility into potential shortages; and improve visibility into raw material sourcing, finished goods and customer inventories, and incorporate that data into its demand planning and production scheduling processes.
The Solution
To increase visibility into its demand and supply networks and thereby improve planning and maintain profitability, Johnsonville decided to phase out its legacy planning solutions beginning in 2005 and replace or integrate them with a single, comprehensive supply chain planning platform. The company chose the SAP Advanced Planning and Optimization (APO) solution, the planning component of SAP Supply Chain Management. SAP APO aims to enable an organization to improve customer service and reduce costs by leveraging its enhanced demand and supply network planning, production deployment and VMI functionality.
Johnsonville knew that a successful implementation of the solution would need to include all slaughter and processing facilities, distribution centers, subcontractors and VMI relationships in the network model. Including the slaughter sites into the model allowed it to plan the effect of slaughter constraints on the rest of the supply chain. The team decided to model for optimal flow and manage exceptions on a case-by-case basis. The solution would take the aggregate demand and use capable-to-match capabilities of the solution to generate planned orders within its ERP system.
To create a plan within the new tool, the company needed to import complete sales history, customer orders, inventory, product, production and procurement information from their BPCS ERP system into SAP APO. (Since then, the company has migrated from BPCS/ERP to SAP.) The following graphic shows the information flows between its ERP and supply chain planning solution:
When a VMI signal arrived, the planning process would review existing inventory, safety stock and already in-transit and leverage capable-to-match capabilities of SAP APO to trigger shipments from distribution centers. The company also implemented what-if scenario planning using the APO system. It allowed them to model various short term resource or demand change scenarios or various long term demand or network scenarios and evaluate their impact on supply plans.
The new system then demanded enterprise-class implementation skills. In addition, internal constraints dictated that Johnsonville deploy the planning solution prior to replacing its in-house ERP system with mySAP ERP, which was part of its long-term plan. These circumstances dictated bringing on board a partner who could significantly reduce the risks involved in such an implementation. Johnsonville selected Bristlecone based on its expertise in the mid-market consumer packaged goods arena with SAP supply chain deployments.
"The Bristlecone team did a great job of defining the specifics of the solution and implementing it across our company. Their deep domain expertise in supply chain planning and in the SAP APO solution enabled us to complete this challenging project on time and under budget during the company's busiest business season of the year. We are extremely pleased with the results," explains Ron Gilson, CIO, Johnsonville Sausages.
The Business Impact
Deploying the new system has impacted Johnsonville's operations in the many ways. The company has improved visibility across raw materials, manufacturing facilities and customer needs, reducing both cost and risk. It also creates weekly demand forecasts which become part of a four-month product planning horizon with greater confidence. The company is more easily able to set production and delivery schedules and as a result, meets service levels around inventory and product mix. Finally, Johnsonville cost-effectively improved an already-solid customer service model, maintaining competitive differentiation.
However, manufacturing and distributing a large mix of perishable products serves up its own set of challenges. Ability to forecast demand correctly in such an environment is critical. In addition, Johnsonville's customers would place orders based on their estimates of demand in the past. Now, however, these customers were increasingly asking Johnsonville to assume that burden -- and the risk of significant losses. Johnsonville needed to ensure that it could support Vendor Managed Inventory (VMI) relationships with its customers and meet and/or exceed its on-time delivery and order fulfillment metrics.
As a result, the company needed to address issues in its planning environment including: Accurately forecast demand on a weekly basis to support the VMI model; manage supply planning for six production facilities with clear visibility into potential shortages; and improve visibility into raw material sourcing, finished goods and customer inventories, and incorporate that data into its demand planning and production scheduling processes.
The Solution
To increase visibility into its demand and supply networks and thereby improve planning and maintain profitability, Johnsonville decided to phase out its legacy planning solutions beginning in 2005 and replace or integrate them with a single, comprehensive supply chain planning platform. The company chose the SAP Advanced Planning and Optimization (APO) solution, the planning component of SAP Supply Chain Management. SAP APO aims to enable an organization to improve customer service and reduce costs by leveraging its enhanced demand and supply network planning, production deployment and VMI functionality.
Johnsonville knew that a successful implementation of the solution would need to include all slaughter and processing facilities, distribution centers, subcontractors and VMI relationships in the network model. Including the slaughter sites into the model allowed it to plan the effect of slaughter constraints on the rest of the supply chain. The team decided to model for optimal flow and manage exceptions on a case-by-case basis. The solution would take the aggregate demand and use capable-to-match capabilities of the solution to generate planned orders within its ERP system.
To create a plan within the new tool, the company needed to import complete sales history, customer orders, inventory, product, production and procurement information from their BPCS ERP system into SAP APO. (Since then, the company has migrated from BPCS/ERP to SAP.) The following graphic shows the information flows between its ERP and supply chain planning solution:
When a VMI signal arrived, the planning process would review existing inventory, safety stock and already in-transit and leverage capable-to-match capabilities of SAP APO to trigger shipments from distribution centers. The company also implemented what-if scenario planning using the APO system. It allowed them to model various short term resource or demand change scenarios or various long term demand or network scenarios and evaluate their impact on supply plans.
The new system then demanded enterprise-class implementation skills. In addition, internal constraints dictated that Johnsonville deploy the planning solution prior to replacing its in-house ERP system with mySAP ERP, which was part of its long-term plan. These circumstances dictated bringing on board a partner who could significantly reduce the risks involved in such an implementation. Johnsonville selected Bristlecone based on its expertise in the mid-market consumer packaged goods arena with SAP supply chain deployments.
"The Bristlecone team did a great job of defining the specifics of the solution and implementing it across our company. Their deep domain expertise in supply chain planning and in the SAP APO solution enabled us to complete this challenging project on time and under budget during the company's busiest business season of the year. We are extremely pleased with the results," explains Ron Gilson, CIO, Johnsonville Sausages.
The Business Impact
Deploying the new system has impacted Johnsonville's operations in the many ways. The company has improved visibility across raw materials, manufacturing facilities and customer needs, reducing both cost and risk. It also creates weekly demand forecasts which become part of a four-month product planning horizon with greater confidence. The company is more easily able to set production and delivery schedules and as a result, meets service levels around inventory and product mix. Finally, Johnsonville cost-effectively improved an already-solid customer service model, maintaining competitive differentiation.