Sticking to the Plan

The words "technology" and "new" are rarely far from one another in articles about supply chain technology. One of the immutable laws seems to be that latest = greatest. That's why it's so remarkable that the SKEP (System Knowledge for Effective Planning) application used to keep PepsiCo Foods Canada on top of its game has been in place for 15 years.
Despite monitoring the application market since that time, Henry Clarke, purchasing planning coordinator, and his colleagues has not been tempted to replace it. "It gives us a tremendous advantage because of the management tools," says Clarke. "We've not seen anything that compares."

Clarke credits SKEP with helping to refine and optimize the company's production.

"In theory, you want the box to come off the line minutes before the consumer wants to buy it and this tool helps the company work toward that goal," says Clarke. "As a management reporting tool it's extremely powerful in providing information we use and work with."

How It Works
PepsiCo Foods Canada was planning production using Lotus 1-2-3 spreadsheets and homegrown algorithms when staff in the production planning department heard about a new solution from a French firm for production planning in a process environment, a solution that had yet to be deployed in North America.

"They showed us, we tried it out and we fell in love," says Clarke. Through acquisition by DynaSys that solution, SKEP, became part of a complete supply chain planning suite, SKEP eXt Solutions, which is now represented in the United States by Production Modeling Corp.

PepsiCo Foods Canada deployed the SKEP planning module in three Quaker plants in Peterborough, Ontario that produces oat products, RTE, baking mix etc; two in Trenton, Ontario that make rice cakes; and another that makes frozen muffin batter.

Clarke, working in Peterborough, and his counterparts in the other two plants use SKEP Planning to optimize their short term schedules, as well as provide long term projections based on the real capacity of production plans, what the inventory targets are and manpower levels. Later this data is consolidated for an overview of corporate capacity at headquarters.

SKEP Planning compiles a Master Production Schedule (MPS) to keep PepsiCo Food Canada's sales and operations plan moving along with its business objectives. The application uses finite capacity algorithms that accommodate both demand and production constraints. Planning is based on seeing, analyzing, and understanding requirements and the capacities in order to ensure better coverage and to find the best compromise between inventory cost and production cost.

PepsiCo Foods Canada's production planning cycle starts with data from the sales forecast. "We use that to generate net demand against inventory and it gives phases over time when it's needed," says Clarke. "The planner's job is to determine optimum production, balancing need versus capacity versus manpower versus materials."

Accomplishing that means taking a number of factors into account.

"It allows you to put in more than just raw sales data," says Clarke. "There is a distribution system built in as well. So if I have a need for Cap'n Crunch Cereal in a warehouse in Vancouver, and it knows it takes seven days to get there, it accounts for that in the system."

Built into the tool are subtleties that are key to accommodating the real world of process manufacturing, Clarke says. For example, it has the ability to build in different rules, such as scheduling downtime for maintenance and holidays.
"It's a great tool to look at capacity utilization," says Clarke. "It does a lot more than figure out you need 500 bags for next week. It finds that you need 500 next week, 500 the following week and 700 in a few months. It calculates warehouse space, the cost of the investment and labor," he continues.

The company also uses SKEP to output data for labor management and conduct long-range manpower planning. Completed plans are uploaded into the MRP in order to generate requirements for other items, such as ingredients and packaging.
Report flexibility is also important to PepsiCo Foods Canada planners, who need to be able to view data in a number of different ways: hours, cases, whole versus plan part, individual SKU versus summary. Clarke and the other planners run calculations such as the number of hours of oat milling required to produce a cookie, enabling them to determine if oat milling capacity will allow for an increase in cookie production.

Still the One
The application has continued to serve PepsiCo Foods Canada despite radical changes in the market, such as faster time to market and quicker product discontinuation, demands for more flexibility in production, and the need to coordinate production up the supply chain.

"We even forecast ingredient demand, so it lets people have a better idea what's going on in the market," says Clarke. "When this system came to us, we were thinking in weeks, months and years. Now we think in days."

PepsiCo Foods Canada segments its production into 13 periods a year. Solid developer support has been key to maintaining the system's long tenure and PepsiCo Foods Canada planners continue to work with DynaSys to enhance the product.

"We're working on the ability to do even more detailed scheduling to tie back to the MRP." PepsiCo Foods Canada uses QAD's MFG/PRO manufacturing resource planning. Despite small changes through the years, "We're still not using it to its full potential."

PepsiCo Foods Canada keeps the application current, but Clarke says the basic functionality remains the same. "With newer and more powerful computers, it's gotten faster, but it's not very much changed in what it does. We've never seen anything that can match it."