Cooking up an integrated strategy

Here's an interesting one: a small firm that's creating its own destiny by what has been, by any measure, innovative and transformational business thinking. It's Victoria Foods, which until the late '90s was a producer of generic baking mixes, but now mostly develops and manufactures market-leading value-added brands that have grown the business to £7.4m. Classics include the Jane Asher baking ranges and newly launched Kelloggs cake mixes, and the company is also actively working with the Guide Association to promote good old-fashioned values. "We're selling half an hour of pleasure; getting people and kids back to basics and doing something creative and useful," says managing director Dan Ross. Beyond the lessons of entrepreneurial flair and sheer guts, the value of this story is in understanding how the company is re-building its IT to manage the fallout of growth through diversification – notably complexity. In production terms, what were straightforward biggish batch lines, with largely common stocked items, have had to morph to accommodate smaller batch, more complex manufacturing involving products with up to four-level bills of materials (BoMs), many more ingredients and additional processes, and hence more difficult management. You're past tweaking All of which put considerable strain on the old ways of multiple spreadsheet-based forecasting, production planning, purchasing, replenishment, warehouse management and the rest – and was exacerbated by inevitably rather more demanding market expectations. As finance director John Blackledge says: "When your customers expect at least 98.5% on-time, in-full delivery service, while ordering on day-one for day-three – but you can't see with clarity your work in progress or what's in the on-site or third party off-site stores – you're past tweaking the system!" Some of that must be ringing bells. "We needed to increase velocity through the business, while also minimising stock holding and potential obsolescence and achieving the required customer service level," says Blackledge. Spreadsheets with data provided by different departments for different functions – and thus at best rarely up-to-date, at worst horribly labour intensive – weren't going to do the job. The strategy has been to go for a packaged ERP system with one set of integrated data, combining MRP and inventory management to get a grip on all stock holdings, while tracking live material movements and simultaneously easing purchasing and production planning and scheduling. Victoria Foods selected McGuffie Brunton's Syspro 6 system, and is currently live with financials, distribution, purchasing, MRP and stock management – now working on making improvements with semi-automated shop floor data capture. The firm also intends to improve the links between forecasting, sales and production by extending the ERP system to include integrated advanced planning and scheduling (APS), and indeed it's already populating the database. The result will be a system that automatically optimises jobs to run, for example, chocolate-based production sequentially – all the usual to minimise set-up and cleaning times, within the rules governing appropriate production lines, thus maximising utilisation consistent with building to customer order, forecast and min/max stocks. Says Blackledge: "We'll also be able to take better note of planned maintenance and cleaning, since all the data will be there. And it will give us visibility of capacity all the way out to logistics. We'll know that it's worth getting a vehicle at say 3.00pm because we'll have all the pallets out of production by then. So it will optimise production, optimise warehouse stock and stock movements and finished goods, and optimise transport. The whole thing will be more streamlined." Here's the difference: prior to go-live, planning manager Stephanie Macdermott would have to work continually with multiple spreadsheets and Microsoft Project to prepare an MPS (master production schedule) and then generate weekly production plans and daily updates. She would be reviewing unstructured forecast and inventory data from within the business and the firm's third party logistics provider, with a never-ending circle of manual intervention. And even so, detailed usage on the shop floor and movements in and out of the on-site warehouse weren't covered by a spreadsheet, so wastage, over-stocking and obsolescence were always a problem. Cooking on gas With the new system, production planning looks at top level demand according to sales and forecast data, and finds net material availability, checking every level in the BoMs automatically, while MRP steers warehouse and direct supply replenishment requirements. Automatic MPS generation saves 1.5 man-days a week, production planning another half day – and when APS is live, Blackledge reckons that will save another day by automatically optimising build sequences and routings. But never mind the time: the system will ensure that only the right materials and packaging are in the right place at the right time. And with its new-found accuracy, the firm can change to 'pick and kit' production, rather than moving bulk goods in and out of the off-site warehouse. Not only does that greatly improve management of the numbers; it reduces double handling, releasing additional capacity and de-cluttering the facility. Further, before system implementation, Victoria Foods was totally reliant on its third party warehouse company's records. Now Macdermott says: "We're going to use Syspro as the master, while theirs will become a back-up." The firm plans to use the supply chain side of Syspro for that, selecting a date range, and ensuring that materials are moved into the local warehouse on a two day time advance for production. The bottom line: although customer service and managing growth and complexity were the key business drivers for this, Victoria Foods is also managing to reduce its overall stock holding, prevent stock obsolescence, and cut third party warehouse stock holding requirements. We're talking significant figures. Beyond that, it's also improving yield and maximising capacity through APS and real-time process performance monitoring – and building a tool with which to establish profitable products and customers, and thus additionally how and what to promote.