Sunsweet Growers Inc., headquartered in Yuba City, California, is the world’s largest agricultural corporation specializing in dried tree fruits. Processing and marketing 40,000 cases of dried fruits daily, Sunsweet is a global leader in prunes. However, the company faces challenges with its supply chain management. These constraints include a single limited source of supply that is subject to the unpredictable forces of supply and demand, as supply is determined by weather conditions while market influences drive demand. Managing the anticipated increase in demand during festive seasons proves difficult. Additionally, packaging goods for the international market poses complexity. Each operational department follows its own distinct model that does not always collaborate effectively with other department procedures. Finally, the reliance on a paper-based spreadsheet system leads to outdated data.
Sunsweet Growers faced several problems due to the constraints mentioned above. These problems included an inadequate single source of supply that couldn’t always meet market demands, inconsistent inventory management that didn’t keep up with changing market trends, inefficient scheduling and line utilization, an outdated paper-based spreadsheet system that led to outdated data, suboptimal manual bookkeeping for big companies, delayed diagnosis of problems, longer critical analysis times, inefficient operational procedures due to an outdated process, and monthly meetings held because decision-making data wasn’t readily available. All of these factors made it difficult for the internal management to make instantaneous decisions. In response to these limitations and inefficiencies in their supply chain, Sunsweet Growers turned to Zemeter for advice. Zemeter suggested implementing their S&OP program, which aims to balance demand and supply at a standardized level while customizing it to the specific needs of the company.
S&OP provides guidance to companies on how to handle unexpected demand, supply shortages, and production issues. The S&OP process involves five stages:
1) Demand Visibility – It is important for internal staff and management to understand the nature of demand and how it fluctuates over time. In this stage, users from different departments have access to the same set of data and department targets.
2) Demand Planning – This stage is focused on providing Sunsweet with a comprehensive forecasting solution, as well as creating a regular demand plan and monitoring its effectiveness.
This also involved the creation and updating of statistical forecasts, making adjustments for variations in price and promotions, and monitoring orders and shipments. The Demand Planner collected all of this data and provided an unbiased method of balancing sales goals with operational guidelines, ultimately resulting in improved budgeting for operational expenses. Demand Planning also included email alerts using warning algorithms to notify the appropriate staff.
Inventory Planning was another component of the system, which used the current inventory level and inventory history to identify patterns and notify stakeholders of potential issues that may require contingency measures.
Sunsweet maintained a consistent labor force for a span of 15 months for Supply Planning in order to understand the production and supply dynamics. By determining the production limit, they were able to establish production requirements without relying on seasonal fluctuations.
Finite Scheduling established daily operational objectives for the cooperative society. This involved addressing fruit-size concerns, ensuring material availability, managing overtime and downtime, minimizing changeover times during packaging, and addressing any work hour issues.
The implementation of the S&OP required the elimination of old data in order to achieve database uniformity. Utilizing a single set of data was vital for effective collaboration among all stakeholders in the supply chain. Following this, the internal staff underwent training to adapt to the new methods and procedures of the S&OP program, ensuring a seamless transition to the new system. As a result of implementing S&OP, Sunsweet observed positive improvements in their business and operational procedures.
S&OP’s unique five stages provided assistance to Sunsweet in the following ways: 1) Demand Visibility – This stage aided Sunsweet in eliminating outdated data and transitioning to automated data compilation as a collaborative effort. As a result, improved communication between departments became essential, leading to systematic and timely decision-making at all levels. Ultimately, Sunsweet achieved a uniform database that can be understood by any internal staff or management. 2) Demand Planning – This stage equipped Sunsweet with a comprehensive forecasting tool that gathers data from multiple sources and delivers the most optimal solution(s).
Different scenarios generated enable management to make economically viable decisions easily. An alert system has been established to notify staff through emails about potential crises, thereby preventing significant financial losses to the company. Forecasts have seen a 15-20% increase and require less time. The system for inventory planning compares current and past inventory levels to identify trends and notify stakeholders of necessary emergency measures. This has resulted in resolving order discrepancies within 2-3 weeks. The supply planner helps consolidate various suppliers onto a single platform, ensuring uniform production and supply regardless of seasonal changes. This stage safeguards against supply shortages and prepares the company for sudden increases in market demands.
This resulted in a decrease in production lines, changeovers for production lines, inventory and transportation costs, and overtime decreased to 10% (from 30%).
Finite Scheduling – During this stage, the conglomerate established daily operational goals that addressed issues such as fruit-size handling, material availability, overtime and downtime, packaging changeover times, and work hour issues.
Before implementing S&OP, meetings were held on a monthly basis. Now, with easy access to up-to-date information, meetings can be held weekly.
By providing everyone with access to a consistently updated database, Sunsweet was able to increase customer satisfaction and reduce operational costs.
Sunsweet was able to implement S&OP in half the expected time due to thorough training and user-friendly interfaces.
Frequent meetings and readily available information expedited decision-making compared to the days wasted using spreadsheets.
S&OP fostered synergy among different departments, allowing for accurate forecasting of demand and supply conditions. However, there are still some areas where the S&OP supply chain model has room for improvement.
In addition to S&OP, Sunsweet can take additional steps to improve their supply chain concern. Firstly, they can consider sub-contracting smaller manufacturers instead of relying on one limited source. This strategic move would allow Sunsweet to expand into new markets and protect against sudden increases in demand. Additionally, forming partnerships with major retail shoppers like Wall-Mart can help manage inventory and reduce costs. Sunsweet can also invest in greenhouses to cultivate products, reducing reliance on favorable weather conditions. Introducing robots into the manufacturing plant can accelerate certain production and packaging processes while meeting international hygiene standards. Furthermore, hiring in-house programmers to monitor and customize S&OP software algorithms can ensure smooth operation and provide regular training to staff. Finally, integrating CRM into S&OP can enhance customer service for priority clients, ensuring higher satisfaction and commitment.
