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Supply Chain Design for Food and Beverage Companies

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Ensuring Product Freshness

Modeling technology can be used to balance the production and distribution supply chain to help ensure freshness and reduce risk of product wastage and shortage:

  • Network optimization identifies the optimal path from production to final customer within the shelf-life requirements
  • Inventory optimization takes into account shelf life, production inventory, and lead times in order to meet service level requirements
  • Simulation, using the policies and targets set in inventory optimization, can be used to track product age at each echelon and throughout the model time horizon
  • Product duration in the supply chain can be tracked by considering transit times, production time, average time in facilities and other time considerations
  • Scenario analysis can analyze trade-offs of alternate production and distribution
    scenarios to reduce the probability of dumping

Supply Chain Design for Food and Beverage Companies

LLamasoft provides software and expertise to help dynamic organizations design and significantly improve their end-to-end supply chain network operations. The LLamasoft supply chain design platform featuring Supply Chain Guru® enables companies to model, optimize and simulate supply chain network operations, transportation routes and inventory levels, leading to major improvements in cost, service, sustainability and risk mitigation.

Here are a just a few examples of how LLamasoft modeling technology can be applied in food and beverage supply chains:

Inventory Optimization

Multi-echelon inventory optimization enables food and beverage companies to create accurate models across all echelons of the supply chain, with a full inventory plan that includes optimal safety stock, cycle stock and pre-build inventory, as well as strategies for promotional products. Companies can also use supply chain simulation to predict the service rates, inventory levels and site capacity constraints for any potential supply chain structure.

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Production Capacity Planning: Utilize Existing Capacity for Lowest Total Cost

Network optimization can also perform more detailed production modeling to right-size
the production footprint as well as to optimize production capacities—globally, or with
drill-down detail for individual facilities. Models can incorporate all production-related
details, including production lines, labor resources, production processes within the plant
and for each line, bills of material and converting semi-finished goods to finished goods,
throughput rates, costs and yields.

Production Footprint Optimization: Where and How Much Should We Make?

Often times demand for products shifts over time to new regions or different quantities, and suppliers and cost structures change as well. As these changes occur, the production footprint should also change to maximize and balance available production capacity. This may mean investing in additional capacity in certain locations or perhaps completely moving production capacity to other facilities within the network. Modeling the production footprint and analyzing varying scenarios helps a company balance existing capacity with the investment required to add additional production.

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Using Cost-to-Serve Optimization for Pricing Strategies and Margin Analysis

Cost-to-serve is the analysis and quantification of all supply chain activities and costs incurred to fulfill a customer’s product demand. This is accomplished by modeling all the supply chain activities in the network, and properly allocating fixed and variable costs. An accurate cost-to-serve model enables informed decision making by answering questions such as, ‘Is this customer or customer segment profitable, given the supply chain configuration and costs?’ or ‘Does it make good business sense to continue to stock and distribute this product?’

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Transportation Route Optimization: Routing Inbound Shipments and Customer Deliveries

Using modeling technology, businesses can identify alternate supply chain network configurations using network optimization and then model the precise transportation costs
of each, or do stand-alone route optimization. This process can help businesses identify optimal DC-to-customer assignments, determine the ideal mode mix and LTL/FTL combination, create optimal multi-stop delivery or pick-up routes, determine the best utilization of assets, evaluate driver work schedules and even perform service-based greenfield analysis.

 

LLamasoft Is Here to Help

LLamasoft is dedicated to helping businesses build optimized supply chains that help them thrive even in changing market conditions. Partnering with LLamasoft ensures you’ll have more than just software and technical support, but a growing community of supply chain design practitioners, workshops, training and coaching to guide you as you progress. To learn more, email info@llamasoft.com or call 866-598-9831.

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