Food for Thought

Oliver Bird discusses the role of simulation in capacity planning for the food industry.

With tight margins, complex supply chains, fluctuating demand and ever-changing legislation among numerous other internal and external risk factors, the food manufacturing industry is a complex and highly competitive environment. In order to meet both consumer and retailer demands while keeping costs under control, food manufacturers need to manage their complex supply chains at the same time as ensuring they are maximising production efficiency, whilst conducting precise capacity planning. In such a precarious business environment, accepting even the smallest degree of unnecessary risk is unacceptable and has potentially damaging consequences. Food manufacturing businesses need as much visibility, predictability and control over future performance as possible. In the absence of a crystal ball, the only way to achieve the best possible outcome and de-risk process design and change decisions is with dynamic process simulation.

One company which has experienced and overcome this challenge is Mars, one of the world’s leading chocolate manufacturers. The company turned to Lanner’s WITNESS simulation software when the Supply Chain team was asked to assess and refine capacity levels across the business’s six US manufacturing sites, each with varied chocolate-making capabilities, chocolate consuming requirements, multiple chocolate types and varied demand. In short, they were working with a very complex internal chocolate supply chain, and that’s before taking into account any external factors. Adding yet more layers of complexity was Mars’ corporate principle of manufacturing chocolate products in the local markets where they’re consumed, and their focus on quality, which prevents the long-term bulk storage of chocolate.

The team recognised that Mars lacked truly reliable forward planning visibility of supply chain performance. Due to the sheer scale, complexities and interdependencies involved in capacity planning across the six sites, the business required modelling capabilities more sophisticated than the existing spreadsheet-based systems. In WITNESS, Mars found a tool which could explore high numbers of what-if scenarios to achieve an in-depth understanding of the impact to the business, of numerous strategic changes within the supply chain. .

A simulation model was created that predicted supply chain performance based on the different chocolate producing and consuming configurations and product mixes across different sites, while adhering to the principle of producing chocolate as close to the consumers as possible. It gave the business a previously unseen level of insight into both existing and planned operations, providing the necessary foresight to enable the supply chain team to build robust business cases for new facilities and to justify investments in chocolate making capacity. Ultimately, it enabled Mars to make the right investments at the right time, ensuring accurate capacity planning and therefore optimum business performance.

This is just one example where dynamic simulation is proven to achieve such a detailed insight into a business’ future activities that it fully informs and justifies business investment plans, optimises capacity and boosts confidence of important decisions across the business. The use of dynamic simulation can save millions for food manufacturers and ensure margins are maintained, significantly reducing risk in an industry where there’s little or no margin for error.