A Dessert Company Bakes in Operational Excellence

As a result of new customer acquisitions from a recent merger, the dessert company’s three facilities struggled to keep up with increasing volume demands. This prevented the operating team from capturing some sizable supply chain opportunities and synergies, as they were spending the bulk of their time responding to the daily challenges of getting product out the door as quickly as possible.

Combined with less-than-contemporary techniques for food processing and supply chain management, as well as more acquisitions on the horizon, this situation was beginning to jeopardize growth. Given that growth trends, which the management team projected, would continue to intensify over the next five years, a new approach was required. They simply did not have the bandwidth to make the required systemic improvements and manage growth simultaneously.

The company sought to increase their production capacity (OEE) to meet current and future demand without having to acquire additional new equipment or facilities. A team of experts from USCCG first conducted a feasibility study to measure the company’s baseline performance. This research revealed numerous operational and supply chain issues that were inhibiting optimum levels of performance, which resulted in an inflated cost structure at reduced production volumes.

Production Facilities

Although the flagship facility was managing to satisfy customer orders, it did so with excessive shifts, crewing, overtime and low levels of equipment OEE. Yield losses on raw materials, packaging, film, and labels were all excessive compared to USCCG benchmarks. Production operating systems were incomplete, reporting too late to be of much use. In many cases, the equipment and the crewing configurations were set up incorrectly, which increased the cost structure and reduced the effective capacity of the facility.

Similar issues were observed across the other production facilities, however, there were also site specific issues related to the challenges of hiring and retaining employees due to the location of the plants to other companies that competed with them for trained employees. Employee turnover just made the operating system deficiencies that more impactful … in a negative way.

Supply Chain

Although the production facilities were a portion of the supply chain, the hundreds of vendors that supplied raw materials to the plants represented a significant amount of the overall cost structure. The sourcing team in place was talented but stretched to the point that they could focus only on the high-priority items that allowed the plants to continue supplying customers. There were not enough resources to ensure that optimal Total Cost relationships were established with vendors. In addition the Sourcing Management Operating System had many gaps and disconnects that inhibited the attainment of optimum pricing. Last, as we find with many companies, the imbalance between mechanistic processing and true strategic sourcing leaves extra cost in external spend.

In the end, we helped this industry-leading dessert producer ramp up its operations without capital expenditure, and meet increasingly high volume metrics, all while paring down its portfolio of assets. These efforts resulted in $3 million of annualized savings through higher throughput, higher yield, lower external spend, and lower labor costs.

Is your organization interested in replicating such success? Connect with USC Consulting Group today to learn more about how our experts can help your business strengthen its operations and achieve a better footing in your market.