Growing US-Based CPG company Turns to Argano to Overhaul Supply Planning and Inventory Management

⇨ The U.S.-based packaged food company faced significant supply chain and inventory management challenges that were exacerbated by ineffective implementation of SAP PPDS and IBP, leading to reliance on manual scheduling methods and decreased customer satisfaction.

⇨ Partnering with SAP Gold Partner Argano allowed the company to implement crucial system and process improvements, resulting in a 98% optimization rate for its supply plan, enhanced planning processes, and better responsiveness to market demands.

⇨ The integration of data management workflows and advanced supply chain modeling through SAP tools positioned the company to effectively pursue future growth, aligning its operational capabilities with evolving customer expectations and sustainability pressures.

A large U.S.-based company in the packaged food industry faced challenges related to its supply chain and inventory management. The company, which specializes in producing, canning, and distributing various food products, including soups, beans, broths, gravies, sauces, and kosher items, was experiencing rapid growth. However, this growth was hampered by the ineffective implementation of SAP Production Planning and Detailed Scheduling (PPDS) and SAP IBP Supply Planning Optimizer. To overcome these challenges required significant improvements in supply planning and inventory management processes.

The existing PPDS system failed to generate an optimized schedule for the company’s brite cans and was not configured to provide schedules for finished goods. Consequently, employees resorted to using spreadsheets for ad-hoc scheduling, resulting in manual, time-consuming tasks, inaccurate master data, and inadequate management of brite and label inventories. The absence of reports and alerts further exacerbated these issues, leading to decreased customer satisfaction.

Recent SAPinsider research shows a continuing focus on mitigating the rising complexities and risks within supply chains, with 53% of companies noting that increasing complexities and risks is the top driver of supply chain transformation projects. In the recent research report, Building Resilient and Agile Supply Chains via Data, Analytics and Automation, companies also recognized the significance of AI/ML in supply chain operations, with 43% of respondents highlighting its increasing prominence on the corporate agenda. External pressures also influence the need to enhance data, analytics, and automation capabilities. Evolving customer expectations and demand (37%) and the pressure to run more sustainable supply chains (36%) indicate a growing societal and environmental consciousness among supply chain leaders.

To address these challenges and realize their vision of an end-to-end optimized digital supply chain, this CPG company sought a partner’s assistance. The company partnered with SAP Gold Partner Argano to implement both system and process improvements. Argano leveraged SAP Hybrid project management methodology (Active) and conducted process roadmap workshops and business process initiatives. These workshops helped stakeholders identify areas for improvement while ensuring alignment with the company’s business objectives.

The company’s Chief Supply Chain Officer said, “It is key to have a partner who helps you get through those challenging times, where you have run into some roadblocks that you do not always understand. Argano was there to ultimately help us, and obviously we are in a better place today as a result of that partnership and collaboration.”

The Argano team integrated SAP PPDS to optimize scheduling for brite cans, labels, and finished goods. Additionally, they implemented an integrated SAP IBP Supply Planning Optimizer solution to enhance planning and material flow. This initiative delivered several key outcomes:

• Continuous improvement in sales, planning, finance, and procurement processes.
• Establishment of a structured process and cadence for sales and operations planning (S&OP).
• Implementation of SAP Integrated Business Planning (IBP) – Financial module.
• Development of a training plan to empower the team to leverage and maximize the benefits of the implemented systems.

Through the integration and optimization of systems and processes, as well as the streamlining of data management workflows, the company achieved substantial improvements in operations planning. Notably, the company achieved an impressive 98% optimization rate for its supply plan related to finished goods using a heuristic-driven approach. This improvement translated to increased resource allocation efficiency and enhanced forecast accuracy.

By gaining a better understanding of demand patterns for finished goods, the company improved its ability to respond to market demands and meet customer expectations. This optimization allowed the company to maximize its previous technology investments and realize significant efficiency and productivity improvements. With integrated solutions connecting processes and data across the business, the company is now well-positioned to pursue its growth plans, setting the stage for success in the present and the future.

What this means for SAPinsiders

Participate in SAPinsider research. SAPinsider will be publishing a research report in December on AI in the Supply Chain that will explore the key drivers causing companies to adopt AI in supply chain, the primary strategies companies are deploying to operationalize AI in supply chain, the critical underlying capabilities that must be in place in order for AI to deliver durable outcomes, and the leading technology tools and providers companies are using to embed AI into supply chain processes and systems. Take the survey today and let your voice be heard!

Fine-tune optimization parameters within SAP IBP. Clearly identify and prioritize business objectives such as cost minimization, on-time delivery, or inventory reduction within the SAP IBP Supply Planning Optimizer solution. The optimizer allows flexibility in prioritizing multiple objectives, so choosing goals that align with the broader business strategy is essential. Use SAP IBP’s capability to adjust constraints like lead times, capacities, and minimum/maximum stock levels. Customizing these parameters helps the optimizer generate feasible plans that reflect real-world limitations, enhancing operational accuracy and reliability.

Leverage SAP IBP to enable advanced supply chain modeling. To improve planning accuracy, model demand and supply variability within the SAP IBP Supply Planning Optimizer solution by integrating historical data and predictive analytics. This approach can better account for fluctuations, making supply plans more resilient to disruptions. SAP IBP also enables users to create multiple planning scenarios to simulate different business conditions, such as increased demand, supply shortages, or changes in supplier capacity. Scenario analysis helps planners assess the potential impact of various decisions and prepares them for unexpected change.