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This week we will look at a company and how they used a successful Professional Services and Software to generate significant cost savings and more profitability.

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Paul Hernandez-Cuebas
Editor


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November 22, 2005
Volume 1 Issue 37

Successful Services and Application Software Implementation Cut Costs

A Sausage Producer that is based out of Texas is a whole hog sausage producer that has private labels, which include a variety of link and patty sausage products, sausage gravy, microwave biscuits, country souse, and sausage rolls (a one pound package of sausage in a roll available in the meat case).  Food service products include fully cooked and fresh sausage products, sausage sandwiches, and gravy.  The hogs they process are considered by-products of the hog business, since they only use those hogs that have been fattened up for breeding purposes and therefore are larger than most.  These hogs provide better quality meat (lean fat percentage) and produce higher yields. Since it cost the Sausage Producer close to the same cost to process a small hog versus a large hog, they get a higher margin, higher yield product.

Company Issues:

In order for this Sausage Producer to make improvements in operation and customer service, they first had to look at their issues of:

Operation:

  • Shelf life

  • Out-of-spec production

  • Lost material

  • Wrong cuts being produced

  • Returns due to “sell by” or “use by” dates

  • Lot Tracking

  • Data collection in order to do a better job of HAACP compliance

Customer Service:

  • Reduction in out of stock conditions

  • Minimize customer order cycle times

  • Faster delivery

  • Minimize lost sales due to missing orders due to poor stock visibility

Solution:

The Sausage Producer knew Technology Services was the answer to the above issues.  It is only a matter of which Technology Solution could handle the issues and solve them correctly in order to pack out more profit.  There are many claimed Technology Solutions; however, meat processing is a niche market (a very defined market) where Technology Solutions need to be specific.  The Technology Solution for the Sausage Producer must be able to handle catch weight, ageing, and disassemble.  Once the Sausage Producer selects the Technology Solution for execution, scheduling, and planning, it is up to them how long it takes to be fully implemented. 

Value:

With the Technology Solution execution, the Sausage Producer will see roughly a 20% reduction in inventory levels, increased sales, and customer satisfaction by at least 15%. 

           Top Operational Benefits:

  • Reduced inventory levels across the entire supply chain

  • Reduced production costs by decreasing changeovers

  • Increased utilization in the kill, cut, and packaging operations

  • Decreased scrap rates by not producing out-of-spec material

  • Optimized distribution by better planning their distribution centers and warehouses

  • Greater confidence in their HAACP compliance with a reduced compliance workload

Top Customer Service Benefits:

  • Increased sales by not having out-of-stock conditions on finished goods

  • Increased customer satisfaction by shortening cycle times and faster

  • Increased total sales by not missing orders (capable to promise)

Distributors can see the same effect on inventory and customer satisfaction even though they do not produce product.  Also, remember SECTION 179 allows you to write off up to $100,000, which can be utilized to make some of this investment before the tax year ends on  December 31st.

 

INVEST SOONER THAN LATER TO REDUCE COSTS

 

 

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