Mike Reibsamen – the Director of Integrated Supply Chain – at Berry Global, spoke about Berry Global’s supply chain transformation at the Council of Supply Chain Management Professionals (CSCMP) annual conference in early October. Mr. Reibsamen’s primary point was that companies will get much better payback from their supply chain projects if they don’t do them in an ad hoc manner. A company should have a comprehensive end-to-end vision of what they want to accomplish, in other words, a view of what their “integrated supply chain” should look like. Companies can then logically sequence their projects to achieve that vision.
Berry Global is a $7.9 billion manufacturer of packaging and protective solutions. The plastics manufacturer transforms 1.8 billion kilograms of resin into a large portfolio of products across 138 manufacturing locations. The company has grown both organically and through acquisitions; 42 since, 1988.
The number of acquisitions, facilities, and product lines had led to a belief that “our part of the company is different” and an aversion to common practices and policies. But with this kind of culture, supply chain synergies are very difficult to achieve. Mr. Reibsamen saw his job as helping to create a comprehensive roadmap with consistent processes and people empowered to execute those processes. To achieve this at scale, he knew he would need tools. They ended up selecting Logility as their primary supply chain planning platform.
A Comprehensive Roadmap for the Integrated Supply Chain
Berry Global created four workstreams, integrated planning, customer interface, transportation and warehousing, and ERP enhancements. The customer interface workstream was primarily focused on moving from taking most of their orders manually to being able to automate that process to a much greater extent using EDI ordering.
In transportation and warehousing, Berry tackled freight operations with “great success” with a warehouse management system (WMS) implementation still to take place.
The ERP enhancements included cleaning up the master data, units of measures, and getting key parameters right. Master planning and finite scheduling at the factories won’t go well, for example, if there are not up to date lead times in the system.
In integrated planning, they included supply chain segmentation, demand planning, inventory planning, replenishment planning and vendor managed inventory, master and finite scheduling in the factories, and the use of demand planning to improve factory procurement.
Berry views sales and operations planning (S&OP) to be the master supply chain planning process that intelligently integrates the other processes. “S&OP is not something extra, it is all of this,” Mr. Reibsaman said. Their S&OP process provides a one number forecast used by the supply chain, finance and sales. It is a rather standard process, with Demand and Supply Review meetings occurring early in the month, and an Executive Review – where the hard decisions are made – at the end of the month. “You need healthy conflict to make tough decisions,” Mr. Reibsamen asserted. If the conflict is missing, the S&OP process is broken and needs to be tweaked.
The key to empowering workers was based on training. “If your people are the most important ingredient in success, you should talk about training first” Mr. Reibsamen said.
Berry Global partnered with APICs to provide training on the fundamentals of supply chain management, not just to the supply chain teams, but to related functions such as customer service representatives, corporate management, and their Black Belt teams. This creates a common Berry vocabulary and nomenclature. For example, if the term “safety stock” is used, that term is defined in a common way across the company.
At the time of this presentation, Berry Global had recently completed their summer course. “650 employees now have Berry certified training,” Mr. Reibsamen stated.
To scale and optimize the planning of their processes they also needed to provide training on the Logility tools to their planners.
Empowering workers also means getting the right people into the right jobs. In demand planning, for example, “if you want certainty, you are not the right person for a demand planning role” Mr. Reibsamen said.
Tools and Analytics
Tools are critical to scaling a process. At Berry Global, which has 9,000 customer and 92,000 stock keeping units, a small team of demand planners forecast all the products. Tools can also help provide the analysis that helps to improve the process. This global plastics manufacturer discovered that customers projected forecast of what they would buy, was much less accurate in the great majority of cases than what the demand planning tool provided.
The demand planning tool also can be used to let forecasters know how well they are doing. At Berry, a forecast of 70 percent accuracy (item/location/month level forecast) or better is considered great. 50 to 70 percent is OK, and if a planner is below 50 percent they need to improve.
Properly Sequencing the Supply Chain Projects
The integrated supply chain, which is initiated and sequenced based on customer forecasts, allows for an outside in focus to improving performance. But before the demand planning solution could be implemented, the master and order data needed to be cleaned up. Then after the demand planning application is live, inventory/replenishment and manufacturing planning can be implemented.
Mr. Reibsamen argued that if you more accurately forecast, but don’t act upon that data, there is no savings. But if the replenishment and manufacturing planning projects are linked to demand planning, the savings can be tied to the demand planning project.
The Results to Date
Mr. Reibsamen was not permitted to talk about the results in detail. He did say however, that once the project had progressed to the point where improved forecasts were used by two factories to improve their manufacturing planning, one of the factories experienced a 30 percent drop in inventory while improving service. It took a year and half of work, the other projects had to be completed first, before they got to the point where the manufacturing pilot could begin.
Mr. Reibsamen, however, had prepared senior leadership by laying out the sequence of projects and making it clear that savings would not occur until downstream processes started to make use of the improved forecasts.
Another benefit included a playbook that can be used when new companies are acquired. The standardization of processes from the playbook, also makes it easier for the company to respond when large unexpected events occur, like a hurricane. A plant in North Carolina, for example, was able to respond much more intelligently after hurricane Florence than would have been otherwise possible.
In conclusion, I always thought the point of supply chain management was to intelligently globally optimize an integrated supply chain, so the term “integrated supply chain” seemed superfluous. But the idea of a transformation driven by a logical end-to-end plan that allows projects to be logically sequenced makes a lot of sense. I can get behind that idea.