Can a stronger supply chain link farm to table?
For consumers unaccustomed to empty grocery store shelves, the COVID-19 global pandemic brought new awareness of our dependence on a reliable supply chain. EY professionals helped one prominent frozen-foods producer completely reinvent its supply chain to meet rising demand.
The company serves some of the largest restaurant chains and retailers around the world, with 25+ facilities in the US and Europe, making a resilient supply chain paramount for the business and its customers.
The client’s growth had been driven by capital investment in new facilities and product lines, but their increasingly complex inventory management and manufacturing processes were limiting production capacity and dragging down potential market growth. The organization needed to reduce its operating costs so that it could redirect funds towards global expansion to meet the increasing demand for its products worldwide.
This leading frozen-foods manufacturer kicked off their transformation by prioritizing three core supply chain areas – portfolio simplification aligned to end-to-end supply chain network optimization, logistics cost-reduction, and manufacturing optimization. EY teams developed a plan that combined service offerings and agriculture insights to give the client a seamless supply chain transformation across products, regions and warehouses.
EY’s supply chain solution keeps food on shelves in 100 countries
EY teams’ comprehensive supply chain solution for the frozen-foods producer peeled back the entire process and realigned the company’s portfolio in three major stages: product analysis, alignment with consumer demand, and more efficient manufacturing and distribution.
To simplify the client’s product portfolio, EY teams used SKU rationalization to determine what was selling and identify redundancies - ultimately reducing the SKU system by 20% so that inventory and distribution matched measurable demand. Through this newly optimized commercial strategy, EY created a more segmented and streamlined portfolio for the organization.
By focusing on complexity reduction, productivity improvement and cost savings, the client has built the foundation for success in their supply chain and transformed their business.
EY teams also assessed the frozen-food producer’s existing equipment, manufacturing efficiency and continuous improvement processes alongside alliance partner Procter & Gamble (P&G). The team’s zero-loss analysis identified over $175m in value from incremental cost savings and profit margin, saving millions that can now be devoted to new capital investments in production lines.
Finally, EY teams analyzed logistics to identify cost-improvement areas including transportation and warehousing, vendor sourcing, network design, and redundant shipments. An evaluation of non-value-add activities revealed that some products were being handled as many as five times before reaching the consumer. By removing unnecessary manual tasks, products can now reach their destination more efficiently with only a single contact point.
Overall, EY teams consolidated distribution centers, shortened shipping times, optimized distribution, and altered freight sourcing options, realizing cost-saving potential of up to 27% of their annual logistics spend.
“Our team zeroed in on the key areas to make a significant impact, focusing on the fundamentals of complexity reduction, productivity improvement and cost savings,” said Chris Cookson, US West Supply Chain and Operations Consulting Leader, Ernst & Young LLP. “By focusing on these core areas, the client has built the foundation for success in their supply chain and transformed their business.”
A smarter supply chain defrosts possibilities for the future
EY teams’ strategy optimized the supply chain end-to-end, strengthening its flow of goods, logistics and manufacturing to meet consumer demands during the pandemic and beyond.
The EY-P&G Alliance and its Integrated Work System (IWS) provides a leading-in-class solution that will empower the company to deliver on future demands. This IWS solution engages 100% of the workforce through new digital tools, lowers manufacturing costs, and defers over $400m in capital investment. A healthier inventory model simultaneously reduces overall inventory levels while improving customer service. New digital dashboards provided by the IWS solution help managers across the organization eliminate redundancies, reducing baseline costs by $20m+.
Reduction in logistics costs$20m+
achieved through digital dashboards that helped managers across the organization eliminate redundancies and reduce baseline costs
The new supply chain solution EY teams helped in delivering for this frozen-foods powerhouse has accelerated the company’s growth strategy around the globe. With a more streamlined portfolio and efficient supply chain, it can now focus on demands beyond the basics - such as shipping directly to customers, elevating service levels and increasing flexibility.
Next up, a multiyear SAP implementation that will allow EY professionals to continue to help this distributor reach the top of the frozen-food chain.
- $175m in incremental cost savings and margin uplift within the first five years
- $20m reduction in logistics costs realized
- $400m potential cash deferral for three-five years
- 20% reduction in SKU system so that inventory and distribution matched demand
- 27% realized cost-savings potential of annual logistics spend
- 15% potential capacity increase across the manufacturing network
- 100% of the workforce engaged
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