Danone Improves Manufacturing and Supply Chain Performance with ILOG Plant PowerOps
ILOG PPO also serves as a collaboration tool between the manufacturing and supply chain departments, allowing them to more easily find the best balance between inventory levels and operational efficiency.
08/06/07 ILOG, announced that Groupe Danone, the world's leading maker of fresh dairy products and bottled water and the second largest provider of biscuits and cereal products, has deployed ILOG Plant PowerOps (PPO) at one of its largest fresh dairy plants in Irapuato, Mexico. Thanks to the use of ILOG PPO, the plant has moved from weekly production planning with mixed scheduling quality to daily planning and high-quality scheduling, improving throughput and customer service while reducing waste and maximizing shelf life quality.
Groupe Danone is one of the world's largest food and beverage companies, with 88,000 employees and worldwide sales of over euro 14 billion (US $18.5 billion) in 2006. Approximately 56 percent of Danone's revenue comes from its fresh dairy product division, which has more than 40 plants worldwide. The division grew over nine percent in 2006, and experienced growth rates exceeding 20 percent in many major emerging markets, including Argentina, Mexico, Russia and Turkey.
The planning and scheduling functions for Danone's fresh dairy production were historically addressed using a combination of home-grown and packaged applications, but these systems could not properly manage the true complexity of the fresh dairy business. A typical Danone fresh dairy plant produces 10 intermediate products that are then used in the production of 120 finished products on 15 to 25 packaging lines. Between preparation, pasteurization, fermentation and storage, as many as 100 tanks can be used in the process. During these steps, care must be taken to ensure high standards of sanitation, control of allergens, batch traceability and maximum product freshness. The plant must closely coordinate the two primary production processes: the transformation of raw materials (e.g., milk, milk powders and yeast) into intermediate products, and production of the finished goods on the filling and packaging lines. The right amount of each intermediate product has to be scheduled, and it has to be used within strict time windows. Cleaning rules must be enforced while minimizing down time.
Danone's former systems could not generate integrated schedules for the production of the intermediate products and the finished goods, nor could they find the best combination of production strategies. Further, planners were reluctant to embrace the other, inadequate solutions and kept using Microsoft Excel spreadsheets. A key goal of the Danone worldwide IT initiative was to find a scheduling solution that could satisfy both the business goals and the ease-of-use requirements of the planners.
A key requirement of any new solution was that it be able to leverage Danone's existing investment in SAP APO. By extending APO with ILOG Plant PowerOps, Danone moved from its home-grown, loosely-coupled scheduling system, which took two days to generate an imperfectly optimized plan, to a system that generates high-quality schedules in under 15 minutes. Using PPO, Danone planners are able to deliver better schedules while realizing the benefits of complete integration with SAP APO. The planners appreciate the ease of use and increased amount of information at their fingertips.
ILOG PPO also serves as a collaboration tool between the manufacturing and supply chain departments, allowing them to more easily find the best balance between inventory levels and operational efficiency. Now, everyone involved can see the impact of unexpected changes in demand on the manufacturing process, as well as the impact of manufacturing operational decisions on inventory levels and order fulfillment rates.
"While comparing production plans generated with and without ILOG Plant PowerOps, we have been extremely happy to see that ILOG's application generates plans that improve every single one of our key performance indicators. Our plant in Irapuato is now equipped with an excellent planning and scheduling tool providing the best possible plans, while improving our operational flexibility and our ability to react quickly to unexpected events. Within Danone, the news is spreading quickly. We already have more requests for implementation in the next two years than we can satisfy. We are currently implementing the solution in Russia, with Argentina next in line," said Jean-Michel Egu, Director Business Solution at Danone.
More than 1,000 commercial customers, including over 150 of the Global 500, use ILOG's supply chain planning and scheduling applications and its optimization tools and engines to solve many of the world's most challenging planning and scheduling problems. ILOG optimization technology is also used by a majority of the leading supply chain management software vendors, as well as in research programs at over 1,000 universities around the world, making the products the "gold standard" for performance and solution quality in the operations research community.
