- By Lanner
- In Customer Stories
- Posted 16/04/2016
Ethical Principles in a Commercial Corporate World
A fundamental overriding challenge for Mars is driving
efficiency throughout the business whilst maintaining a core
corporate principle of manufacturing chocolate products in
the local markets where they get consumed. This is often
sub-optimal from a purely commercial perspective, thus it
is even more critical to ensure the business performs in an
optimal manner.
Mars have 29 product lines running across six sites in
the USA, each with varied chocolate making capabilities
and chocolate consuming requirements. Add in multiple
chocolate types and varying product mix and demand, the
internal supply chain for chocolate is a complex one.
Also, Mars’ focus on quality prevents it from bulk storing
chocolate products long term, which presents a fulfilment
challenge when demand peaks. Therefore accurate capacity
planning is fundamental to ensuring the chocolate supply
process is capable of meeting the demands of the business.
Thus when the Supply Chain team were asked to provide
the business with assurances that significant future finishing
line investments could be satisfied from a chocolate making
perspective, an initiative was deemed necessary to assess
and refine capacity levels across its network in order to
achieve greater confidence in such business planning.
As part of the project, Mars quickly identified that the scale,
complexities and interdependencies involved in capacity
planning across the six sites would require modelling
capabilities that were more sophisticated than those within
its existing spreadsheet based capacity planning systems.
Predictive Simulation has an exceptionally high ROI
and proves that you don’t have to engage the likes
of McKinsey and spend $4 million a year to improve
business performance.
Scaling up to the Challenge
Before turning to predictive simulation, Mars had limited
detailed insight into the relationships and variability of the
chocolate production and consumption processes, lacking
truly reliable forward visibility of supply chain performance
and quantifiable terms of reference for accurate capacity
planning.
“Static modelling works well in certain areas, but
we needed a tool which could explore high volumes
of what-if scenarios and plot multiple answers
/ ranges to achieve an in-depth, contextualised
understanding of our six sites, based on variable
capacity, demand and product mix”
“Having used WITNESS predictive simulation
software from Lanner in a number of areas across
our global operations – primarily for line level
loading, supply chain and packaging process
modelling - we had
that
WITNESS was the best solution to support this
project.”
“WITNESS models complex scenarios and delivers
exceptional levels of clarity. If your model is well designed,
it can effectively be future-proofed to be used again and again over time as a key strategic asset, extending the ROI substantially.”
Paul Myler, Director of Supply Chain Strategy & Industrial Engineering, Mars Chocolate North America.
Model Behaviour
Recognising the need to partner with an
experienced business modelling team, Mars worked
closely with Lanner to create a WITNESS simulation
model that predicted supply chain performance
based on different chocolate producing and
consuming configurations and product mixes across
the different sites. A key focus of the model was
understanding the impact of key strategic tradeoffs,
for example whether it is better for the
business to make all chocolate types at the location
it is required, or build fewer larger chocolate
making facilities and ship products across the
country. Mars also holds a corporate principle
that to deliver the best quality chocolate, it is
important to manufacture as close as possible to
its customers. The simulation model could quantify
how best to work within such parameters.
The use of predictive simulation has provided Mars
with insight into its existing and planned future
operations, identifying current risks throughout
the supply chain and highlighting opportunities for
cost savings and performance improvements. In
turn this has provided foresight to build business
cases for new facilities and justify investments in
chocolate making capacity, thus ensuring the right
investments are made at the right time.
“The WITNESS model generated a five year view,
and whilst the initial runs confirmed that capacity
was fine for the next two years, after that point
we would be likely to experience supply shortages
if not addressed,”
Myler continues. The model
highlighted how to overcome the shortage with
minimal additional investment, and is now run
every six months and feeds into the company’s
Capital Allocations Budget to assist business
planning.
“Essentially it means that we always have
visibility over our long term planning timeframe of
the timing and level of funding required for new
chocolate capacity to meet the demand of current
and future facilities.”
The best example of how the WITNESS model has
assisted long term planning was when it was used to support Mars planning their new
production site in Kansas. A new facility represents major
capital expenditure, so Mars robustly interrogated
their WITNESS model to ensure that exactly the
right level of investment was channelled into
chocolate making assets to meet this new demand.