Fresh-Tec System Helps Maple Leaf Farms Reduce Costs Through 99% Inventory Accuracy
Maple Leaf Farms specializes in the processing of chicken patties, strips, nuggets, and entrees. In early 1998, in an effort to reduce costs and improve the quality of information, the company began to explore the possible alternatives for the purchase, or the design and build, of a warehouse management system (WMS). The evaluation determined that a cost effective pallet system could be introduced into its existing operation. In January of 1999, they began the design/build with Ames & McBain, Inc. (Grand Rapids, MI) to integrate what is now known as the Fresh-Tec system into the distribution center (DC) in Milford, IN.
Fresh-Tec is an integrated data system using bar code labeling and radio frequency scanning designed expressly for the meat, poultry, and fresh food industry. While it was initially designed as a pallet tracking system at Maple Leaf Farms, it can effectively follow a product from its introduction into the facility through a manufacturing or purchasing process to a customer's FOB point. Provisions can be made for weight control, yield management, work-in-process, production reporting, labeling, scanning, scheduling, order fulfillment, shipping, automated shipping notices (ASNs) and e-mail shipping notifications, inventory cycle counting, USDA recall assistance, and others. Fresh-Tec has been created to be ODBC compliant, and is currently in use, or has been fully tested, on Microsoft SQL Server, Microsoft Access, DB2, Oracle and Informix.
New Program Provides Immediate Positive Results
In May 1999, Maple Leaf Farms introduced the Fresh-Tec System into its facility and, within six months, the new distribution program completely returned the investment with improved accuracy and better flow of both information and product through the company's distribution center.
"Our primary objective was to eliminate any need ever for massive recalls throughout the process. We knew that - if we could shorten the window as to where and when a product was produced and stored - we could save considerable expense. Every pallet has its own usage life, and a single pallet averages 75 cases of product. The new system uses radio frequency communications for real-time updates of inventory and fits in with other systems that are in place or under consideration. Effective inventory control is assured from point of production."
Morgan, working with Ames & McBain systems designer, Mark Buskirk, felt that accuracy had to be the key driver in any system that was adopted. The existing all-paper system yielded accuracy rates between 85% and 86%. It was extremely labor intensive, and generated corrupted data that affected the quality of information throughout the entire process. "Information was controlled from the office rather than the shop floor leaving considerable room for error," he says. "We knew that - if we could shift the flow of information to the source - we could improve accuracy and profitability. To do that, we began by asking ourselves 'what do we really need to know'."
What Do We Really Need To Know?
Maple Leaf Farms evaluated its requirements and determined its most crucial information: a complete history of the pallet, inventory accuracy, SKU numbers by slot, ready analysis of empty locations in the freezer, shipment accuracy, and locations on hold with information as to why, in addition to other "pallet history." This included quality analysis, damaged pack information, and other relevant data.
The system that was adopted also had to be simple to use since most of the people on the shop floor were not universally computer and system literate, and the success of the program was predicated on its use and acceptance by the users. Input was solicited from the entire distribution center staff prior to implementation of the program.
"For our purposes," Morgan explains, "we use handheld Intermec scanners to follow everything from catch weights to anything related to product movement. Citadel PCs on turret trucks provide touch-free access to information throughout the operation."
A training program, developed by a team from Maple Leaf Farms and Ames & McBain, is linked to a series of simple procedures. Every employee was trained, including a combination of mature workers who had initially been resistant to adoption of the program and younger workers with varying levels of electronic literacy.
"We designed in as many fail-safes as possible," he says. "The system acts as a license plate for the product right down to case level. In order to create a pallet tag, every step has to be followed, and nothing can be avoided or the system will not accept the information. Inventory accuracy is maintained in a number of ways. Real-time updates from the dock assure that, from the moment that product is scanned, it is moved in the system. When another user checks that inventory, the change is instantly reflected in the computer. Since the life of a pallet is tracked at each stage from production to shipment, it is possible to easily track operator error and to both empower people and make them accountable for accurate transactions."
Investment Returned In Less Than Six Months
The Fresh-Tec System has returned Maple Leaf Farms' entire investment in less than six months, and information is so accurate that the company's auditors have released the company from taking physical inventories. Service to the customer has improved dramatically, with a 40% decrease in overages, shortages and damages. Transportation has seen reverse logistic costs reduced by more than 30%. Because the system has become virtually paperless, and information input has been transferred to the distribution center floor, the need for one office employee (out of the two used for information management) has been eliminated, with the accompanying cost. Other benefits include:
- Increased space utilization. The system identifies and tracks partial pallets, and - when another partial pallet of the same SKU is brought into the system - it is assigned to the same location. This reduces the number of partial pallets and uses storage space more effectively.
- More cases - fewer workers. In 1999, the distribution center shipped 16% more cases with 15% fewer employees. Loads are constructed more quickly and easily with 99% accuracy.
- Reduced time with increased accuracy and flexibility. The importing order process has been shortened from 15 minutes to two. There are far fewer manual transactions and the need for physical inventories has been eliminated.
- Increased the DC efficiency by using real-time replenishment for the picklane process.