Dairy Producer Granarolo Improves Forecast Reliability and Cuts Inventory and Lead Times in Half with ToolsGroup’s Machine Learning Technology
Milan and Boston, May 20, 2014 – ToolsGroup, a leading provider of solutions for supply chain planning, announced that its customer The Granarolo Group, one of Italy’s largest dairy producers and distributors, used its SO99+ software and Rulex ® machine learning technology to cut its inventory levels in half and grow average forecast reliability to 85% from 80%. Forecast accuracy now peaks at 95% for fresh milk and cream and 88% for yogurt and dessert. Granarolo also halved its delivery lead times, so fresh items are available on retailers’ shelves longer, resulting in higher profits and customer satisfaction and less waste.
Granarolo has Italy’s largest milk supply chain, selling to 11 million families through some 60,000 retailers. Its distribution network includes eight production plants, six logistic platforms, 35 transit depots, a large fleet of refrigerated vehicles and about 750 merchandisers servicing daily sales. In addition, 100 wholesale distributors serve local markets. Its Demand Planning process includes collecting information like promotions, assortments and seasonality from these field operations to produce production and distribution plans.
Dairy industry supply chain planning is particularly difficult because products have short shelf lives and demand varies greatly in response to promotions. Granarolo manages thousands of promotions per year, calculating sales forecasts for more than 34,000 item/promotion combinations. Peak demand can run in excess of 30 times baseline demand. This means that inventory levels and logistics both need to be fine-tuned to serve these demand peaks and troughs: excess inventory and delivery times leads to high costs and waste; empty shelves lead to disappointed customers and wasted money on promotions.
After acquiring several companies since 2004, Granarolo accepted that its SKU and logistics complexity had grown to require a more sophisticated planning system. It chose to implement ToolsGroup’s S099+ Powerfully Simple planning software, which produces an accurate demand plan for its perishable products, rapidly identifies exceptions, and optimizes inventory and logistics to meet demand and minimize waste. To optimize demand for its ongoing promotions, Granarolo uses ToolsGroup’s innovative Trade Promotion Forecasting (TPF) module, based on Rulex ® machine learning technology.
With approximately € 1 billion in revenue and more than 2000 employees, Granarolo is the largest Italian-owned agro-industrial group in Italy, comprising two separate entities working together: a consortium of milk producers – Granlatte – which operates in the agricultural sector and collects raw milk – and a joint-stock company – Granarolo S.p.A. – which processes and sells the finished product, with 8 production sites throughout the country at the end of 2013.