iSource: When you talk about the customer, are you thinking about the end user of your product, the consumer, or the retail outlet?
George: Primarily the retail outlet, or our institutional customers. We have a hardy private-label business: We produce for 18 of the top 20 retailers in the country. We also have a branded business, which is sold at retail. We own nine regional brands that sit in the number one or number two market share positions. But then we also have a very robust institutional business, which is primarily food service and an exclusive relationship that we have with SYSCO Corp. We also provide pasta ingredients for companies like Kraft and General Mills that they move into their boxed dinner offerings.
All of that diversity in customer base flows back into a single supply chain, a single manufacturing organization. So we have to be prepared, once we come out of our pasta press and out of packaging, to move in a lot of different directions.
As far as the challenges that we see on the retail side, the retailers are becoming very good supply chain and logistics managers, and they recognize that there is a great deal of cost tied up in the movement of materials through their supply chains. So there is constant pressure to reduce their inventories, reduce their economic order quantities and have shorter lead times. By definition that creates a higher velocity of goods moving from us to them, and the challenge as a manufacturer is being able to do that without incurring the age-old issues that go along with more changeovers and smaller batch sizes and so on. We employ technology in a lot of different places to predict that.
iSource: What is the technology infrastructure that you employ?
George: We primarily apply technology in three areas. One would be an overall planning capability that is rooted in a supply chain model. We bought the base model from INSIGHT, and we've built an extremely robust supply chain model that reaches beyond our infrastructure to include our customers as well. That gives us the ability to do pro forma planning, if you will, and we can change a number of variables inside that model and understand what the cost implications are and where the capability stresses may be and so on.
Then, dialing down a little bit further, we employ some fairly robust predictive modeling on the demand planning side. We try to do continuous replenishment planning (CRP) with meaningful chunks of our volume, and we feel that the more we can control up front, the better the opportunity is to have good planning as it rolls back into our manufacturing sites.
Then the third piece is a warehouse management system that allows us to move our goods from manufacturing to the customer in the most efficient way. We have a saying here that we want to "one-touch" every pound. The drivers of cost in the supply chain are time and touches. The more time something's resident, the more expensive it is; the more times you touch it, the more expensive it is. So we want to one-touch everything straight out of manufacturing. That's why we've developed a warehouse management system that integrates with our order processing system, which allows us to literally capture product as it comes off of our manufacturing lines and move it straight to a truck. We can mix that with a pick-and-put-away capability, and it's all in the same system.
iSource: How about from the manufacturing facility back to the "Earth"? How are you working to improve those processes?
George: One of the reasons we put the warehouse management system in is that we not only manage finished goods with it, but we also manage the material flow into the factory with it. That system allows us to better control material movements and inventory positions, and all that information that's resident can be exchanged with our upstream suppliers. We can plan our production scheduling off of advanced shipping notices (ASNs) from our suppliers, just as most of our customers will plan deployment off of ASNs from us. For us, the real advantage is on the packaging side, because we produce more than 3,000 SKUs [stock-keeping units].