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Founded in 1886, New Britain, Conn.-based Guida's Milk & Ice Cream is one of the largest independent dairies in Southern New England. Guida's holds a reputation for supplying the finest fluid milk, cottage cheese, sour cream, ice cream mixes, fruit juices, fruit drinks and water products to its large customer base. Customers include major retailers, restaurant chains, schools, hospitals and nursing homes.

With an 18-day shelf life on all fluid milk products, emphasis on planning is paramount. In addition to a short shelf life, high inventory turns and high demand volatility — due to frequent promotional activity and seasonal demand variability — are inherent characteristics of Guida's business.

Go Big or Go Home

Guida's challenge was twofold. First, the company's forecasting application wasn't robust or flexible enough to handle all the inherent variability in their business. As a result, Guida's was basing all customer replenishment orders solely on previous order quantities to each customer location, not on true demand. This replenishment method often left customers with excess product taking up limited space in their coolers. Or it would lead to frequent stockouts, forcing Guida's to make costly special deliveries in order to keep their customer commitments.

Just as challenging, generating customer replenishment orders was a painstaking effort for Guida's staff. "Even the simplest order would take hours to generate because of tedious workarounds and manual calculations based mostly on gut feel," said Mark Schenking, lead retail merchandiser for Guida's.

Guida's second challenge came in October 2005 when the company's biggest customer, a large grocery chain representing 10 percent of Guida's business, announced it was going to field test scan-based trading with its dairy suppliers. Scan-based trading (SBT) is a practice that uses point-of-sale scanner data to manage payment, promotion and replenishment of products in a retail store.

The plan called for Guida's, which had been the grocery chain's primary milk supplier, to supply half of the test stores. A much larger competitor was contracted to supply another group of stores. The message was clear: The customer's future dairy business was up for grabs, and the supplier that could make this test successful stood to win big. Yet with a hard, go-live date of January 16, 2006, Guida's had less than 90 days to find, purchase, implement, test and get trained on a system that would enable SBT.

"We knew this was a daunting challenge," said Joel Bartolome, IT manager for Guida's. "Not only did we have to find the right system in a few short weeks, but also, once we found it, we would have to implement it during the busiest time of the year for us — the November to January holiday season. Since Guida's future with this very large customer hinged on the outcome of this program, failure was not an option."