2005 Supply & Demand Chain 100 Case Study  Litehouse Foods Inc. / Ross Systems Inc.

Profiles in Supply Chain Enablement: Food company increases fill rates, reduces finished goods inventory by implementing supply chain management solution

Profiles in Supply Chain Enablement: Food company increases fill rates, reduces finished goods inventory by implementing supply chain management solution

Company: Litehouse Foods Inc. (Sandpoint, ID)
Company Size: Medium
Company Sector: Manufacturing (Food)
Area(s) of Enablement: Order/Demand Capture, Procurement, Fulfillment/Logistics, Product Lifecycle Management, Supply Chain Integration & Infrastructure
Enabler: Ross Systems Inc. (Atlanta, GA)

SDCE 100 2005Case Study: Litehouse Foods is a manufacturer of refrigerated dressings, dips and sauces. The company was founded in 1963 by Edward and Doug Hawkins, who expanded their father's Hope, Idaho, restaurant, called The Litehouse, in order to package and distribute the restaurant's signature salad dressing to local grocery stores. This family-owned business has expanded to include mass retailers, national grocery chains and other food services organizations among its customers.

The Challenge

Growing rapidly in order volume as well as number of product lines, Litehouse more than tripled its offerings in a five-year period. To avoid stockouts, oversupply and safety stock expense, it was critical for the company to be able to predict demand and effectively handle increased procurement and distribution complexity. Litehouse wanted to increase visibility into the planning and production process and forecast consumer demand at a more detailed level. In this way, the company could improve customer service and strengthen existing relationships with its retail partners.

Since 1998, Litehouse had been using an enterprise resource planning (ERP) system called iRenaissance from Ross Systems, achieving better tracking of inventory and the ability to provide increased customer service. Current service levels average 95 percent for the fill rate and 97 percent for on-time delivery. In addition, the integration of the financials has reduced Litehouse's closing time significantly, down to just a few days.

The Solution

Having optimized operational efficiencies, the company wanted more accurate and timely demand forecasts to ensure the right amount of inventory was available at the right time. In the summer of 2002, Litehouse selected Ross Systems' supply chain management suite, iRenaissance SCM, for its demand planning capabilities, which allow suppliers to plan more proactively and accurately. Ross said that the solution is especially suited to the needs of companies whose demand patterns are shifting due to retail promotions, seasonality and other variables.

Litehouse went from using spreadsheets to forecast more than 1,000 units at the category level on a monthly basis, to forecasting at the product level on a weekly basis, which is more efficient and reliable. Ross said that iRenaissance SCM gave Litehouse greater control over its production and planning processes, ensuring that the proper product mix and quantity were being produced. Improved production scheduling capabilities negate the need for emergency shifting mid-production, which is costly and time consuming.

The Payoff

After implementing the supply chain management suite, the company realized cost savings in less than a year, increasing product fill rates by 20 percent while simultaneously reducing finished goods inventory by 6 percent, saving considerably on carrying costs. In addition, Litehouse has increased reliability and forecast accuracy while improving visibility and increasing customer-service levels.

In addition, Litehouse no longer maintains unnecessary safety stock to account for unexpected shortages, which has brought the company closer to a make-to-order production model and helped to cut costs. The increased efficiency has allowed Litehouse to make better use of existing capital and human resources.

"By achieving a correct one-number forecast for the entire company, we can now plan, modify and manage at the customer level like never before possible," said Bill Hawkins, chief operating officer of Litehouse Foods. "This data is turned into useful information that allows us to proactively plan for trade promotions, improve overall collaboration with our trading partners and, through this, increase customer satisfaction. We are well-positioned for growth and anticipate even greater results."

For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.