The CIRCULAR ECONOMY —

Supply Chain Integration in a POST-BREXIT WORLD—

Best Practices inDATA MINING AND ANALYTICS

ISSUE 3 JUNE 2017

6

OFFICES

NORTH AMERICAHAVI Global Headquarters3500 Lacey Road, Suite 600Downers Grove, IL 60515United States of AmericaPhone: +1 (630) 493-7400E-mail: info@HAVI.com

ASIA-PACIFIC MIDDLE EAST / AFRICAHAVI3A International Business ParkTower B, #08-10/13ICON @ IBP609935SingaporePhone: +65 6895-2100E-mail: info-asia@HAVI.com

EUROPEHAVISchifferstraße 16647059 DuisburgGermanyPhone: +49 (0) 203 7090 2600E-mail: info-europe@HAVI.com

HAVI3 Furzeground WayStockley ParkUxbridgeMiddlesexUB11 1EZUnited KingdomPhone: +44 (0)20 8606 3118E-mail: info-europe@HAVI.com

LATIN AMERICAHAVIAv. Garcia del Rio 2477, 9 BBuenos Aires C1429DEAArgentinaPhone: +54 (11) 4519-0690

HAVI is a global, privately owned company focused on innovating, optimizing and managing the supply chains of leading brands. Offering services in supply chain management, packaging, logistics and recycling & waste, HAVI partners with companies to address challenges big and small across the supply chain, from commodity to customer. Founded in 1974, HAVI employs more than 10,000 people and serves customers in more than 100 countries. HAVI’s supply chain services are complemented by the customer engagement services offered by our affiliated company The Marketing Store. For more information, please visit HAVI.com.

HA

VI

I

SS

UE

3_

JU

NE

20

17

8

This Issue

4MARKET INSIGHTS

6VANTAGE POINTThe Circular Economy Drives Both Business Growth And Waste Reduction

8INDUSTRY INSIDER Joining the Dots: Supply Chain Integration in a Post-Brexit World

10 INDUSTRY INSIDERBest Practices in Data Mining and Analytics

12 FOCUS ON THE CONSUMERMeal Kits: Making Homemade Simple

13 INDUSTRY INSIDERDemand Planning: The Hybrid Engine of Supply Chain Optimization

14ASK THE EXPERT Peter Voskühler

16CASE STUDY FOCUSFood Management for Leading QSR Streamlined Through Process Optimization Deployed by HAVI

18IN THE NEWS

19 ON THE ROAD

12

10

16

INNOVATIVE APPROACH

In partnership with waste recovery company Suez and upcycler TerraCycle, P&G will soon release a limited-edition bottle of Head & Shoulders shampoo made from 25 percent postconsumer recycled plastic collected from beaches. The world’s first recyclable shampoo bottle made with beach plastic is planned for release in France, with exclusive availability in French Carrefour retail stores.

The collected materials include a range of plastic and nonplastic materials, such as seaweed. At the TerraCycle facility, materials are sorted manually to remove

nonplastic items. From there, the plastic is sent to Suez where it is shredded, cleaned, and sorted again into specific plastic categories. Sorted, pure high-

density polyethylene is then used as part of the resin mix (25 percent) for the Head & Shoulders bottle. The resulting grey bottle signals the nature of its recycled material origins. P&G’s goal is to illustrate the possibilities of making the unrecyclable recyclable. By the end of 2018, the company aims to have manufactured more than half a billion of the bottles for

European retail, which is more than 90 percent of hair-care bottles in P&G’s portfolio, including its brands of Pantene and Head & Shoulders.2

HA

VI

I

SS

UE

3_

JU

NE

20

17

FRESH AND FAST

Independent grocer California Fresh Market recentlyopened a second location in San Luis Obispo, California, that allows customers to skip checkout lines thanks to technology from FutureProof Retail. While shoppers scan product bar codes using the store’s app, the app maintains a running total and provides shoppers with information about store specials. Once it’s time to check out, the shopper scans a QR code and submits payment via Apple Pay or a credit card. New York–based mobile developer FutureProof Retail claims that California Fresh Market is the first to completely discontinue the use of checkout lines in lieu of using its platform.1

HABIT

Founded by Neil Grimmer (the mastermind behind Plum Organics baby food), Habit is a California-based startup with plans to revolutionize healthy eating by creating personalized nutrition plans based on a person’s DNA. More specifically, Habit will develop nutritional guidelines based on a person’s personal goals, as well as his or her unique biology and metabolism. The company will then create an individualized food plan and deliver those ingredients to the user’s home. Baseline information will be gathered through an in-home blood sample kit. The blood sample is then analyzed to identify a series of biomarkers, including those focused on nutrition and genetic DNA variations. Measurements are taken to determine how biomarkers change once the consumer drinks a “proprietary, milkshake- like metabolic challenge beverage,” which helps assess how the consumer’s body responds to fat and sugar. Other metrics considered include height, weight, waist size, and health and wellness goals, along with vitamin levels, insulin levels, fasting glucose scores, and more.4 Data is synthesized using a patent-pending approach before generating a personalized meal plan. Plans provide a breakdown of carbs, fats, and proteins that the consumer should eat that day. Ideally, the meals delivered by Habit should satisfy what the consumer’s body is craving, which could differ from what the consumer thinks he or she wants.

Initial testing will cost $299 per person, with optional meals available for $12-$15 each, though Grimmer hopes to bring down the price to increase accessibility for at-risk populations. Long-term growth will depend on Habit’s ability to sustain consumer interest once the plan starts to feel routine. Grimmer states that Habit will extend beyond initial testing and meal plans but has not shared specifics. The Habit beta is set to be launched in January 2017.5

4

MA

RK

ET

INS

IGH

TS

5

FRESH FOOD TO GO

In its quest to provide consumers the best-tasting hummus on the market, health-food company Baruvi Fresh’s inability to provide fresh, preservative free hummus in a portable package was a significant hurdle. The answer? Packaging the hummus components in three discrete pouches with barrier technology that keeps ingredients fresh. hummustir is a uniquely appealing, shelf-stable hummus kit that allows consumers to safely transport the ingredients and combine them anywhere, at anytime, in order to enjoy organic, non-GMO, preservative-free hummus. Kit components include a laminated retort pouch housing 9.5 oz. of chickpea purée and two smaller foil packs containing 2.5 oz. of toasted tahini and spices. The pouches, along with an included wooden stirrer, are held in a round, lidded paperboard cup.3

_1 Progressive Grocer. (2016, November 10). California Fresh Market Ditches Checklanes, Progressive Grocer. Retrieved from http://www.progressivegrocer.com 2 Mohan, A. M. (2017, January 17). P&G Unveils First Recyclable Shampoo Bottles Made with “Beach Plastic,” Packaging World. Retrieved from https://www.packworld.com3 Mohan, A. M. (2016, November 12). Make-Your-Own Hummus Kit Is Shelf-Stable, Packaging World. Retrieved from http://www.packworld.com

COVERING NEW GROUND

Arul Arulrajah, a coffee-loving professor ofgeotechnical engineering at Swinburne University ofTechnology in Melbourne, Australia, was inspired tofind a sustainable solution when he noticed a baristathrowing used grounds away. His idea? Build newroads! Arulrajah spearheaded the collection of soggycoffee grounds from a local restaurant, drying them inan oven at 50 degrees Celsius. His team also obtainedslag, a waste product from steel manufacturing, andused an alkaline mixture to bind a seven-part coffeeground and three-part slag concoction. The team thencompressed the mixture into cylindrical blocks, creatinga product strong enough to serve as a base layer for aroad. Recent scientific studies of the material confirmedits viability, stating that Arulrajah’s recycled product hasthe “potential to transform the construction industry inthe sustainable usage of waste by-products in futureroad subgrades.” 6

_4 Watson, E. (2016, November 2). Personalized Nutrition Is the Future, Says Habit CEO, Nutra Ingredients USA. Retrieved from http://nutraingredients-usa.com5 Sustainable Brands. (2016, November 1). Startup Aims to Get People in the ‘Habit’ of Eating What Their Bodies Truly Crave, Sustainable Brands. Retrieved from http://www.sustainablebrands.com6 Kua, T. and A. Arulrajah, S. Horpibulsuk, Y. Du, and S. Shen. (2016, July 15). Strength Assessment of Spent Coffee Grounds-Geopolymer Cement Utilizing Slag and Fly Ash Precursors, Science Direct. Retrieved from http://www.sciencedirect.com

RECYCLE

VANTAGE POINT

THE CIRCULAR ECONOMY Drives Both Business Growth and Waste Reduction

f there is one element of business

operations that companies want to

maintain ultimate control over, it is

costs. As more emphasis is placed on

the environment and reducing waste, the

demands surrounding it—both political and

economic—are often seen as burdensome

and running in contrary to cutting costs. In

reality, however, this need not be the case.

A central pillar of the circular economy is

to drive greater resource productivity. As

such, business growth and waste reduction

should not be seen as mutually exclusive, but

as mutually beneficial. The question is how

this is achieved.

HA

VI

I

SS

UE

3_

JU

NE

20

17

6 7

by

SCOTT SAUNDERS

SVP, Supply Chain

Integration

have 400 direct suppliers, responsible for delivering parts, assemblies and kits for a specific product to be built. The organization knows precisely when a set of parts should arrive, when they should be shipped to the production plant, and so forth. However, without real-time visibility of execution, it is impossible for the company to establish where waste levels can be reduced. Only once the real-time data has been conveyed to senior decision makers within the supply chain can the necessary steps be taken to move towards a cyclical approach.

DEMAND PLANNING

Once the supply chain has been efficiently designed, and all decision makers have been given access to pertinent data within it, demand planning forms the third pillar of ensuring a comprehensive move towards a circular economy. The increased consumer demand for environmentally-friendly products and socially responsible operations has simultaneously increased the required cooperation between suppliers, local firms and logistics providers. As such, the need to expand the planning process from a simple factory floor activity to a strategic function, capable of initiating, monitoring and implementing ‘sustainable practices’, could not be greater. As separate as the three pillars may seem, the transition to a circular economy is only possible when all three are implemented as one. The process of demand planning cannot begin without visibility into the multiple levels of the supply chain. Yet there is little use in having visibility into a supply chain which has not been designed for optimal efficiency. Such measures may, at first glance, seem superfluous. Though in a world of ever depleting natural resources, the need to make such steps towards a circular economy is paramount.

RE

DU

CE

REU

SE

NETWORK OPTIMIZATION, VISIBILITY AND DEMAND

PLANNING are crucial to any such aims, allowing insight at every level of the supply chain. Without this, companies stand little chance of fully transitioning from a traditional linear economy.

DYNAMIC NETWORK OPTIMIZATION

It is undisputed that globalization has drastically changed the way we live and with that, the way in which businesses operate. In theory, it is therefore natural to expect that the way in which supply chains are designed has also drastically changed. Yet this is not always the case. With the rapid globalization of supply chains, the distance between points in the distribution network has increased considerably. Longer transportation distances lead to increased air pollution and greenhouse gas emissions, affecting human health and contributing to global warming. As a result, the need to efficiently design eco-friendly supply chains has never been greater.

VISIBILITY

Before any efficient designing of supply chains can be carried out, organizations need to first fully assess the situation at hand. A manufacturer may

by

PETER VOSKÜHLER

Chief Supply Chain

Officer, HAVI Europe

THE BREXIT EFFECT

While the need for supply chain integration is clear, the questions now being posed to business leaders is how this will be shaped by Brexit and the broader political landscape. The most prevalent issue causing concern within the industry since the referendum is fluctuating currency values—namely, the price of Sterling. Given that the UK is a net importer of goods in most industrial sectors, a weaker Sterling has caused many firms’ costs of goods to increase. Although ‘hedging’ has long been a mechanism by which organizations have dealt with such changes, the upward pressures will eventually be felt, most likely resulting in rising prices for the consumer. Moreover, the more globalized an organization is, the more exposed they are likely to be to such pressures. There are a variety of steps which can be taken in response to this. Moving sourcing back to the UK from overseas could protect the business from the effects of a weaker pound. However, given that the majority of supply chains are inherently global, sourcing from a local supplier is not guaranteed to fully protect against depreciations in specific currencies, particularly as their components are often sourced internationally. Dual sourcing is also a valid option in this instance, which can help mitigate against the risks associated with currency fluctuations. It is, however, crucial

HA

VI

I

SS

UE

3_

JU

NE

20

17

8 9

JOINING THE DOTS: Supply Chain Integration in a Post-Brexit World

INDUSTRY INSIDER

to factor additional elements into the equation, such as cost price impacts and the implications on working capital. Given the need to take account of such varying factors, the importance of supply chain integration could not be greater. It not only enables oversight of all levels of the chain, allowing for informed decision making to take place, but also allows for flexibility. Without such flexibility, companies are often slow to react to external events, such as the actions of competitors and changes in customer demand. While the precise end result of Brexit for businesses remains to be seen, the need for closely integrated supply chains is clear. The trade relationships which have been established over centuries are not going to disappear overnight. Their nature, however, will change profoundly for the future.

Britain’s decision to leave the European Union did not just send

shock waves throughout the political world; it has had huge

ramifications for all businesses—few places more so than in the

supply chain industry. From currency fluctuations to uncertain

future trading agreements, it is difficult to think of a time when

supply chain management and integration have been more

crucial. Yet this integral and multi-faceted aspect of business

operations is often difficult to clearly define, leaving organizations

at risk of overlooking its importance. It is imperative then to

outline precisely what is meant by “supply chain integration,”

demonstrate why it is vital for multinational businesses, and

assess how it is likely to evolve in this new political age.

SETTING THE RECORD STRAIGHT

If there were a list of business buzzwords from the past year, ‘integrated’ would certainly feature on it. ‘Integrated’ supply chain management refers to the close alignment and coordination of every level within a supply chain, often with the use of shared management information systems. From raw materials to manufactured products, to delivering the end product to the consumer, every step requires close analysis, input and action. While every step demands different processes and expertise, each must ultimately come together as one holistic effort.

A crucial aspect of supply chain integration is establishing the extent to which various strands of a product’s journey to the consumer are in fact truly integrated. For instance, at a primary level, integration would require close communication between stakeholder groups within the supply chain. Sitting alongside this would be the signing of contracts between partners to ensure specific quantities of goods can be transported at specific times at a set price throughout the duration of the contract. Taken to a higher level, supply chain integration could involve a more sophisticated level of coordination between partners, such as the setting up of a distribution center close to the supplier’s assembly plant. Such a move could allow for the closer sharing of process systems, for instance, and significantly reduce logistical costs. Of crucial importance is identifying what level of integration is right for the individual organization and is best suited to its strategic aims. Identification is only the first step, but arguably the most vital.

FOLLOWING ARE data mining and analytics best practices that can be applied to businesses across most industries.

UNDERSTAND WHAT ANALYTICS IS (AND IS NOT)

Analytics can help businesses gain insight into what has happened in the past, what is likely to happen next and what steps they ought to take to optimize future outcomes. Reports —bar graphs depicting inventory levels, transaction summaries, word clouds illustrating terms trending on social media—or any other method of data delivery are not the same as analytics. Analytics may utilize reports, but the practice of advanced analytics is predictive and prescriptive in nature and provides insight, rooted in data, that can be used to help move businesses in the direction they want to go. To leverage analytics successfully, businesses must understand why they are using analytics and what analytics can help them achieve.

BEST PRACTICES in Data Mining and Analytics

AIM TO PREDICT AND PRESCRIBE

Most businesses incorporate what Gartner refers to as the first two stages of analytics: Descriptive and diagnostic. Descriptive reveals what happenedi, e.g., sales of a national limited time offer (LTO) fresh food menu item were flat. Diagnostic gets at why it happenedii, e.g., inclement weather throughout much of the U.S., including the region where the sole supplier is located, severely impacted harvest, resulting in a shortage of supply, and caused road closures that delayed shipments to restaurants. Many businesses are practicing Predictive analytics. A business may predict which items consumers are likely to buy based on their past purchases or which items are likely to be purchased together (e.g., cookies and milk, shampoo and conditioner) as a result of analyzing overall historic sales data. Applied to the earlier example of the LTO, predictive analytics can help the business determine what is likely to happen in the futureiii. In this instance, if the organization offers a fresh menu item and works with a single supplier, inclement weather or another variable could negatively impact supply and distribution. Customers will be upset and restaurants will miss their sales targets if shipments are delayed or not received. The brand could take a hit to its reputation. Prescriptive analytics helps businesses decide what should be doneiv. Algorithms and advanced analytics let businesses consider multiple scenarios and their likely outcomes in order to prescribe the optimal course of action. In this

egardless of industry, nearly

every business generates data.

Financial institutions record

consumer credit card activity,

restaurants track point-of-sale information,

logistics companies document mileage

and delivery times, even sports teams

log player performance. The Internet of

Things (IoT) is exponentially growing

the amount of data that is collected.

Harnessing, making sense of and extracting

strategic and operational insights from

this data, is the practice of analytics.

Organizations that do these things well

enjoy the competitive advantages such

business intelligence affords—cost savings,

increased efficiencies, more agile supply

chains, greater customer satisfaction and

more profit.

by

KRISTIN KRANIAS

SVP, Analytics

Solutions at HAVI

INDUSTRY INSIDER

HA

VI

I

SS

UE

3_

JU

NE

20

17

10 11

i http://www.gartner.com/it-glossary/descriptive-analytics/ ii http://www.gartner.com/it-glossary/diagnostic-analytics iii http://www.gartner.com/it-glossary/predictive-analytics-2 iv http://www.gartner.com/it-glossary/prescriptive-analytics

instance, prescriptive analytics might determine that the organization should identify and source from multiple suppliers located in different regions of the country and run the LTO during July and August when snow and inclement weather events are statistically less likely to occur.

DECIDE WHAT YOU WANT TO KNOW

To collect good data, ask the right questions. Data should be collected regularly in order to accurately predict outcomes. You need sufficient amounts of data to provide insights without any gaps. At the highest level, good data leads to better decisions. If data is not “good” (read: helpful, producing ROI), consider what was collected. Determine what it is that you really want to know. Those responsible for gathering data should think “If I were managing the business, what insight would help me the most?” and develop surveys and inputs accordingly. Analytics skills alone are not enough. A deep understanding of business process and the ability to see the bigger picture and to put information into context are essential to generate the data needed to make better business decisions.

DON’T OPERATE IN A VACUUM

Similarly, don’t fall into the man (data scientists and analysts) vs. machine (algorithms and simulators) mindset. It’s not an either-or situation. In fact, blindly accepting computer-generated prescriptive analytics without the context of men and women steeped in the history, relationships,

complexities and nuances of an industry or business could be a recipe for disaster. Collaboration between senior executives across business departments —supply chain, marketing, operations, finance—and data scientists is crucial. When collecting and analyzing data, schedule periodic check-ins for executives and analysts to test findings (“does this make sense, sound right?”) and discuss how data can be leveraged to impact P&L and move businesses forward. Refine data and outputs as necessary.

SET REASONABLE EXPECTATIONS

Collecting the right data and generating quality outputs won’t happen overnight, so set expectations accordingly. The more data that is collected and the more that outputs are refined, the better results will become. Commit the time and energy to this initiative and recognize that it is an iterative process. Business intelligence will increase and improve as data is honed and industry and organizational acumen are applied. Successfully mining and analyzing data will help businesses uncover the “a-ha!” moments that drive transformational change in their operations and inspire new products and innovative campaigns. Businesses that recognize the value of the data that surrounds us and are prepared to gather and analyze this information will benefit from the insights they reveal. If tracked and applied successfully, data can be used as a strategic enabler for company growth. Not realizing data’s potential leaves many missed opportunities.

Successfully mining and analyzing data will help businesses uncover the “a-ha!”

moments that drive transformational change in their operations and inspire

new products and innovative campaigns.

WHEN CONSUMERS PREPARE meals themselves, they know exactly what they are eating and can customize dishes according to their unique taste preferences and dietary needs. There is a sense of satisfaction in preparing one’s own meals (“the IKEA effect” of having done it themselvesii), and, often, cost savings too. The challenge with homemade for many consumers is time, or the lack thereof. Home cooking is a time-intensive endeavor that requires planning meals, shopping for ingredients, preparing and cleaning up, not to mention basic culinary skills. For some consumers, limited storage space for dry goods and pantry staples is an issue as well. Enter meal kits: Home cooking made simple for time-strapped consumers. Fresh, packaged ingredients— everything required for a complete meal—are pre-measured and shipped with step-by-step cooking instructions directly to consumers’ doors. There are now more than 150 meal kit delivery services operating in the U.S.iii and Packaged Facts predicts the market will grow to a multi-billion market over the next five years.iv According to NPD, 20 percent of U.S. consumers are interested in trying

meal delivery kits. Market research firm Mintel forecasts growth of the meal kit delivery service market in Europe as wellv, citing the concept’s convergence of several trends, including consumers’ comfort with ecommerce and preference for convenience and customization. There are environmental benefits to meal delivery kits too. Pre-portioned packages mean consumers have just enough of an ingredient to make a recipe so there is nothing left over to potentially spoil or be thrown away. Many times, kits are assembled with seasonal ingredients from local growers as opposed to imported foods and that helps reduce carbon emissions from long-distance shipments. Because local ingredients often can be shipped to distributors in bushel baskets and barrels instead of corrugated boxes and other more robust packaging required for foods traveling longer distances, waste further up the supply chain also is eliminated.vi Meal kit delivery services have prompted grocers to increase their prepared food and take-and-make offerings and introduce meal kits of their own.vii In some instances, kits are available for purchase in store or through delivery services like Peapod.

As Rick Stein, vice president of fresh foods at FMI points out, supermarkets have the advantage of loyal customers who regularly shop at their stores and trust in the quality and safety of their food.viii Supermarkets also can offer fresh packaged meals at lower prices, making meal kits accessible to more consumers. The average cost of a meal from a kit delivered to a consumer’s doorstep can range from $10 to $12.50 per person (source: NPD). When consumers shop for and prepare ingredients for homecooked meals themselves, the average cost is $4 per person.ix Expect to see more fresh packaged offerings in supermarkets and greater competition among meal kit delivery services as consumers increasingly look to make homemade simple. What does this mean for supply chain management? End-to-end supply chain visibility and access to real-time data will remain critical as organizations monitor and respond to shifts in consumer shopping behavior, flavor trends and ingredient availability.

Consumers increasingly want fresh,

healthy foods and they prefer

homemade as well. In fact, research

demonstrates that people actually

like meals better when they are

self-prepared versus already made.i

i https://www.ncbi.nlm.nih.gov/pubmed/26690640 ii https://www.wsj.com/articles/most-food-tastes-better-when-we-prepare-it-ourselves-study-finds-1476669842 iii http://www.foodbusinessnews.net/articles/news_home/Business_News/2016/06/Meal_kit_delivery__fad_or_futu.aspx?ID=%7B1D9BDDD0-2E6B- 4702-A3E1-83D330F046FB%7D&cck=1 iv https://www.packagedfacts.com/about/release.asp?id=3892 v http://www.foodnavigator.com/Market-Trends/Has-the-meal-kit-craze-arrived-in-Europe vi http://www.eater.com/2015/6/26/8839791/blue-apron-review-pros-cons-environment vii http://www.supermarketnews.com/deli/giant-offer-fresh-meal-kits viii http://www.progressivegrocer.com/departments/deli-prepared-foods/ready-or-not

ix http://www.cnbc.com/2016/11/11/its-not-a-fad-meal-kits-are-going-to-change-the-way-you-eat.html

FOCUS ON THE CONSUMER

MEAL KITS: Making Homemade Simple

HA

VI

I

SS

UE

3_

JU

NE

20

17

12 13

by

JASON MALMASSARI

Senior Director,

Supply Chain

Management

f, as Peter Sondergaard, Senior Vice President at Gartner, says: "Information is the oil of the 21st Century and analytics is the

combustion engine,” then simulation modelling is the hybrid equivalent. It’s a fact that companies will always need to respond to shifting customer demand, but in some cases this demand can span entire continents and fluctuate according to all sorts of disparate factors: the weather, changes in consumer spending power, employment, climate change and government regulation. These challenges can suddenly amass at once to an enormous uphill battle. It’s why demand planning has become so important and why predictive analytics has become a crucial area of expertise —helping customers to model an efficient and cost-effective solution in an age of uncertainty. But peek under the bonnet of the modern supply chain and you’ll find all the original parts are still there: visibility, communication, a low-cost base and a reduction in waste. And even if they are a little rusty, they will always be important to the mechanics of supply chain optimization. However, since the 1950s, the needs of both the consumer and businesses have grown and diversified and the supply chain engine now needs road-testing for any eventuality. Enter predictive analytics, which allows companies to take a test drive into a new environment, rather than be driven by the effects.

Let’s take this opportunity to take a look at how this new hybrid component puts the organisation firmly in the driver seat.

DEMAND DRIVEN MANUFACTURE

The American multinational GE first chose to use demand planning after it opened a giant battery manufacturing plant in 2012. The Durathon battery production had over 27,000 variables. This meant that GE had a lot of data but, before they approached AnyLogic they had no means to understand and analyse the production or the manufacturing system as a whole. GE wanted 20-20 visibility to make real-time operational decisions, such as: “Do I need an additional operator in the next eight hours?” and this is where simulation modelling paid off, helping to run what-if scenarios and optimise the results whenever they wanted. For GE, it was mission accomplished. They achieved real-time production optimisation by determining a baseline capacity that allowed for variability. This incorporated the system dynamics to identify bottlenecks, plan production ramp-ups and control a gradual expansion of the plant—all of which enabled overall improvement of the whole manufacturing system. Shanshan Wang, an Operations Researcher from GE Global Research, said they were delighted with the new decision making capabilities: “Now we can have the leadership team all sitting in a room and we can send them the simulation results within ten minutes, so it definitely facilitates better conversation”.

A ‘YACHT-IF’ SCENARIO

A yacht manufacturer in Italy needed to simplify its planning process. Yet luxury yachts require a huge amount

of time and care because the manufacturing process is complex, and the quality and craftsmanship cannot be sacrificed. There is a network of highly skilled trades at play and each vary in complexity. Some can be done in a sequence and others cannot. What’s more, these 60ft yachts are made in what is best described as a claustrophobic environment. There is very little space in the factory and it is impossible for too many people to work on the yacht at once. Fair Dynamics and DSE Consulting provided a demand planning support tool with a hybrid approach, using discrete events to model the physical layout and the manufacturing process. Agent Based decisions were used to model the production planner’s complex and adaptive daily decision making. It was this solution, which combined the simulation of human and automated decision making, that provided everything—scheduling, resource, review stage planning alongside production planning data analytics—all in a matter of seconds.

FAIL TO PREPARE, PREPARE TO FAIL

Perhaps data is the oil of the 21st Century, after all. The cost of failing to maintain an accurate forecast can be catastrophic financially. A company may see benefits of traditional models for operational excellence but in the long-term it could be outperformed by a competitor using simulation modelling to predict demand from thousands of new scenarios. We expect the use of predictive analytics to transition from ‘innovative’ to the ‘new normal’.

INDUSTRY INSIDER

DEMAND PLANNING: The Hybrid Engine of Supply Chain Optimization

by

KLAUS RUETH

Senior Director,

Supply Chain

Management

ow did you get to where you are today? I actually began my career at HAVI in 1991 after completing my German equivalent of ‘A Levels’ (Abitur). Having seen a job advertisement in a newspaper for a transport management role at HAVI, I applied for the job and was offered the role. Time flew and before I knew it, I had built up 15 years’ experience in operations and was running distribution centers (DCs) in my own right. In 2006, I made a big leap from being a DC manager, running operations, to being head of HAVI s supply chain integration organization. This was my first real experience of supply chain integration and was a great opportunity for me to get my teeth into it.

After three years there, I spent one year in Russia—supporting our local logistics division followed by three years of running HAVI s European STI Freight Management as vice president of Freight Management.In 2014, I returned to HAVI Global Logistics, leading supply chain integration work across the whole of the logistics business. I am currently part of a global team that is building the Global Supply Chain Integration Service Line. What would you say is the best part of working for a company like HAVI?

I have been lucky enough to have benefitted from a truly global experience at HAVI. The various roles I have held within the company not only span different countries but also continents as I have worked in Russia, Europe and Asia. It has certainly enriched me both professionally and personally. I have spent the vast majority of my career at the company and have worked for all of the entities within the organization, so I definitely consider myself a HAVI person!

What challenges does working across such an international network present? It’s inevitable that there are cultural differences between countries and continents. Until you experience different cultures for yourself, you assume that your way is the only way. That’s precisely why having the exposure to different ways of life and work is crucial, in addition to a diverse workforce.

For instance, the Swedish model for business-making is very much based on agreement and consultation, which takes quite a while, but eventually bears fruit. This is in complete contrast to the German way of doing things, which is more direct and fast-paced. However, this needn’t be a hindrance. The more diverse a group is, the greater the end result can be. The key factor is to have an acute sense of cultural awareness and to quickly establish, within a group, what works well and what does not.

While the focus in the majority of Western European countries is on visibility within the supply chain, in China and Russia, the key aim is to have absolute control over the processes. Having an awareness of such critical differences is essential if you are to operate successfully at a truly global level.

HA

VI

I

SS

UE

3_

JU

NE

20

17

14

AN INTERVIEW WITH PETER VOSKÜHLER Chief Supply Chain Officer

HAVI Europe

ASK THE EXPERT

And what about supply chain related challenges?

Market maturity is undoubtedly the greatest variance between different countries. For example, in Germany, much of the focus is on turning manual work into automated processes in order to generate efficiencies and enable competitiveness. However, it is a completely different base line in a market such as China, which has a much larger low-wage workforce at its disposal. They have similar supply chain challenges, but their ultimate focus is completely different. While the focus in the majority of Western European countries is on visibility within the supply chain, in China and Russia, the key aim is to have absolute control over the processes. Having an awareness of such critical differences is essential if you are to operate successfully at a truly global level.

In the past 6 months, we have seen huge geopolitical shifts from Brexit to Trump. How is that affecting HAVI and specifically, global supply chain management? I do not believe that globalization is a stoppable force. The current increased focus on national identity will not, in my opinion, put a stop to it. However, from a supply chain perspective, we have certainly seen a more patriotic consumer trend developing for quite some time. For example, one of the consequences of mad cow disease was that more and more brands adjusted their marketing campaigns to promote ‘home-grown’ products, i.e. goods which have not travelled

throughout multiple markets. This of course limits the network optimization potential of a supply chain. However, it is more important to swiftly respond to changing customer demand, particularly given this particular trend is likely to become stronger. It is also important to remember that while political events such as Brexit present challenges, they also present opportunities. It will certainly change the way in which we interact at a global level, but it will not eradicate those international relationships.

In light of these ever changing consumer demands, do you think companies are agile enough to deal with them?

There has definitely been a move towards agility within the industry. If you look at companies such as Amazon and Deliveroo, you find business models which are extremely agile and have been successfully driven by consumer behavior. Understanding this behavior—and ensuring you are always one step ahead of it—is the crux of the issue. It is clear to see that companies that appreciate this fact and act accordingly are those leading the way in terms of market share.

Finally, which three key trends would you identify as having most influence on the industry in the next decade?

Fresh food, sustainable goods and products that are perceived by the consumer as more personalized than industrialized.

There has definitely been a move towards agility within the industry. If you look at companies such as Amazon and Deliveroo, you find business models which are extremely agile and have been successfully driven by consumer behavior. Understanding this behavior—and ensuring you are always one step ahead of it—is the crux of the issue.

15

CHALLENGE

HAVI proactively identified that multiple departments within the company had different work processes and views of accountability in the management of their day to day functions for an industry leading QSR. All of these activities lived in various closed share drives, but no collective point or, source of truth, existed for the end-to-end process management for new product launches of the QSR .

PLANNING

FOOD MANAGEMENT FOR LEADING QSR Streamlined Through Process Optimization Deployed by HAVI

A leading quick service restaurant (QSR) undergoes process optimization in order to streamline projects and workflows, to create a centralized information database and to identify inefficiencies to generate solutions and opportunities. Through cross functional evaluation, modification and streamlining of the national food management processes, HAVI identified and implemented significant resource efficiencies. The creation of a formal governance structure, and of a centralized and interactive online process repository, have ensured all team members are working from the most current processes for every project initiated. The user-friendly and interactive navigation of an online process site has established “one source of truth” ensuring all impacted departments are operating from a consistent methodology.

CASE STUDY FOCUS

HA

VI

I

SS

UE

3_

JU

NE

20

17

16

to marry the way that their team operated their executions with the way that the QSR ran their product development lifecycle. This helped to create a common language for all team members for each phase of development. The team broke down the end-to-end process into eight phases of development and then mapped workflow swim lanes, tasks, roles, interdependencies, and responsibilities across each phase creating one holistic view of the food management business. While doing this, the team was able to identify existing inefficient pain points and provided solutions to those opportunities for improvement. Through this analysis, the team was able to identify 2,000 cross-functional hours of productivity across the departments, correlating to 1 FTE savings per year. The team improved over 20 processes throughout the phases of development including packaging development, supply planning,forecast development, pricing protocols, data management and SKU creation, etc. Additionally, with the centralized Project Management source of truth, there became a formalized governance process clearly defining delegated responsibility and priorities for anyone managing a piece of the food business at any given time. This resulted in a reduction in errors, an increase in efficiency, and an established internal trust from the reduction in confusion amongst team members.

Obstacles arising without the streamlined workflow processes and inefficient system include individuals or groups lacking an understanding of their role within the planning or execution of an event, breakdown in communication between cross-functional team members, or a lack of ownership or governance over the tasks to be completed. These challenges arise when authority, accountability and responsibility are not in alignment, resulting in what can be considered a massive web that needs to be detangled in order to efficiently deliver project results.

SOLUTION

The HAVI team identified the need to develop one source of truth for each phase of the promotion lifecycle, mapping out the entire process with department alignment and housing it in a centralized open online location containing version control history. This ensures that team members are consistently leveraging the most updated information, templates and tools, as well as identifying continued efficiency improvement. To effectively achieve this cohesive yet linear approach, HAVI brought together a cross-functional team of 18 people leading the different functions of the company with direct oversight of the QSR food business. The group reviewed the QSR’s new product operations and worked out a way

BENEFITS

– The implementation of the formal governance online site (one source of truth) for food processes increased consistency across promotions ensuring up to date templates and materials were being leveraged for all teams and projects.

– An adaptable process optimization tool that has also been leveraged across additional business efforts and can be translated as needed for different industries and business models.

– Saved a total of 2000 hours productivity

across several cross functional departments (1 FTE) allowing effort to be redirected to other business needs, strategic initiatives, or the support of up to 2 additional programs per year for the existing customer.

– Optimized over 20 processes within all phases

of the promotional lifecycle: product development,

supply planning, demand planning, finance and data

management; Defined formal roles & responsibilities

for all cross functional stakeholders through all phases

of development.

– Reduced the planning phase (from 120 to 60 days), positioning HAVI to react to the market’s

increased need for speed to market in new product

launches and enabling increased customer profitability.

17

Sustainability Shapes Packaging for Asian 'Transumers' Packaging South Asia MAY 2017 Phil Davidson, Sustainability Senior Manager, Europe and Asia, at HAVI talks about the rising concerns of Asian consumers, emphasizing the need for innovative and sustainable packaging to attract and influence consumers' buying decisions.

EVISIT HAVI.COM TO LEARN MORE

HAVI Supports All Major Foodservice Associations and their Members in Developing Industry’s First Supply Chain Optimization Best Practices HAVI APRIL 2017 HAVI has joined forces with International Foodservice Manufacturers Association (IFMA), Kinetic12, a food industry management consulting firm, and research company Datassential to support the development of the first-ever best practices for foodservice supply chain optimization.

EVISIT HAVI.COM TO LEARN MORE

Good Question...Who Would be on Your Mount Rushmore of Transportation and Logistics Visionaries? Inbound Logistics MARCH 2017 Reinhard Steup, Senior Manager, Supply Chain Management, HAVI, was again featured in Inbound Logistics' monthly supply chain question: Who would be on your Mount Rushmore of transportation and logistics visionaries? Reinhard identified Elon Musk and Malcom McLean for disrupting the transportation and global trade space, respectively.

EVISIT HAVI.COM TO LEARN MORE

BULLETIN

IN THE NEWS

European Foodservice Summit Zürich, Switzerland, Europe SEPTEMBER 26-27, 2017 The Summit is the number one European Platform for the restaurant Industry. Issues discussed are trendsetting and on tomorrow’s agenda. Together we have created a think tank to analyze the most important changes in the industry as well as an annual forum where we may all share our thoughts on a regular basis. The people who join us are the industry leaders who shape the European restaurant landscape for the future. HAVI is an educational partner of the European Foodservice Summit.If you would like to meet with a HAVI representative at this event, please contact us at www.havi.com/contact-havi.

EVISIT HAVI.COM TO LEARN MORE

ON THE ROAD

Restaurant Franchising & Innovation Summit London, UK, Europe JULY 18-20, 2017

HAVI will be attending and sponsoring the 2017 Restaurant Franchising & Innovation Summit in London this summer. The Restaurant Franchising & Innovation Summit will explore how limited-service chains can leverage innovation in a variety forms—from experience innovation to kitchen innovation to menu innovation and beyond—as a catalyst for franchise expansion. We will be speaking at this event and HAVI representatives will be available if you would like to connect with us. To meet with a HAVI representative, please contact us.

EVISIT HAVI.COM TO LEARN MORE

IFMA Marketing & Sales Leadership Forum Chicago, North America AUGUST 8-9, 2017The IFMA Marketing & Sales Leadership Forum focuses on marketing and sales collaboration, providing these professionals the means to apply actionable insights and best practices to work together to improve both strategic planning and go-to-market execution. If you would like to meet with a HAVI representative at this event, please contact us.

E VISIT HAVI.COM TO LEARN MORE

Packaging InnovationsLondon, UK, Europe SEPTEMBER 13-14, 2017As a global leader in packaging and supply chain management, we will be showcasing a number of new innovative packaging technologies including our SIX500 packaging that is designed for optimal performance in accelerated cooking ovens. Look for SIX500 and more exciting industry innovations on our stand F40. If you would like to meet with a HAVI representative at this event, please contact us.

E VISIT HAVI.COM TO LEARN MORE

HA

VI

I

SS

UE

3_

JU

NE

20

17

18 19

5 Key Trends Impacting Supply Chains QSR MARCH 2017 QSR Magazine published our Supply Chain Trends press release for 2017 in which we identified five foodservice industry trends for 2017 and beyond that could impact foodservice supply chains. These trends include increasingly diversified consumer demand, an emphasis on homemade, traceability, sustainability and technology such as mobile ordering apps.

EVISIT HAVI.COM TO LEARN MORE

HAVI Achieves ISO 9001:2015 Accreditation HAVI MARCH 2017 HAVI Achieves ISO 9001:2015 Accreditation For Its Freight Management Business In Hong Kong, Shenzhen and Guangzhou. HAVI is pleased to announce that it has successfully achieved the internationally recognized ISO 9001:2015 certification for its freight management business in Hong Kong, Shenzhen and Guangzhou, consolidating its status as one of the leading businesses in its field.

EVISIT HAVI.COM TO LEARN MORE

HAVI’s New State-of-the-Art Hub/DC in Japan HAVI MARCH 2017 HAVI’s new Kansai Hub/DC located in Kobe, Japan, is now fully operational. This state-of-the-art facility, which took 12 months to construct, is a compelling demonstration of HAVI’s commitment to working alongside its customers to drive their long-term growth while investing in the countries where it operates.

EVISIT HAVI.COM TO LEARN MORE

19

HAVI.com