Planning for Success in the Face of Disaster. Ventura Foods & Chiquita

Transcription

1 Planning for Success in the Face of Disaster Ventura Foods & Chiquita

2 IMPACT ON TRANSPORTATION Unprecedented Disasters Hit North America

3 INTRODUCTION Ventura Foods & Chiquita Brands

4 What Our Customers Expect from Ventura Foods Manufacturer and distributor of food products Over 3 billion LBS annually, dry and refrigerated Oils, margarines, shortenings, dressings & Sauces 11 plants that include 10 distribution centers and one 3PL network Four primary channels with distinctive supply chain needs and buying patterns... Foodservice Corporate Chain Industrial CPG

5 What Our Customers Expect from Ventura Foods 5700 active SKUs 5-day minimum order-cycle Can virtually get every SKU from each distribution center Regional Distribution concept Customer may pickup or receive per the efficiency of their own supply chain & purchasing needs (50%/50%) 6,000 LBS order minimum up to 42,500 Service level on Order 97.5% We are a big custom shop

6 Supply Chain Complexity Sourcing Approximately 80% of our main ingredient OIL delivered by rail tank car or bulk truck Origin capacity Transit is well beyond minimum order-cycle Destination capacity geared to rail 30 oil types required at St. Joseph plant Alternative sources of oil are also competitors, we are not vertically integrated, & control of freight resides mainly with the supplier Some suppliers are tied to proprietary formulas, restricting source

7 Chiquita Brands Stephen Coale

8 Chiquita Brands NA Supply Chain $3.2 billion in revenue 23,000 employees operating in 80 countries Product lines include packaged salads, bananas, healthy snacking, and ingredients Primarily serve grocery, food service, QSR, B2B, and convenience channels Five regional salad manufacturing & distribution centers Five NA port operations supported by multiple inland ripening/distribution centers Deliver 85% of customer volume

9 Were you ready? Ventura Foods & Chiquita Brands

10 Missouri River Floods St. Joe

11 Order of Events June 8 UP issues embargo for St. Joseph, MO All rail cars in route are required to be diverted or returned to origin No billing of rail cars allowed at origin Main supplier for oil at St. Joseph, depends heavily on inbound crude oil, rations oil to Ventura s plant, supply reduced by 30% Plant has a 2-week safety stock for finished goods

12 Perspective the impact of 2011

13 PERSPECTIVE Unprecedented Events in 2011 Limited ability to mitigate via raw/finished inventory. Regions can only carry 24 hours of raw product and about the same amount of finished inventory Eastern facilities are 4 days from source for most raw Dependent on a core group of carriers who understand our coldchain, food-safety, load-trucking, and service requirements Production is specialized and regional for some sku s (i.e. Gourmet Café, Apples, Clams/Organics), which makes replenishment a less effective lever for network rebalancing.

14 How did you handle the disaster? Ventura Foods & Chiquita Brands

15 Disaster Relief Process Initiate corporate plan didn t have one Step 1 - Immediately establish a War Room to bring essential departments together with the plant Step 2 data mine and analyze production capabilities and customer orders Oil components amounts & sole source Formulas, labels Manufacturing line pack size capability Determine sole source manufacturing by SKU for St. Joseph Step 3 determine and assign alternative production to be branch transferred in order to not disrupt customer supply chain networks

16 Disaster Relief Process (C ntd) Step 4 - Immediately establish a transload from rail to tanker truck an internal process not allowed before from a QA standpoint Step 5 create supplemental transportation Bulk tanker for oil from current and new oil sources Dry/refrigerated carriers for finished goods at alternative manufacturing points Determine direct transportation opportunities based on order mix

17 Disaster Relief Process (C ntd) Step 6 Work with Customer Service to handle pricing arrangement/adjustments Step 7 Provide communication to Sales for their communication to the customer Step 8 - Establish all required face-to-face relationships at the ground level using plant personnel Inspection and discussion of food grade process at rail transfer point along with bulk carrier Plant works with local Railroad management Trainmaster, MTO Bulk tanker truck coordination and drop lot operation.

18 War Room Activity Consistency of operation Daily - Same time Same order of topics Assign tasks & report on tasks Review oil supply vs. manufacturing plan for current and upcoming weeks Address transfer orders quantities and adjust in the system Consistency and follow through build confidence

19 PROCESS Leadership Team Aligns the Response

20 PROCESS Cross Functional Leadership Team Convenes to Align on Network Response Broad network response communicated to leaders Regional leaders respond with current supply capability Network replenishment group executes finished goods cross-dock support Customer service shifts orders to other regions for direct-ship support

21 PROCESS Cross Functional Leadership Team Convenes to Align on Network Response Transportation reroutes raw material trucks Transportation team engages carrier partners for surge capacity Customer service executes product allocation according to pre-determined customer priority list Pre-position equipment (powerpacks, etc.)

22 What did you learn? Ventura Foods & Chiquita

23 Keys for Success Our Experience Maintain task execution at existing levels fight the urge to elevate Stay true to what your supply chain objectives are; under pressure, people work best in a heighten but consistent environment Senior and/or HQ management play supportive role and control communication Determine ahead of time what your level of financial pain is relative to the company culture for operations and service level

24 Return to Normal Operation Recovery Can be just as difficult a matter of managing timing Return the flow of rail oil; closed down the transload Adjust for transfer order flow Work off excess finished goods inventories Control the tempo with customer service Wrap up the corporate communication Discussions become essentially cost avoidance matters as everyone recognizes the cost impact of the program Account for all incremental costs to build your case for the insurance claim

25 Residual Benefits We have a workable program for disaster relief intelligence and operating components We understand our pain points and capabilities We can address our customer s inquiries as to What if.. How would you recover We can take the disaster plan and adjust for any potential work stoppage

26 PRINCIPLES Chiquita Brands

27 PRINCIPLES Agree to process in advance of event. A crisis is not the best time to align on principles Rapid senior leadership alignment is crucial to execution. In the absence of clear direction, folks will: rubber-neck at the car wreck disproportionately emphasize their own priorities Struggle with cost/service/quality tradeoffs

28 PRINCIPLES Align on organizational capabilities in advance of event. Avoid overpromising and under-delivering: There is tremendous pressure to over-commit Disproportionately rely on core carrier partners who are familiar with our cold-chain, food-safety, and service requirements Periodic refresher training. Also helps retain commitment to process.

29 PRINCIPLES Maintain up-to-date network capacity & capability data Maintain up-to-date contact info including satellite phones at ports Ongoing strategic network optimization to determine installed capacity, flexibility and projected response time in case of emergency. Update supply risk assessment & contingency plan on an annual basis.

30 Planning for Success in the Face of Disaster Ventura Foods & Chiquita