Supply Chain Planning Series: Optimizing for Product Mix & Profitability
[00:28] Another dynamic on this is how much money you’re going to make producing each of these different products. Because each one has a cost of production, each one has a selling price and, and how, how can I manage that margin of profit effectively, by playing different tunes and scenarios within my processing operation. So that’s the kind of the next dynamic the next layer, if you like to put across what we’ve been discussing today is, ultimately we’re in business to make money. So for any plan that we produce, we should really understand what’s the profitability for that product, mix on that shift or that day’s production through the plant, and then play scenarios or be able to play with different scenarios to see how you can optimize that depending on, you know, the inventories, my stock levels, just in time deliveries for fresh products, etc. How can we manipulate that, building ahead slightly packing ahead for tomorrow’s orders in anticipation to try and be ahead of the game? So there’s a tremendous amount that goes into this. Getting planning right, within a process and environment.
[01:39] Yeah, and if we go back a little bit, you know, to the, to the supply, right, because the supply chain before the plan is quite big. So there are breeders hatcheries, and then there is a broiler grow out. And like you mentioned at the beginning, you know, when there are some changes that are coming from the plant, and the plant is basically telling, okay, we need to change the plan, we need to you know, move the truck, so we need to come pick up more birds, or we need to pick up another farm or something. It’s usually quite a lot of tension, you know, because it’s always like that, you know, plan says this, then live operation says that, so how live operations and its planning and its supply can help to make sure that all the processing planning go maybe a little bit smoother.
[02:34] Yeah, I mean, and that, and that’s largely about communication and setting up really good. And frequent communications between the processing plant, the sales team, and even your end customers, to make sure that you’re feeding back regularly, what they’re anticipating what they want to sell and by SKU’s, what the season is, what the likely volume requirements will be and feeding that back through to agriculture, so we got to get the business working as a full supply chain not as agricultural planning, processing, planning and sales. To optimize it, we need them all working together tightly so that there’s good advanced warning of of changes to SKUs and weight profiles that can then be factored in correctly to broiler cycles, setting, setting programs and volumes, etc. So we get that timing right. So I would always advocate very good and strong collaboration between all parties involved in the process, and not just talking about next week. But talking about three months out, six months out, So what do we anticipate. And learning from what went previous is always good, too. So understanding what happened last year, through summer, winter, or seasonality, and then looking at how we can build sensibly on that. And, and it’s so important to have that dialogue with the end customer with the retailer or food or the food service client. Because they need to understand the impacts of what they want to do on the agricultural, on the process and agricultural supply chain. So there’s some key elements there. So promotional activity needs to be managed. You don’t just want to return it on promotional activity next week, and then we don’t have the bird weight, right? You know, so there’s a lot of planning, there’s a lot of good strong communication needs to go into it. The other thing that can be done, of course, from a from a live operation side is trying to forecast more accurately how your birds are growing. And when they’re likely to hit slaughter weight and having a good an accurate understanding of weight prediction has always been a kind of a challenge for the live operations. But it’s something that we can continually work out with new technology, new hardware, there’s an opportunity to do that. To be more accurate about
[03:17] it I think they hear you mentioned that and communication would be the key you know, because if there is a communication then all the rest can be managed you can communicate that okay orders are changing or supply is changing weight is changing or maybe I have a flock issue or something like that. And if you have a way to predict it far in advance, see it and then communicate the change to the next chain in line and, you know, most likely there will be less issues or less problems.