Sales and operations planning overview

Technology

The case argues that Sunsweet's supply chain is constrained both on the supply side and the demand side. On the supply side, weather and the growing season are both variables. The growing season constrains when supply of fresh fruit will be available The drying process helps to smooth this out somewhat because it allows Sunsweet to store fruit from the harvest all year round. Demand conditions are much smoother than the supply conditions. The other constraint is the harvest itself, which is affected by the growing conditions that season. The quality of the fruit and abundance of the harvest is affected by the quality of the growing season. Again, drying helps to smooth this out, as this process helps to mask flaws in the fresh fruit.

On the demand side, the case argues that demand is also a constraint because for some reason it peaks around the holidays. The big production challenge for Sunsweet is to get fruits from the harvest in late summer/early autumn dried and packed in time for holiday sales beginning in the last autumn. The good news for Sunsweet is that even though demand is uneven, it is predictable year-over-year.

2.

There were many problems as a result of these constraints. The company would often struggle to get the product ready on time to bring to market. The processes is time-consuming, and with most of the products arriving within a short window, and then being sold in a short window, the company faced a capacity crunch every autumn. Sunsweet would seek to alleviate this problem with seasonal workers and overtime, which proved costly. Moreover, there is a need to hold some goods in inventory for a year in order to meet the demand throughout the year, but also because the supply of a given fruit would vary year over year depending on the harvest. If demand is to 100,000 each Christmas, but harvests vary from 80,000 to 140,000, the company needs to hold a reserve supply in inventory -- a cost to the company -- in order to ensure that it can meet demand each year.

This means that there were challenges in maintaining adequate inventory levels. The company would often face shortages, if it did not hold extra in inventory or if harvests were weak two years in a row. Moreover, the need for seasonal workers and overtime increased the risk of production disruptions, with inexperienced and/or tired workers. Eventually, it came to be that the workers were from all over the world, increasing the risk of intercultural management issues and workplace conflict as well.

The company ended up having to deal with its complex issues using outdated data, ad hoc adjustments, and inferior software. As a result, the task of organizing the autumn season was taking up all of management's time, and even with that management felt that it was not able to get the information it wanted when it wanted it. Management was forced into ad hoc solutions because of its inability to model different demand and supply conditions in advance and develop appropriate contingency plans. The pace of gathering and processing data was simply too slow for such an intense period.

4.

The S&OP software represented a marked improvement in supply chain management for Sunsweet. The company was able to even out its production over the course of the year (it is not explained how this works with a perishable product). Sales forecasts were improved. Production was developed over the long run, allowing it to reduce the number of seasonal workers it hired. The system delivered a return on investment of 15-20%. Moreover, management was able to handle its planning, scheduling and analysis tasks in a much shorter time frame -- hours instead of days -- with the new software, freeing up managerial time to perform other tasks, and improve the company in other areas.

5.

Sunsweet still has some supply chain concerns. These include a lack of flexibility in the program -- changes in operations are difficult to input into the program, which constrains the company's ability to implement continuous improvement. There is also a lack of organizational knowledge of the systems -- a risk if the information gatekeepers move on.

The big takeaway is that training is required. The system is only useful if people know how to use it. Sunsweet needs to ensure that a broader number of people are able to use the system and act as information gatekeepers. In the past, it was reasonable to have a small handful of gatekeepers, but that is no longer the case. Training should reflect this, and open the system up to more users so that it becomes part of organizational knowledge.