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by Lauren Gibbons Paul, Contributing Editor   | Abstract: | Manufacturers face ever more uncertainty, making risk management a major challenge. A variety of software tools can help manufacturers assess demand and react to unforeseen events. |
The prune business isn't easy. Sure, once you get the plums dried down to the optimum moisture level, they have a shelf life of three years or more — much longer than many food products. But success hinges on the annual harvest. Everything from volume, size of fruit, and sugar level can affect how well you do, and the profit margin is perilously thin. This market segment is fraught with risk. "If the yield falls short, we can't just go out and buy more prunes since they've all been spoken for already. If it's a bumper crop, we have to manage that, too," says Harold Upton, vice president of strategic business processes for Sunsweet Growers Inc. "We don't have the luxury of pulling the product off the shelves one year and doubling it the next according to our volume." A grower cooperative, Sunsweet is the world's largest producer of dried fruit, processing more than 50,000 tons of prunes every year, along with apricots and cranberries. Sunsweet faced two years of disastrously low yields, in 2004 and 2005, immediately following on the heels of the highest-ever surplus in 2003. Management had already decided in 2000 to invest in Supply Chain Consultants' Zemeter supply chain planning suite, which included a sales and operations planning (S&OP) tool. Zemeter allows Upton to model a variety of "what-if" scenarios and plan accordingly. The ability to quantify and mitigate the risk associated with crop yield has helped Sunsweet weather the back-to-back years of low harvests. "We can quickly see the impact as we gain market and crop intelligence, and we can quickly decide what to do," Upton says. [Click to continue] |