A Scheduling and Capable-to-Promise Application for Swift & Company

1. A Scheduling and Capable-to-Promise Application for Swift & Company 2조 이종윤, 석문호, 김원규, 김윤중, 김용태, 박은진 Management Science of Yonsei University MBA By Professor Kim Seongmoon

2. 0. Common Sense about Cow Meat !

3. + 1. About Swift & Company ■ 회사 개요 1. 1855년 Gus Swift에 의해 설립 2. 2nd Largest processor of Beef & pork in the world 3. 매출규모 : $ 10 Billion/year 4. Out-standing Point of Swift & Company - Contribution to the food industries : (1)Conveyor belt를 이용한 혁신적인 disassembling process (Henry Ford에 의해 자동차 대량 생산에 적용) (2) Refrigerated rail car(1881) : brought top-quality meat from Chicago to East Coast - Creating the Swift Brand : 지역에서 도축한 고기를 소비하는 고객들에게 일주일이 경과된 안전한 고기 제공을 위해 brand power 도입 - Turning waste into profit : 도축 설비의 대형화로 발생되는 부산물을 활용하여 제품화 시킴 - Continuing the tradition in innovation : 업계 최초 ISO9002 획득, 100% 원료 검사 등을 도입하는 선도자의 역할 수행 5. 2007. 7. 남미 최대의 beef processor인 JBS S.A.(sales $2.1 billion)에 인수되어 JBS Swift Group로 세계 최대의 beef processor가 됨.

4. Capacity : 2,500 마리/ shift • (for a total of 18,000 to 25,000 per plant per week) C B A Fat Cattle 2살 이상의 살찌운 소 Brand Grade Weight Buyer D E Bull Dairy cow Swift’s Factory 1. About Swift & Company ■ CAPA

5. product line slaughter Many variable 80h in a chill room Fabrication processing • seven primal cuts : classified • by quality grade, yield grade, • weight, brand characteristics • minimizing trim waste/ • maintaining the speed Package primal into smaller, subprimal pieces pack in plastic, vacuum package, boxing 2. Swift’s product line and Necessary of Lear-Program • 1. quality grade (차돌박이 무늬 수준) • show high levels of fat marbling based upon a cut made at the 13th rib byUSDA inspectors • individual cattle are highly variable and may not grade out as expected • 2. yield grade ( 살찐 부분의 외부 두께) • the thickness of the outer fat covering byUSDA inspectors • individual cattle are highly variable and may not grade out as expected • 3. weight (무게의 변화) • customers order by weight and not by the piece, it takes a greater number of pieces from light carcasses to fill an order than from heavy carcasses. • the cattle vary greatly in weight, with a typical carcass weighing between 600 and 800 pounds. • 4. brand characteristics (많은 제품) • Swift & Company has many product brands. To be sold under a particular brand name, an animal must meet certain standards and possess certain characteristics. • Swift either sells it as trim or uses it to make ground beef. • - The fabrication and disaggregation for offal are similar to those for boxed beef, although less complex.

6. 3. A simplified disaggregation tree of Swift’s product

7. 4. Property of Cow Meat Market and Comparison between America and Korea ■ 소고기 시장의 특징 1. 제품이 썩기 쉽기 때문에 원료 및 제품의 생산과 재고 관리가 절대적으로 중요 : 기간에 따른 할인 발생 2. 원료 및 부위에 따라 다양한 제품을 얻을 수 있음. - 제품의 부위별 수요 차이 => 균형을 맞출 수 있는 주문 관리 필요 -나이, 먹이 주는 방법, 소의 종류, 품질 등급 분류 - 다양한 가공 과정 필요 3. 원료 확보에 기간이 소요되며, 원료의 등급 판정 등에 많은 변수 존재 4. 원료 구매 이후 빠른 회전율 5. 원료 비중이 매우 높음(85% 이상) 6. 원료를 최대한 활용해야 수익성을 확보할 수 있음 7. 외부 요인에 의한 영향 큼 –광우병 등 ■ 한국과 미국의 소고기 시장 비교

8. 5. PROJECT PHOENIX

9. 5. PROJECT PHOENIX Capacity Planning Forecasting & Demand management Scheduling Model ■ Model Configuration Sales & Operation Planning CTP CSRs Master Planning ATP

10. Production Capacity or Inventory ATP Committed order time Production Capacity or Inventory Firm Slushy Free Committed order time Demand Time Fence Planning Time Fence 6. Available-to-Promise (ATP) vs. Capable-to-Promise (CTP) ■ Available to promise (ATP) The uncommitted portion of a company’s inventory and planned production, maintained in the master schedule to support customer order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and over-due. ■ Capable to promise (CTP) Under the MTO (make-to-order) environment, CTP use to determine if the orders is possible to handle or not during the specific period.

11. 7. Scheduling Model • 1. Model Object • Manager : Plan and Monitor each day’s production • CSRs : Enter the orders and check product availability • 2. Model Functionality 1. Current finished goods inventories 2. Committed orders 3. Forecast with Committed orders 1. Shift Level Schedule 2. Daily Level Schedule 3. Snap shots on every 15 Min. interval INPUT OUTPUT Scheduling Model

12. 목 적 함 수 • Minimize ∑ Operation Cost for Cutting & Packing + ∑ Unsatisfied demand penalty • + ∑ Capacity violation penalty for Production, Packing and Inventory limit • - ∑ Sales price x Sales amount • Cutting & Packing Operation > 0 • Demand fulfillment, Unsatisfied demand >= 0 • Limitation violations for Production, Packaging and Inventory >= 0 • Box production for Fresh and Frozen >= 0 • Ending Inventory >= 0 • Sales from Production >= 0 변 수 7. Scheduling Model • Subject to • Carcass availability : 2times of Carcass availability • Packing Operation : ∑ Packing operation = ∑ Fresh packing + ∑ Frozen Packing • Inventory balance : Ending inventory = Staring inventory + New product – Sales • Demand balance : ∑ all demand = ∑ Not fulfilled from Inventory • + fulfilled from production • Total sales : Total sales = Sales from Inventory + Production • Production limits : enforces any limits on piece/box production • Inventory capacity : Not possible to storage the inventory capacity

13. 8. Capable-to-Promise Model 1. Model Object Determine whether a plant to ship a requested order on the requested date and time with the production and cattle constraints during 90day model horizon 2. Model Functionality 1. Cattle availability 2. Customer Orders 3. Finished-goods Inventory 1. Next Shift Production Schedule INPUT OUTPUT CTP Model

14. 8. Capable-to-Promise Model • 3. Model Transaction • Product queries to find out the available product/quantity on a specified date • Product commitments to see if the plant can make on specified date. • Deletion of existing order line items by fixing the unfulfilled demand variable • General edits of existing order line items quantities, which can be done in either query or commit mode • 4. CTP Model • Scheduling과 거의 유사한 개념 • Major differences with Scheduling Model • Coproduct production is not tracked in CTP models • All sales are from production • There are no inventory locations or associated inventory capacity

15. 9. Available-to-Promise Model 1. Model Object - Provide the real time visibility of the inventory to proactively sell 2. Model Functionality - 총 45 Model 의 최적화 : 5개 공장 x 3개 Line x 3 Operation 1. Stating Inventory 2. Committed orders 3. Production Schedule from CTP 1. Unsold production from each shift INPUT OUTPUT ATP Model Each LP model

16. 9. Available-to-Promise Model • Available fresh production >= 0 • Available frozen production >= 0 • Ending fresh inventory >= 0 • Ending frozen inventory >= 0 변 수 목 적 함 수 Maximize ∑ Available fresh production + Available frozen production • Subject to • Fresh-production balance • = Available fresh production – Freezing operation – Fresh sales – Ending inventory • Fresh-Inventory balance : Starting fresh inventory – Sales = Ending inventory • Frozen-production balance • = Available frozen production + Starting frozen inventory – Frozen sales – Ending inventory

17. 10. Benefits and Results 1. On time delivery rate 향상 1) On time delivery +/- 1 day : 65% → 87% (22% 개선) - 1day delivery : 24% → 6% [18% 개선] + 1day delivery : 11% → 7% [4% 개선]

18. 10. Benefits and Results 2. Percent-sold/week 개선 : 평균 14% 개선 ㆍLP Model 기반 시스템이 고객 수요에 맞춰 생산 스케줄을 최적화 ㆍPercent-sold position : 일주일 생산 중 기수주된 Order의 생산스케줄이 차지하는 비중 14% 개선

19. 10. Benefits and Results 3. 판매량 증대 : 평균 20% 증가 [115,000 box] 20% 개선

20. 10. Benefits and Results 4. Business Model 변화 : Production-Push → Demand-Pull ㆍ고객의 수요에 의해 생산 스케줄 및 원재료 구매가 이루어지는 사업구조