Using mathematical methods to adjust blend recipes within specification to take raw material cost & availability into account when planning raw material purchase and consumption
Gray House Consulting and its associates are developing an Advanced Planning Solution that models the Raw Tea supply chain across multiple sites and multiple time buckets. The solution takes the following into account:
Tea Raw Materials:
- Raw Tea classification - what each Raw Tea 'brings' to a Blend
- Availability (on hand & on the water, contracted, in the future market)
- Future market prices
- Blend performance characteristics (which can change through time)
- Future blend demand
Other Master Data:
- Shipping networks used, shipping costs & lead-times
- Material stock level limits
The planning solution is an optimisation rather than being purely rule based; by mathematically combining the performance characteristics of the individual Raw Materials within Blend performance characteristic limits, the solution has the flexibility to adjust the 'Bill Of Material' of each Blend over time to deliver consistent Blend performance while making optimal use of the Raw Materials that are available immediately and in the future, and minimising the overall cost of future purchases.
The outputs of the solution are:
- a recommended Recipe plan per Blend per time bucket
- a Raw Material buying and shipping plan recommendation per time bucket
- By taking future availability into account, the risk to blend production plans due to seasonality of key ingredients is reduced.
- By taking future price into account, strategic buying and market saving opportunities can be identified.
- By taking existing stocks and stock level limits into account, inventory levels can be managed optimally within geographic & time-based constraints, and can potentially be reduced
- New plans are generated in full; taking into account the latest view available of the supply chain, including the actual execution outcomes from previous plan recommendations.
Gray House Consulting and associates Brown Et Al have been working together in the Food & Beverages, Retail and Supply Chain sectors for over two decades, with a network of consultancy experience in the Tea Industry and Optimisation & Rules-based technologies.
We have significant expertise in integration with ERP, using bespoke and proprietary specification management solutions and optimisation tools.
We have practical experience of analysing, developing and deploying technology to optimise Supply Chains by leveraging the flexibility of Blend recipes through the use of characteristic based products.
Blend recipe flexibility leading to:
- Reduced Supply Chain costs
- Reduced dependency on key Raw Materials
- Strategic management of seasonally available Raw Materials
- Consistent Blend performance
Plans & scenarios providing:
- Raw Material spend projections
- Blend cost projections
The 'Blend Flex' concept has already proven to be beneficial in the Raw Tea supply chain for a number of FMCGs when implemented using technology that was available 20 years ago.
This solution is also directly viable for milled products (e.g. animal feed & flour) where performance characteristics can be defined and specified, and raw material availability fluctuates.