Bringing Quality to Internal Customers
The central coast of California is home to many produce growers and shippers, including the world’s largest berry producer: Driscoll’s of the Americas. Based in Watsonville, California, the more than 100-year-old family-owned business, like many others, aims to delight its customers. This applies to those who receive the company’s berries and to internal customers and suppliers as well.
A few years ago, Driscoll’s Supply Chain group took this philosophy a step forward. Miguel Miciano, director of procurement, took the lead and reached out to Driscoll’s suppliers and asked for their participation and commitment to work together as a team to reduce operational costs along the supply chain.
Two early partners that aggressively worked with Driscoll’s to reduce operational cost included Sambrailo Packaging of Watsonville, California, and Sustainable Productivity Solutions of Scotts Valley, California.
The improvement efforts
Both Sambrailo and Sustainable Productivity Solutions worked on improving different aspects of this process.
Sambrailo developed and installed an inbound inspection process to improve the quality of the clamshells (the containers berries are placed in) provided to the growers. Sustainable Productivity Solutions generated improvement ideas for the harvesting through inbound process and later used simulation modeling and analysis to design a more efficient network for Driscoll’s Central Mexico operations.
Driscoll’s Central Mexico network includes seven Driscoll’s distribution centers and 15 supplier distribution centers. Currently, the supply chain process for packaging materials goes from these supplier distribution centers directly to each of seven Driscoll’s distribution centers.
Some of the challenges with this current materials flow include:
- Each of the seven Driscoll’s distribution centers has to use existing floor space to perform the inspection process. As the business continues to grow, it is preferable that this floor space be used for processing finished product.
- In addition, this inspection process not only takes resources away from more critical processes, it is difficult to ensure that the discipline exists to execute the inspection process every time.
- Due to the suppliers’ preference to deliver in “full truck load” equivalent, the Driscoll’s distribution centers are forced to carry more product on-site than they desire.
To resolve these issues, it was proposed that the supply chain be modified by inserting a materials hub between the supplier distribution centers and the Driscoll’s distribution centers. This solution comes with significant costs for both the leasing and the operation of this hub facility.
The initial model was a reflection of the currently existing supply chain. This model was built with a high level of detail that focused more on the interactions between the various distribution centers on a daily level. Next, a model was developed with the hub inserted between the suppliers and the Driscoll’s distribution centers. In this model, all supplier deliveries went to the hub instead of to the individual Driscoll’s distribution centers. And the Driscoll’s distribution centers’ replenishment orders were sent to the hub instead of to the individual suppliers.
Comparing the results of the hub model versus the current supply chain model, the following were the key benefits of a hub-based supply chain:
- The frequency of missed deliveries from the Driscoll’s distribution centers went from an average of three or four missed deliveries per day to almost zero per day for the hub-based system. Since the hub is the only source of deliveries for the Driscoll’s distribution centers, distribution centers receive deliveries daily. And this ensured consistent replenishment when needed. Also, deliveries are composed of all the various products needed.
- Thanks to the daily deliveries from one destination (the hub), the inventory management strategy used can be made more specific to the level of demand of an item. For example, for high movers, the distribution centers can carry less inventory than before since they can receive replenishments quicker with the hub system.
Re-engineering clamshells and cartons
Clamshells are both a mechanism for storing and protecting the berries, as well as for presenting or displaying the berries on the grocery store shelf. These needs for new or modified clamshells and cartons arise frequently. The focus of this re-engineering effort was an informal, nonstandardized new product development process. This process often resulted in many efforts to create new clamshells and cartons that were not communicated well within Driscoll’s and often had no justified business case.
Sustainable Productivity Solutions worked with Driscoll’s personnel and their suppliers to bring rigor to this process. The first step was to understand the current processes and failure points. The major failure points identified included:
- Poor communication and coordination between suppliers and Driscoll’s
- Failure to communicate design objectives and specification fully (Information is missing.)
- Failure to consistently calculate the expected return on investment/value proposition
- Failure to document design iterations
- Difficult to design packaging that works for all regions/varieties because of fruit size variability
- Incomplete engagement of all critical stakeholders during design projects
Once these findings were communicated among all stakeholders, a process mapping exercise was used to develop what the desired process would look like. From there, toll gates were identified, the specific requirements for each toll gate were defined and the results were communicated to all involved teams. Significant effort was placed in involving all stakeholders during the process definition phase. Then individuals were assigned to manage this process and to drive the discipline into the organization to follow this process.