Improving CHEP Inventory Managementat Bolthouse Farms

Amanda CebellRuby JuarezWill Altmiller

Asif Sohail

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Bolthouse Farms(History)

1915

Michigan

1972

Bakersfield

1990

Baby Carrots

2003

Premium Beverages

Salad Dressing

2007

Source: www.bolthousefarms.com

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Bolthouse FarmsMission:We are a market driven, fully integrated farming company. We are innovative in agricultural and packaging technology. Within the parameters of our Corporate Philosophy, our focus is to offer quality products at the lowest possible cost through a “state of the art” plant, quality raw material and the maintenance of trust and credibility with our customers, growers and employees.

Products:

Fresh Carrots

Premium Beverages

Yogurt and Vinegar Based

Dressings

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PalletsCommonwealth Handling Equipment Pooling

• consumer goods, produce, meat, home improvement, beverage, raw materials, petro-chemical and automotive industries.

• Containers and pallets are not for sale.

•Rental price for pallets varies depending on contract agreement.

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Step 1 of DMAIC - Define Pallet Tracking Issue:

Over or Under-stated Inventory Levels No inventory maintained in the System

Vendor (CHEP) Complaints

Continuous Manual Adjustment

Potential loss of pallets not reported

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CHEPs Flow at Bolthouse

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Step 2 of DMAIC - MeasureMeasurements and Goals for

ImprovementThe variance b/w In and Out

Currently 2000 (approx) pallets per week500 pallets + or – per week is the goal

Audit of Transfer/Customer Orders Less than 1% discrepancy b/w physically on

rail car and what the transfer order showsPhysical count

Less than 0.5% variance b/w physical count and inventory level in the system.

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Step 3 of DMAIC - Analyze

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Step 3 of DMAIC – Analyze(cont….)

Check Sheet

Week # Inbound Pallets Outbound Pallets Variance Percentage

1 26,865 29,079 -2,214 -8.24%

2 60,267 56,160 4,107 6.81%

3 50,880 45,576 5,304 10.42%

4 54,141 45,354 8,787 16.23%

5 52,239 49,575 2,664 5.10%

6 107,451 99,717 7,734 7.20%

7 63,501 40,956 22,545 35.50%

8 66,420 59,886 6,534 9.84%

9 111,660 119,418 -7,758 -6.95%

10 44,754 42,642 2,112 4.72%

11 46,383 39,132 7,251 15.63%

12 43,212 42,675 537 1.24%

13 41,454 40,959 495 1.19%

14 45,099 42,303 2,796 6.20%

15 47,100 37,389 9,711 20.62%

16 38,694 43,347 -4,653 -12.03%

17 56,757 44,469 12,288 21.65%

18 60,729 46,815 13,914 22.91%

19 51,258 42,696 8,562 16.70%

20 52,098 45,963 6,135 11.78%

21 53,856 43,062 10,794 20.04%

22 49,032 47,925 1,107 2.26%

23 66,960 48,639 18,321 27.36%

24 159,819 153,546 6,273 3.93%

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Step 3 of DMAIC – Analyze(cont….)

Weekly Percentage Variance

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Step 4 of DMAIC – ImproveI. Goals for Improvement1. Reduce Current Average Variance from 10% to 3%2. Minimize the Financial Impact .

II. Alternatives:1. New Software system implemented

Con: too costly current system is already implemented.2. RFID tag all pallets– too costly3. Efficient Accountability (See Following Fish Bone Diagram)

1. Process Auditing2. Using the Existing ERP System3. Physicality Measures 4. Regular Reconciliation

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Step 4 of DMAIC – Improve(cont….)

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Step 5 of DMAIC – ControlContinued Process Improvement:

Monthly Reconciliation with CHEPDevelop and Implement SOP:

Staff Training Timeliness/ Inventorying Accountability Practices

Annual SOP review and updatingControl Charting

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ConclusionDefine: The tracking of CHEP Pallets at Bolthouse FarmsMeasure:

The Variance between in/outAudit of Transfers/Customer OrdersPhysical Count

Analyze: Data & Process Flow of Inventory ManagementImprove:

Reduce VarianceMinimize Financial Impact-Utilize Technology

Control: Monthly reconciliation of CHEPStaff TrainingAccountability

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