Case Study Detail
Language: English

VERGANI: Seasonal demand and supply chain planning for the confectionery industry

 Secondo Vergani S.p.a.
 Food Industry
Seasonal Demand Supply Chain Planning & Scheduling MES

Secondo Vergani S.p.a. is a leading company in the confectionery business for the production of nougat, chocolate, marron glacés and mustard. The manufacturing process of the company, in the historical plant in Cremona, is based on automatic production and packaging lines. The Italian large-scale retail trade is the main market, but all products are expanding into foreign markets. In 2006 the company joins Gruppo Lameri, strengthening the process of industrialization, accomplishing new sales&marketing strategies and investments to improve all business processes.
To further strengthen this strategy Vergani decides to implement a new supply chain planning & scheduling software and a MES system to track and control production processes and the project is entrusted to Plannet.

The contest
The main challenge of the food business is to manage seasonal demand. In the Vergani case for instance, 20% of the annual sales of nougat and mustard are achieved in the period January/March and the remaining 80% between September and December. Also chocolate products are affected by seasonal demand, in September and during Easter, but with a less variable trend. Before Compass project, production planning was managed by the sales team on the basis of forecast data calculated considering the past years trends and trusting planners experience. The first orders of the season were already planned in a pre-season period (March/August); during the peak season (September/December) planning process frequency used to be increased frantically, trying to chase sales data patterns. Forecast data were managed on the ERP system, but made available with remarkable delay compared to the actual needs (purchasing and production campaign were already launched); moreover such data were not reviewed promptly and consistently. Production and purchase planning processes were filled with incorrect information on quantities to purchase/produce. As a result, the high level of uncertainty led planners to increase safety stock level, to be able to fulfill market demand during the peak season.
The mentioned contest became more and more critical, considering the increase rate in annual sales ( +15% on last year turnover), in production volumes ( +20% on last year) and in the production mix (600 to 900 items during the last 3 seasons). The most relevant issues Vergani wanted to address are summarised below:
- reduce inventory levels while continuing to provide highest availability of raw and packaging materials;
- reduce complexity of processes caused by the seasonal increment of production


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