Food and beverage companies achieve supply chain optimization through advanced analytics

Baker Tilly’s advanced analytics specialists help food and beverage industry executive and operational management teams focus on and prioritize the potential profit centers within their current business or their desired future asset base. In the examples below, Baker Tilly used statistical scenario-modeling and data visualization to evaluate the business case for multiple supply chain optimization projects.

Middle market dairy company

Client need: Our client, a middle market dairy client had seen increasing transportation costs and headwinds in the market. To address these challenges, they were evaluating a new asset; the business case was premised on reducing the transportation costs while adding value to the raw milk.

Baker Tilly approach: Working with the client, we pulled ‘farm-to-plant’ movements at the truck level over the course of the year. Blending in their growth forecasts, we developed network optimization models that accurately reflected their current transportation costs, and used these models to understand the future state costs of a range of siting alternatives, and considering major factors like the seasonal nature of the business.

Result: Contrary to expectations, the new asset was estimated to increase haul costs in all scenarios. By demonstrating that a key assumption related to the business case did not hold at an early stage in project development, the client was able to pivot and dedicate resources to other strategic initiatives.

Large food and beverage company

Client need: Our client, a large food and beverage client had a complicated multi-tiered supply chain to produce a wide range of products for mostly B2B customers. A strategic partner wanted to purchase a new product in substantial volumes, so the organization was trying to determine approaches to meet this need.

Baker Tilly approach: By collating data from all significant material movements throughout the organization, the supply chain was mapped in unprecedented detail. This information was then used to take a supply chain design approach, considering a wide range of alternatives to meet the need. The resulting cost estimates, coupled with detailed water, wastewater, electricity and natural gas utility information, were used to evaluate the net-present-value to select the best option. Our team partnered with the project team throughout the development process; by collaborating closely, the critical drivers were understood throughout the project’s evolution.

Result: After many detailed reviews, a new Greenfield project was selected as the path forward, which met the customer’s needs while substantially reducing the total supply chain costs incurred by the organization. These estimated savings were considered in the bankable business case and used to secure New Markets Tax Credits and traditional financing for the asset, which is now in service.

Joint venture with three large food and beverage processors

Client need: Three large food and beverage clients had each seen significant volume growth in the past few years, which left them each short on production capacity. To address this need, they were negotiating a possible joint venture to construct a Greenfield production facility, both to minimize the capital outlay required from each partner and to achieve economies of scale. The supply chain impacts of the project were expected to be very significant, but the partners were unwilling to share detailed production and customer data with their counterparts, which prevented any kind of analysis or evaluation of these benefits.

Baker Tilly approach: After securing non-disclosure agreements with all parties, we collected this highly sensitive data from all three joint venture partners. This data informed supply chain network design models to understand the impacts on the joint venture partners, their suppliers and their future customers. We then curated this analysis, coupled with detailed rate studies, utilities capacity analysis and possible incentives, and shared back transparently to all joint venture members the results of the analysis in pre-approved formats. This approach provided each executive team with the intelligence needed to make a decision, while protecting the confidentiality of all parties.

Result: As negotiations progressed, the model was rapidly adapted to changing circumstances and assumptions. This maintained momentum in the dialogue between the parties through a range of different possibilities. After a multi-year effort, the joint venture agreed on a $400M asset meeting the needs of all parties.

For more information on this topic, or to learn how Baker Tilly advanced analytics specialists can help, contact our team.

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