CASE STUDY: Fleury Michon forecasts success
French supermarket food supplier Fleury Michon has achieved 99.5% service levels on deliveries with forecasting technologyFleury Michon, one of France’s leading food suppliers to supermarkets, healthcare facilities and airlines, has implemented forecasting technology from FuturMaster to help anticipate future demand and the daily production requirements for its cold meats, ready meals and snacks.
By closely analysing sales patterns and consumer demand over the years, the software has enabled the food manufacturer to reduce stock and achieve 99.5 percent service levels on deliveries.
The €725m company, which sold 380 million units last year and is present in 79% of French households, is responding to consumer demand for more organic and healthy eating ranges.
Over the last few years, the group has launched more and more bio products and introduced cold meats which are free from additives like nitrates, antibiotics and genetically modified ingredients. Recent product launches include veggie burgers, salad bowls and ready meals with no additives. It claims to be the first consumer food brand to apply a nutritional score to its 1,000 plus products.
With 85% of annual sales primarily from French supermarkets, the group is branching out into new overseas markets and food services. It currently operates nine factories in France and two overseas, with its own production facilities in Montreal, Canada to serve an expanding international airline catering business.
Fleury Michon recently announced (in July 2019) the acquisition of Marfo Group, the second-largest player in the European market for airline ready meals and snacking, making it the world's leading supplier, it says. The Marfo production unit in the Netherlands adds to the current production capacities in France.
With many of the company’s staple lines being fresh meats and seafood snacks, products have a relatively short shelf life and have to be shipped out to customers, in the right quantities, as soon as possible. To make a product takes between three days and three weeks, depending on the recipe, type and process.
Shelf life varies from five days for some seafood products to three weeks on cured meats, but the food manufacturer makes sure that products can be shipped within just three hours of any order coming in.
The challenge - for a team of eight demand planners working across a wide range of products and customers - is made even more complicated given that the group tries to minimise the amount of finished goods it holds across multiple warehouses.
The company doesn’t hold stock in its production plants, instead pushing out finished goods so that no two same products are held in separate warehouses.
Out of a total of 3,600 employees working in its factories and offices worldwide, fifteen people deal with around five hundred suppliers, mostly to ensure a steady supply of fresh ingredients as and when required. Only a minimal amount of raw materials are held in stock. Planning for production, labour, supply and even the phasing of new product launches, deliveries and promotions with supermarkets is all made possible thanks to accurate planning.
“Sophisticated forecasting technology makes the process a whole lot easier,” says Stephanie Ricot, head of forecasting at Fleury Michon.
The manufacturer deals with 6,500 orders a week, delivering over a million boxes – around 1,600 tonnes – every week. Two or three dedicated planners on each production site are responsible for forecasting the week’s anticipated demand and estimating daily requirements.
A team of strategic planners also focus on longer term planning - looking up to 18 months in advance – and how future product launches or promotions will likely impact sales.
Running more promotions each year and introducing new lines to boost sales has meant that collaboration - both externally and internally - has become a vital ingredient to success. It’s why the company decided to add FuturMaster’s promotion planning module and later its S&OP (sales and operations planning) software so that everyone – from sales and marketing to production and finance – would collectively follow the same, shared goals and forecasts.
Regular communication and exchanging data with clients and suppliers is carried out daily using EDI (electronic data interchange).
“We have monthly forecast reviews with marketing, logistics and finance to anticipate our future needs and plan our direction. For instance, more organic sourcing of materials over the next few years is expected,” says Vianney Pineau, head of supply chain projects and long term planning. “Employment can be very seasonal and we need to anticipate demand. We’ve now got a reliable sales history model to spot trends and see how seasonality and promotions affect sales.”
FuturMaster’s demand forecasts help trigger a co-ordinated manufacturing programme and the software checks to see if it’s better to send some production to another plant, depending on analysing what’s the best (or most profitable)case-scenario. For instance, closer proximity to a customer can mean lower transportation costs and faster deliveries.
Fleury Michon now maintains an enviable 99.5% service level on deliveries to customers and has improved forecast accuracy from 87 to 93% over the last few years. Reserve stock levels (on finished goods) are down to just three days.
“Even weather forecasts are incorporated into our planning requirements, given that, over the years, we’ve built coefficients (into the software) to see how sales evolve as temperatures rise,” adds Pineau (such as higher demand for salads during warmer periods).
Thanks to the collective insights after two decades of working with FuturMaster (using all its software modules), Fleury Michon is next thinking about having all products in all warehouses to reduce the time it takes to get them out to customers spread throughout France and overseas. The company is also looking towards more mobile technologies and cloud computing to drive even more efficiencies across its growing international business.