It’s impossible to turn stuffing back: how planning automation saves inventory resources

Automation of MEAT industry enterprises has now become an urgent need. The tasks of increasing revenue and entering new markets for domestic products, and, as a result, continuous adjustment to the diverse needs of consumers require high speed from modern manufacturers. They must adapt quickly, keep up with demand and, of course, monitor the high quality and safety of products.

Of course, in conditions of high competition and regular but varied socio-economic changes in the market, it is very difficult to maintain your position. Not all manufacturers were able to get their bearings; the process of business consolidation has already begun. For example, in 2022, the New Duck Farms company, part of the Damate Group of Companies, acquired at auction part of the property of the bankrupt Donstar, once the country’s largest producer of duck meat. And there have been more than a dozen such transactions in the last two years alone.

At the same time, large enterprises readily accept the challenges of the time and actively use promising technological developments to solve the most complex problems posed by today's dynamically changing external environment. By automating production based on independent and reliable Russian IT solutions, such enterprises create a sustainable business model and increase the food security of the country as a whole.

Alexander Eder, Ph.D., DIRECTORfor business development in the agro-industrial complex of the K2Tech company clarifies that food enterprises regularly face a huge number of risk factors, and in order to minimize them, large market players continue the previously deferred implementation of complex digital projects to automate business and production processes: “The agro-industrial complex has always been sufficient conservative, but it has now become obvious that manufacturers, receiving additional support from the state, are more actively implementing solutions that form the digital foundation of the IT infrastructure, and then combining them into a single digital platform. At the same time, they rely on mature Russian developments as more stable and promising.”

According to Alexander Eder, automation has a direct impact not only on reducing risks and increasing enterprise profitability, but also on product safety. For example, previously at a meat processing plant, piece products were laid out on a tray manually: they were cut, placed on a scale , and if 50 grams were missing, they were taken from another tray. An unstructured process for planning the consumption of raw materials and regular human contact with the product negatively affected the quality and shelf life. For example, by automating the operational planning process, the manufacturing plant can offer the buyer guaranteed delivery times and reduce its own costs.

Automation of production planning for a food enterprise

“In the market as a whole, we see that automation in the meat production and meat processing segment remains at a low level. However, companies have already begun to accumulate high-quality expertise in this area. And it’s important that industry leaders share their experiences and continue to develop their systems.”
Sergey Ivashchenko, HEAD of production planning at GoodsForecast.

Overproduction of any type of product leads to losses. Underproduction means lost revenue. Planning is one of the most important stages in meat processing plants. Errors at this stage can lead to serious losses for the company due to suboptimal use of raw materials, warehouse stocks and premises, as well as frozen capital. The company may also be subject to fines for missing delivery deadlines, or it will suffer lost profits by not meeting demand. The company may also lose money by writing off balances if more products were produced than needed. Emergency production changeovers due to planning errors also lead to additional costs.

Today, in many food industry enterprises, accounting and planning are still carried out manually. Planners enter data into a large number of Excel tables, and this approach creates many difficulties, including the risk of incorrect information entry. In addition, work at enterprises is carried out not only with current information, but also with historical data, and to process an array of such data a person will need a significant amount of time.

An alternative is GoodsForecast, an automated production planning system that is powered by predictive analytics and machine learning and can process tens of thousands of rows of historical records per second. “The system searches for the optimal operating plan for the enterprise, choosing it from tens of thousands of possible solutions. A person is simply not able to go through so many options,” notes Sergei Ivashchenko, head of production planning at GoodsForecast.

Through the introduction of machine learning and artificial intelligence technology, planners are now able to compare several production scenarios, changing various input parameters, and select the most optimal option for the business, taking into account restrictions, for example, planned equipment repairs, lack of necessary raw materials and supplies.

The GoodsForecast system balances production and selects the optimal methods for cutting raw materials so that customer demand is maximally satisfied, and at the same time, unused raw material remains are minimal. Thus, a large regional agricultural holding, which introduced this technology into the enterprise infrastructure, noted an improvement in the turnover of the company's fixed assets by 9%, a general reduction in the shortage of finished products by 20% and a reduction in labor costs for inventory management by 30%.

Implementation of a planning system. Case of Cherkizovo Group of Companies

“You can’t put a chicken back when it’s been cut up. Excess cutting is unprofitable and has low liquidity. Therefore, the “healthy sleep” of the glider at the poultry farm is the correct production task and automated balancing.” - Lev Belev, Director of Supply Chains for the Poultry Segment, Cherkizovo Group of Companies

The main volume of production at Cherkizovo Group of Companies is chilled chicken products . Several large factories are working to supply the market with the necessary volume of goods. One of the tasks that the company’s management had to solve was building the enterprise resource planning process in such a way that each customer received the required assortment on time.

Cherkizovo Group specialists needed to receive an order from retail chains in a very short period of time and process it, that is, carry out balancing and correctly place the order at the production site. If we talk about specific deadlines, then within 48 hours from the moment of receiving the order, the poultry farm must produce and deliver products to each retail shelf in Moscow, St. Petersburg and other regions of the Central Federal District.

It was necessary to evenly distribute the load between plants, reduce the daily work time of specialists in distributing production orders by automating processes, provide for the possibility of daily production planning in a single logic, and also include a larger number of factors and performance indicators in the optimization process. At the same time, it is necessary to maintain a high level of service.

Director of supply chains for the Poultry segment of the Cherkizovo Group of Companies Lev Belev notes: “The peculiarity of our business is that the products are supplied both whole and in cut form. It would seem that there is nothing difficult about dividing a chicken. But if you cut something off a chicken, it can no longer be put back into the carcass. Half cut chickenlow liquidity, it will be difficult to sell. Accordingly, if we cut up excess chicken without optimally placing orders in our factories, it will result in financial losses. It is important to understand that chilled chicken itself has liquidity for one day. That is, you cannot produce the product in advance - it will lose freshness. Therefore, the poultry farm produces goods exclusively to order, precisely by the hour.”

Automated balancing helps to ensure the correct production task, taking into account the time it takes to complete it. To implement the task, the Russian automated production planning system GoodsForecast was chosen. In just a few minutes, the system builds a forecast of demand and the likely volume of orders, taking into account new products, promotions, options for cutting meat products, restrictions on raw materials, production and packaging capacities. By recording this information, the system builds an optimal production plan and balancing orders across production lines. From the many available scenarios for distributing orders across production sites, the production forecasting system selects in a few minutes the best option to cover demand with minimal costs.

During the project, not only daily balancing was carried out, but also monthly planning, and weekly planning by day, and detailed planning, down to each chicken cut, client and region. Production scenarios for the next 14 days are also spelled out.

Now the automated system helps specialists of the Cherkizovo Group of Companies collect and analyze information on factories and shipping warehouses, on customer orders, take into account production restrictions, preferences in choosing factories and warehouses, shipping and production features, balances of raw materials and finished products, expiration dates, routes movement of vehicles. As a result, the plant received a balancing of the production plan, which takes 5-7 minutes, and optimized the load on production capacity. As a result of using the system at the enterprise, already in the first year, a 30% increase in sales and a 20% decrease in the write-off of raw material balances were recorded.

Practice shows that the implementation of automated production planning systems quickly pays off and brings benefits both in terms of finances and in terms of process control and rational use of resources.