Supply Chain integration within ORTEC’s

Advanced planning & Optimization systems

Marijan Vrandečić, 12.11.2015

Optimize world

Jamnica is the largest Croatian producer and

distributor of waters and soft drinks

2

...with revenues of >300 mil EUR and volume of

>500 mil l

3

Volume >500 mil l = 225 olympic swimming pools

42%

Carbonated

mineral water

31% Non-

carbonated

mineral water

11% Fruit

juices

16% Ice tea,

CSD, Other

Our tradition goes back 187 years

4

The wells of Jamnička Kiselica

known since the Celtic era...

Organized exploitation

started 18 October 1828

when the first bottles for

the market were filled

Today we are the leading water and beverage producer

in the Adriatic region

Geographic diversification: greenfiled

and acquisitionsProduct diversification

Exporting to >15 countries worldwide

Strong growth driven by Agrokor – modern-day Jamnica owner, since 1992.

5

Production+distribution Distribution

Agrokor Group is the largest private company in

Croatia and one of the leading regional companies

6

• Agrokor Group is the largest

privately owned company in

Croatia

• One of the leading regional

companies

• Almost 60,000 employees

• Consolidated revenues of 6.4 bn

EUR, EBITDA of 0,5 bn EUR

Agrokor group comprises a diverse portfolio of

leading brands and banners

Ice Cream and

Frozen Food

Water and

Beverages

Edible Oils and

Margarines

Meat and

Agriculture

7

Croatia

(796 Stores)

Bosnia and

Herzegovina

(264 Stores)

Slovenia

(493 Stores)

Serbia

(337 Stores)

Montenegro

(89 Stores)

#1 in all primary markets

Food

manufacturing

and distribution

19% of Agrokor

sales

Retailing and

wholesale

77% of Agrokor

sales

Jamnica’s RTM strategy is based on predefined

sales routes and own distribution fleet

As we are market leader with highest price on the market, we developed RTM strategy

with very high service level (delivery, and in store operation).

8

Sales Distribution

Salesman routes

Defined service levels

Online ordering

Rerouting orders

Picking and dispatching

In store delivery

To secure operational excellence we developed

distribution network with high complexity

• Cross-docking

• Multi-load

• Backhauls

• Empties/returns

• Trailer decouple

9

Transportation modalities:Commercial optimization s/w also considers various synergies

20 Dispatch locations

145Own trucks (slide

walls, hydraulic ramps)

Key figures – Distribution daily operation

100 Carrier trucks

6.000 Daily pallets delivered

DC

SC and RTM processes integration became NECESSITY

processes

Resource

management

execution

service

Level

control

planningKPI

reporting

warehouse

service

Jamnica

DC

DC

DC

DC

DC DC

DC

10

Before... After...

• Large number of planners and growing

• Poor utilization of the fleet

• No interactions with other DCs

Each DC acting as a company within the

company

Need to introduce RTM system integrator

• Automatic planning supporting best practices

• Control over number of FTE’s and resources

• Interaction between DCs to optimize routes

• Execution

• Processes

• KPI reporting

• Resource

management

• Planning

• Warehouse

service

• Service level

control

11

Impact level

Resources to

cover

Key planning

issues

Tractor Trailer Tractor TrailerTractor Trailer

Real TimeMultiyear

Strategic

Addressed in this session…

Execution

Operational

Tactical

Process integrator was founded

Project implementation is really demanding

12

January 2014

Tender – supplier definition

Kick off meeting

Function

required

document

Master data

preparation

300.000

records

February and

March 2014

Solution Design

Document

Implementation

of GPS tracking

system

April and May

2014

ORTEC Routing &

Dispatch training

User education

Partial

automation

June 2014

ORTEC RD Kick

off

Manual

planning in the

main DC

Testing the

system

September to

end 2014

Implementation of

solution in all DCs

Manual

planning

Automatic

planning

Editing master

data

Project timeline

January till August 2015

• ORD in secondary and primary logistics

• Testing system for primary distribution

• Work on automatic planning, and merging DC’s in regions

• A reconciliation of processes in primary distribution

• Fine tuning system to apply in the primary and secondary distribution

2013

2014

2015

Promising results in first seven months based on

quick wins

13

12% increase indeliveredvolume

40% decrease

inoverloads

7% decreasein overall

secondary(DSD)cost

All DCs using the

same procedures

Decreasein workinghours 8%

Shipping without delay

8%

more

loadings

10 planersless

700.000€ savings in

first year

Still we have a lot to do…..

Tactical routing – additional savings in km and

vehicles

Manage drivers on the field – navigations and

information in real time

Dynamic sourcing - deciding from which

warehouse to deliver based on real cost

ORTEC shuttle central warehouse – optimization

and assigning min. cost to warehousing operations

14

Improvement in automatic planning – improving

algorithms - additional savings in km

Tactical Routing – way to optimize salesman route

and order schedule

15

• POS location

• Resource location & availability

• Equipment, skills & qualifications

• Balanced workload by geography

• Geographical clustering

• Insight in required fleet size

• POS location

• Visitation frequencies

• Equipment & skills

• Balanced workload

• Geographical clustering

• Balanced delivery calendar0

500

1000

1500

2000

2500

3000

3500

4000

4500

Maandag Dinsdag Woensdag Donderdag Vrijdag

We

rk

last

INPUT OUTPUT

• Additional savings in distribution cost based on optimizing salesman route

and service level with balanced workload in a week

• Estimation is that we can save additional 5% savings in distribution cost

Territory

Assignment

Period

Scheduler

16

Key facts

High seasonal influence

• 30.000 pallets preproduction for

season; lack of capacity

• 5.000 pallets daily dispatched

• Lack of adequate warehousing

capacity

Benefits

Low warehousing cost 3€/pallet with manipulation

High space utilization 6 pallet/m2 / 30.000 pallets in 5.000 m2 plot

High outbound capacity 400 pallets/hour (300 trucks daily in/out)

Managing exceptional seasonal impact on production

ORTEC Warehousing solution for Jamnica

17

1. Satellite retrieves pallet from channel

2. Shuttle brings pallet to the Sequencing Buffer

3. Shuttle puts pallet in channel with other pallets for that

order/shipment

4. Pallets are sequenced in reverse drop sequence (each

channel can contain 18 pallets)

5. When the truck has arrived, all pallets are retrieved from the

Sequencing Buffer

6. Pallets are brought down in the correct sequence by an

elevator

7. Pallets are loaded fast and flawless

3 12

4

567

25-11-2015 18

Supply Chain Design

Tactical Routing

Stock Replenishment

Workforce Scheduling

Routing & Scheduling

Routing & Dispatch

Warehouse control &

optimization

Load Building

Pallet Building

ORTEC @ ROTO

PILOT: Analysis & Results

Optimize your world

Data provided

20

7 Days of orders

2 DCs

1,611 PdV

3,445 Transport orders

Depot

Deliveries

Pickups

The ROTO routing problem

21

Planned Executed Arc been travelled at re-routing instance

Static

Orders

DC/Call Center

Served

OrdersDynamic

Orders

Static orders known from previous day (delivery, pickup)

Dynamic orders (delivery, pickup) received in real-time from call-center

Dynamic orders need to be assigned to the best routes in real-time

Pickup

Delivery

ROTO business dynamics (1/2)

22

Arrival profile or dynamic orders

Most dynamic orders received from 09:00 til 12:00

Similar pattern among the two depots

ROTO business dynamics (2/2)

23

Arrival profile or dynamic orders

Dynamic orders are not very urgent – potential for optimization

Karlovac – even less urgent (but, limited # of dynamic orders)

Routing scenario

24

Continuous optimization / re-optimization

Static Plan

Batch Planning

DispatchingReceive

New ordersRe-

optimization

Updated PlanImport

N – 1 N = Day of planning

Planning horizon

Dispatch/Execution

PILOT process followed

25

Focus on business process simulation

If new (dynamic) orders exist

PILOT Process: 1. Import

26

Import Batch Planning Re-optimization Reporting

PILOT Process: 2. Batch planning

27

Import Batch Planning Re-optimization Reporting

PILOT Process: 3. Replanning/Re-optimization

28

Import Batch Planning Re-optimization Reporting

Routing: Results & Analysis

29

Estimated cost/savings (sum of three days)

Orders Kilometers Costs Trips % Avg. Util.

ASIS 1,519 25,523 71,204 167 58%

OPT 1,519 14,425 51,602 141 75%

% Dif. (ASIS vs OPT) - 42,9% 27.5% 15,6% 29.3%

ORTEC Routing & Dispatch