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									                Bay Valley Foods Adds $2.5M to the Bottom Line Through
                Operational Improvement
                Monday, May 12, 2008
                Lora Cecere, Alison Smith, Simon Jacobson

Bay Valley Foods is a private-label manufacturer of pickles, non-dairy powdered creamer, and soup. The
company is a TreeHouse Foods subsidiary, with 18 plants and $1.5B in revenue. It’s currently on track to
complete an implementation of CDC Software’s Factory system for manufacturing operations management
across its entire plant network within the next 12 months.

CDC Factory software provides shop-floor visibility and intelligence technology, which was acquired from MVI
Technologies, with scheduling and manufacturing execution functionality from the existing CDC Software
portfolio. It combines operations intelligence (OI) with classic manufacturing execution in a highly packaged

AMR Research recently had a chance to discuss high-performance team development with George Jurkovich, the
senior vice president of operations from Bay Valley Foods. Mr. Jurkovich enabled a step-change improvement in
operations by giving the operating teams the right data to make decisions.

Q: Please tell us more about your project.

Mr. Jurkovich: It’s critical for Bay Valley Foods to control our conversion costs. Our focus is on margins and
driving productivity. When I first started with the company in 2006, a CDC Factory team made an appointment
and explained their application. At first I did not believe them. It sounded too good to be true.

After the meeting, we visited two references and could see the power of the software and service combination.
This was followed by a three-day performance benchmark and audit that highlighted some of our inefficiencies
and showed us exactly what the software could do in our environment. We were believers then.

After implementing the system, I now know that it’s powerful. It takes people from gathering information to
using the data to make decisions on the floor where it counts most. The system allows us to gather near-real-
time data to manage our operations.

Q: How do you use the data?

Mr. Jurkovich: We use the data in multiple ways. Let me explain how it works:

       Every two hours, the production teams meet on the production line. This meeting is with the folks—
       operators and maintenance—that can make a difference.
       We also use the data at the end of the shift to review and analyze shift performance with the data while
       it’s still fresh. CDC Factory provides a summary detail with cost per unit, yield, and overall equipment
       effectiveness (OEE), with comparisons to targets and event details that impact performance. The end-of-
       shift analysis is also used to ensure there is a proper handoff to the next shift.
       The data is also summarized and used in weekly improvement meetings. In this session, we review the
       downtime and focus on getting to root issues.

This is visible from the top of operations. I can see how the factories are running in near real time from my desk,
but I am careful to not use it as a big hammer. I have to let the people who can drive change use the data. My
goal is to enable the right improvements and actions to be taken.

A key factor for our success was that the daily operating best practice was standardized and implemented across
all factories at every plant. We did not have to design or build anything. It streamlined time to value. As a result,
we made consistent improvements in weeks.

This, in turn, has a direct impact on our rolled up or aggregate performance. I now have an actual line of sight
on aggregate operating performance. It really is out of the box and suitable for a plant network.

Q: What are the results?

Mr. Jurkovich: We are seeing two things:

       We have driven factory efficiency improvements—Year to date, we have a 3% to 4% improvement
       against a goal of 7% to 10%. This is because of sharing accurate data and using it to improve operations.
       We are changing how we do work—We are now operating in a much stronger team environment. The
       operating teams have the ability to focus on the right problems and ask for funds to fix the issues. People
       want to do a good job. This technology helps them focus on the right things.

We are on track to achieve a 5% to 10% improvement in efficiency across the plant network in a year.
Estimating that each percentage point of increased operational efficiency is valued at $500K, the company
expects to return $2.5M in savings to the bottom line in the first year.
Q: How did you build trust?

Mr. Jurkovich: We have union and non-union plants. Our unions are fairly aggressive, so we established an
implementation team to get buy-in. So far, there have been no issues.

CDC Software has been good to work with. The company is committed to what it’s doing. It believes it’s driving a
significant change in the food industry one company at a time, starting within the four walls of the factory and
moving all the way up to the boardroom. That whole attitude is pervasive in the organization. The head of IT was
involved in the selection process at the beginning of the project, and so far there have been no issues.

Q: What are your next steps?

Mr. Jurkovich: Currently, we have completed seven of our factory locations and plan to do two more before the
end of the year. Our goal is to finish 11 of our factories. I believe this will make a major difference in the long

The power is in giving the right people the right data to make a difference and allowing the teams to make the
right decisions. I understand I can derail the process if I use the data as a big hammer and try to drive a top-
down process. It has been fun to see the teams step up to the plate to make this happen.

                                          Copyright © 2008 AMR Research, Inc.

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