In this session, Filippo Focacci, product marketing manager for ILOG’s Supply Chain Management (SCM) product line, presented ILOG Plant PowerOps (PPO) and how it was used to radically improve production planning and scheduling in Danone’s dairy manufacturing plants around the world.

PPO is ILOG’s new integrated planning and scheduling solution for the manufacturing process industry, specifically optimized for fast moving consumer goods (FMCG), pharmaceutical, and chemical processing applications.

The models generated by PPO provide management of tank operations, cleaning policies, shelf life and maturation times. They also provide decision support to help planners map the scheduling process and conduct what-if analyses to asses performance. PPO can also be integrated directly into existing IT infrastructure (ERP, etc.) and with the Logic Tools range of supply chain management solutions.

A dairy manufacturing plant requires an extremely complex manufacturing process that includes tank management, flow control and scheduled cleaning activities. The Danone project was designed to address three major business challenges:

• Meeting demand
• Manufacturing efficiency
• Quality

The solution provided integrated planning and scheduling for both intermediary and finished products and modeled all the plant’s key manufacturing and plant floor constraints. Integrated planning and scheduling means that planning decisions made at the same time as decisions about operational capacity. This is the only way to determine trade off between planning decisions and operating efficiency, that is to say between supply chain and manufacturing goals.

ILOG worked with Danone to create custom KPIs to enable them to track performance of the system and simulate various scenarios.

These KPIs allowed Danone to compare optimized plans generated by PPO with previous manual processes created by their experienced planning team. These comparisons revealed areas of the manufacturing process that could be considerbaly optimized. For example, manual planners would build in too margin in certain processes to mitigate risk, but this margin would often be far greater than was strictly necessary for operational efficiency.

PPO’s production smoothing tools help companies like Danone move towards lean manufacturing processes by reducing variability in the manufacturing process.

Danone identified the following key benefits of the PPO solution:

• Information Systems: Full SAP integration, modeling of both finished and semi-finished products with a repeatable core model that could be used as a template for other plants.
• User: Very high user acceptance, easy to learn and use.
• Organization: Manufacturing and supply chain use the same tool and planning is now a daily activity rather than the previous week-long process.
• Process: Improved operational efficiency, optimized service levels and inventory corridor. Ability to deliver executable plans for finished products and white mass as well as cleaning and changeovers.

The first Danone plant to adopt the PPO solution was in Mexico. Danone has since implemented similar solutions in Russia, Argentina, and now Brazil. These are all markets with 20-30% market growth potential per year, bringing Danone very high return on their investment. The largest gains to made with PPO are in markets that have high growth and capacity constraints, where improvements in plant throughput are essential to meeting growing customer demand.

Major synergies are possible between PPO and Logic Tools or other supply chain management applications, such as SAP or Oracle. So while the Danone story certainly represents a breakthrough in production planning and scheduling, so much more is possible.