Analysis of the Current System:

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According to Unilever, responsiveness is the ability to respond to the uncertain demand for ice cream through a reactive supply chain. Unilever wants to maximize the responsiveness of Algida’s supply chain. When responsiveness is at the maximum, stock levels should be able to fulfill all demand. Examination of the stock availability for each SKU in a weekly basis for the main storage areas shows that some SKU’s were out of stock for certain weeks which means there are possible lost sales. In order to analyze the reasons of low responsiveness, lost sale quantity and loss reasons should be determined.

After finding estimations for lost sale quantities, total estimated lost sale quantity for the SKU’s with stock outs in 2011 is calculated as 10% of the total sales of those SKU’s in 2011. Since this is a high percentage, lost sales have to be dissolved. Estimations for lost sale quantities for the weeks with stock out and the data of reasons of stock outs for each week are combined in order to find the percentage of the stock out reasons. It is found that the stock outs occurred because of capacity related issues, factory shut down, and raw material/pack material (RM/PM) related issues.
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Problem Definition:

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The analysis of the current system above leads us to define the problem in Unilever’s End to End supply chain of Algida as improving responsiveness of the supply chain by eliminating the reasons for stock outs which are  related to RM/PM and capacity conditions, and getting rid of lost sales.
 

Methodology:

An ABC analysis is done according to turnover that is found by multiplying turnover of the SKU by demand including lost sales that found before and dividing this to total turnover of all SKUs. After negotiation with supervisors in Unilever, according to strategic feature, product type and innovation products that will be on sale next year, 12 A, 13 B and 5 innovation SKU’s are determined for further analysis.

For increasing responsiveness, it is needed to see bottlenecks in the system. Value stream mapping is an efficient way to examine SKU’s in detail. Value stream map (VSM) is an elaborate supply chain network beginning with the raw material procurement process, going through the manufacturing processes and ending with transportation to warehouse. With the help of these maps, every step of the process is seen clearly and the bottlenecks of the system are identified easily.

When VSMs are examined with different departments of Algida, such as sales, planning and purchasing, the following bottlenecks are identified in the system;

• Suppliers are not sufficiently flexibile and cannot respond changes in the demand accurately.
• Global contracts are binding for Algida to find alternative suppliers.
• There is no alternative for most of the RM/PM
• There exists communication problems with suppliers
• There is no standardization in RM/PM. Therefore, it is impossible to use substitutable materials.

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Proposed Solutions:

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After determination of the bottlenecks in the system, some scenarios are generated to relax these bottlenecks. These generated scenarios are gathered under two main categories.

Standardization and Localization of RM/PM: Tubs and lids of the Carte d’or Patisserie and Selection families, sticks of the Max and Magnum families, and selected aromas from VSMs are evaluated under this category. Different cases, such as only standardization for just one family, only localization for just one family, both standardization and localization for two families, and their results are attained.  Acquisitions are achieved in terms of days on hand.

Hub Material Location: A demand weighted P-Median Model is used to find the optimal location of a Hub Depot which wil be used by both Çorlu and Konya factories for RM/PM. The model aims to minimize the demand weighted average distance. Suppliers and these two factories are assumed as possible nodes.