An advanced analytics application to efficiently source raw ingredients by predicting price variance in the market for one of the largest food and beverages company
Client: Kraft Foods Inc. (now Kraft Heinz Company) is one of the largest US food and beverage companies and markets some of the most iconic household food brands including Kraft (cheese), Cadbury, Jacobs, Maxwell House, Oreo, Oscar Mayer etc.
Challenge: Kraft Foods has a business division that produces and markets Kraft Singles which are individually wrapped processed cheese slices. The business division was looking to build an application that helped source its raw cheeses from various auctions without compromising the taste and quality of its cheese slices. Processed cheese is made by combining different types of raw cheeses available in wholesale cheese markets along with other necessary ingredients. There are several cheese wholesalers who conduct daily cheese auctions for manufacturers and prices can vary drastically on a daily basis.
To gather the raw material forKraft Singles production, the client had to go through two main optimization challenges:
- To collect raw cheeses at lowest possible cost from the wholesale auctions and at volumes tied to consumer demand-driven production targets
- Purchase the right mix of raw materials that would allow manufacturing the standardized sliced cheese as determined by its team of food scientists
Solution: With extensive experience in supply chain management and advanced analytics, SSI’s team of data scientists engineered an application that allowed Kraft Foods to efficiently source its raw ingredients. The application allowed to predict price variance in the market and provided prescriptive analytics to take timely purchasing decision. The analytics model also accounted for the various constraints and limitations of purchasing and keeping volumes tied to production planning.
Result: The advanced analytics application delivered by SSI helped the client in adopting a cost-effective approach in the complex process of optimal material selection for Kraft Singles. The client experienced immediate cost savings, improved enterprise planning, and simplification of a highly complex process.