Featured Customer Story
Agricultural Storage Capacity Analysis Postpones 12 Million Dollar Investment
Client: A leading berry produce company
A leading berry produce company with fields and storage facilities all over the western US and Mexico needed to accurately forecast their cooler storage capacity in preparation for the upcoming growing seasons. Their high quality berries are picked from the field and must enter the cooling storage facilities (giant cooling tunnels and storage coolers) within 2 hours of being picked, or the quality begins to degrade. In the past, extra berries that could not be entered into cooling tunnels within the required 2 hours had to be shipped to a third party company to maintain freshness. This created a loss in revenue and reduced business.
To properly understand their future cooling capacity needs across the entire organization, the company created a new strategic planning group. This group would plan and forecast berry growth and related cooling and storage capacity needs, as well as cost and profitability over the next five years as the company is scheduled to double in size. The planners found that traditional spreadsheet analysis for strategic planning could not accurately forecast their capacity needs. So they decided to engage ProModel to introduce a simulation solution that offers them a dynamic representation of their production capabilities and the predictive analysis necessary to improve operations.
The first project involved a particular field in Mexico which had requested and received approval from corporate for an additional $12 million worth of cooling tunnels for the upcoming season. The new planning group was responsible for reviewing all requests of this type going forward and decided to pilot ProModel's capability by reviewing this request, even though it had already been approved.
The business objectives for developing a more accurate capacity planning capability were to:
- Eliminate lost revenue due to insufficient cooling capacity
- Avoid unnecessary capital expense from adding too much cooling capacity, or adding it before it's fully required
- A $12 million capital expense for additional cooling tunnels at the Mexican facility was avoided and postponed until the
need fully requires it.
- In addition to the cost avoidance in Mexico, the client was also able to justify the delay of additional cooling equipment for one of its California facilities, as it was determined unnecessary at current capacity levels.
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