ERP implementation brings lean processes and increased profitability to KLN Family Brands

Profile picture for user Lance Schultz By Lance Schultz November 24, 2020
Summary:
Pet food and snack manufacturer KLN Family Brands saw huge improvement when it replaced spreadsheet planning with a new ERP system. IT chief Lance Schultz tells the story

KLN Family Brands headquarters sign
(KLN Family Brands)

Managing diverse and highly variable production across multiple sites is a complex jigsaw puzzle for any manufacturer. Can it be solved with Excel spreadsheets? That's what we used to do at KLN Family Brands. But after implementing a new ERP system we have transformed our scheduling capacity, production efficiency, cost control and traceability.

As a manufacturer of a range of pet foods and snacks for humans, KLN Family Brands has a constant need to be fully on top of inventory management, manufacturing schedules, labor and materials costs, quality control and, of course, compliance requirements. As well as manufacturing our own brands, we perform work as a private label and co-manufacture products too.

It is fair to say that there is always a lot happening at KLN. It is also fair to say that our business systems are vital to meet our customers' demanding expectations with the consistency they expect from KLN.

A complex and ever-changing production line         

Because we manufacture a wide range of products, in a wide range of batch sizes, and with a strong emphasis on organic and segregation of ingredients that may be allergens, our production lines see constant changeover from one product to the next based on demand from customers. We can see multiple changeovers in a single day. Not only do we need to switch recipes and ensure we have the materials on hand for the new product run, but we ensure we are meeting the specific handling requirements for the specific product. When we are manufacturing an organic product, we have to do a full cleaning before we start — the same is true for our hyper-allergenic lines. When these product integrity issues are not a concern, we may be able to just purge between runs. All of this needs to be factored into the production and maintenance schedules.

Profitability on different production runs can vary greatly. For our smaller customers or higher-end products we have a smaller production run, but that might not necessarily mean less profitability. A niche or premium product with a small run might be highly profitable, as might a lower-priced product with longer run.

Managing diverse and highly variable production across multiple sites is a complex jigsaw puzzle. We need accurate forecasting, planning and inventory management. We need to be able to schedule with precision, balance batches of work across plant, and plan production line changes so that they are ultra-efficient.

Forecasting, planning and inventory management

Before we implemented our new enterprise resource planning (ERP) system we were managing most of our requisition and resource planning through Excel. Now that we're doing this directly within IFS we're seeing huge efficiency gains. Literally hours are being saved by our schedulers every week, and this of course means more production uptime.

Better ERP means our schedulers can do their jobs more quickly, which creates time for them to do other, equally important tasks like forecasting future requirements and working directly with customers to help them better understand what we can offer them. More direct contact with customers helps them place orders in a way that's more cost and time efficient for them. So by using ERP to help our own efficiencies, we're also able to help our customers be more efficient too.

There is another aspect to improving production efficiency too. Within three months of going live with our new ERP provider we had achieved significant reductions in stocks of finished goods. Instead of stockpiling inventory which we had paid to manufacture in advance of sale and were now paying to store, we are now able to produce product lines in the quantities required by our customers, and at the right time.  Their faith in our ability to do this has helped further cement our reputation for reliability in the market.

Extended capabilities around labor costs and traceability

While improving the way we get the actual production process done was a key factor for us in moving to a new ERP provider, we have also experienced other significant gains. Our new provider has a broad suite of integrated products available including the shop floor workbench.

With this tool we can identify in great detail the labor costs involved in producing each product.   When we set this information alongside materials costs and the costs we incur in changing our production line to accommodate a particular product, we have much more granular data about actual costs, and we can refine our pricing to customers. We are finding this particularly useful in ensuring profitability for smaller production runs.

Another area where we've seen a significant improvement is in traceability of ingredients. As a company that sells pet and human food products, and one that has a significant reputation for our organic lines, we must ensure transparency and traceability around ingredients.

We are now able to document that materials have been through our control plan, so that we can provide auditors with appropriate information whenever required. And purchase orders in our ERP system have their Certificate of Analysis attached, which is vital for our ability to ensure traceability of organic products and verify the chemical composition of material we include in our products or products we purchase from others. This audit traceability is absolutely vital for us as a company to maintain our customers' trust, and we can now achieve it with less administrative overhead.

Easy customization and a fast, tangible return on investment

What's really impressed us is how quickly staff have adapted to the new system. Because we were seeing value improvements within a few months of implementation, and these improvements benefitted a wide range of our staff such as those involved in scheduling, cost control, purchasing and customer relationships, they were willing to incorporate it into their work and we have realized maximum gains.

This breadth of functionality is almost entirely standard, but we did have to make one modification for the advance planning board to enable us to overlap different balanced batches and go back-to-front or front-to-back. What we have heard from colleagues on the IFS user group's Food and Beverage Advisory Council (FABAC) is that more than 90% of these changes are moved into the next core product.

Apart from that, we have found the ease with which the system can be customized by end users in a no-code environment has really encouraged our people to get involved. It has been easy for us to, for instance, add custom fields that meet the field definition requirements of our warehouse management system (WMS) can just pick up the data it needs, eliminating errors that had occurred when importing into WMS. People see they can control their environment and achieve real efficiency gains. The fact that we can perform these type of improvements internally also means we can evolve our system without incurring systems integration or consulting costs.

It is fair to say that when we decided to move to a new ERP system we had high expectations, and these were all, ultimately, about helping us get more granular control over our production processes while simultaneously lowering inventory on hand. We certainly achieved that. Going live in our first location within a year, our second a few weeks later, and seeing real, tangible financial benefits just three months after go live, we're certain we made the right decision.