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Managing the Holiday Supply Chain: Easter


Innovative supply chain through customization

Americans buy over 120 million pounds of Easter Candy each year. How that product reaches customers is a sophisticated supply chain dilemma. Peeps Marshmallows, made by Just Born, are one of the most popular candy treats. Annual consumption is so vast that if a single year’s production of Peeps would circle the globe - twice. How do so many candies reach their destination in time for the holidays? The answer lies in innovative supply chain management. Easter: By the Numbers:
  • $17.2 billion dollars spent in the US annually celebrating Easter
  • 16 billion jelly beans are made for the Easter holidays
  • 70% of Easter candy is chocolate
  • Over 4 million Peeps are made per day

easter_infographic_cropped-0315The demand balancing act

Product transportation to retailers and distribution points is one of the most costly parts of supply chain management. Just Born has been making candy since 1923 and has solved the problem through a unique approach to supply chain strategy called pool points. Pool points utilize distribution centers to consolidate less-than-truckload (LTL), truckload (TL) shipping and third party logistics to manage deliveries. As part of a re-engineering effort, Just Born asked:
  • What type of shipment best serves the customer – a full or partial truckload?
  • What is the most effective number of pool points?
  • What Time-Quantity-Route combination delivers products with maximum efficiency?
Just Born solved these and other challenges with the help of external supply chain consultants, collaborating with the Center for Supply Chain Managers at Lehigh University in Bethlehem, PA.  Together they constructed a mathematical model that uniquely represented Just Born’s needs.

It is all about collaboration

Just Born started applying collaborative transportation to its process. Collaborative transportation enables many different manufacturers to share warehouse and distribution centers – reducing costs. Products from multiple suppliers housed their products in a shared warehouse environment which would then reach the retailers on one truck.  As a result, warehouse, transportation and energy costs were all minimized. Just Born participates with other candy manufacturers in a collaboration called the Confection Connection.

Hershey's supply chain

The Hershey Company took a different approach. They decided to optimize their supply chain network by using off the shelf software rather than invest in custom development. Initially it appeared that the savings generated by restructuring their network would be offset by incurring higher freight costs. Customers were grouped by geographic regions, and stock-keeping units were associated with product groups. The team members adjusted the model until they felt comfortable with its accuracy. Once they achieved the desired accuracy, a baseline was established. This baseline became the framework for future decisions.  Analysis confirmed that closing specific centers would save money. Decreasing the number of large distribution centers was the goal. Modeling helped to identify which centers would be most effective and Hershey estimated the saving to exceed $15 million per year.

iStock_000012248943Improving the process through better management

In some countries government auditing is much less involved than in the US.  GE, for instance, improved their supplier auditing program by abandoning a reactive mode where they responded to problems as they occurred, and switched to a more preemptive mode. GE now uses new key performance indicators for suppliers. These assess how well issues related to the environment, health, safety, security and human rights are being addressed.

Barcode Technology is an integral part of supply chain management

According to Wasp Barcode Technologies, taking stock of inventory is a basic necessity for managing both products and assets. There are tremendous costs associated with poor inventory management and with neglecting opportunities for improvement. Conducting business in the most cost effective manner is essential. Efficient inventory management requires great planning. You must carry enough stock to satisfy customer demands, but overstocking means you may be tying up valuable working capital and creating inefficiencies that will lower profits. High demand holidays are even more challenging. You want to ship concentrated product inventories to customers at just the right time for the holiday. Being late means losing out on sales. Today’s technology helps you to maintain the right amount of inventory and other assets without over- or under-investing. You can also track inventory from end to end.  Effective tracking and auditing will ensure your business is profitable whether it is a high volume holiday or a typical Tuesday. What are your thoughts or concerns about meeting customer demand during holidays – tell us in the comments section below.