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Language: English
 

Milking Demand
 

Company:

Oracle
Demand Management Planning & Scheduling


Since the 1920s, the image of a seated Native American maiden holding a package in her hands has become synonymous with the word butter. That’s when the Minnesota Cooperative Creameries Association was formed, later renamed Land O’Lakes. The cooperative established a new standard of quality in the dairy industry with the systematic inspection and certification of butter from its member creameries. Today, the co-op is one of the largest producers of butter and cheese in the United States, handling 12 billion pounds of milk annually and generating revenues of US$12 billion.

Despite that generous slice of the U.S. dairy goods market, Land O’Lakes’ dairy business is subject to extreme shifts in seasonal demand. When colder temperatures drive Americans indoors and the winter holidays give them reason to fire up their ovens, production of Land O’Lakes butter spikes by as much as 65 percent. During November and December, grocery stores around the country require 1 million pounds of butter per day to meet customer demand.

Historically, this fluctuation in demand required planners to stock excess inventory to make sure they could meet customers’ needs and service levels. But in 2010, Land O’Lakes deployed Oracle’s Demantra Demand Management to give production and deployment planners the ability to optimize production planning, significantly reduce inventory on hand, and effectively route products to markets where demand is highest—all while maintaining high service levels. These improvements in operational efficiencies have led to better use of raw materials (in this case, perishable milk), increased working capital to fuel growth, and higher profit margins.

“Figuring out how much inventory we need to meet customer demand—and understanding where product will be needed at a specific point in time—is critically important to the business,” says Barry Libenson, vice president and CIO at Land O’Lakes. “The Demantra solution is the key driver that we use in order to make that happen.”



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