Skretting, a global leader in providing nutritional solutions for the aquaculture industry, offers innovative products and services with high importance placed upon sustainability and transparency to ensure positive environmental and social impact.
The company has manufacturing facilities in 18 countries across five continents, delivering high-quality feeds from hatching to harvest for more than 60 species. Their North American division necessitated urgent production planning and scheduling guidance to remain a competitive force and roll out the same measure of service across all branches.
Facing seasonal challenges
The aquafeed industry is highly seasonal, with the majority of sales made to a handful of major clients with considerable bargaining power, creating a substantial reliance on such trade and, with their previous approach, little flexibility to take on new clients and operate with a degree of fluidity.
Managing production during the peak demand season has been a significant challenge for Skretting owing to unforeseen short-term changes, and a highly volatile supply chain. Furthermore, Skretting operated with a make-to-order (MTO) strategy, a manufacturing approach in which production only commences upon order confirmation; this entitles clients to personalise goods to meet their precise needs and requirements, increase productivity and reduce excess stock. However, it could lead to extended waiting times and vulnerability to irregular sales, availability of raw materials, and varying product demand. In this instance, Skretting would prepare the product within two weeks of the sales team closing a deal; a system could become strained by unforeseen production interruptions due to high-priority orders.
Embracing the shift with Adaptfy
Skretting enlisted Adaptfy, a joint venture between Metyis and SHV, one of the world’s leading trading companies, holding a diverse portfolio of subsidiaries in domains including transport, retail, oil, food and financial services.
Adapfty was forged to accelerate capacity and capability throughout the growth process and create value by optimising business practices and processes with advanced data, analytics, and technology, creating turnkey solutions for the entire SHV network. Welcoming Adaptfy as their trusted partner, Skretting could now shift away from the MTO strategy, embracing new methods for meeting heightened consumer demand, designed and implemented by an experienced team from a full range of technical expertise.
Rising to the occasion
Skretting required a solution to extend its demand forecasting capabilities beyond the current horizon and harmonise its existing MTO approach with a make-to-stock (MTS) strategy – a method that allows companies to match inventory planning and production with anticipated and historical client demand. Implementing a combination of MTO and MTS leverages surplus production capacity during low-demand seasons and improves production planning to relieve pressure during high-demand seasons, which can reduce waste and promote sustainability, a core value of the firm’s ethos.
Adaptfy’s two-phase approach to production
Adaptfy outlined a two-phase plan for implementing this strategy. The initial phase focuses on building an interactive MTS recommendation engine, allowing production planners to get insights regarding the demand in the upcoming period and optimising production runs. The second phase takes a deeper look into Skretting’s existing forecasting to develop a more robust demand forecasting platform that will, in turn, reinforce recommendations resulting from the first phase.
As the initial phase began rolling out, it quickly became apparent that a crucial first step in designing a successful system to provide actionable MTS-MTO recommendations is to select a suitable subset of Stock Keeping Units (SKUs) for consideration in the underlying decision-making process. These unique product identifiers help companies keep track of their inventory and are a vital tool for identifying individual goods and monitoring stock levels across various channels.
Regular interactions with the Skretting team revealed that many SKUs could be excluded from this project's scope, as their nature makes them unsuitable for an MTS production strategy. Furthermore, analysing various historical data — including sales, manufacturing, inventory, and margins — allowed the team to engineer several relevant features that would form the basis of the MTS selection process. After clustering and classifying these items and identifying product groups with favourable MTS characteristics, the recommendation engine was approached as an optimisation problem, suggesting an optimal production volume given the existing production and capacity constraints.
As for the improved forecast methodology, several statistical and machine learning models were considered and trained on the available historical sales. More specifically, different variations of the Seasonal AutoRegressive Integrated Moving Average (SARIMA) model, which attempts to predict future sales based on their history, were taken into account by employing a champion approach and selecting the best-performing model on an Item by Item basis.
Exploring the MTS Pro tool
The completed end-to-end solution presented to Skretting consisted of an interactive MTS Pro application explicitly tailored to the company’s needs. Adaptfy’s expert team of professionals trained and equipped employees with the proficiency to use the tool, ensuring the firm could gain exponentially from its deployment.
The application allows the firm’s production planners to visualise and inspect the recommendations coming out of the MTS engine and offers the possibility to explore the improved underlying forecast. The tool’s MTS Recommendation panel prompts the user to fill in the current month’s constraints, such as storage capacity and individual production capacity per line. These insights identify the optimal item selection and provide the production planner with an overview of the selection’s characteristics and recommended volumes. The Forecast View showcases the improved forecast for the upcoming 12 months and displays both Skretting’s and Adaptfy’s forecasts against the actual sales during that period, allowing production planners to easily compare performance to build increased trust for this tool within the Skretting teams.
Following MTS Pro Toll’s recommendations is anticipated to achieve significant cost savings with increased line efficiency and enhanced production planning. The tool will reduce the likelihood of out-of-stock situations and delayed deliveries.
Replicating successful implementation company-wide
Since the initial deployment of Skretting’s Vancouver plant, the introduction of the MTS Pro app has prompted enthusiasm across Skretting’s entire operation, with several Skretting sites reaching out to replicate this process.
Insights gained from such projects contribute to Adapfy’s ability to empower businesses to meet heightened demand, optimise workflows, allocate inventory, and boost customer satisfaction, helping companies thrive in competitive and diverse industries with the continued support of dedicated professionals.
About the authors behind the article
Andrea is the general manager for Skretting North America, taking over the role after serving as CFO for 4 years. Payam is a Quality Assurance director at Skretting with over a decade of company experience and IBP manager for Skretting Vancouver. Yannis Muller is a Data Science Analyst at Adaptfy office in Amsterdam with a background in International Business Administration and Information Management from the Rotterdam School of Management.