Ice Cream Ops Mgmt

Polytechnic University of the PhilippinesGRADUATE SCHOOL

Sta. Mesa, ManilaMaster in Business Administration

Case Study onOperations Management on Manufacturing

FOOD INDUSTRY: Ice Cream

Presented by:Panlilio, Belinda L.

Highlights1. History of Ice Cream Industry2. Major Players in Ice Cream Industry:

International and Local3 . Ice Cream Operations Management

Operation and Productivity

Operations Strategy in a Global Environment

Forecasting Designing of Goods and Services Managing Quality

Highlights4. Ice Cream Operations Management

Process StrategyLocation StrategiesLayout StrategiesHuman Resources, Job Design, and Work MeasurementSupply Chain ManagementStrategic Material Management

Production PlanningMaterial PlanningInventory Management

History of Ice Cream Industry

The origins of ice cream can be traced back to at least the 4th century B.C. Early references include the Roman emperor Nero (A.D. 37-68) who ordered ice to be brought from the mountains and combined with fruit toppings, and King Tang (A.D. 618-97) of Shang, China who had a method of creating ice and milk concoctions.

First Ice Cream Parlor In America - Origins Of English NameThe first ice cream parlor in America opened in New York City in 1776. American colonists were the first to use the term "ice cream". The name came from the phrase "iced cream" that was similar to "iced tea". The name was later abbreviated to "ice cream" the name we know today.

Major Players Ice Cream Industry

Unilever in US: Breyers, Ben and Jerry’s, Good Humor, Klondike, Popsicle

Nestlé in US: Dreyers

The great ice cream battle

Operations Management

Operations and Productivity

Voice Directed Workflow

When Dreyer's Edy's was reporting approximately $1 billion in annual sales, it installed a voice-picking system from Pittsburgh, Pa.-based Vocollect – which specializes in voice solutions for mobile workers in warehouse and distribution center operations – in two facilities. The technology expanded with the company, and has since been installed in 12 facilities, helping Dreyer's Edy's reach $2 billion in sales and become a Nestle subsidiary. Recently, the company acquired Kraft Pizza, which doubled its size and volume.



Strategy - Nestlé Roadmap to Good Food, Good Life



Strategy - Nestlé Roadmap to Good Food, Good Life

Operational pillars

•Innovation & Renovation •Wherever, whenever, however •Consumer communication •Operational efficiency

Nestlé must excel at each of these four inter-related core competences. They drive product development, renewal and quality, operational performance, interactive relationships with consumers and other stakeholders and differentiation from our competitors.

If Nestle excel in these areas it will be consumer-centric, it will accelerate its performance in all key areas and it will achieve excellence in execution.


Forecasting

Nestle demand planner uses Exponential Smoothing and Linear Regression to forecast demand.

The system used is from SAP. Module used is APO (Advanced Planning and Optimization) and Sub Module Demand Planning

Main Ingredients in the Ice Cream Mix

There are three categories of ingredients in the ice cream mix: dairy, sweeteners, and additives. Milk, cream, and non-fat milk solids make up the dairy portion of ice cream. Sucrose or Splenda is used to sweeten the mix, and stabilizers and emulsifiers are added to give the ice cream the desired body and mouth feel. Also present in the ice cream is air.


Designing of Goods and Services



FIRST PEELABLE ICE CREAM: Television commercials of Eskimo Monkey in Thailand showed how fun it is to peel the ice cream.

Hervé Cathelin, Global Head of Nestlé Ice Cream, explained the relevance of the ice cream snack and said: “When you work in ice cream you need to think like a kid. A kid wants to play, explore but most of all have fun. In Nestlé ice cream it is important to achieve our objective of developing products that not only appeal to kids, but also meet the Nestlé nutritional foundation. The peelable ice cream achieves this in a fun and playful way.”



This project was totally 2D brand led, following strict third party brand guidelines.



Stage 1. Meeting with Nestle in Geneva to be briefed on brand guidelines and shown examples of ice cream and confectionery branded Nestle.

Stage 2. Research: EU Standards, the target market, working environment, mechanical loads required to dispense ice cream, ergonomics re user constraints, brainstorm 3D form branding concepts, product operation concepts.

Stage 3. Design: The selection board of Nestle confirmed the visual direction that we all felt to be most appropriate to portray the Nestle brand in 3D.

Stage 4. Development: Mechanical function tests, destructive testing defining the limits. Ice cream temperature and resistance measurements.



Stage 5. Development: CAD integration of product form and product operative mechanism.

Stage 6. Colour and Graphics: 3D form approved we created 4 schemes relating to colour, graphics, on product texture and materials options that would enhance the tactility of the product.

Stage 7. Sign Off: British Standards were invited to our premises to test and confirm that the product was “fit for purpose”

Stage 8. Production. Signed off production drawings issued to manufactures and orders placed for production. 5,000 assembled and packed units inclusive of accessories were delivered to the distribution hub on time, on budget and 3D Nestle..


Managing Quality

Packaging improvementsGood packaging is critical to guarantee product safety and high quality, as well as prevent spoilage and food waste (which has its own environmental impact).

Reduction of packaging material Use of sustainably-sourced Renewable resource-based materials where possible Use of Recycled content in packaging material where possible Support Recycling or energy Recovery from used packaging. NQS: Nestle Quality System


Managing QualityFor example in France between 2008 and 2009, the La Laitière brand: Launched a new sorbet range with 15% more fruit and 20% less sugar Reformulated its bulk ice cream to be more indulgent without any artificial colourings or flavourings Reduced the sugar content of sorbets further (30% less sugar than competitive products)Improved packaging for less environmental impact. The cardboard tub is produced using wood from sustainably managed forests and formed on-site at the factory to reduce transport.

La Laitière

Operations Management : Process Strategy

Slow Churned Rich and Creamy Ice Cream Full flavor with lower fat and calories.

Taking almost a decade to develop and perfect, Nestlé R&D established a process to destabilize the fat droplets in ice cream, making half the fat go twice as far. Slow churned rich and creamy ice cream has half the fat and a third fewer calories than conventional counterparts, but maintains the rich, creamy flavor of full fat ice cream.

The Basic Steps in Manufacturing Ice Cream1. Blending of the mix ingredients2. Pasteurization3. Homogenization4. Aging the mix5. Freezing6. Packaging7. Hardening


Process flow diagram for ice cream manufacture: the red section represents the operations involving raw, unpasteurized mix, the pale blue section represents the operations involving pasteurized mix, and the dark blue section represents the operations involving frozen ice cream.


1. Blending of the mix ingredients


2. Pasteurization

The mix is then pasteurized. Pasteurization is the biological control point in the system, designed for the destruction of pathogenic bacteria. In addition to this very important function, pasteurization also reduces the number of spoilage organisms such as psychrotrophs, and helps to hydrate some of the components (proteins, stabilizers).

Pasteurization (Ontario regulations): 69° C/30 min. 80° C/25s


3. HomogenizationThe mix is also homogenized which forms the fat emulsion by breaking

down or reducing the size of the fat globules found in milk or cream Homogenization provides the following functions in ice cream

manufacture:Reduces size of fat globules Increases surface area Forms membrane Makes possible the use of butter, frozen cream, etc.

By helping to form the fat structure, it also has the following indirect effects:

makes a smoother ice cream gives a greater apparent richness and palatability better air stability increases resistance to melting


4. Aging the MixThe mix is then aged for at least four hours and usually overnight. This allows time for the fat to cool down and crystallize, and for the proteins and polysaccharides to fully hydrate. Aging provides the following functions:

Improves whipping qualities of mix and body and texture of ice cream


5. Freezing

Following mix processing, the mix is drawn into a flavour tank where any liquid flavours, fruit purees, or colours are added. The mix then enters the dynamic freezing process which both freezes a portion of the water and whips air into the frozen mix.

Ice cream contains a considerable quantity of air, up to half of its volume. This gives the product its characteristic lightness. Without air, ice cream would be similar to a frozen ice cube. The air content is termed its overrun, which can be calculated mathematically.


5. Freezing


6. Hardening

Overview on Manufacturing Ice Cream


Location Strategies

Dreyer’s Grand Ice Cream Manufacturing Facility, Laurel, Maryland, USA

Key DataOrder year2004Construction startedNovember 2004Project typeIce-cream manufacture, packaging and distributionLocationLaurel, Maryland, USA (east coast)Estimated investment$210mCompletionOctober 2006, nine more manufacturing lines possibleSponsorsDreyer’s Grand Ice-cream holdings Inc.


Location Strategies


The plant has grown more than six-fold in size and boasts an area of 705,000ft² (bigger than 14 American football fields). The plant can store enough milk to fill ten Olympic-size swimming pools. The expansion added five new ice-cream manufacturing lines to the original six and also added the capacity for nine future lines, for when additional manufacturing capacity is required or for new products. The expansion also added a -20ºF ice-cream curing facility that can hold up to 23,000 pallets of ice-cream and frozen snacks, and a 23-door distribution centre.

The five-store curing facility finishes off (hardens) and temporarily houses freshly made ice-cream before it is loaded into freezer trucks and shipped to outlets across the US. The company expects LOC to produce nearly 58 million gallons of packaged ice-cream and 370 million packages of frozen snacks a year.


Location Strategies – LOCALNestlé Phils. opens new P700-million ice cream plant in Pulilan, Bulacan

The facility is a major initiative to beef up its production capabilities to serve local market demand with world-class quality products appealing to the Filipino taste.


Layout Strategies


Dennis Group directed the architectural design and engineering contract for the expansion. The LOC is slightly larger than the Bakersfield Operations Centre (BOC) in size and capacity and gives Dreyer's two of the world's largest ice-cream facilities, one on each coast of the US.


Human Resources, Job Design


In August 2010, Dreyer's announced plans to increase production of its Skinny Cow brand at the Laurel plant. To achieve this, Dreyer will employ 100 additional workers. The company will hire 65 workers by the end of 2010 and another 35 workers in 2011.


Supply Chain Management

Nestlè Philippines Inc., (NPI), a global leader in food, nutrition and wellness, has appointed OneStop Logistics Solutions, Inc. as its 3rd party logistics partner to manage its Central Distribution Center for Ice Cream and Chilled Products in Pasig City.

The Pasig Distribution Center serves NPI’s Distributors and Key Accounts nationwide. The facility has 4,500 pallets for Ice Cream with temperatures ranging from minus 25 to minus 28 degrees celsius. Seven hundred pallets are dedicated for chilled products.

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The underlying strategy for Nestlé’s Route to Market

.

DC

TSP

Distr. warehouse

Retailer DC

DC

Picked deliveries

Sub distr.

outlets

Large wholesaler

Tier I Tier II Ev.Tier III

200 - 8000km ~ 500 km ~ 20- 100 km

factory

factory

Full truck deliveries

Strategic Material Management

The concept of managing the flow of materials from supplier through production to customer is what we refer to as MATERIALS MANAGEMENT.

1.Manufacturing Planning and Control is responsible for the planning and control of the materials flow through the manufacturing process. This involves Production Planning, Implementation and Control and Capacity Planning systems.

Strategic Material Management

2. Physical Supply/Distribution, on the other hand includes all the activities involved in moving goods, from the supplier to the start of the production process, and from the end of the production process to the consumer. This involves activities such as Transportation, Distribution inventory, Warehousing, Packaging, Materials Handling and Order entry.

Strategic Material Management: Production Planning

TacticalStrategic

Master Production Scheduling (MPS)

Operational

Detailed Production Scheduling (DPS)

Load Planning

Distribution Requirements Planning (DRP)

Supply Planning

Demand Planning (DP)

Material Requirement Planning (MRP)

Demand Planning

Demand and Supply Review (DSR)Demand & Supply

Review

Strategic Material Management: Production Planning

Production Planning Effectiveness Oriented Metrics

Schedule Adherence Capacity Utilization Inventory TurnsNumber of Stock-outsOrder Lead-timeDelivery in Full

Strategic Material Management: Materials Planning

What are we going to make?

Demand Data

What does ittake to

make it?

Bills ofMaterial

What havewe got?

InventoryData

What are therules?

Item dataand

planningparameters

MRPCALCULATIONS

What we must buy?

What we must manufacture?

Strategic Material Management: Inventory Management

The inventory policies and procedures must be consistent with and supportive of the strategies of the company, the environment in which it operates, and the functional strategies. These would determine the techniques to be used for controlling inventories.

There are three questions that should be answered by these techniques:

When to replenish the inventoryHow much to order when replenishing the inventoryWhat costs are associated with ordering the inventory

Equipments in Manufacturing Ice Cream

FreezersThese equipment freeze the ice cream mix and incorporate air to give ice cream its desired texture. Added ingredients like confections or fruit bits are mixed with the semi- frozen ice cream prior to filling to make it more appealing to the consumers. Filling is done at -5 deg Celsius


Big Drum MachineThis machine sprays the cones with chocolate, then fills them with ice cream, and sprinkles the appropriate toppings prior to covering with plastic lids.


Vitaline This machine produces molded stick products. Molds are filled with cold mix and dipped in brine solution at a temperature of -38 deg Celsius to cause instantaneous freezing. The frozen products are then extracted, wrapped individually and packed in carton cases.


Hardening TunnelThe tunnel rapidly freezes filled semi frozen ice cream to a core temperature of -23 deg Celsius. The novelties stay inside for 45 minutes, while it takes 3 to 4 hours for the bulk to harden


Vitaline Wrapping MachineThe wrapping machine is for molded stick line products coming from the extraction machine. It also has an attached packing conveyor.

THANK YOU!

Ice Cream Ops Mgmt

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