Smart Snacks (a Canadian Corporation) was founded six years ago to produce healthy, organic snack products. The firm started off small in a single location in Toronto but became very popular with Canadian consumers and sales began to rise. Soon it became evident that they needed to acquire an additional manufacturing facility. They were able to find another small facility in the same industrial park.

Smart Snacks was also prolific in new product development and over the next few years, they developed many new products and product lines. This in turn required the further acquisition of more manufacturing and inventory storage space. Some of this space was directly acquired and some was acquired through the use of 3PL which performed most of the warehouse logistics for those facilities. Two of their facilities were located outside of Canada – one acted as Distribution Center for the United States and the other was a Distribution Center for Europe.

Smart Snacks is growing very quickly and expect to continue this growth for several years. As a result of their future plans, they have decided to purchase SAP’s S/4HANA product.

ORGANIZATIONAL ELEMENTS of SMART SNACKS

Currently, Smart Snacks has the following organizational elements:

•There are 5 manufacturing plants - all in Canada that manufacture all the products. (Factories F1, F2, F3, F4, F5)

•There are 4 Distribution/Storage Centers in the firm. Two of the Distribution Centers are in Canada, one is in Germany and the last one is in United States. DC1and DC2 are in Toronto and Vancouver respectively while DC3 is in the United States and DC4 is in Germany.

•The Distribution Centers in Germany and the United States are owned and operated by Business Partners in those respective countries.

PRODUCTS

•Smart Snacks has the following 3 product groups:

oSnack Bars – 5 different flavors, 3 different package quantities

oSerials – 4 different flavors, 3 different packaging quantities

oCookies - 5 different flavors, 3 different package quantities

FlavorsFAFBFCFDFE

Package SizeLMSLMSLMSLMSLMS

Snack Bars % Sales306010405010305515205030454015

Serials % Sales6530555351070255454015  

Cookies % Sales10751515805108010157015206515

•Most of the products are Make to Stock, but there are some products that are Make-to- Order as they are packaged differently for specific large customers (Costco and Walmart). Make-to-order products can only be sold to the customers they are created for and orders for them tend to be large and irregular.

•All the products have a specific shelf life of about 7 months, and most customers require that the products they order have at least 50% of their shelf life remaining when they are received from Smart Snacks. Items reaching 50% of shelf life that are unsold are usually donated to charities.

•Being food products, all products and ingredients need to be lot tracked. All purchase ingredients and all finished goods its must have lot numbers and Smart Snacks needs to record which lots of finished goods go to each customer in case a recall becomes necessary.

SALES and DISTRIBUTION

•Smart Snacks currently sells its product to large retailers like Costco, Walmart, Target, and the major grocery chains like Sobeys, Loblaws and Metro as well as many smaller convenience stores such as 7-11 and Daisy-mart.

•Currently, each Distribution Center creates its own forecast for each of the MTS products they will sell and receives sales orders for those products from their various customers.

•Factories F4 and F5 manufacture products, but also create a forecast for each of the products they will sell and receives sales orders for those products from their various customers.

•All Distribution Centers receive their stock from the manufacturing plant that makes the item, based on their forecast.

•Approximately 80% of the purchase orders arriving from customers come in the form of EDI. The other 20% come by email, fax, or over the phone.

•Most customers want delivery within 2 weeks of sending their order. Orders for Make-to-order items usually expect delivery in 3 weeks.

•The owners of Smart Snacks are considering the acquisition of a new manufacturing facility along with an additional Distribution Center in the near future to be set up in South East Asia.

•Smart Snacks are also considering the sale of their products through e-commerce but needs your help in deciding how to do this.

PRODUCTION

•Production is currently forecast in weekly planning periods for about 12 months into the future.

•The production plan is created on a spreadsheet to support the forecast.

•Production orders and purchase orders are manually created based on the production plan spreadsheet.

•To keep the factory efficient, schedulers try not to run more than 2 different flavors on their assembly lines per day. Machine cleaning is required between runs of products with different colors i.e. strawberry and chocolate,

•Package size changes require a significant change order and are therefore minimized as much as possible.

•Many basic ingredients are common to all products, but each product has some unique components.

YOUR ROLE and ASSIGNMENT

You are an SAP Consultant specializing in the Sales and Distribution area who has been hired by Smart Snacks Inc. to act as a “solution architect” to advise them on how they should structure their business and conduct their business practices in the Sales and Distribution functions. They expect you to provide the following in the form of a properly structured Business Report:

The report would have the following sections:

•Introduction

•Analysis – must address all the questions.

•Conclusions

•Specific Recommendations – must address all the questions

•Report Structure and Flow

1. Based on their existing structure and expected growth plans, state and explain the company codes you would recommend creating.

Answer rating: 100% (QA)

INTRODUCTION Smart Snacks Inc is a Canadian corporation which was founded six years ago to produce healthy organic snack products The firm started off small in a single location in Toronto but became ... View the full answer