January 22, 2020

Presentation: Pushing the Efficient Inventory Frontier at The Kraft Heinz Company

Every supply chain team must balance inventory investment with service level performance. Without balance, excess inventory accumulates throughout the supply chain and traps vital working capital. Inventory Optimization, a form of prescriptive analytics, determines where and how much stock to hold to meet a designated service level while complying with specific inventory policies. IO can have a huge financial impact by minimizing inventory and freeing up working capital while guaranteeing the right stock is on hand, when and where it is needed.

The Kraft Heinz Company, co-headquartered in Pittsburgh, PA and Chicago, IL is the third-largest food and beverage company in the US, and fifth largest in the world. The company has a market penetration of more than 95% in US households. Flagship brands include Oscar Mayer, Ore-Ida, Classico, Kool-Aid, Capri Sun, Lunchables, Jell-O and Planters. The company has 43 internal plants in the United States, more than 110 warehouses and more than 10,000 SKUs active at any given time. Additionally, a significant amount of the company’s production is planned for exports to Canada and Europe. The company is continually managing more than 40,000 different combinations of its stock and inventory policies The Kraft Heinz Company is one of the very few companies that have implemented a multi-echelon inventory optimization (MEIO) solution to intelligently manage this complexity resulting in a reliable overall inventory reduction of 10%, freeing up working capital and enhancing customer service.

The Machine Learning enabled MEIO solution used by Kraft learns and adapts to optimize safety stock locations and levels. The platform automatically changes inventory parameters and settings and provides that information to supply chain execution systems (inventory management, replenishment, etc.) These machine learning capabilities within its MEIO solution are a cornerstone for its very successful digital supply chain transformation.

Key Learnings:

  • How to balance inventory investment and customer service levels across a multi-channel distribution network.
  • How to use “what-if” scenario analysis to analyze tradeoffs between costs and service levels to maximize company performance and minimize risk.
  • How to determine Push/Pull network scenarios based upon space constraints.

Presented by
Chris Hooker
Senior Manager of Inventory Management & Analytics
The Kraft Heinz Company