Re: More from the Y2K Investors' Conference on Embedded Systems
Don Butte, VP of Food Service Operations for Kraft Foods, gave a fantastic talk on "Supply and Distribution Chain Integrity", which is a factory floor issue. Here are a few highlights:
Kraft Foods is typical in the food industry in that they only control about 10% of their distribution network. Thus, even if Kraft becomes Y2K compliant, there could be disruptions if their partners are not.
Phillip-Morris, the owner of Kraft (and Miller), estimates it will spend $300-500 million on Y2K related work.
The product date is crucial to the entire chain, from manufacture to warehousing. Since time is already short, Kraft will track the few products with 1.5 year expiration dates by hand. For products with a year expiration date, such as salad dressings, Kraft has calculated it can not "fix" them all, so they will drop 5 or 10 of the 272 varieties.
Most of their control panels are home-made, so off-the-shelf fixes are impossible. Their huge distributed control systems (the ones that adjust the formula and weight for things like decaffinated coffee and special cheeses) must be replaced in their entirety because fixing them would cost three times as much. They will accumulate 3-5 weeks of inventory so they can close the plants for that long to install the new systems.
Their #1 issue is how to make sure the manufacture of their main products (i.e. Maxwell House, Post Cereal, and Velveeta) can be manufactured. The problem is that some of those products have tiny amounts of an ingredient that is single-sourced. Thus, a strategy of assuring major vendors are compliant (like many companies have) would not guarantee major products could be produced. So, in many cases, Kraft foots the bill for their small vendors to be compliant.
Kraft maintains a time-table down to the day. If they fall behind they make up the time that week or else they find the time is gone forever. Even with all that they realize it will be a challenge to success. Meanwhile, many of their competitors are just now doing an evaluation!
- Jeff |
