The US subsidiary of Perfetti Van Melle (PVM), the sixth largest candy maker in the world, produces the wildly popular Airheads, Airheads Extreme, and Mentos, primarily in its plant in Kentucky. While its operation in the US ranks as a mid-size company, PVM competes head to head with candy giants like Hershey and Mars. It operates ‘round the clock, five days a week, making three million colorful Airheads per day, at a rate of approximately 6,000 pounds of candy per hour. The plant uses ten million pounds of sugar a year to make cherry, blue raspberry, watermelon, strawberry, green apple, orange, and “white mystery” Airheads, and the vibrant: red, yellow, green, orange, and aqua Airhead Extreme Sour Belts.
But a lot changed after September 11, 2001. One U.S. Government directive was the Food and Drug Administration’s (FDA) Bioterrorism Act of 2002, which is playing a major role in the worldwide food industry. This act requires companies that process, pack, manufacture, or hold food that will be consumed in the United States to register with the FDA. Companies also have to maintain detailed records on acquisition, production, distribution, and sale of food products, and to provide the FDA with detailed tracing of any food product at a moment’s notice. Companies the size of PVM are on the hook to comply by June 9, 2006. Those that do not comply face significant penalties, and in certain cases violators may be criminally prosecuted.
That was then; this is now
Dave Hofmeister, CIO of PVM USA, says that products at the company traditionally were tracked simply by date code. In the event of a product recall, which PVM never had to do, the date code tracking strategy would have necessitated the gross recall of all product within a certain date range printed on packaging. Now, under the Bioterrorism Act, companies must be able to track products by batches of all materials so that product can be recalled with greater specificity in the event of inadvertent or intentional contamination.
These new requirements for tracking and tracing increase the level of accountability necessary at each step in the candy manufacturing process. “From an information management point of view, the challenge is to track and trace accurate real-time data on all elements of the physical flow of raw materials, intermediate material, and finished product,” says Hofmeister. “The scale of such an undertaking eliminated any idea of managing with manual processes.”
Because PVM is already an SAP shop, Hofmeister worked with itelligence, an SAP Global Partner, to help implement the batch management functionality in SAP R/3.
Compliance – and a leg up on the future
With a mandated compliance date looming large, PVM executives knew they had to act, and with help from itelligence the new batch management application was implemented within three months. Hofmeister reports that because staff members understood the importance of the changes they were making they got on board with the new system quickly, which helped ensure the success of the project.
Also, according to Hofmeister, “Implementing segments of the solution serially rather than in parallel was vitally important to the success of the project.” With help from itelligence, PVM focused first on implementing batch management and radio frequency bar coding to ensure tracking and recall capabilities. The project schedule included two weeks devoted to valuable upfront pre-project planning and development of a project blueprint that ensured disciplined realization of the go-live goals on time and within budget.
Hofmeister points out that a larger company with more resources could bite off larger chunks at a time, but that SMEs do well to size the work realistically.
Catalyst International supported the RF capabilities effort, which in addition to providing the ability to track the movement of goods in real-time in the SAP solution, increases the quality of data over the previous manual input system. It also positions PVM to be able to take the next step, implementing RFID based on the SAP Auto-ID Infrastructure. It’s a near-term priority for PVM as an SME supplier to the big box retailers.
Hofmeister acknowledges that the Bioterrorism Act put considerable pressure on PVM to upgrade its technology, and to do so in a very strict time frame. Besides meeting the Bioterrorism Act compliance mandates, the benefit to the company is that Hofmeister’s team has escalated the implementation of capabilities that support improved business practices, with better batch management throughout the entire process: mixing, extruding, cooling, cutting, packaging.
True to his disciplined serial implementation philosophy, Hofmeister says that his team is currently evaluating additional capabilities to roll out. Top priorities include SAP’s sophisticated sales order, pricing, and logistics execution functionalities.
Most Airhead and Mentos lovers won’t care about the lot numbers on the product and on the wrappers, but the FDA believes that its requirements are vitally important to product safety. Perfetti Van Melle took the mandate seriously and today is fully compliant. The added bonus is that the company’s new solution, with the reductions in non-conformances and improved tracking of raw ingredients it provides, continues to help PVM increase its business process standards.