Businesses across multiple industries have felt the intense supply chain pressures brought on by COVID for nearly five years now. As a result, 86.2% of businesses have spent the last few years working to “de-risk” their supply chains, according to the National Association of Manufacturers. Blue Diamond Growers, the world’s largest almond cooperative, has been investing in reducing this risk and creating a more resilient supply chain.
For the past decade, Blue Diamond Growers has worked with SAP, starting with a rapid installation of SAP ERP Central Component (ECC) in 2014. When Steve Birgfeld, VP of Information Technology and Services at Blue Diamond Growers, started with the company in 2016, he saw the likely benefits of investing further in the optimization journey to “really take advantage of this technology,” Birgfeld said in an interview with Retail TouchPoints.
Blue Diamond has since built out its SAP tech stack significantly, implementing SAP S/4HANA, SAP IBP for Supply Chain, ISBN solutions, SAP Analytics Cloud and SAP Signavio to streamline its operations and supply chain. Through this transformation, the company has saved $1 million in annual transportation logistics, reduced supply-on-hand by 20%, reduced financial closing time by 40% and achieved a 99% customer-order fill rate.
“We have a great foundation, and we continue to optimize and tweak the toolset accordingly,” Birgfeld said. “Where we’re really focused right now is improving data and analytics to the business — that whole business intelligence and decision-making capability. That’s everything from demand to supply to logistics to manufacturing, and having all those insights across [different areas]. So we’re focused on making sure we’ve got the right data in place, the right insights in place, so we can respond quickly to our customer and consumer demands.”
Aligning Supply and Demand
Blue Diamond has two main lines of business: the branded snack business and an ingredients business, with the company reselling its almonds to other CPG companies to use in their products. “A lot of the planning required was done separately, so trying to align the demand with supply was the biggest inflection point to take hold of,” Birgfeld said. “There was a lot of pain with our suppliers to get purchase orders to them and get invoicing back.”
Although the sheer complexity of the Blue Diamond Business is what motivated the team to first invest in SAP IBP for Supply Chain, COVID was the trigger point that kickstarted the business’ more robust transformation journey.
“2021 is when we went to the S/4 environment, but COVID opened our eyes to some additional needs, predominantly around logistics and planning,” Birgfeld said. Previously, the company had a monthly demand planning cycle. But, with COVID, the company realized it had to accelerate to a weekly cadence and more dynamic planning cycle.
“We implemented the SAP Transportation Management with the Logistics Business Network to help improve that side of things,” Birgfeld explained. “We spent a couple months tweaking that to get to weekly, even daily planning from supply, because things were in such flux.”
Improving Operations and Logistics
The other critical component of Blue Diamond’s transformation was logistics, which had largely been manual and therefore time-consuming. “We had a third party we worked with, but even then, just trying to secure containers for international shipments went from taking two to three weeks to taking three months or more during COVID,” Birgfeld said.
Blue Diamond used Ocean Freight Software to optimize for logistics and used the business network to tie in its carriers. “We use Project44 as part of that, so we were able to gain visibility,” Birgfeld noted. “It took eight or nine months to get that stood up, but it really helped alleviate the issue we were seeing with getting product to our customers, both internationally and domestically.”
Maximizing Margins in a Fraction of the Time
This level of transparency has helped Blue Diamond improve margins for the ingredients side of the business. “With our model, there are certain almonds we use for certain products,” Birgfeld said. “If we’re short on one, we can do substitutions, but we always want to maximize the best margin. Having the IBP capability can let us do what-if scenarios, which previously would take us six hours. Now it’s a 20-minute cycle.”
IBP also can help Blue Diamond streamline the supply side of the business, especially if one of its partners sees an influx in demand. “Making sure that the right product is in the right warehouse at the right time is really key so we can meet retailers’ demands accordingly,” he said.
“We’re seeing a lot of value on the transportation management side,” Birgfeld added. “Before, the process could take half a day to understand what we had to ship, where and when, and the most cost-efficient way to do it. Now it takes a couple of minutes to run the optimizer and get the insights.”
This level of transparency and speed has a trickle-down effect to the broader business. Better transportation means reduced costs and improved efficiency, but it also means a lower carbon footprint. “Our transportation cost has a sustainability metric to it as well,” he said. “We don’t have to keep moving product from one warehouse to another, and we have better insights into where a product should go right out of the gate, which maps into sustainability.”
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A Proven Transformation Partner
SAP has become Blue Diamond’s digital transformation partner, largely due to the depth of integrations it’s made available.
“My directive is about leveraging the SAP ecosystem, and we have most of the components,” although the company also has an outside system that manages the co-op and growers side of the business, as well as Workday for its human resources information system and payroll, according to Birgfeld. “We have had a strong partnership throughout; they have listened to our weaknesses and technical challenges and have given us the support we need to know how to move forward with all these pieces.”
Birgfeld noted that SAP’s architecture team has been especially helpful in providing insights and guidance on how Blue Diamond can best architect its environment. “They have a Center of Excellence that helps guide us, so we can bring in key business users and business stakeholders to hear what we were asking for and designing for, and what SAP could say they could support.”
