CorporalKnowledgeViper13
Smart Snacks (a Canadian Corporation) was founded six years ago to…
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’s 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 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:
o Snack Bars – 5 different flavors, 3 different package quantities
o Serials – 4 different flavors, 3 different packaging quantities
o Cookies – 5 different flavors, 3 different package quantities
Flavors FA FB FC FD FE
Package Size L M S L M S L M S L M S L M S
Snack Bars % Sales 30 60 10 40 50 10 30 55 15 20 50 30 45 40 15
Serials % Sales 65 30 5 55 35 10 70 25 5 45 40 15
Cookies % Sales 10 75 15 15 80 5 10 80 10 15 70 15 20 65 15
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 their 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 creates 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 as 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
need your help on 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:
Answer the following question:
Define how you would recommend approaching the use of e-commerce (if at all) to sell
Smart Snack products. What product characteristics lend themselves to e-commerce
sales? Who would they sell through?
