Smithfield (Curly’s Foods)
Smithfield Foods, the world’s largest pork producer, acquired Curly’s Foods as part of its acquisition growth strategy. Smithfield’s plan for the production facility included expanding its offering to include a wider variety of meat products. However, to expand production at the newly acquired plant, additional personnel were needed to manage the heavily manual cost accounting process. The ImpactECS cost management system was selected to eliminate the company’s dependence on spreadsheet tracking and provide a cost solution that is accurate, flexible and easy to use without adding more support headcount. As a result of implementing ImpactECS, the plant was able to expand production approximately 20% and discover time savings in a number of accounting functions without the need for additional personnel.
Existing Cost Management Solution
Originally a processor of raw ribs, Curly’s Foods of Sioux City, Iowa, was acquired by Smithfield Foods and added to the John Morrell division which targets the wholesale and restaurant markets, expanding their product line to include both raw and cooked meat products.
Curly’s employed a number of spreadsheets to estimate yields and calculate daily standard and actual costs such as labor, ingredients, packaging and cold storage. Even more spreadsheets were used to track and value inventory as it moved through the production process. The paper-intensive task required that tickets attached to all meat-in-process are manually tracked at each stage to provide a daily snapshot of inventory positions and value work-in-process. A final set of spreadsheets was focused on capturing important information for monthly closing and reporting.
In addition to the manual methods for calculating data, Curly’s also housed much of its pricing and vendor information in spreadsheets. Accurately tracking information such as market prices for production inputs became nearly impossible with the sheer number of ingredients and products used in processing. Understanding costs became a cumbersome process, often leading to inaccurate cost analysis for Curly’s.
The existing accounting system at Curly’s required two full-time personnel to manage data input and tracking. Once Smithfield expanded the operation to include both raw and cooked meat products, the accounting department had to hire two additional employees to keep up with the amount of cost information generated during production. Smithfield’s management team needed a way to continue expanding operations without the expense of adding personnel to the plant’s accounting group.
ImpactECS was chosen because it is uniquely designed to centralize cost data and eliminate accuracy issues prevalent when managing costs using stand-alone spreadsheets. With one system that could integrate with the existing IT infrastructure, standard and actual costs can be calculated rapidly using the system’s high performance calculation engine. The best-of-breed cost management system also provides reporting tools to provide daily cost information to production and cost managers so they can make better business decisions.
The first phase of the project centered on installing a centralized cost management system that would eliminate the need for spreadsheet tracking tools. 3C Software consultants began the implementation by performing a mass balance of inventory. Now, inventory information collected when the meat arrives at the dock is imported directly into ImpactECS to ensure an accurate account of all material-in for the day. The meat remains in inventory until it is consumed during processing at which time ImpactECS updates the inventory count and performs customized calculations based on the plant’s production processes to determine yields and costs using production information from the factory floor.
Next, Curly’s Foods required reporting functionality to easily summarize cost categories including labor used, meat material-in, by-products produced, and quantity produced. While the existing manual process of tracking paper tickets is still in place, the data is input directly into ImpactECS to generate daily cost and yield reports. The reports are provided in the same format as their original spreadsheets, eliminating the need to train employees to interpret the cost data.
In the final phase, a daily snapshot of the inventory position for all meat is required to maintain accurate product and inventory costs both locally and for corporate reporting. Integrating ImpactECS with Freezer, Smithfield Foods’ corporate inventory system, provided an automated process to report daily inventory reports. Once the data was reviewed, a flat file was created by ImpactECS and exported to Freezer.
The implementation also provided solutions to ease the monthly reporting process. Relevant data is exported daily to an archive file in Microsoft Access to eliminate data re-keying. Because the data’s integrity and availability is enhanced with the export features, Curly’s can access historical data for more effective routine reporting.
Results from Implementing ImpactECS
With ImpactECS, the Curly’s Foods production facility can now maximize its production potential without the need for adding additional support personnel. Since implementing ImpactECS, the plant has expanded production by almost 20%, including the addition of a retail-ready product line that requires more processing and packaging. Updates to bills of materials and prices for packaging and ingredients, an activity that traditionally took a full day to complete, are now accomplished in 20 minutes allowing better monitoring and more frequent updates of costs throughout the production process. The process for tracking received meat material-in and work-in-process provides Curly’s with historical data to forecast production trends and future spending. Automated inventory tracking with ImpactECS now saves the plant’s accounting team 20 hours a month that can be used to focus on more value-added activities. Literally hundreds of spreadsheets were eliminated, and ImpactECS’ integration with the existing IT infrastructure allowed Curly’s to automate many parts of their accounting process. The integrity of cost data was increased and management now has access to information vital to make smart business decisions.