Jaro Caban: “Establishing S&OP is a challenging journey”

Nine questions about the topics on the supply chain agenda of a supply chain professional. In this edition: Jaro Caban, Global S&OP, Cargill Animal Nutrition.

By Helen Armstong (Supply Chain Movement)

In 2011 Cargill, the multi billion-dollar agri-industrial conglomerate acquired animal nutrition specialist, Provimi. With a price tag of $2.1 billion dollars it was one of the company’s largest acquisitions. It consolidated Cargill’s global animal feed production and strengthened its internal supply chain capacity for food production and processing.
It’s hard to imagine that Cargill began as a grain storage warehouse in Iowa, USA, in 1865. Today it operates in 67 countries with 143,000 employees and has 76 business units on six platforms that cover animal feed, food production, energy and transportation, financial services and pharmaceuticals.
Still, after nearly 150 years, it remains a privately owned company. Jaro Caban, moved with Provimi into the Cargill fold. Based in Rotterdam, he is responsible within the global supply chain of Cargill Animal Nutrition (CAN) for the task of establishing S&OP and Supply Chain Process Optimisation across five global regions with 250 factories, multiple distribution and warehousing activities and customer service points.

What is your responsibility regarding the supply chain?

“Cargill Animal Nutrition (CAN) is clustered around five major regions: North America; Latin America; EMEAR, including Russia; South Asia and East Asia. We are in the process of implementing supply chain structures across the regions while maintaining a global supply chain function. My responsibility is Global S&OP and Process Improvement Lead and I take care of three elements: Firstly, to establish S&OP across CAN. This is a four to five year journey and we already have a framework and tactical strategy in place. We started in 2012 and we are currently in the roll-out phase across the regions in terms of processes, organisational structures, measures, developing the roles and responsibilities of the players, educating and training and implementing technology.
Secondly we are setting up Business Process Optimisation (BPO) and my global responsibility lies between process and IT. I have to maintain the drive for improvement and enable these process improvements to be made through technology by working with IT partners in the regions. Month by month we are improving two main processes: Order Fulfilment and Demand and Supply Management. We look at where we need to enhance our technology program, optimize transports and warehousing, segment and increase services to our customers, all within the matrix of improving the global supply chain.
Thirdly I have set up global raw material supply (GMS), a supply entity that consolidates CAN’s global purchase orders and global vendors to plan and deliver raw materials for our manufacturing sites. I split this off from global sourcing because we had plenty of buyers but not enough planning and logistics so service and documentation was failing. GMS is a team of nine people based in Rotterdam, Shanghai and Minneapolis. Their mission is to work with our many global buyers, collectively known as Risk Management and Sourcing (RMS), to streamline the buying, planning and logistics.
Our buyers are purchasing micro ingredients, such as vitamins, additives, minerals, etc. and some macro ingredients, for their own segments. They make a contract which is then consumed through planning and purchase orders. These global purchase orders follow the locally developed material forecasts made by the individual offices around the world and are then sent to and consolidated by our GMS entity. GMS approaches the global vendors with purchase order and manages it throughout, taking care of all shipping documentation and regulatory factors, such as customs duties, and organises third party logistics for on-time in-full material fulfilment of deliveries to our warehouses.

What is the strategy of Cargill Animal Nutrition: Operational excellence, Product leadership or Customer intimacy?

“We address all three sides from the triangle holistically: Within CAN we have a program of operational excellence and at the same time we focus on customer intimacy. Also, we do have the animal feed products with technological uniqueness and with these we compete as market leaders.
Our commercial teams develop strategies with our customers, for example the distributors, integrators, wholesalers, small retailers, small or large farmers, or the segments required based on high, medium or low complexity. We align our supply chains along these strategies and, at the same time, we aim for lean and/or agile manufacturing. Operational excellence is not only about costs, it also aligns with our customers’ needs and with product development. All three should be in balance.”

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What are the main business challenges that drive supply chain projects at the moment?

“Our current focus is planning and order fulfilment. We tend to work in a reactive mode so when we get an order we rush around. Customer service is often very high but it is not cost effective. We are trying to achieve more service and more efficiency through integrated, long term business planning. From the supply chain perspective good integrated planning, with a 12+ months rolling P& L, has a huge advantage. But for some people this is very new and they question why they need to know anything beyond one month. Getting all our business leaders and commercial people on board is a big challenge but we are starting to change the culture.
At Provimi we had already embarked on S&OP and we were putting planning procedures in place. The entire CAN platform is much larger so we’ve scaled-up the program and it includes management changes, education and training at top and middle level, and workshops. Getting funding and commitment is difficult and requires multiple business discussions.
Nevertheless, we started our journey in 2012 and, due to many new internal procedures that we already have in place, we are on target for 2014. We’ve completed I believe about one third of the journey with another four years to go.”

What supply chain challenges keep you awake at night?

“I know where we need to go with S&OP and how to get there but the benefits of longer term planning are not everyone’s top priority. It’s frustrating when I get a phone call from a department head to say, for example, an already planned workshop can’t go ahead. It holds things back. I felt if we’d had the initial leadership workshop we could move ahead at full speed. People have other priorities and planning is not always on top of their agenda. It’s not yet part of the business culture it seems. It is of course discouraging when I make promises and they can’t be realised.

What do you do about these challenges?

“The challenges come from the different regions: CAN’s span of business activities is large and covers operationally about 40 countries or management areas, so about 40 different S&OP teams, and handling each one’s standard approach directly is a real challenge. Therefore we try and work with our global directors and leadership teams in each of the five regions, in an organised way.
We, as supply chain and operations, take part in the business and commercial meetings, organise workshops and prepare the necessary communication. We also highlight good business cases and practices internally within Cargill. We are also educating and training our planning specialists and business analysts from the bottom upwards and developing roles so that eventually we build an organisation that has started mid- and long-term planning. It’s a combination of training from top down and bottom up to enable people to perform their management or specialist roles.”

Who do you like to meet for exchange of knowledge?

“I have been invited to other divisions within Cargill that have already performed or who are embarking on the S&OP journey.
Also, we have a strong connection with the SCM World organization created by MIT, we are actively involved in APICS and similar certifications and we participate in other global supply chain network communities. With our partners we organise internally web seminars, educational events at leadership level and benchmark information on best practice performance of large companies. I also attend and/or present at conferences such as Logicon, IFB, regional Supply Chain and Logistics summits to share knowledge and network with professionals in the field.”

Which book has inspired you the most and why?

“I worked for Deloitte Consulting for 10 years and was stationed in the USA from 1996-97. At that time there was the big move from logistics into business process reengineering and we linked up with the leader at that time, Michael Hammer. I found his book The Reengineering Revolution very inspiring, as was The Goal by Eliyahu Goldratt. I enjoyed reading about the business life of Jack Welch, of General Electric in his autobiography Jack, Straight from the Gut. Also during my MBA studies I read several inspiring books, such as Competitive Advantage by Michael E. Porter and Business at the Speed of Thought by Bill Gates.

I am also inspired by the creativity and educational style of Hughenden Consulting and similar companies that focus on leaders as well as specialists in the area of process and people change management.”

Where do you expect to be professionally in five years?

“I enjoy management, especially operations, and leadership in the area of global supply chain. Of course, my dream is to elevate this role to the board of directors to enable and achieve even more than so far.”

What do you use for an agenda?

“I use Outlook for my business calendar where everything is also replicated on my Blackberry so it is easy to use and manage globally.”