Blending MES and ERP Cuts Costs at Coffee Company

As the second largest roaster in a country renowned for coffee, Holland’s Ahold Coffee Co. travels to exotic and faraway places for beans — Sumatra, Kenya, Colombia, Costa Rica, you name it. But it was the mundane challenge of tracking shop floor activity at home that drove one of its most important recent business improvements: the installation of an IT system on the packaging lines.

 By percolating data up from machine sensors to the boardroom using manufacturing execution system (MES) software tied into ERP, Ahold has made smarter decision-makers of executives who stir up everything from sales plans to customer strategies.

 Ahold, which is part of the giant €41 billion Royal NV Ahold food retailer, was finding that the lack of timely knowledge about events at its two huge roasters and 15 packaging lines in Zaandam, Holland, was costing it money. The lines churn out private-labeled packages of a wide variety of coffee for European retailers, such as Morrisons and Asda in the United Kingdom; Albert Heijn and C1000 in Holland; Kesko, in Finland; and Ica in Sweden. An outage on one line can affect how much to plan and how to price for a given customer, or for instance, how much more espresso to make versus, say, a mild strength grind.

 In the past, Ahold executives, if they were even aware of outages, were clueless about details. “We couldn’t distinguish one line from another, except by standing next to them,” says Operations Manager Jeroen de Jager, who is part of the executive team reporting to Ahold Coffee CEO Ward de Groote. That meant that if a line was down simply because it was out of paper for packaging, it might as well have been down for more serious reasons, such as a mechanical failure. Executives would not know the difference or how to act upon the differences unless they went to the plant. And since frequent trips to the plant floor are not always the best use of executive time, the company realized that something had to be done.

 “We decided to connect every single production line to a central system,” de Jager says.

 Three years ago, the company came up with the solution: to outfit the plant floor with MES. After evaluating software from three vendors, it chose Citect’s Ampla software, over a program from Holland’s HAI and Siemens’ Simatic IT.

 The company took a full year to deploy the software, with the help of Dutch systems integrator Burgot-Epsia, whose tasks included tying MES data into the NEC FlexProcess ERP enterprise software that Ahold uses. One of the most difficult challenges during implementation was “making sure the information you’re collecting is classified correctly,” de Jager says. In other words, coding of the many elements noted by Ampla had to be consistent so that the FlexProcess ERP didn’t start recognizing, say, a 250-gram bag as a 500-gram bag, or an empty paper tray as a blown fuse. Ahold equipped each of the 15 lines one by one and decided to hold off for now on the roasters.

 The first phase went live two years ago. De Jager won’t reveal how much Ahold spent, but he says the project paid for itself after the first full year through what he characterizes as “the improvement of overall equipment effectiveness.” Translation: It has helped the company cut costs.

 Ampla makes detailed note of whether a production line is running on target or has slowed down or stopped. Just as important, if there is trouble, it notes why. The software can send executives specific information on things such as whether a line is out of paper, under-filling sacks of coffee, splitting bags, or downright out of order. It also makes constant note of production levels and yields.

 The gains offered by MES can come from extremely granular information. For example, de Jager notes, Ahold typically optimizes a line to put a certain number of bags into a carton. Sometimes a customer will request a deviation — it might ask for five bags instead of 10. The MES system takes note of how efficiently the line runs at the adjusted level.