Oregon Freeze Dry

Using TOC for Distribution
Developing a Competitive Edge using the TOC Distribution Solution.

BACKGROUND
Oregon Freeze Dry (OFD) works in removing water from different products at low temperatures and pressure. They sell finished products and freeze-dry goods in the following areas:

Food products: ingredients, private label meals, backpacking foods (their own Mountain House brand), and government rations

Non-Food products: heat, oxygen, shear-sensitive materials, microbials, pharmaceuticals, nutraceuticals, and chemicals

The story began with OFD's attempt to get a large consumer package goods company (Company X) to renew a contract for one of the ingredients that OFD makes. In March 1997 an OFD executive attended an External Constraints Course at the Goldratt Institute to develop an unrefusable offer to make to Company X.

In order to address inventory and distribution issues in the offer to Company X, OFD participated in a dedicated Two-Day Distribution Workshop as well.

Unfortunately, the offer made by OFD to Company X was refused, but the story does not end here. OFD decided to implement the TOC Distribution Solution in their Mountain House division.

RESULTS
Results Achieved in Mountain House after the implementation of the TOC Distribution Solution:

Course Taken: March 1997

Implementation in Mountain House division: began March 1997

• Reduction in late shipments due to out-of-stocks:
  7/96 - 10/96: 1164 shipments; 245 late (21%)
  7/97 - 10/97: 1697 shipments; 11 late (0.6%)
• Value of finished goods inventory maintained at hundreds of thousands of dollars less in 1997 than in 1996 (a 60% reduction; in 1998 expected to be an 80% reduction)
• 20% increase in sales

After seeing the success in the Mountain House division, OFD's Ingredients division implemented the TOC Distribution Solution beginning in July 1997.

Results in the Ingredients division from 7/97 - 10/97:

• 21% reduction in finished goods
• On-time deliveries increased from 97% to 100%
• More than a 50% reduction in make-to-order lead time

DESIRABLE EFFECTS
The desirable effects resulting from the implementation of TOC Distribution at OFD include:

• lower inventories
• improved on-time shipments
• fewer production mistakes
• less wasted time (no more "What should we make, when should we make it?")
• much faster reaction time to changes in demand
• competitive advantage (the industry norm is "out-of-stocks" and "back-orders")
• contributed to 20%+ sales increase.

This success story was presented by Oregon Freeze Dry at the Jonah^SM Upgrade Workshop in November 1997. The presentation is available on video (#JFL-6).