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Sausage Producer Packs Out the Profit with Technology

Written By: P. Catz
Published On: September 21 2001

Company   

Odom's Tennessee Pride Sausage, Inc. (http://www.tnpride.com), based in Madison, Tennessee outside of Nashville, is a whole hog sausage producer with plants in Little Rock, Arkansas, and Dickson, Tennessee. Douglas G. Odom, Sr. and his wife Louise S. Odom founded it in 1943, and it is still a family owned company.

Odom's manufactures both retail and food service products with a retail market of 25 states and a food service market of 38 states plus nationwide coverage through a major retail chain. Retail products, sold under the Tennessee Pride label and a number of private labels, include a variety of link and patty sausage products, sausage gravy, microwave biscuits, country souse (a regional food) and sausage rolls (a one pound package of sausage in a roll available in the meat case). Food Service products include fully cooked and fresh sausage products, sausage sandwiches, and gravy.

Odom's is a specialty house, processing whole hogs into specialty sausage products. The hogs they process are considered by-products of the hog business, since they only use hogs that have been fattened up for breeding purposes (Sows) and therefore are larger than most. These hogs provide better quality meat (lean fat percentage) and produce higher yields. Since it cost Odom's close to the same cost to process a small hog versus a large hog, they get a higher margin, higher yield product.

Company Issues   

Odom's objectives included operational and customer service improvements. Operational objectives included the handling of substantial losses and business challenges in the areas of shelf life, out-of-spec production, lost material, wrong cuts being produced and returns due to "sell-by" or "use-by" date issues. Government regulations were a major factor with Odom's wanting to improve their lot tracking, data collection in order to do a better job of HACCP (Hazards Analysis and Critical Control Points) compliance including biological sampling.

Customer service objectives included a reduction in out of stock conditions, shortening customer order cycle times and faster delivery. They also wanted to minimize the lost sales represented by orders not placed due to poor stock visibility.

Solution   

Odom's considered a number of options. A basic challenge in selecting a solution was the very nature of their business, meat processing. Few vendors could show Odom's reference installations which reflected some of a meat processor's basic needs like catch weight, ageing, disassemble and others. They finally selected iProcess.sct from SCT (www.sctcorp.com) for execution, scheduling and planning. Beginning in December 1999, the new system was fully implemented within 15 months.

Value   

Chuck Odom, owner, discusses the project's payback period, "We saw savings that pay for the applications within the first three years."

Chuck reports that Odom's operational objectives have been met. The top operational benefits cited by Odom's include:

  • Reduced inventory levels across the entire supply chain

  • Reduced production costs by decreasing changeovers

  • Increased utilization in the kill, cut, and packaging operations

  • Decreased scrap rates by not producing out-of-spec material

  • Optimized distribution by better planning their distribution centers and warehouses

  • Greater confidence in their HACCP compliance with a reduced compliance workload

"Our project has driven a roughly 20 % reduction in inventory levels, production costs and scrap and we've optimized distribution substantially by being able to plan our DC's and warehouses better."

Chuck reports another win with Odom's customer service objectives. The top customer service benefits include:

  • Increased sales by not having out-of-stock conditions on finished goods

  • Increased customer satisfaction by shortening cycle times and faster delivery

  • Increased total sales by not missing orders (capable to promise)

The financial return on the customer service effort has pleased Odom's. Chuck states, "We have increased sales and customer satisfaction by at least 15%."

Lessons Learned   

Chuck says he would do it all over again. The returns to the business more than justified the investment and effort required. But he does counsel others on a few key points.

Chuck emphasizes that this type of project cannot be an IT project. "This was the biggest project the company has ever done (outside brick and mortar), both in cost and human resources. This was not an "IT" project it was much bigger than that. It was very difficult to do your day job and the project at the same time. Never underestimate the problems of major change in the organization, we are talking about what people do for a living it's personal."

The supplier you select is critical. Go beyond the sales pitch and look at the details that are critical to your specific situation. Talk to the vendor's customers who are in your kind of business. This gives you insight into the vendor's abilities and the effort required before you begin the project.

 
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