Rastelli Foods Group trims $3.5M of inventory in the first three weeks with Optimity

Rastelli Foods Group is a true American success story. From a one-room butcher shop in Deptford, NJ, Ray Rastelli, Jr. and his brother Tony built a global premium-quality meats and seafood business.

Today, Rastelli’s is a $600M company supplying the finest hotels, restaurants, and retailers across the US and overseas. The company is still family-owned and run, and the Rastelli brothers have stayed true to their roots with an uncompromising commitment to product quality and customer service.

In the fall of 2022, the company invested in best-in-class supply chain planning capabilities to enable further expansion – a move that is already paying dividends.

A growing business needs better planning

Strong sales growth and the 2021 expansion of the company’s state-of-the-art 185,000 sq ft production and distribution facility meant the business needed better operational support.

Steve Rossiter, Production Planner at Rastelli’s, explains, “We didn’t have a dedicated planning system. As a result, production was just reacting to customer orders. Our customers liked the flexibility, but it wasn’t sustainable. We needed visibility of customer demand to optimize production…and the rest of the supply chain.”

“Although our ERP system provided some basic planning functionality, it fell well short of what we needed. I had developed a production scheduling tool in Excel at a different company, and I knew this approach would not work for Rastelli’s. What we needed was a comprehensive supply chain planning solution.”

“We didn’t have a dedicated planning system. As a result, production was just reacting to customer orders. Our customers liked the flexibility, but it wasn’t sustainable. We needed visibility of customer demand to optimize production…and the rest of the supply chain.”
Steve Rossiter,
Production Planner, Rastelli Foods Group

In June 2021, Rastelli’s started the search. “We met with five vendors, and Optimity quickly became our benchmark. It’s a complete planning suite with all the functionality we need. The system is connected and works in parallel with your ERP system,” says Steve.

“Ease of use was a top priority for us, and Optimity was also the most flexible and intuitive of the options we looked at. For example, everyone loved the Excel-like pivot tables.”

“Optimity is so intuitive compared to other solutions. If you’re used to Excel, you’ll quickly be up to speed. It’s also incredibly flexible.”
Steve Rossiter,
Production Planner, Rastelli Foods Group

Nevertheless, it took over a year before a decision was made. Steve explains, “Everybody liked Optimity, however we decided to look at what our existing ERP vendor could offer.”

In the end, the investigation confirmed what Steve and his team suspected, “We were trying to fit a square peg into a round hole. Trying to do what Optimity does in an ERP system isn’t possible.“

Demand forecasting in 6 weeks

Early discussions at Rastelli’s mainly revolved around production planning. However, following Optimity’s recommendations, the team started with demand planning. Steve feels it was a logical decision. “The forecast sets the pace for the rest of our supply chain, so it was the obvious place to start.”

In January 2023, after just six weeks, the company went live with Optimity’s Demand Forecaster. However, the biggest challenge was not the system implementation itself.

Steve explains, “We lacked a formal forecasting process, so our sales reps never had a baseline forecast to compare their own and their customer’s projections with. Adjusting to a new tool and way of working took some time, but the reps are now beginning to see the value. They can see when their products will be available for shipping and address any short orders promptly with customers.”

Rastelli’s forecast accuracy at the customer level is improving and is now in the mid-eighties. “Given where we’ve come from, we’re delighted with these results so far.

“Optimity’s statistical forecast is generally better than the customer’s own projections. As a result, management has instructed us to build frozen inventory for the next eight weeks to the Optimity forecast. This allows us to plan our resources more efficiently,” says Steve.

Inventory visibility triggers immediate $3.5M savings

With the Demand Forecaster up and running, it was time to tackle production planning and inventory optimization. The implementation is ongoing, but the work has already generated $3.5M in savings.

“It has already saved us nearly $3,5 million, and we’ve only had Optimity running for a few weeks. This is without counting the reduced warehousing, transportation, and packaging costs. It’s a massive win for us.”
Steve Rossiter,
Production Planner, Rastelli Foods Group

Steve explains how Rastelli’s can now see the number of days of inventory given current stock levels, planned production, forecasted demand, and customer orders. “I remember when our senior management saw our data in the system for the first time. My boss said… ‘Stop the tape. What’s happening here?’

“Some of the products were showing way too much coverage. It was a real ‘aha moment’. It came down to how we worked with our customers. Without reliable information, sales could not meaningfully challenge our customer’s projections and follow up on whether they called off what they’d told us they would order. The sales reps are instructed to focus on sales, and as they moved on, we were stuck with excess stock. With Optimity, we can see exactly who the customer and sales rep are, the forecast, and how much the customer called off. This allows us to have a different conversation, both internally and with our customers.”

“It has already saved us nearly $3,500,000, and we’ve only had Optimity running for a few weeks. This is without counting the reduced warehousing, transportation, and packaging costs. It’s a massive win for us”, says Steve.

“One of the most important benefits of Optimity is its ability to visualize information, “ says Mark Walker, MD of Optimity North America. “Rastelli’s needed a way to determine what was really in the warehouse. We put together a view that looked at finished goods inventory and defined it by analyzing safety stock settings, the current forecast, open orders, and more. The report was enlightening and immediately kicked off an effort to turn the inventory into cash.”

A game changer for S&OP

A new and improved S&OP process is also taking shape at Rastelli’s. The executive team, including sales, logistics and operations, currently meets once a week to talk about upcoming promotions, volume changes, new customers, and forecast anomalies. Optimity’s demand forecast and optimized production and inventory plans are driving the discussions in these meetings.

“Planning is becoming more strategic to the business. Optimity gives us a complete picture of our supply chain and allows us to have a much more focused discussion. This is a game changer for our S&OP process,” says Steve, adding that a more formal monthly S&OP meeting will soon be added to the calendar.

“Optimity is a game changer for our S&OP process. It gives us a complete picture of our supply chain and allows us to have a much more focused discussion.”
Steve Rossiter,
Production Planner, Rastelli Foods Group

Managing change

A modern supply chain planning solution requires new working processes to get the most out of the new system. Changing company culture and shifting old habits is part of this challenge, and Steve admits this has been a significant part of the overall effort.

“Optimity has triggered a necessary cultural shift. In the past, we simply produced to order. Now we’re strategizing, looking at the overall business. It’s a learning curve, not least for our sales team. We are not just asking them to review and adjust their numbers in a new system. We want them to take ownership of their forecasts. Part of this is a closer, sometimes more challenging, dialogue with their customers.”

Steve mentions how some of the sales reps that deal with new customers were reluctant to override the client’s forecast numbers. This had a knock-on effect on purchasing, as they were unwilling to bet on questionable numbers.

“New customers often don’t know how much they will require in a certain period and are often overly optimistic. Rather than simply accepting their estimates, there’s a lot we can do on our end. For example, by looking past sales to other, similar new customers, adjusting for company size and other relevant criteria.“

Steve and his team have worked closely with the sales reps to explain how the forecast numbers are generated. “The forecast is primarily based on the sales history in the ERP system. The difference is that Optimity provides the forecast using dynamic mathematical algorithms.”

“We had to stop producing inventory toward make-believe sales numbers and just-in-time orders. An accurate forecast means we can simultaneously improve our customer service, operational efficiency, and inventory situation.”
Steve Rossiter,
Production Planner, Rastelli Foods Group

The idea of building inventory to an 8-week forecast also caused some initial concern. Some argued it would only worsen an already capacity-constrained situation. But with Optimity, Steve knew that producing eight weeks out would benefit the business if based on a good forecast. “We had to stop producing inventory toward make-believe sales numbers and just-in-time orders. An accurate forecast means we can simultaneously improve our customer service, operational efficiency, and inventory situation.”

Next steps

Rastelli’s still has work to do but plans to be up and running with Supply Chain Optimizer across the entire business by 1st October. “We’re currently in the process of integrating our global export division into our ERP system. This changes what’s coming through to Optimity, and we’re working on that at the moment.”

Beyond that, Steve already has his eyes set on Optimity’s Production Scheduler. “We need the extra level of granularity to run the floor. Exporting the weekly production plan from Optimity into Excel and finalizing the scheduling there takes time, and we’re missing out on the benefits of shop floor optimization. With Production Scheduler, we will have a complete solution for our production.”

Summary

“Optimity is so intuitive compared to other solutions. If you’re used to Excel, you’ll quickly be up to speed. It’s also incredibly flexible. Whenever we ask the Optimity guys to do something, they can. At the same time, they are not afraid to push back and suggest alternative best-practice approaches. This is a real testament to their consultants. There’s a lot of knowledge and experience for us to tap into. They know supply chain planning and our industry inside out and how to make the system work for us. It’s been a great experience.”

About Rastelli Foods Group

Rastelli Foods Group has been at the center of food management since 1976. An industry-leading corporation servicing food service, retail, and DTC e-commerce with the highest-quality food products. Since their inception, they have expanded their operation from two retail locations to two high-quality, USDA-inspected processing facilities, warehouses, and distribution centers. Rastelli’s is a world-class provider of meat and seafood that sets the standard in taste, quality, cleanliness, and safety from each of their food processing plants. They take ownership of the production process; hand trimming, processing, and packing in their state-of-the-art facilities. Through direct ownership or proprietary partnership, they select the finest products for their customers and carefully monitor quality throughout all the steps needed to fulfill orders.

To find out more about Rastelli’s journey and how they’re optimizing their supply chain, contact Mark Walker.