Going nuts: California’s largest almond cooperative streamlines its supply chain

During the pandemic, nut lovers were alarmed to see shelves in their favorite part of the supermarket empty–and devoid of the roasted delicacies they craved.

Now, we finally understand why.

In addition to the usual threats–droughts, wildfires, and weather–California almond growers had to contend with wild fluctuations in supply and demand while transportation resources became limited, unreliable, and expensive.

This was challenging news for Sacramento-based Blue Diamond Growers, the world’s largest almond processing and marketing cooperative.

The state “provides 80% of the world’s (almond) supply,” Aubrey Bettencourt, President and CEO of the California Almond Alliance, explained to KCBS Radio. “Part of that is dependent on our ability to transport it around world. The inability to move that product, that is sold but cannot be delivered, means a cash-filled crisis, because we get paid once the product is delivered.”

Out of their tree

This was compounded by the fact that Blue Diamond’s processes, systems, and documents used for managing the cooperative’s $300-million supply chain and logistics functions were limited by a number of manual processes. With workers dependent on a disjointed network, the conditions created by the pandemic made it all but impossible to consistently satisfy demand.

While customers worried about the uncertainty of orders being filled, customer service representatives were required to navigate through 10 different systems and data sources for answers. At times, it took days for customers to receive a reply.

During this period, lead time for securing freight increased from three weeks to five months, while the early stage of planning new promotions stretched from two months to five.

The chaotic environment also hampered the ability of the cooperative to create a 12-month demand and supply plan for the fiscal year. With so many disparate documents and systems, consolidating, validating, and analyzing the data and metrics was time consuming, leaving limited opportunities to run scenarios and simulations.

The circumstances accelerated the need for Blue Diamond to move to a completely digitized supply chain–and there was little time to lose.

Kernel of hope

Originally founded as the California Almond Grower’s Exchange in 1910, Blue Diamond now represents approximately 3,000 growers and ships to nearly 75 countries. The organization’s efforts are largely responsible for California’s almond crop being the state’s largest food export.

“Almonds are all we do,” the cooperative boasts.

Indeed, the organization’s catalog includes everything from wasabi and soy sauce almonds to low-sodium treats to almond milk.

Yet, to maximize returns for each grower, Blue Diamond must regularly develop new products while operating with efficiency, scenarios the old supply chain system did not particularly enhance.

Since 2014, though, Blue Diamond had been working with enterprise resource planning (ERP) software leader SAP. Now, the cooperative turned to the German multinational to utilize its transportation management, logistics, business planning, analytics cloud, and other capabilities to build a world-class supply chain solution.

Planting the seed

Deployment occurred in phases over 2021 and 2022, building off the SAP and ERP ecosystem foundations.

The enhanced supply chain visibility and planning tools helped eliminate shortages due to supply and freight issues, while the organization now had a single source for responding to customer inquiries.

The new system allows planners and support representatives to comprehensively plan ahead to meet demand, relieve supply gaps, and identify transportation gridlock.

Indeed, supply planning, which used to take place once a month, can be done weekly or even daily.

Meanwhile, the number of related systems supported by the IT team declined from five to one.

Rather than being assigned low-level Excel tasks, planning employees have been endowed with new responsibilities, redefining themselves as product managers and experts.

With a more comprehensive management view across the business, Blue Diamond has been able to meet the industry standard of keeping two months of inventory on hand at a particular time. This is a 20% reduction from the prior method of stocking 75 days of product.

Another noticeable change: scenario planning can be concluded in 20 minutes, down from the previous six hours.

An incredible $1 million has been saved in logistics costs, and order fill rates increased to 99%–10% more than the industry average. Forecast accuracy has improved by almost 10%, as well.

“We have created a solid foundation for an intelligent, data-driven cooperative that provides the best value for our growers,” observed Steve Birgfeld, the cooperative’s Vice President of Information Technology and Services.

The development of a state-of-art supply chain earned Blue Diamond Growers the distinction as a finalist at the 2023 SAP Innovation Awards, a yearly ceremony honoring organizations using SAP products to craft meaningful change.

The solution provides a roadmap to improve production planning, scheduling, plant maintenance, sustainability, and other critical areas as part of an overall movement of “resilience disruption.” You can read how Blue Diamond accomplished this in their Innovation Awards pitch deck.