Steve Inamorati: Moo-ving up the Supply Chain

Talk about the pressures of supply and demand!

With consumers clamoring for natural and organic dairy products, Stonyfield Farm, Londonderry, N.H., has grown by 20 to 30 percent each year. But the company has had a hard time keeping up with growing demand for organic foods.

“We’ve experienced an organic milk shortage,” explains Steve Inamorati, the company’s vice president of supply chain and logistics. “For a year or so, we’ve had a hard time getting enough milk.”

Toss in a petroleum market that’s not only driving up transportation costs, but also squeezing supplies of resin used to make the plastic cups and bottles Stonyfield packages its products in.

Then add the challenge of trucking perishable products from a single New England distribution center to customers all over the United States: Florida and California, for example, are Stonyfield Farm’s fifth- and sixth-largest markets.

These are the demands Inamorati deals with every day.

“Fortunately,” he says, “most of these challenges are brought on by our unbelievable growth each year.”

Founded in 1983 as an organic farming school, Stonyfield Farm now keeps 250 people busy making and distributing yogurt, yogurt smoothies, cultured soy, frozen yogurt, and organic ice cream. As its customer base expands, the company is enhancing its infrastructure to match its needs.

Stonyfield Farm is installing demand planning software from SAP, and will eventually implement SAP’s enterprise resource planning suite. The company is also planning an expansion of its production and distribution facility.

In addition, Stonyfield Farm recently implemented a business intelligence software tool that gives Inamorati and his team “information we’ve never had before at our fingertips,” he says.

The software can extract in 30 seconds information that used to take 45 minutes to retrieve. That makes it much easier to access the cost and usage data needed for inventory control.

The state of the petroleum market in the months after hurricanes Katrina and Rita has posed special challenges for Stonyfield Farm. “Our outbound transportation costs are in the $10-million range,” Inamorati says. “When diesel fuel costs more than $3 a gallon, trucks get only six or seven miles to the gallon, and we ship products 3,000 miles away, it puts a strain on the financial picture.”

To cope with uncertainties on the supply side, the company takes special care to nurture its relationships with vendors.

“Right now, most of our big resin suppliers are on force majeure,” a contract provision that releases them from volume obligations when a natural disaster or other uncontrollable force disrupts their operations, he says. That has caused problems for plastic packaging manufacturers and, in turn, for companies that need those plastic products.

“We’ve been lucky—we aren’t getting shorted in shipments of cups and bottles,” Inamorati says. Stonyfield Farm finds itself in this fortunate position “because we have built very good relationships with our suppliers over many years,” he says.