Maple Leaf Hog Slaughtering

Case Study
Nov. 20, 2014

Maple Leaf Hogs

Executive Summary
The Director of Logistics and Procurement at Maple Leaf slaughterhouse
has a semi-complex logistics problem to solve involving getting the right
number of hogs at the right time from local farms to the slaughterhouse to
maximize their productivity and keep their costs as low as possible. There
are several key success factors important to the slaughterhouse that must be
taken into account while making this decision, including: maintaining 100%
capacity in production, take into account the appropriate times of operation
of each of the stakeholders, and devising a schedule that takes into account
the stress on the animals, trucks and drivers, all while keeping total costs as
low as possible.
While taking into account the above requirements, the Director should
choose to purchase 15 new trucks and trailers, keep the transportation and
scheduling functions in-house at the slaughterhouse and create 30 sizeadjustable pens to make sure the slaughterhouse can run at 100% capacity
while keeping costs low. This option will allow the slaughterhouse to keep
control of their critical logistics function to get the right number of hogs to
the right place at the right time. This choice will reduce the risks of handing
over the critical scheduling function to a 3PL and stocking out of hogs at the
slaughterhouse.
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Once accepted, the Director of Logistics and Procurement and Logistics

Coordinator will be responsible for the implementation of this plan. On-time
delivery, hours of service and measuring stock-out rates and safety stock
levels are among the metrics that will be measured and followed-up on to
monitor and control this plan to guarantee that Maple Leaf slaughterhouse
reaps the expected results.

Maple Leaf Hogs

Table of Contents

Page 2

Executive Summary

Page 4

Table of Contents

Page 5

Issue Identification

Page 6

Environment and Root cause analysis

Page 9

Alternative and/or options

Page 12

Recommendations

Page 13

Implementation

Page 14

Monitor and Control

Page 17

Conclusion

Page 18

References, Exhibits, and Appendixes

Maple Leaf Hogs

Issue(s) Identification
The following is the analysis and design of the logistics plan for the
Maple Leaf slaughtering house in Brandon, Manitoba while taking into
account the demand, trucking routes and times, and inventory levels that
were stipulated in the initial report. There are three major decisions that will
be solved through the implementation of this new logistics strategy:
1. The number and type of trucks the slaughterhouse will need to operate
to be able to pick up all of the hogs needed each year.
2. The comparison of the cost-effectiveness of outsourcing the
slaughterhouses logistics needs versus owning the trucks themselves
and having a substantial logistics staff on hand to cover in-bound
receiving, scheduling, and maintenance.
3. The inventory policy that should be implemented for the number of
hogs to be kept overnight as well as the number and size of pens
required to hold this inventory.
Some of the main issues that must be taken into account while solving the
above problems include:
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1. The starting and ending production times of the slaughterhouse, the

farmers operation/delivery times and the logistics scheduling of trucks
including loading and unloading.
2. The amount of wear and tear being put on the trucks due to long
distances and heavy loads.
3. The possible detrimental effects surrounding the amount of time we
are asking our drivers to work and the number of drivers we employ.
4. The fact that the slaughterhouse must be run at 100% capacity at all
times and the animals must wait in pens for at least four hours after
delivery to the slaughterhouse before being killed.
5. The importance of being able to trace the animals back to the point of
production.

Environmental and Root Cause Analysis

There are several reasons why each of the abovementioned issues are
occurring at the slaughterhouse and why they must be taken into
consideration when deciding on the best strategic plan for the organization.
These reasons are listed in order below:
1. The starting and ending times of the different stakeholders are very
important and must be taken into consideration to make sure the plant
can run at full capacity, to prevent the possibility of animals dying on
the trucks because of improperly planned routes and to make sure we
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are maintaining healthy relationships with our farmers by not showing

up to their farms too early or too late causing them undue hardship. As
well, asking the workers to work outside of these hours may constitute
overtime, which can get costly very quickly. Finally, labour laws have
to be respected as well as the ethics of how we treat our employees.
2. Employing too few trucks for the necessary routes will lead to low
production volumes and excess capacity issues at the slaughterhouse.
Combined with the heavy transportation schedule this issue will lead to
extended downtime, missed pickups and frustrated stakeholders both
working at the slaughterhouse and on the farms. Eventually higher
costs will have to be taken on as a new third-party logistics provider is
hired to take over the routes leaving unused trucks or more trucks are
added and more maintenance costs are incurred.
3. The amount of time the drivers are working is cause for concern
because if their needs are not considered they may quit unexpectedly,
be dangerous vehicle operators on the roads perhaps injuring
themselves or someone else and their loads will be behind schedule
due to unsatisfactory work conditions. Therefore, the appropriate
logistics plan will need enough drivers for them to be safe on the roads
and meet all applicable labour laws.
4. The root cause of this issue is that a slaughterhouse is a very
expensive operation to run and generates profit based on the volume
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of meat produced per hour and therefore it must maximize the

efficiency of each hour that it is in use. Therefore, the strategic
logistics plan must make sure there is enough inventory on hand to
cover the killing of 1,000 animals per hour to ensure the plant is
covering its costs and meeting its demand.
5. This issue is caused by the importance of protecting humans and the
others end-customers of the meat products produced by the
slaughterhouse from the possible spreading of disease and crosscontamination between the animals. Therefore, being able to trace the
animals back to their point of origin and keeping them separated
during transportation and in the hours leading up to slaughter is an
important consideration while designing the logistics system. Also, if
an animal is found to be sick, it will be much easier to trace it back to
its point of origin so the proper quarantine can be implemented on
animals from the same farm.
6. A known constraint, but something that that factors into every delivery

is the minimum 4-hour rest period for each animal to allow them to
calm down so as to provide a high quality end-product.

Maple Leaf Hogs

Alternatives and/or Options

The following topics have been addressed as pertinent to this case:
1. Absolute minimum to get the 2.5 million hogs to the slaughterhouse on
time is 12 trucks and trailers, trailers will be based on the split for the
average day. Please see reference file: Master Hog Case Analysis, Tab:
12 Trucks.
Pros
a. This would be the least costly option.
b. This would be the most efficient way of working for Maple Leaf
given an ideal world.
Cons
a. Trucks will wear out faster. Our calculations show that using our
scheduling each truck in a 12 truck fleet would therefore have to
travel on average 189,787 Miles per year.
b. Operating expenses for a truck are pegged at $1.46/Mile, and
with such high mileage per truck the costs would be prohibitive.
(Source #2, Page 2, Less truck/trailer
lease)http://truckexec.typepad.com/files/atri-operational-costs-oftrucking-2013-final.pdf

Maple Leaf Hogs

2. Adding three trucks to the fleet for a total of 15. (The additional trailers
would be 240 size to accommodate any load size) Reference file:
Master Hog Case Analysis, Tab: 15 Trucks.
Pros
a. Helps reduce the wear on each truck.
b. Spreads downtime across more trucks.
c. Allows for regular schedule preventative maintenance.
Cons
a. Mileage reduces to 151,830 Miles per year per truck. High, but a
manageable figure.
3. Use a 3PL to handle all Maple Leaf Logistics.
Pros
a. Removes an element of the business that may not be a core
competency.
Cons
a. May not save us money.
b. Removes some level of risk mitigation.
c. Reduces flexibility both in day to day operations and in times of
expansion or contraction of business.
4. Use a 3PL to handle all trucking for Maple Leaf but maintain scheduling
in-house.
Pros
a. Removes an element of the business that may not be a core
competency.
b. Maintains an element that is critical to the continued smooth
operation of the Maple Leaf business.
c. Maintains a level of control and touch with our vendors.
Cons
a. May be too costly.
b. Gives away some control.
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c. Reduces flexibility to make changes both in the short term and

long term.
Issue of inventory policy
1. Hold as few hogs as possible to keep inventory costs low, while
mitigating the risk of production shortage. Our calculations bring this
number to around 5,950 hogs each night. Master Hog Case Analysis,
Tab: Inventory Policy.
Pros
a. Limits the number of pens required.
b. Limits carrying costs.
c. Allows for continuous production.
Cons
Only allows for minimal risk protection in situations of extreme bad
weather or truck breakdowns. (Ref. File: S11 and S12 Problem
Schedule. Tab: Receipts.)

Issue of Pens
1. Allow for 30 pens this is our maximum inventory split by a max pen
size allowing for 240 hogs. Master Hog Case Analysis, Tab: Pens.
Pros
a. With modular and easily moved gating/sections each pen can be
quickly resized to accommodate shipment sizes ranging upwards
from 30 hogs.
b. The flexibility in sizing the pens will allow for segregation of all
size of shipments from small farmer shipments to large
truckloads. Traceability is therefore not compromised.
Cons
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a. Should production suffer a sizeable breakdown Operations could

cancel and postpone shipments to stop inventory from
ballooning. There would not be room to allow for holding
inventory of 10,000 hogs in the receiving area.

Recommendations
Based on data collected and analyzed the recommended solution is to
continue with keeping the entire logistics component of Hog processing as
one of Maple Leafs major functions.
This decision will require a range of improvements helping to adjust logistics
processes to manageable level.
These improvements will include:
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expanding the truck fleet up to 15 trucks and trailers (Ref: Master Hog

Case Analysis. Tab: 15 trucks)

creating 30 size adjustable pens (Ref: Master Hog Case Analysis. Tab:

Pens)
keeping overnight inventory up to 5,950 hogs. (Ref: Master Hog Case
Analysis. Tab: 15 trucks)

It is not recommended to outsource any of the logistics components to 3pl

companies due to the fact that slaughterhouse provides major portion of
revenue for Maple Leaf and has to be utilized at 100% all times. This makes
transportation and scheduling components of logistics as critical as the
smooth operation of slaughterhouse itself. As demonstrated outsourcing the
logistics to a third party will be more expensive in Cost Comparison.
(Reference: Master Hog Case Analysis. Tab: Cost Comparison.)
The comparison of in-house logistics options between 12 and 15 trucks
demonstrated that though 15 Truck Option is higher in cost it is the option
providing greater flexibility and higher efficiency particularly in situations of
truck breakdowns or maintenance.
Implementation
Maple Leaf has been handling in-house trucking, logistics planning and
scheduling for many years. The decision to keep doing this will not involve
starting from scratch.
Given that the possibility of going to an Outsourced model has undoubtedly
reached the entire staff it would be important to have senior management
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kick-off the fact that Maple Leaf will handle all transport internally. This vocal
support would be needed to signal to the staff that the company is fully in
on this endeavor with both feet. No more safety valve of another company
taking over the responsibility.
An official roll-out of the programs to reignite the team on the responsibility
to provide product to our production is required.
This re-energizing of the staff will include some effort put into to crosstraining the in-house staff on other peoples functions to help promote a
team atmosphere. A fresh look at each task and assumption could result in
many improvements.
Where applicable all staff should have a voice in such decisions as features
included with any new trucks being purchased. Allow some of the fun
projects to be touched and influenced by all.
Internal Competitions on most efficient route scheduling and pen layouts will
result creative prizes for the winners. (Leave at Lunch on your chosen
Friday?)
Creative yet simple graphics could be applied to the KPIs to help get the
staff to look and pay attention to the stats beyond making it mandatory
reading. (Put numbers on the graphic on the title page of this Study based on
a weeks production how many bacon strips were we responsible for this
week?)
Drivers will be polled on best routes to be taken where sometimes the
fastest route may also be the worst route for causing tire flats. The
incorporation of this feedback would be addressed and implemented based
on validity after testing.
Farmers will be surveyed to understand their hurdles and possible ways that
Maple Leaf could accommodate changes to eliminate them. Maybe the
arrival of a truck at a slightly different time would allow for a greater haul? Or
the bay door selection changed to allow for easier loading. Even small things
that reduce overall friction often make a big difference.
Monitor and control

Maple Leaf Hogs

14

Upon implementation of the in house trucking fleet several key metrics will
need to be measured and tracked. Key performance indicators will be
monitored by the procurement/logistics department and will be conveyed to
the logistics co-ordinator on a monthly basis. Should there be any significant
disparities between the numbers and the expected outcome the logistics
team will seek root cause and corrective action and will outline a plan to get
back on track. The following metrics will be measured:
1 On time delivery performance: as deliveries are very time sensitive
and the slaughter plant is operating on a very lean schedule on time
delivery performance will need to be monitored on an hourly basis. The
goal will be to have 98% on time delivery within the hour; performance
in any given month below 95% will trigger a root cause analysis and
corrective action procedure. In addition to on time delivery percentage
the number of deliveries which are more than 1 hour late will need to
be tracked. It is not acceptable to have more than 3 deliveries per
month which are more than one hour late; should this threshold be
breached root cause analysis will need to be determined and corrective
action will need to follow. If the root cause is due to a lack of trucks
available or lack of flexibility of scheduling because of truck shortages
the procurement team will need to determine if more trucks should be
purchased.
2 Hours of service: total number of driving hours charged should match
the amount estimated in the typical daily and weekly schedule
provided in the appendix. If the numbers are consistently running over
the estimates we will need to look into the root cause of the problem
with the logistics team. Monthly billed hours will be given leeway of 3%
before corrective action requirements kick in. Corrective action would
vary depending on the root cause. For example, if the cause is
unforeseen unloading times due to congestion at the plant during peak
hours we will need to look into rescheduling shipments to spread out
the arrival time of trucks. If the root cause is found to be truck
downtime we will need to look into revising our preventative
maintenance policies and procedures.
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3 Stock out rates and safety stock levels: based on the previously
calculated standard deviation of lead time and the maximum shipment
size, safety stock levels had been set to roughly 1000 hogs. If this level
of spare inventory should prove to be either too much or too little
based on changes in lead times - i.e late deliveries are more or less
frequent than previously calculated then stock levels will need to be
adjusted in order to match the new data. If we are finding that the
amount of safety stock on hand is consistently insufficient this would
indicate that the delivery performance of the trucking fleet is not
satisfactory and will also be reflected in the metrics described
previously.
4 Overnight Inventory and stock outs: we will need to monitor the end of
day inventory levels to ensure that our on hand inventory consistently
matches our early morning requirements. If we are finding that we are
experiencing stock outs as a result of lack of rested hogs in the
morning then the inventory policy will need to be re-examined.
5 Pen system effectiveness: we will need to measure the capacity levels
of the pen system to ensure we are have an efficient amount of pens
available to use. Should the pens be consistently running short or if we
are found to have an overage in capacity we should consider adding or
removing pen capacity. We will also need to monitor the effectiveness
of the separation of hogs, the instances in which cross-contamination
occurs, the response rate to quarantine any hogs with questionable
health and the time which it takes to convert pens from one size to
another.
6 Loading/Unloading Time: we are currently allowing for 30 minutes of
loading and unloading time for each shipment. These times will need to
be documented and tracked to ensure they are accurate. If we find that
certain routes or truck sizes require increased loading time we can
adjust our schedules accordingly. If we find that too many trucks are
arriving at the plant simultaneously and this is causing a bottleneck
then we can investigate options to stagger deliveries.
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7 Weather/seasonal patterns: it is important to track the difference in

delivery performance in terms of monthly patterns from year to year.
The weather in Manitoba in the winter months can pose a unique
challenge to trucking conditions. If we find that there are consistently
more breakdowns or late deliveries due to weather in the winter
months we will need to look into ways to mitigate this risk. One such
method is to have a backup plan with a 3PL who can be called upon in
emergency situations. Another suggestion may be to change
maintenance periods during these months or to allow for more safety
stock during winter months in the event that late deliveries affects
production rates.
8 Truck maintenance down time: it will be important to monitor the
amount of time which trucks are spending out of service due to
maintenance both scheduled and unforeseen. If we are finding that the
trucks are breaking down more often and for longer periods than we
expect it may be necessary to look into increasing fleet size or
increasing the number of mechanics on staff. If the delays are the
result of not having sufficient spare parts on hand a cost analysis will
need to be done to determine the value vs risk of holding more parts.

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Conclusion
In conclusion we are exciting to have the operations of hog hauling fully
under our control at Maple Leaf. We have been successful at handling this
part of the business for years. The fact that this study has come out as it has
proven that this is part of our core competency. We take pride in that and will
continue to do so for years to come.

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References, Exhibits, and Appendixes

Source
1
2
3
4
5
6
7

Hyperlink
http://www.servicecanada.gc.ca/eng/qc/job_futures/statistics/7411.shtml
http://truckexec.typepad.com/files/atri-operational-costs-of-trucking-2013-final
http://www.thetruckersreport.com/facts-about-trucks/
http://www.evantransportation.com/blog/semi-trucks/fuel-efficient-semi-trucks/
http://www.servicecanada.gc.ca/eng/qc/job_futures/statistics/7312.shtml
http://www.servicecanada.gc.ca/eng/qc/job_futures/statistics/1474.shtml
http://www.agf.gov.bc.ca/emergency/Evacuation/AGRI_Livestock_Poultry_Reimb
d_2014.pdf

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Excel files:
Master Hog Case Analysis Each sheet include here. Also available as a soft
copy emailed.
S11 and 12 Hog Problem Schedule Each sheet include here. Also available
as a soft copy emailed.

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