Supply chain planning at Palmex Alimentos

Palmex Alimentos operates two plants, one in Santa Catarina, Nuevo León, and another in Puebla, with around 80 SKUs split between them.

It serves customers across Mexico and abroad: Canada, the United States, and the rest of Latin America.

With two plants and customers spread across the continent, every order raises the same question: which plant should produce it to reach the customer at the best freight cost, without unbalancing either plant's capacity.

Solving that by hand for dozens of SKUs and hundreds of destinations is not feasible: it required a model that optimized the allocation of production between plants and also supported scheduling.

“We saw the need to determine which plant should produce, to deliver to the customer with the best freight cost. So we saw the need for robust software that would optimize that and help us schedule production.”

Aleph5 built and implemented a supply chain planning model that optimizes production across both plants, considering production costs, freight costs, and available capacity.

The model does not only solve day-to-day allocation: it also allows scenarios to be simulated and structural decisions to be evaluated before they are made, such as stopping or shifting entire production lines.

The model has been in use for ten years. A recent example of its value: facing electricity cost increases of up to 60%, Palmex uses the model's simulations to evaluate whether to stop lines in Santa Catarina and shift volume to Puebla, instead of deciding by intuition.

Initial and final inventory levels at each plant are also determined with the solution, which improves planning and coverage of customer needs.

“The solution helps us determine our initial and final inventory levels at each plant, so we can plan better and cover our customers' needs.”

Palmex highlights two things about working with Aleph5: the quality of service and the mathematical depth behind the tool, handled so that the end user still works in a simple way.

“The service is of very good quality, and so is the mathematical depth, which is very well taken care of, together with the fact that you can work in a very simple way. It has helped us a great deal in the company's results.”

Palmex Alimentos, a company that has spent ten years using the supply chain planning model developed and implemented by Aleph5:

Luis Humberto Santacruz, Administration and Finance Manager at Palmex