MOD004050 Supply Chain Strategy and

Ninak Snacks
Operations

This is the case study for the limited time individual assignment.

Case Study: Ninak Snacks

Brief History of French Fries

It is thought that French Fries originated in France and Belgium in the 1830s and by the 1880’s the
idea was introduced into the USA. There are a few different theories about how French Fries got
their name. Their name could be because American soldiers during WWI coined it to describe the
fried potatoes they were eating whilst stationed in Belgium (French being the language spoken in
that area of Belgium). A second explanation is that it is derived from the verb “to french” which
means “to cut into thin strings”. A third explanation is that it actually originates from a
misunderstanding of the archaic British usage of “French fried potatoes”, which is a food preparation
techniques consisting of two frying steps and cooling in between (van Loon, 2005). About 60 years
ago, after World War II, freezing techniques were developed that facilitated storage and distribution.
This was the time that the big fast food restaurants started their business, and a massive growth of
the industrial production of French fries and other frozen potato products occurred. In 2019, over
19.5 billion kilos (43.2 billion pounds) of potatoes were produced in the US, of which, approximately
41% were made into frozen products (National Potato Council, 2020).

Ninak™ Snacks
Ninak™ Snacks produces a full line of potato-based frozen food products. Their major product lines
are french-fries; wedges; waffles and hash browns. Gary Ninak Sr. was a potato grower, by trade
and had a large farm in Idaho Falls, which is a prime region for potato growing. Idaho Falls has a
seasonal climate:

Weather Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Average high
-2.2 1.1 7.8 13.9 19.4 25 30 29.4 23.3 15.6 5.6 -1.7
in °C:

Average low
-11.7 -8.8 -3.9 0 3.9 7.8 10.6 9.4 5 -0.6 -5.6 -11.1
in °C:

Av.
precipitation 2.1 2.0 2.4 2.4 4.0 2.8 1.6 1.9 1.9 2.3 2.3 2.1
in cm:

Converted from Fahrenheit: US Climate Data (2020)

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Gary Ninak Sr sensed the growth of the US fast-food market and he came to the conclusion that
more profit could be made from processing potatoes into French fries, than growing them. Hence,
when Gary Sr discovered that a major conglomerate was selling a large facility close to his home city
of Idaho Falls, he seized the opportunity and bought it in 1978. Hence, Ninak Snacks was born and
with Gary’s passion and workaholic tendencies, he drove the business to great success
manufacturing French fries and selling them to fast food chains. He spotted young Tom Granham,
the son of his great friend, as a good choice to run the production side of the business. Tom proved
to be an excellent factory manager who ensured that Ninak was continually improving and using
new manufacturing techniques. In the 1990’s Gary Sr. invested heavily in both the facilities and
marketing. He diversified into new products and expanded to sell products to the supermarket
industry. In late 2008 Gary Sr. retired, and now Ninak Snacks is now run by Gary Jr., Gary’s eldest
son.

Gary Jr. has been running the business, supported by 4 other Directors on the Board: Tom Granham;
Jolene Carter; Vijay Shah and Karen Ninak. Tom Granham, who is the Operations Director, manages
the main factory near Idaho Falls and the development of technology in the factory. Jolene Carter is
the Marketing and Sales Director in charge of bringing in new contracts and maintaining customer
sales and relationships. Vijah Shah is the Supply Chain Director who is in charge of product
distribution; procurement and IT. Karen Ninak (daughter of Gary Senior) is the Human Resources
Director managing all people issues and health and safety. An organisation chart of the top three
levels of the Ninak Snacks is shown in figure 1.

Figure 1: Ninak Snacks Organisation Chart

Gary NInak, Jr
CEO

Jolene Carter Vijay Shah Karen Ninak

Tom Granham
Marketing and Sales Supply Chain HRM & Finance
Operations Director Director Director Director

George Farmer Bryan Forburt Carla Salins

Kevin Smith
Category Manager Warehouse Recruitment and
Shift 1 Operations (Fast Food) Manager Training Manager
Manager

Julia Davenport Jean Munnier

Chen Lim Bob Horricks
Category Manager Procurement
Shift 2 Operations Manager Health and Safety
(Ninak brand and
Manager by-products) Manager

Paul Stevens Patrick Sullivan

Ivan Clairmont Jayne Puttock
Category Manager IS and IT Manager
Technology Chief in Finance
Development (Grocery chains)

Ninak Snacks compete in 4 distinct markets: fast-food restaurants; own-branded products for
supermarket chains; Ninak™ branded products and by-product markets. Their largest market by far
is supplying to fast-food restaurant chains, which is mainly due to 3 large contracts with: Kellys;
Granters and Quick & Tasty. They also market their products under the Ninak™ Idaho brand name in
local grocery store chains which has become well-recognised in their home state of Idaho and
neighbouring states of Oregon; Wyoming; Utah and Nevada. They produce own-branded products
for the major grocery store chains across the US, including: Mart X; J-Store and Selcos. It is possible
to sell by-products from the production process: namely any rejected potatoes and peelings can be
sold to farms as animal feed and starch from the rinsing process can be sold to a starch processor.

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Currently, Ninak are selling approximately 25% of the possible animal feed and 30% of the starch,
the remainder is disposed of using a commercial waste removal firm. Julia Davenport admits, “We
could be doing more with the by-products, but, I need to focus on the Ninak Snacks brand products –
they are the more profitable than the peel and starch.” This year, the sales have been different than
other years, with a decline in sales through fast-food chains. Many fast food outlets were closed or
had reduced sales due to the Covid 19 pandemic. However, there was a distant increase in sales
through the supermarket chains as more people were preparing their own food at home. Overall
though in 2019-20, Ninak Snaks saw a decline in total sales for the first time.

Annual Sales in kilograms (kg) 2019-2020 2018-2019 2017-2018

Fast-food chains:
Kellys: Russet fries 3,660,000 5,550,000 5,700,000
Granters: Idaho only fries 3,200,000 5,050,000 4,900,000
Quick & Tasty:
Russet or Idaho fries 1,550,000 2,450,000 2,500,000
Russet or Idaho hash browns 287,000 565,000 540,000
Ninak Idaho brand products 1,800,000 1,100,000 980,000
Own-branded for supermarket
chains
Mart X (Russet or Idaho) 1,448,000 650,000 655,000
J-store (Russet or Idaho) 1,130,000 460,000 460,000
Selcos (Russet or Idaho) 980,000 235,000 250,000
Total sales 14,055,000 16,060,000 15,985,000
By-product sales 40,450 39,620 39,610

Potato harvesters are used to dig the potatoes out of the dirt and separate them out from the other
plant material, dirt, and rocks. They are complicated machines which have to separate the potatoes
out without bruising them. For every 1,000 kg of sellable potatoes 3.80 kg of CO 2 is produced by the
potato harvester.

Ninak’s customer handling

Their most profitable and largest customer segment are the fast-food restaurant chains. The first
chain they worked with was Granters and they have a good relationship with them and have been
their preferred supplier since Ninak’s opened in 1978. Gary Sr. was very happy to maintain this
relationship, particularly because Granters wanted Idaho® potatoes. Two other major contracts
were also won with Kellys, who are the majority of Ninak’s sales. This contract is difficult to maintain
and takes up most of George Farmer’s time. The reason is Kellys have a strong bargaining power and
are constantly trying to beat Ninak’s down on price. They have also been known to cancel orders
and/or change quantities required often.

Quick & Tasty is the smallest fast-food chain that Ninak deal with. Their relationship is strong and
together co-developed the hash brown recipe, although the machinery and equipment was all
through investment on Ninak’s part in 2017. Demand is fairly constant throughout the year. The
fast-food chains insist on consistency of the product and flexible delivery into their distribution
centres. To enable this flexibility a large part of Ninak’s warehouse is dedicated to fast-food
supplies. On a daily basis, Bryan Forburt works with ExpressIt, the logistics partner used by all 3
chains. Together, they ensure that the demand is met for all three chains. The choice of carrier,
ExpressIt is made by the fast-food chains and is the dominant 3PL in the industry. ExpressIt is known

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for being fast and reliable and also incorporating some steps to be more environmentally friendly,
including investment into GPS systems for improved route planning and aerodynamic trailers.

Ninak Snacks produce own-branded products for the major grocery store chains across the US,
including: Mart X; J-Store and Selcos. These customers are strongly driven by price and can be
difficult to manage. The demand is constant throughout the year, except the usual increases for
supermarket deals and seasonal changes. The distribution of Ninak products to the regional
distribution centres is managed and handled by a separate logistics company called FreshDist.
FreshDist have been known to be difficult to work with and often turn up to pick up the products
late. Due to the limited storage this has caused quite chaotic warehousing situations for Ninak
Snacks. Ninak have been forced to move products to different locations in order to accommodate
the products that were due to be collected by FreshDist. Furthermore, the customers have then
complained to Ninak Snacks about the delays, so Paul Stevens has had to deal with those complaints.
FreshDist were originally selected as they offered the cheapest deal for transportation. Bryan
Forburt and Paul think that a new distributor should be selected, but Jean Munnier explains “
Finding a new distributor that can handle temperature controlled transportation and reach all the
RDCs is very difficult. I’m afraid FreshDist will always be the cheapest and also flexible, so we will
have to put up with the delay and make the most of it.” Paul felt Jean just could not be bothered to
consider other alternatives and is feeling more and more disgruntled that his category, which is the
second most profitable, is ignored, while the rest of Ninak push and push the Ninak Snacks branded
products.

Customer Service
Jolene is concerned her sales people are spending too long on customer service and has been
logging the type of complaints they are handling last month for their own-branded products,
delivered by FreshDist, approximately 10.15 kg of CO2 per gallon.

Complaints that require a re- Frequency Time to Redelivery or Diesel (average

delivery (month) resolve at collection gallons to rectify
Ninak (average miles to complaint)
(average rectify complaint)
mins)
Too few sent 12 28 695 57.4
Too many sent 8 23 585 49.8
Wrong items 7 25 645 54.0
Delivery is late 12 20 - -
Missing or incorrect 3 21 - -
information (e.g. price or
promotion codes)
Incorrect documentation (e.g. 1 15 - -
invoice)
Delivery is early 1 9 - -
Poor communication 1 20 - -
(Fuel consumption and CO2 emissions derived from U.S. Energy Information Administration, 2016
and 2018)

She can see there are issues here, but not sure how to prioritise them or who can solve them.

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Ninak Idaho brand product range

The Ninak Idaho brand was an initiative started by Gary Jr. He thought that selling products with the
Ninak brand would be another asset to the business. This product range added to the complexity of
production scheduling though. The Ninak brand currently manufacture seven products: Ninak™
Idaho Fries; Ninak™ Idaho thick- cut skins on fries; Ninak™ Idaho potato wedges; Ninak™ Idaho spicy
wedges; Ninak™ Idaho Potato Waffles; Ninak™ Idaho Home Roasters and Ninak™ Idaho hash
browns.

Ninak™ Idaho Fries Ninak™ Idaho thick-

Delicious for all the family cut skins on fries
and only 12 minutes in Wholesome goodness
the oven! baked with skins on for
your nutrition!

Ninak™ Idaho potato Ninak™ Idaho spicy

wedges wedges
Mildly spiced for all the For a bit of a kick – bring
family. on the Ninak Idaho spicy
wedges.

Ninak™ Idaho Potato Ninak™ Idaho Home

Waffles Roasters
Adding fun to any Just right for your home
mealtime. cooked meal.

Ninak™ Idaho hash

browns
Triangles of goodness for
your family.

The fries and wedges are manufactured on the existing lines and each type requires a 2 hour set-up
change over. The roasters; waffles and hash browns are manufactured on a separate line, that was
developed for these products. It was expanded from the existing machinery used when Quick &
Tasty contract was won for hash browns in 2017. Ninak branded products are sold in local grocery
store chains and have become well-recognised in their home state of Idaho and neighbouring states
of Oregon; Wyoming; Utah and Nevada. However, the cost of production is much higher and hence
a lower profit margin is achieved despite the premium pricing for the “Grown in Idaho” ® seal.

The variety of Ninak ™ brand products has added to the complexity of production scheduling though.
Chen Lim often reflects on whether this line is really profitable, Chen says “Mr Ninak is very keen on
investing in the new Ninak brand and I have to prioritise it over the other lines. However, I worry if
this is the right thing to do, as it means that I am having to run set ups all the time and the lines are
running for less time.” Julia Davenport was initially responsible for by-products, but then was
chosen by Gary Jr to launch the Ninak brand disagrees with this. Julia says, “Ninak branded products
are the way forward for us. With our own brand we are not reliant on pushy customers and can set
our own pricing, rather than constantly being negotiated down. The Ninak brand is the most

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exciting development and we must all focus on building this.” Gary Jr. is in agreement with Julia and
takes great pride in seeing Ninak products in stores. Jolene, who has a closer eye on the profit
margins is privately quite sceptical. She thinks they risk losing their larger, profitable customers if
the Operations team don’t find a way to schedule and plan better. Her team can bring in the sales,
she needs the factory to keep up and make the right products.

Ninak’s suppliers
Ninak Snacks source their potatoes from a range of sources, either directly from the farms or from
rather large warehouses, depending on the time of year. Jean Munnier handles supplier selection
and contracting. Ninak predominantly use the Idaho and Russet varieties of potato. An Idaho
potato is one grown in Idaho that has been federally registered with the Idaho Potato Commission
(IPC). The seasons for Russet Burbank vary: in April and May, potatoes come from Florida; June, July
and August, Ninak gets their potatoes from North Carolina; in the September and October, all Idaho
potatoes are harvested. However, over the winter Ninak depend on their potato storage. The table
below shows how many kilos of potatoes are received at Ninak each month in 2019.

April May June July August Sept Oct

Florida
(by truck loads of 954,000 1,221,000
7,500 kg, travelling
2,400 miles)
North Carolina
(by truck loads of 1,701,000 3,857,000 1,970,000
7,500 kg, travelling
2,150 miles)
Idaho
(by truck loads of 5,151,000 3,710,000
7,500 kg, travelling
15 miles)

The potatoes are transported in 7,500 kg loads in temperature controlled vehicles mainly by Ninak’s
own fleet. Ninak’s fleet of 24 heavy-duty diesel trucks and they run about 12 miles to the gallon,
producing 10.15 kg of CO 2 per gallon. However, from April-August they also use a 3PL as the
distance is too far and there are too many loads for Ninak’s fleet to manage, the 3PL also uses heavy-
duty diesel trucks. There had previously been some discussion to using rail to transport the great
distance during the Florida and North Carolina harvests, there is potential to use this transport
mode, as shown in the rail route map.

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Adapted from: U.S. Department of Transportation Federal Railroad Administration (2018)

When the potatoes arrive at the Idaho plant, they are checked for water content; grades and the
level of sugar content which indicates the age of the potato. Russet potatoes are a much cheaper
product costing between $0.25 -$0.38 a kilo depending on the grade and Idaho potatoes, considered
higher quality/brand are $0.35-$0.47 a kilo.

The other main input to their process is vegetable oil, Jean Munnier focuses on sourcing this through
competitive bidding for the best price per gallon.

Ninak’s Production Processes

Production line technology has been invested in heavily at Ninak. They have three production lines
working two 8 hour shifts. Each line is fully automatic with a capacity from 800kg/hour-2000kg/hour.
At Ninak, their French fries (chips) go through 14 basic stages of production:

1. Potato Storage
Ninak prefer to keep storage of potatoes at a minimum as the best taste results are achieved using
fresh crops. However, from November-March no fresh crops are available at all so storage is
necessary. Furthermore, for Idaho only products in the months of November-August storage is
necessary and for Russet only products in the months of September-March storage is necessary.
Ninak have carefully designed storage facilities to keep the potatoes alive and slow the
decomposition process, which involves the breakdown of starch. The storage area has to be kept
dark, well ventilated temperatures maintained close to 4 °C (39 °F). However, they must not allow
temperatures to fall below 4 °C (39 °F) as the starch converts into sugar – affecting the taste and
cooking qualities. Furthermore, particularly in the production of fried foods, this can led to higher
acrylamide levels in the cooked product. Acrylamides are thought to be possible carcinogens,
although later research disputes this.

2. Cleaning

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The potatoes pass through rollers to rub off any foreign matter, for example, soil, rocks and plant
parts and to scrape off eyes (where tubers may have started to grow). They are then cleaned by
high-pressure water jets as they spin in revolving cages. The cleaning device has to be maintained by
cleaning every hour.

3. Sorting/batching
The potatoes are then batched/sorted based on their size, so that different potatoes can be used to
different products (for example smaller potatoes may be used for hash browns). Sorting is
conducted by a sorting machine: which has successive levels of vibrating grids and collected into a
collection bin.

4. Peeling
When the collection bin is full, the potatoes are steamed for around 10 seconds to loosens the peel.
After the peel is loosened it is sprayed off with high-power water jets. This by-product is collected to
make animal feed. (Any skins on fries are not peeled and instead sent through another washing
process).

5. Inspection
Ninak employees visually check the quality of the potatoes coming out of the peeling process. They
remove any green, rotten potatoes or pieces of potato skin, this is disposed of.

6. Chopping
Ninak use a hydrolic system, where running water pushes potatoes against cutting blades to cut the
potatoes into fries. There is a set-up in this process to change the blades for thickness of the fries
and/or to make potato wedges. This required several members of staff and is quite complicated and
hence, they prefer to make large batches of one type of potato, rather than frequently change the
blade mechanisms. There is another machine for cutting potato waffles that is a dry process using a
specialised rotating mechanical slicer.

7. Inspection
The cut up potatoes drop in a canal flowing water transports them along a conveyor belt. Another
inspection process takes place with a high tech camera detectors that will notice any discoloration or
if the size is wrong. Any chips that do not meet the quality criteria for size or colour are blown of the
line. These detectors can inspect around 1,000 strips and chips each second. The collected chips
that were too small will go on to be processed as hash browns on another line.

8. Blanching
Chips are then processed on a conveyor into a large vat of hot water for 7-12 minutes at 32 0C and
then cold water to remove excess sugar. Blanching improves the flavour and the surface of the fries.
It also releases starch and some of this starch is sold as a by product.

9. Drying
The fries move along a belt and are partially dried blasts hot air from both the top and bottom of the
belt. Ninak have found this machine to be temperamental and sometimes over dries the fries, which
takes out too much of the water content. The effect of this is that when they are cooked by the
customer they can be too dry. This has been picked up by the quality inspectors at Ninak and by end
customers.

10. Frying
The fries then pass to the fryer on a conveyor belt. They are fried in vegetable oil for 2 minutes in
one of the 20 large Energy Star rated deep-fat fryers, which are kept at a temperature of 190 oC, each

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one uses 1 kilowatt of electricity per hour when idle and are around 80% efficient. The vegetable oil
is disposed of after 2 hours of frying time to preserve the taste.

11. Draining
The fries then pass on a conveyor belt with holes to drain off the excess oil.

12. Freezing
Blast freezing is a method that freezes the French Fries which travel down on the wire conveyor
using air cooled down to -40oC. It takes about 10 minutes to freeze the fries. Blast freezing is also
energy intensive using 2.8 kilowatts of electricity an hour.

13. Packaging
The fries then pass through oscillating conveyor belts that send them down shoots. Each shoot has a
built in package weight so that when the weight is reached, the shoot opens and the fries drop into
the bag. This can be quite complex for Ninak as they ship a variety of different weights to their
range of customers. Fast-food customers order much larger low density polyethylene bag sizes than
supermarkets. Therefore, the production runs need to be scheduled correctly based on the potato
variety; weight and end product. Orders are often further packaged into cardboard outers.

14. Storage of end product

The packaged products are transported to the frozen area of the warehouse before being
transported to the customer.

Warehousing
Bryan Forburt is in charge of two main warehouses: raw potatoes and frozen. He ensures that the
over 18m kg of raw potatoes a year are stored correctly. He must maintain the potato area so that is
dark, well ventilated and the temperatures maintained close to 4 °C (39 °F). He also makes sure it
doesn’t fall below 4 °C (39 °F) as the starch converts into sugar – affecting the taste and cooking
qualities. In order to maintain this temperature, the current energy used varies depending on the
time of year, but is around 8.4 kilowatts per day. He must also organise and manage the handling of
the potatoes from warehouse to factory line, according to the type required. He also operated the
FIFI (first in- first out) stock rotation to reduce the time that the potatoes are in storage as much as
possible. Having worked at Ninak Snacks for five years he manages the potato area well. He says,
“It’s only 2 basic types of potato, one temperature, it’s not difficult.”

However, the finished good frozen area gives Bryan more of a headache. “Jolene needs to sort her
team out; they give me a different forecast every week. The space is limited in frozen. She doesn’t
seem to realise that it takes time and effort to keep moving pallets around. Don’t even get me
started on FreshDist… #?#? ” But FreshDist and Jolene aren’t the only one Bryan thinks causes a
problem “The factory don’t seem to know what they’re doing, why am I getting 8 different products
from one shift. Why don’t they just make one thing per shift? It would be much easier for me to
organise the warehouse.” Before the product lines were increased, the frozen area used around
16.5 kilowatts per day. However, with the more frequent moving of products and opening and
closing of the doors, this can get up to 22.70 kilowatts per day.

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Technology and IT
In 1977 Gary Sr. ran the factory with the existing production equipment. By 1995 he realised that a
major investment was needed into production technology. He hired Ivan Clairmont, who sourced
the equipment for 2 lines, a further line was added in 2000. Ivan Clairmont ensured that the
equipment was maintained and updated with smaller investments. The new hash browns area was
developed in 2017 and then expanded further for the Ninak line after that. This is the area that Ivan
feels really needs improvement. Ivan says “We have the ovens on far longer than we need them,
just wasting electricity as they don’t need to run all shift. But if we turn them off, then we have to
wait to heat them up again so it can halt the whole process. We need to plan and schedule batches
more efficiently.” The hash brown ovens use a standard commercial oven that is not Energy Star
rated and runs at over 1.6 kilowatts per hour when idle.

Currently, Ninak do not have a larger-scale IT system. Patrick Sullivan explains “We only purchase
and make a few things, we don’t need an expensive system for that.” Patrick has installed and
implemented: Sage Finance and HR and Payroll system for producing company accounts and payroll.
The software organises Ninak’s cash flow and payroll and ensures they adhere to financial and
business regulations. Patrick worked hard with Tom Granham to develop a database to work out
production schedule and set production targets. Generally Tom would review what the database
suggested and adjust it based on his knowledge. Patrick wanted to develop a similar database for
Bryan Forburt to organise the warehouse. However, Bryan insisted he had it all under control and
instead preferred to create his own spreadsheets for stock control and warehouse management. He
would then feed the information of what arrived and left the warehouse over to Jayne Puttock to
feed into Sage to create invoices and pay suppliers. Bryan himself admits that given the new
varieties of product and the changing demands he could use some help. Marketing and sales
currently use a contact system to manage customers and forecast based on last years figures and
customer orders. They produce a new forecast every Friday and pass this to Tom’s; Vijay’s and
Karen’s team.

This case study is fictional and written by Dr Helen Benton for learning purposes. Do not reuse
without my expressed permission. Any likeness to persons or organisations is purely co-incidental.

Sources used to create this case study:

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at: <http://eng.clima.org.cn/Machine/Potato-Processing-Line/Frech-Fries-Equipment.html>
[Accessed 10 Dec 2017].

Energy Star., 2018. Commercial Fryers Key Product Criteria [online] Available at:
<https://www.energystar.gov/index.cfm?c=fryers.pr_crit_fryers> [Accessed 19 Feb 2018].

Energy Star., 2018. Commercial Ovens Key Product Criteria [online] Available at: <
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Idaho Potato Council, 2011. Potato FAQs [online] Available at: <
https://idahopotato.com/frequently-asked-questions> [Accessed 8 Jan 2016].

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Kohli, P., 2011. Potato Storage and Value Preservation [online] available at:
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<https://www.nationalpotatocouncil.org/potato-facts/ [Accessed 19 Jul 2020].

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<http://www.sciencechannel.com/tv-shows/how-its-made/> [Accessed 15 Dec, 2017].

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U.S. Energy Information Administration, 2016. Frequently Asked Questions. [online] Available at: <
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