agenda supply chain management: myth vs reality supply chain management: an analytical perspective...
Post on 26-Mar-2015
222 Views
Preview:
TRANSCRIPT
Agenda
Supply Chain Management: Myth vs Reality
Supply Chain Management: An Analytical Perspective
Strategic Sourcing
Sales & Operations Planning (S&OP)
Unification of Marketing and SCM
SCM and the Green Movement
1
Strategic Supply Chain Design Analytical Tool
Computer-Based Mathematical Model of Entire Supply Chain
Crosses Organizational and Functional Boundaries
Relevant History From the Early 1970s (“Warehouse Location Models”)
Today Often Called a Network Design Tool This perspective is far too limited Too much emphasis on location questions True situation
Comprehensive strategy Considerable tactical power
2
3
Multiple Stages of Production
Raw Materials In
Production Line 1
Production Line 2
Process 1
Production Line 1
Production Line 2
Process 2Finished Products
Out
Intermediate Product Production Lines
Finished Product Production Lines
Overall Objective
To find the set of facilities and transportation links and associated product flows that either minimizes total costs or maximizes total profit…
Subject to the Following Restrictions (Constraints):
Procurement availability limits Manufacturing capacity limits DC throughput limits Storage limits Inventory targets Customer service limits Other transportation link restrictions Energy consumption limits Carbon emission limits
Solver Engine: Mixed Integer Linear Programming
Classic Issues: Structure, Ownership, Mission
Number and Location of Raw Material Suppliers Plants/Vendors/Copackers Production Lines/Processes DCs
Transportation Links and Flows Inbound: suppliers to plants Transfers: between facilities Outbound: DCs to customers
Facility Ownership Issues Owned, leased, public, 3PL Outsourcing
Facility Mission Issues Commodities procured, manufactured, distributed per location Costs and capacities
Beyond Location: Critical “What If” Issues Business Decision/Policy Issues
Supply Chain/Marketing Integration S&OP Energy/Carbon Footprint/Sustainability Supply Chain Vulnerability/Hardening Strategic Sourcing Customer Profitability (Cost-to-Serve) Mergers and Acquisitions Master Capacity Planning Transportation Policy International Trade Long Range Planning Seasonal Demand/Supply Product Introductions/Deletions
Strategy is About MUCH More Than Locations!!
Summary of Inputs
Network Description Commodities
Raw materials Intermediate products (WIP) Finished products (typically aggregated from SKU level)
Locations Raw material suppliers Plants/vendors/co-packers
Drill-down to lines/processes DCs/pools/cross-docks/ports
Drill-down to lines/processes Customers (typically aggregated from ship-to level)
Other Customer channels Time periods
Customer Demands Table by customer/channel/finished product/time period
Summary of Inputs (cont) Transportation Costs
Inbound (supplier to plant) Transfer (between facilities) Outbound (to customer)
Facility Data (technically optional but critical) Mission data (eligibility of commodities) Procurement costs, capacities & violation penalties Manufacturing costs, capacities & violation penalties DC location costs, capacities & violation penalties Bills of material Inventory targets and holding costs Lock open/close options
Other (optional) Duties, taxes, currency conversions Selling prices (needed for profit max studies) Customer service limits Data scaling options Energy usage and carbon emission factors & constraints
Thoughts About Inputs So…Where Are You Going to Get This Stuff?
Demand and historical flows: transaction histories Transportation: typically left to the specialists Duties and taxes (say what?)…go find a specialist (if you can) Facility: ah, there’s the rub
Facility Data Types of costs
Fixed Variable (per unit of network flow) Step functions (CAUTION)
Thoughts About Inputs (cont) Procurement
Fixed costs: unlikely Variable costs (by raw material) Capacity limits Source: typically right from the contracts
Manufacturing Overall plant
Fixed costs Variable costs
Drill down to production line/process Fixed costs Variable costs (by intermediate and finished product) Capacity limits (by line and by line/IP and line/FP) Line rates (by line/IP and line/FP)
Bills of material Sources: accounting, ABC, engineering, experts, statistical analysis
Distribution Center (also cross-docks, pools, ports) Fixed costs Variable costs (by product) Capacity limits (throughput, storage, SKU count) Sources: accounting, ABC, engineering, experts, statistical analysis
Final Thoughts About Inputs ABC Costing is a Powerful Leg Up
Strategic decisions deserve the best possible inputs Not a necessary condition but it sure helps. To wit…
Data Accuracy is of Utmost Importance These are boardroom issues Millions are routinely at stake Defending the numbers is inevitable. To wit…
When The Opposition Rears Its Head (AND IT WILL) Not demand data (unassailable if transaction-based) Not freight costs (mystery mercifully left to the experts) Not duties and taxes (even greater mystery left to the experts) Facility costs and capacities (everyone is an expert)
Your Model Will Appreciate Accuracy As Well Major consulting/support challenge: cookie cutter models Tremendous influence on optimization algorithm performance
Agenda
Supply Chain Management: Myth vs Reality
Supply Chain Management: An Analytical Perspective
Strategic Sourcing
Sales & Operations Planning (S&OP)
Unification of Marketing and SCM
SCM and the Green Movement
13
Unification of Marketing & Operations
Evolution of Network Tools & Perspective Finished goods distribution Integrated logistics Supply chain management Unify procurement, manufacturing, and distribution
Integrate Remaining Silo: Marketing Managerial objective: rigorous development of corporate strategy Mathematical (and managerial) objective: profit maximization
Expand Target Audience to Senior Management Above the pay grade of CLO and CMO Direct impact on C-level metrics
14
Unification of Marketing & OperationsThe Rationale
Intense Pressure to Maximize (Protect?) Profit
Intense Competition Across Functions For Limited Resources
The S&OP Message Is Valid: Need For Cross-functional Business Process Integration. BUT…
Typical Weaknesses of S&OP
Demand given via forecast from marketing Limited supply chain scope: often manufacturing only No ability to redesign and/or rebalance entire network Weak supply/demand synchronization methodologies Typical procedure: “warring spreadsheets”
15
Unification of Marketing & OperationsThe Solution
Start With Comprehensive Supply Chain Design Perspective
BUT: Traditional Analytics: Demand is Given
Suppose We Relax The Assumption Of A Fixed Forecast…
Add Marketing Campaigns or Initiatives Can represent any marketing activity
Advertising campaigns Coupon distribution and/or product samples Sales force adjustments
Typically customized by channel and brand Composition
Budget: fixed and variable costs Overall & market-level activity limitations (min/max limits) Response coefficients by product (projected lift)
Add Selling Prices
16
Unification of Marketing & OperationsThe Solution
Analytics Response May optionally “buy” additional demand Must pay for
Marketing campaign Full supply chain fulfillment costs
Will Accept IF Profitable and IF Feasible
Will Reject If Unprofitable and/or Infeasible
Objective: Profit Maximization
Final Result: Profit Max Corporate Strategy
17
top related