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AchievingCompetitiveAdvantageThroughSupplyChainManagementAdvancedPlanningandSchedulingSystemsMay25,2000,Agenda,1.TheEvolutionoftheSupplyChain2.AdvancedPlanningandSchedulingSystems2.1HowTheyWork2.2TheVendors,TheSupplyChainencompassesanumberofkeybusinessprocessesinvolvedinmanagingtheflowofmaterials,information,andfundsfromtheinitialsupplierstotheultimateconsumer.,theconceptofsupplychainmanagementisrelativelysimple.,However,intherealworld,multiplesuppliers,multipleplants,multipledistributionpointsandmultiplecustomerssignificantlycomplicatematerialandinformationflows.,And,giventhatsupplychainscrossmultiplecompanies,wallshavebeenbuiltthatpreventfullandtimelyinformationflow.,Breakingdownthesewallsandintegratingthesupplychainiscritical.However,todate,mostsupplychaininitiativeshavebeeninwardlyfocused.Onlyrecently,manufacturersarebeginningtoembracethetotalsupplychainasameanstoachievingcompetitiveadvantage.,Phase1-ProcessIntegration(e.g.,reengineeringtheorder-to-cashprocess).Phase2-Intra-EnterpriseIntegration(e.g.,salesstrategiescoordinatedwithsupplychaincapabilities).Phase3-Inter-EnterpriseIntegration(e.g.,collaborativeforecasting&replenishmentbetweenretailersandsuppliers),Stage1:Separatebestofbreedapplicationsdedicatedtospecificbusinessprocesses(1970s),EnterpriseResourcePlanning(ERP),SupplyChainTechnologyhasevolvedoverthepastseveraldecades.,TodaysERPsystemsaretransaction-basedapplicationswithlimiteddecision-supportcapability.,Stage3:Enterprise-wideapplications(earlytomid1990sandstillongoing),Stage2:Suitesofintegratedapplicationsforfunctionalprocesses(1980s),APSDefinitionERPorlegacyinterfaceddecisionsupporttechnologywhichusesadvancedalgorithms,(e.g.,LPs,IPs,mixedIPs,heuristics,theory-of-constraints,etc.)tomodelsupplychainconstraintsandenableintelligentsupplychainplanning/decisionmaking.APSCharacteristicsAllowscomplexsupplychainrepresentationandrapidSCmodelreconfigurationEnablesconcurrent,dynamicplanning,and“what-if”simulationsusingmemoryresidentprocessingPossessscaleableobjectarchitecturescapableofrunninglargedata-intensivemodels,AdvancedPlanningandSchedulingSystems(APS)AretheNextStepoftheEvolutionforProvidingDecisionSupportCapabilities.,Whilewetendtodrawallsupplychainsthesame,therearemanytypesofsupplychains-eachwiththeirownuniquechallenges.,E.g.,Pulp&Paper,E.g.,High-Tech,E.g.,ConsumerProducts,HowDoYouKnowIfYouHaveSupplyChainManagementProblems?,CustomerServiceConcerns-Customercomplaints,lossofshare,deliveryproblems,customersurprisesMaterialsManagementDifficulties-Highinventorybuffers/obsolescence,hightransportationcosts,suppliershortages,lostpurchasingdiscountsManufacturingProcessProblems-Productioninefficiencies,overcapacity,undercapacity,costgrowthPlanningDifficulties-Inaccurateforecasts,highstockouts,growingoverheadcostsObsoleteTechnology-Incompatiblesystemslinkages,inaccurate/inaccessibleinformationRevenueCycleConcerns-Lengthytimetomarket,longordercycle,distributiondelays,conflictingchanneldemandsVendorManagementProblems-Poorresponselevels,lostgrowth,lackofcommitment,TheImportanceofSupplyChainManagementHasIncreasedSignificantlyOverthePastFewYears.,TheResponse:Approximately60%ofManufacturersCurrentlyHaveaMajorSupplyChainInitiativeUnderway.,However,42%are“lessthansatisfied”withtheoutcomeoftheirpreviousimprovementefforts.,AsthePaceofBusinessContinuestoIncrease,aKeyChallengeforTodaysSupplyChainManagersIstoMakeGoodBusinessDecisions,UsingAlltheInformationThatIsAvailable,WithinaShortTimePeriod.,TheSupplyPlanning(SP),DistributionPlanning,MasterPlanning,FactoryPlanning&Scheduling,InventoryPlanning,SP-InventoryPlanning,InventoryPlanningGoal:Determineoptimalinventorylevelsandlocationtoprotectdesiredcustomerservicegoals,TradeoffbetweeninventoryandservicenotunderstoodLimitedabilitytoknowhowmuchinventory,whenandwhereInabilitytoplanatasufficientlevelofdetailInabilitytoquantifytheimpactofdemandandsupplyvariability,Challenges,SPMasterPlanning,MasterPlanningGoal:Globallyoptimizeproductionplanconsideringtradeoffsofavailablecapacity,materials,costs,time,LackofvisibilityDisjointedplanningInabilitytoreconciledemandprioritieswithsupplyconstraintsInabilitytogloballyoptimizeproductionplanconsideringmultipleconstraintsPlanningdoesntsupportcorporateobjectives,Challenges,DistributionPlanning,MasterPlanning,FactoryPlanning&Scheduling,InventoryPlanning,SPFactoryPlanning&Scheduling,FP&SchedulingGoal:OptimalexecutionoftheMasterPlantominimizecostandimprovequalityoftheplan,MaterialandcapacityconstraintsnotconsideredsimultaneouslyInaccuraterepresentationofrealworldconstraintsSlow,inabilitytoreactLackofproblemvisibilityPoordeliverydatequotinginbuildtoorder,Challenges,SP-DistributionPlanning,DistributionPlanningGoal:Optimallypositioninganddeployinginventorytoachievedesiredcustomerservice,Store&DCreplenishmenthandledindependentlyLimitedabilitytoprioritizedemandPredetermined(akainflexible)distributingrulesInventorydistributedinadvanceofactualsales,Challenges,DistributionPlanning,MasterPlanning,FactoryPlanning&Scheduling,InventoryPlanning,CustomerBenefits,Growth:IncreaserevenuesIncreasedmarginperformanceFinancialPerformance:ReducedinventorycostsandobsolescenceOptimaluseofavailablecapacityandinventoryReducedprocurementexpensethroughaccurateorderingImprovedCustomerServiceAndifyoudotheaboveincreasedstockprice,SelectedAPSImplementationsbyIndustry,AerospaceBellHelicopterU.S.NavyAutomotiveFordGMVolvoChemicalOccidentalChemicalNovartisMacMillanBloedelConsumerGoods(Durable)BakerFurnitureBlack&DeckerBoseHermanMillerConsumerGoods(Non-Durable)3MAultFoods,ConsumerGoods(Non-Durable)CocaColaE&JGaloFritoLayHighTech3COMDellDigitalGatewaySiemensIndustrialCaseCaterpillarMercuryMarineMedicalJohnson&JohnsonBristol-MeyersSquibbMetalsTimken,ThereAreaNumberofAPSVendors.AccordingtotheGartnerGroup,i2TechnologiesandManugisticsAretheLeadersToday.,DeloittecurrentlyhasestablishedAPSrelationshipswithi2,Manugistics,SynQuestandParagon.D&ThasERPpartnershipswithPeopleSoft,JDENumetrix,BaanandSAP.,Source:GartnerGroup(03/26/99),NotefromS:TheTablewasdeletedduetocopyrightsconstraints.RefertotheGartnerGroupdatabaseinSforcurrentinformation.,1999EstimatedTotalSCMMarketShare,Source:BenchmarkingPartners,Inc.,1999Estimated%ShareofMarketLeadersByVertical,Source:BenchmarkingPartnersInc.,1999Estimated%GrowthbyVertical1998-1999,Source:BenchmarkingPartnersInc.,1999AssessmentintheConsumerPackagedGoodsIndustry,Source:BenchmarkingPartnersInc.,Appendix,DemandPlan,KEYCONCEPTSTrulyincorporatesknowledgefromvariouslevelswithinandoutsidetheorganizationProactivelycontroleventsandreducevariationsindemandforecastingSupportstop-down,bottom-upandhybridplanningapproachesMulti-dimensional,enterprisedemandplanningthatintegratessystems,processesandpeopleatmultiplelevelsINPUTConsidersstrategicgoals,inter/intra-companyobjectivesandconstrainedsupplyinformationtoconstructrealisticdemandplanConsidersexternaleconomicandevents(promotions,pricingchanges,etc.)Multiplescenariocomparisonsandwhat-ifanalysisfacilitateappropriateusestoaddvalueOUTPUTIdentifiesopportunities,formulatesstrategies,translatesthemintoactionplansandactualexecutionsteps,andanalyzesresultsProducesrealisticforecastthatdrivesinventory,financialandoperationalplansReducessupplychaininventoryandcosts,SupplyPlan,KEYCONCEPTSFacilitatesthedesignofoptimaldistributionnetworks,productionplans,sourcingdecisions,andinventorylevelsHelpsdeterminethemostprofitablesupplychainstrategyforend-to-endorderfulfillmentRealtime,enterprisewideandcrossenterprisevisibilityandoptimizationofconstraintsReliablereal-timemarket,productandcustomer-allocatedcapable-to-promiseandduedatequotingINPUTConsidersconstraintsthroughoutthesupplychainatagreatlevelofdetail,enablingrapidwhat-ifsimulationsOUTPUTManufacturing,distributionandsourcingnetworkoptimization:improvecustomerresponsivenessandreducecostsatthesametimeIncreasedabilitytofocusonhigh-valuestrategydecisionsthatdrivetacticalandoperationalactivities,andresponsivenesstochangesinbusinessenvironmentShorterorderfulfillmentcycletimeLowerinventoriesOptimizedassetutilization,ProductionPlan,KEYCONCEPTSProducesoptimizedandfeasiblefiniteproductionschedulebasedonconsiderationofdynamicconstraintsINPUTWhat-ifanalysisATPbasedonup-to-datematerialandcapacityconstraintsFastre-planningoforderstoaccommodatedemandvolatilityOUTPUTResourceoptimizationUtilizationimprovesby10to50%Inventoryreducedupto75%OrderLeadTimes:10to60%reductionDeliveryPerformance:25to50%improvementOrderFillRates:50to90%improvementReducedplanningcycletimefromweekstohours,TransportationPlan,KEYCO
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