Business Marketing Plan

Supply Chain & Logistics Best Practices – are You Keeping Up?

March 1, 2011

We are told that the continuing increase in computing power (a version of Moore’s Law states that computing power / dollar doubles every two years) has changed the way in the world, and supply chains operate . This article describes some ways of the Internet and computer technologies have allowed other established “best practices”. The question is whether you keep you! First Predicting demand and companies ManagementMany forecast customer demand, because their time to deliver more of their customers usually wait for products. The most common method is an overall level (product family or geography) forecast and then know what is in each store or regional warehouse in essence, the forecast again, sending the demand this year is the same ratio as last year being. Once done, because it is “impossible” to write and produce a forecast for potentially millions of combinations point location /. The best practice is for a machine with a statistical forecast for each item in each location and then that aggregate demand management control and adjust (by product or geography). The adjustment path can be automatically applied for each position / location in the proportions of the original estimates. This practice may, by so-called “tournament” prediction, where the computer tries to schedule a series of predictive models is possible and the best model based on the lowest forecast errors are improved objective . The tournament will again go through the update whenever the underlying application data (usually weekly or monthly). If you are not at / tournament prediction location, you do not keep up. Second inventory method OptimizationA very common for the management of inventories subject to a policy or rule, usually on a segmentation analysis (eg, ABC) are based, to maintain a number of weeks of average demand history – for example, four weeks of the cycle and has two weeks to security. Unfortunately, approaches based on rules are “one size fits rather” all. This means by definition that the rule is the right amount of inventory to provide some items to attend too much inventory for other items and not enough inventory to service levels for other products. Therefore we get that inventory imbalances lead to excessive inventory costs, cash flows and prevents arms and / or inconsistent levels of service all at the same time. In addition, approaches based on rules that are sensitive to changes in demand. So what, you ask? Now, it means they are relatively static and not on other important factors such as service level and forecast accuracy associated. For example, if you want to increase your level of service, you must understand to be done (for example, the best estimate), to change something in your inventory with these rules will be. If you are in a forecasting system and invest Improve your forecast accuracy to deliver a few weeks “approach does not reward you with reduced safety stocks. Again, you need to know what effects and changes in the rule itself itself. This becomes especially difficult when you have a large number of products and storage locations. Fancy doing this for 10,000 products every week! But there is a solution. Best practices is a target level of service satisfaction the request of the shelf, then calculate the parameters of the equipment (for example, order quantities and safety stock), taking into account all relevant variables: Well, if we increase our service levels Our inventory parameters of all elements automatically adjust because there is a direct link – and our customers are satisfied with their service because we are always on target. If we improve our forecast accuracy, our investment in safety must be resolved, and we are rewarded by better inventory turns and flows of cases. The result is the combination of the inventory for each and every time in any position, and benefits are the achievement of Best in Class “rate of inventory turnover and levels of customer service at the same time. If you have any rules approaches inventory management, you do not keep up. Optimization third – Dates of service plans / / spreadsheet assignmentsThe work is the tool most commonly applied to the problem of resource planning, whether in our classrooms, the collection from storage, operating rooms, factories, television studios, airports or van. The planner of all these companies trying to find an optimal solution, but more often for the first time the “satisfaction” the solution, they moved to meet the internal heuristics, that a list of good, timing, route or assignment. The best practices are computer algorithms to solve the problem and creating an optimal or near optimal solution. Recent advances in performance and mathematics have applied problems have been very available to direct calculation, and that lowering the threshold where such methods are economically viable for smaller organizations. computer algorithms can often raise the capabilities of a human planner would never study and produce solutions that are fair, objective, cost-effective and produce more quickly. If you have more of a planner who is dedicated to do everything by hand in a case worksheet, you do not keep up. 4th Spares IndustriesKeeping capital equipment in use is the key to profitability in industries like mining, power generation, electronic networks and commercial airlines. The different philosophies of maintenance used to keep downtime to a minimum of planned preventive replacement, followed by the state or the expectation of a collapse, and react quickly. Supply of spare parts rather than supporting a rapid return to service (at a provided or the method of ventilation, where events are randomly distributed components moving) is an art “black” in most industries, and often left on the plant engineer maintenance and consulting services provider, which may have an interest in the sale of spare parts. Best Practices to see how many times in the Air Force, or NASA, is data intensive since records of each failure component or the removal of the base must be maintained to provide a conservative analysis. This type of documentation is required in civil aviation, but increasingly in modern computer systems maintenance management in order to apply the production facilities or data networks. Other factors such as size (based on redundancy and failure modes in the design of the machine), the point, the cost of downtime failure rates (often called the mean time between failure) is expressed and repaired Total Repair Cycle Time (if the component can be, and returned to the serviceable parts pool) can be combined in a marginal analysis of each combination gradual replacement Area. The cumulative curve resulting in inventory investment represents an “Efficient Frontier” – a line of optimal cost of the replacement part that maximum levels of service (availability) for the system to deliver. Such analysis may be to buy that first save, the best part (and where to place them in a network) for the “local” to improve system availability, and to record the second and third, to save the budget is exhausted. The traditional point by point, the analytical approach, where only the failure rate, repair time and are considered a good idea, offers a unique package biased, non-optimal sub-areas within a given budget. If you operate the equipment capital intensive and do not use a system based on marginal analysis saves, you do not keep up. 5th Supply Chain FinancingMany companies have optimized their supply chains and inventory operations, has adopted lean manufacturing and to streamline their development cycle product. The final frontier for these companies is the leading supply chain of financial engineering. Buyers and suppliers have been in conflict, as each tries to optimize their payment terms – try concepts buyers and suppliers to try to reduce the time between billing and payment, to extend their pool match turn. Best practice is a lender, usually with a relationship with the buyer to take advantage of arbitrage between the cost of debt to buy the company and the cost of debt (usually) small suppliers. The debt financing of the conflict removed by the supplier to extend the duration (about 90 days instead of 60), with the buyer lending company is funding the bill from the date of issue. With traditional factoring or invoice discounting arrangements, the supplier receives a percentage of the fee due to the front. However, initiated by a supplier and a financial commitment, the process by the buyer on their own bank, and thanks to the strong buyer rating agency, the conditions are likely to be more favorable than the conditions on the offer supplier through a local bank. This can be as non-use of funds for banks that are experienced in these solutions are structured reverse factoring. The lender is the exposure of the buying company, even when the seller receives payment. The creditor may obtain a margin that exceeds the normal return borrowed money to the buyer is reached, but the cost of funds to the seller because it is against the credit profile of the buyer a loan. The seller benefits from a shorter cycle and cash transactions are perhaps some of this benefit to the buyer, send a lower price. The buyer has the effect of cash flow positive and potentially lower prices – to improve profitability ratios and growth opportunities. The lender is the increase in business volume, improve the profit margin on the buyer’s risk and strengthens the relationship with the buyer. The key to such a system is viable process automation and real-time visibility of invoice data allows all parties to each bill length, their advance payment and final settlement – reducing risk and costs for the three participants. If you have a major purchaser of goods or services, and are not automated Supply Chain Financing, you do not keep up. 6th Optimal Supply Chain Network does DesignWhen one company to another, everyone is talking about “synergy” and “economies of scale,” it may be true in terms of market share and product portfolios, but they can become too heavy and slow in the supply chain. integrator usually begins at least two parts of the organization of all – network storage, transport and supply, information systems and cultures. The usual approach is to try to “cherry-pick choose what works best (or cheapest seems) to time without necessarily understanding the impact on supply chain risks, inventory or customer service. Even without understanding a merger situation, what should be the path of growth, in strategic terms for the production and distribution at home and abroad is often reactive painful. About 80% of the cost of a supply chain is defined in the planning phase – the others are simply vote negotiations. Best practice is to integrate the use of graphs and mathematical models of supply chain design, strategic level. The network graphics cards, usually with geographic data (such as time road / distance matrices) related to non-mathematical mind to visualize the existing network and planned. Optimizing the Solver model guaranteed billions of possible combinations of plants, transportation capacity tested contributions, inventory and customers, and defined benefit or a cost optimal solution. If you do not behave with mathematical optimization methods for strategic network design, you do not keep up. 7 Sales and Operations PlanningSome corporation as if the “good old days are” are always with us. You have the ability or enough spare flex they meet any customer demand or are comfortable holding a board lot stock somewhere in the supply chain – and probably unhappy shareholders. These companies have often paid a premium to a vendor who can sell on the budget, but a cane Operations Manager, who can not keep that pipeline full. For these companies in the budget once a year to look ahead (previous year: + 5%) and monitoring is based on the perspective of today – what happened in the last month and where us so far this year. Sales has three rows of numbers – budgets, and what has been done, if the organization was to be delivered could be. The operations budget and what was expected, and what which had to be pushed into the calendar “to address urgent” orders, raw materials accelerated and new clients that are presented directly. Accounting budget variances to budget and forecast returns online. Best practice is to Business sales and operations planning, sales followed a series of numbers on a budget for each item. On a monthly cycle, forecast future demand for the next 18 months to run, adjusted for information and anticipation of new products and locked the formal request for all Plan. This request requires the plan of operations – procurement, capacity planning, labor and material planning, inventory and use a level “rough cut. Supply approved plan then feeds a prospective view of costs and revenues, which is the Chief Executive and approved by the budget be measured. The budget is actually the S & OP plan at the beginning of the year. Top-down seat adjustments “imposed” in the actual plans related to the actual actions taken into account. Sales are measured and rewarded the accuracy of the demand side. Operations is responsible for the implementation of the Agreement of Procurement Plan. The company has reduced the basis agreed for the long-term planning and short-term unit costs, since it gets to the front view of maximizing capacity. If you are not with your company appear on a series of numbers, not with integrated sales and operations planning, you do not keep up. Article by Alan Denton, Principal GRA written. GRA are Australian supply chain consultants and Experts demand and inventory optimization. www. GRA. net. to

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