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  • This script is untended as a talking point guide for the SCS instructor. It could also be useful as a supplement to the @home self-paced training course. Please direct questions to Steve Ellet (617)551.2871 or Abraham Joseph (770)xxx-xxxx. INTRODUCTIONS/ADMIN 1) Introduce instructor; provide title, background, why instructor is qualified to give course. 2) Admin issues: tell students location of bathrooms, phones, fax machines. Describe format -- breaks, lunch, etc. 3) Student intros -- each student introduces himself; tells why he is at the course and any background he has with the app or similar apps 4) Cover course agenda -- 10 minutes max.
  • This focus has allowed us to capture business from the global “Who’s Who” of leading companies across all industries. In fact, i2’s customer list includes about 80% of the Fortune 500 companies. Customer stats: 13 of 18 top Semiconductor companies 6 of 9 top contract manufacturers 7 of 7 top communication equipment manufacturers 11 of 11 top PC manufacturers 5 of 5 top consumer electronic companies 8 of 20 top global pharmaceutical companies
  • Additionally, Gartner Group, a leading technology focused research and advisory company, has consistently recognized i2 as a visionary leader with the ability to execute in their “Magic Quadrant”—placing i2 in their leaders’ quadrant for 9 consecutive quarters. This Magic Quadrant is a graphic description of global vendor performance in a market segment based on viability, service and support, features and functionality and technology. Ability to execute shows Gartner’s view of how well a vendor performs today. Vision is their view of how well a vendor will do in the future based on where the market is headed. So, what does this mean to you? It means that with i2, you can gain competitive advantage by leveraging our vision and ability to execute—helping you to solve your toughest business challenges. Also, partnering with i2 lowers your risk. Our proven solutions have been implemented at over 9000 sites. If you have unique value chain challenges, we’ve probably seen and solved them before.
  • The need to do something must to be stressed in light of the prospect’s needs and business case context. SALES/PRESALES: PLEASE send your slides with “current practices”, including any competitive information back to Product Management and to Solutions Marketing. We’ll use the SOA’s business analysis methodology: identify Pain Points and Opportunities; for example, inefficient supply-demand match generate losing orders and hence deteriorates customer service levels map them out to the current way of conducting business and the capabilities that traditional methods do not offer (this is the opportunity to start introducing arguments against the competition you are currently facing) relate to the problems you are proposing to solve with SCS Take the opportunity to customize this slide within prospect’s context. Pick and choose key areas from this slide and the Appendix and relate to prospect’s business case
  • Stress the current practices that the prospect is currently conducting. Focus on stressing i2’s competitive functionality advantages relevant to the prospect.
  • The third fundamental strategy for achieving competitive advantage focuses on customer intimacy. This strategy involves an intense focus on understanding and rationalizing your customer base and tailoring your product and service offerings to each segment. Fundamental to this strategy is the ability to tailor promotional, merchandising and assortment plans to a highly segmented customer base. While this can be expensive from an operational perspective, these companies are typically willing to absorb higher costs in exchange for long term customer loyalty. Companies who have employed this strategy include IBM in their glory years and Home Depot, more recently. Traditional management consulting theory has been that the most successful companies will be those who focus on excelling in one of these disciplines, while meeting industry standards in the others.
  • i2 has many types of solutions. SCS is a strategic planning tool. Decision making tools are “live” tools. An example: Consider a factory scheduling tool; it creates a schedule for every day -- what to run on each line at each time. It is effectively making the decision. Decision support tools allow the user to learn about trade-offs among multiple scenarios and make an educated decision. The user/mananger/consultant uses the tool to gain insight. The tool supports analysis that will lead to a recommendation, but does not spit out the answer. If you want to do the things on the right side of the list, talk to your sales rep, we have tools for those, too.
  • OK, we’ve talked for an hour about the concepts, now I want to talk about how SCS models the supply chain.
  • SCS uses a set of basic building blocks called entities as the foundation of the model. They are listed at the upper right. The modeler uses these to design the network that reflects the reality of the physical network. The modeling paradign is extremely flexible -- you can fit the model to the problem rather than trying to fit the problem into a rigid model. The user can allow any facility to ship to any other facility or demand region, regardless of “echelon” or reverse-logistics rules. Within a facility, a processes and products can be placed and customized to reflect the costs and capacities within the walls of a plant/dc/supplier/etc.
  • Each facility has a set of properties. Processes and Products are added to the facility; each with its own set of properties. Many products and many processes can exist in a single facility. THIS IS PROBABLY THE MOST IMPORTANT SLIDE OF THE COURSE. THIS IS THE MODELING PARADIGM FOR SCS. The flexibility this paradign enables is significant as we will see later.
  • Here is an example of some complexity that can be modeled. Notice that the first process takes in As & Bs and uses them to make Xs and Ys. Notice that Ys are demanded and Xs are used at other facilities downstream. Notice that the 2nd process can make As from Bs and Cs. The solver will decide if it makes more sense to bring As in from the “supplier” facility at the top-left or make As in the 2nd process. It is possible that it will choose to do some of each. IMPORTANT takeaway: Outputs of one process can be inputs to processes in the same facility. This enables quite a bit of functionality and flexibility.
  • Example: In this model, each process represents a type of activity at the plant. Notice that the output of one process can be the input of another and how that could be used in this situation to illustrate bottlenecks in the overall flow. Cooking must be done prior to coating and mixing which must be done prior to packing. If packing is constrained, all the preceding processes will also be constrained. This model could also be used to consolidate functions among several plants. For example: assume that coating has a fixed cost of $1 million at this plant as well as the plant down the street. The model might choose to coat only at one of the plants in order to save $1 million in fixed cost, thus consolidating the functions into a single process.
  • Processes can be of a vairety of types. They can have any number of inputs and any number of outputs.

Transcript

  • 1. Welcome MIT MLog Program Steve Ellet Product Marketing Manager, Strategic Planning [email_address]
  • 2. Agenda
    • Introduction to i2
    • i2’s strategic planning suite
    • Introduction to Supply Chain Strategist
      • demonstration
      • system overview
    • Model building exercise
  • 3. Our Mission - Value
  • 4. i2’s Mission “ To add $75 billion of value, in growth and savings for our customers by the year 2005.”
  • 5. Our Customers and their Achievements
  • 6. i2 Serves a Wide Range of Industries, Including
    • High-tech electronics
    • High-tech semiconductor
    • Consumer goods & retail
    • Automobile
    • Metals
    • Logistics
    • Aerospace and defense
    • Footwear and apparel
    • Forest products
    • Chemical, Oil, and Gas
  • 7. Over 1,000 Global Customers 80% of Fortune 500
  • 8. Market and Visionary Leader Source: “Fourth Quarter 2001 Supply Chain Planning Magic Quadrant,” Gartner, December 4, 2001.
  • 9. An introduction to i2’s Strategic Planning Solution
  • 10. Planning Processes hours days weeks months year + operational tactical strategic execution Strategic Planning Demand Planning Scheduling buy make move sell store Supply Planning Production Planning
  • 11. The value of strategic planning
    • Typical impacts of various planning efforts:
    • Strategic planning: 10 - 20% improvement
    • Tactical planning: 5 -10% improvement
    • Operational/transactional: <5%
    Strategic Tactical Operational
  • 12. Opportunities for optimization are everywhere
    • Rapid growth is (or soon will be) exceeding current capacity
    • Recent or future merger or acquisition
    • Considering capital investment in systems, production, or facilities
    • Expanding into new markets or new products
    • Need to reduce redundancy in the supply chain
    • Evaluating a web-centric “go-direct” model rather than the traditional channel strategy
    • Need to create optimal 1 – n year strategic plan
  • 13. Current Practices
    • Lack of Optimization
      • Extensive spreadsheet-based planning yielding non-optimal or only locally optimal results
      • Unrealistic/infeasible plans
    • Current methods lack flexibility, power to solve overall network strategy
    • Lack of “what-if” strategic war-gaming capability
    • No repeatable process for strategic network planning
      • Lacks speed
      • Lacks formality
    • Network evolves in an unplanned, sub-optimal manner
  • 14. Common Strategic Manufacturing Problems
    • How much capacity is needed? Number/types of lines? Number of shifts?
    • What are the cost and service tradeoffs of alternative manufacturing strategies?
    • Where should manufacturing centers be located?
    • Should any manufacturing sites should be closed or re-tooled to other products? Which ones?
    • What products should be produced in each manufacturing location?
  • 15. Common Strategic Distribution Problems
    • What types of logistics facilities are required to support finished goods distribution? Distribution centers? Cross-docks? Drop-lots?
    • Where should current and new facilities be located? How large should they be?
    • Are any of the current facilities redundant?
    • Which customers and products should be served from each facility?
    • As a result of a recent or proposed merger, what would an optimal, combined distribution network look like?
    • What are the cost and service tradeoffs of alternative distribution strategies?
  • 16. Common Strategic Transportation Problems
    • What transport modes and lanes should be used to move products through out the network?
    • Which ports should be used to bring product into and out of a country?
    • Should hubs be used for consolidating products flowing into manufacturing centers? For replenishing DC’s? For delivery to customers?
    • Which products, if any, should move directly from manufacturing centers to consumers?
    • What are the cost and service tradeoffs of alternative transportation strategies?
  • 17. Common Strategic Procurement Problems
    • From where should raw materials, components, and sub-assemblies be sourced?
    • What strategic vendors should I contract with given my demand projections and my current supply chain network?
    • Are there synergies between my supply chain and my vendors’ that can be exploited to reduce costs?
    • Is my current supplier network capable of supporting my planned product rollouts?
    • What are the cost and service tradeoffs of alternative procurement strategies?
  • 18. Common Strategic Market Planning Problems
    • What products should I sell and customers should I serve to maximize my profit contribution?
    • Should I maintain my current channel-focused strategy, adopt a “go-direct” model, or some combination of the two?
    • Into what new markets or marketplaces should I expand?
    • From what existing markets, channels, or product lines, should I withdraw?
    • How will proposed changes in pricing affect the overall profitability of the supply chain?
  • 19. Common Strategic Master Planning Problems
    • How much should I produce, store, and ship each month given the expected seasonal demand so that I minimize total cost but still meet my service levels?
    • How does seasonality of demand affect my build-ahead inventory policy? (related to, but more tactical than, Strategic Inventory Planning)
    • How much discretionary demand should be served for a given demand region in a given month to maximize overall profitability? (related to, but more tactical than, Strategic Market Planning)
  • 20. Components of the Strategic Planning solution
    • Supply Chain Strategist (& Simulator)
      • Optimization & Simulation for single time period models (typically 1 yr)
    • Supply Chain Strategist – Tactician
      • Multi-time period modeling
      • Supports strategic master planning and capacity expansion planning
    Operational Planning ‘ Tactical’ strategic planning (SCS Tactician) “ When?” High level strategic planning (SCS) “ What, where, how much?” Model validation (SCS Simulator) Model validation (SCS Simulator) strategic tactical operational Strategic Master Planning
  • 21. Supply Chain Strategist Overview
  • 22. What is Supply Chain Strategist?
    • SCS is ...
    • A high level strategic planning tool
    • A decision support tool
    • A tool which allows a user to evaluate various scenarios in order to gain a better understanding of the dynamics of the supply chain
    • SCS is NOT ...
    • A shipment routing tool
    • A shipment planning/ load building tool
    • A scheduling tool
    “ Decision Support, Not Decision Making”
  • 23. Capabilities of Supply Chain Strategist
    • Supply Chain Strategist is a decision support strategic planning solution that
      • Delivers optimized and implementable strategic plans.
      • Constructs and manipulates “what-if” scenarios.
      • Provides a means to quickly represent complexities and interdependencies of the entire value chain.
      • Uses LP/MIP optimization and discrete event simulation.
      • Determines facility/sourcing locations and assignments.
      • Considers service requirements, capacities, and total network cost or profitability.
  • 24. What are the key features of Supply Chain Strategist?
    • Supply Chain Strategist creates an optimal and valid network plan for an enterprise or value chain using:
      • A flexible and powerful modeling paradigm
      • A platform that supports easy data import and export
      • A powerful, intuitive, graphical interface
      • Linear and Mixed Integer optimization
      • Discrete event simulation
      • An integrated workflow that covers the entire analysis process
  • 25. Flexible & Powerful modeling paradigm
    • Fixed, variable, closing, and step costs throughout the supply chain
    • Multiple processes within facilities
    • Inventory at facilities and in-transit between facilities
    • Customers and their requirements
    • Lead times and service levels throughout the supply chain
    • Power to model the entire supply chain with the flexibility to model a only specific portion
    Build a flexible model of the system rather than force-fitting into a rigid model Store Store Make Make Source Demand
  • 26. Easy import and export of data
    • Automated Import/Export “Wizard” guides user through the process
    • Full support of ODBC compliant data sources
    • Tight integration with MS Access and Excel using MDAC/DAO
    • Maps, charts, data views can be copied/pasted for presentation of results in any format (e.g., PowerPoint, web, etc.)
    All data and graphical objects in the model can be imported, exported, or copied/pasted.
  • 27. Powerful & intuitive graphical user interface
    • Drag and drop items on the world-wide interactive map
    • Instant custom graphs, tables, and charts from the memory-resident database
    • Control Center enables easy access to all data
    • Add, modify, delete data on the fly
    • “Save” and “Save-as” for intuitive scenario management
    • User-defined scenario summary reports
    • Dynamic update of tables, maps, charts based on optimization
  • 28.  
  • 29. Modeling Concepts
  • 30. SCS Modeling Paradigm Product Process Facility Demand Region Transportation Link Key:
    • A generalized modeling approach:
    • flexible structure: no rigid echelon structure
    • facilities play multiple roles by supporting all types of processes (sourcing, assembly, packaging, etc.)
    • The modeler customizes and assembles model components to represent scenarios
  • 31. SCS Modeling Paradigm Min Max Fixed Cost Closing Cost* FACILITY PROCESS Min Max Fixed Cost Closing Cost* Variable Cost Components (Recipe) PRODUCT Min Max Fixed Cost Closing Cost* Variable Cost
  • 32. Schematic Overview A B C X Y A Process Parameters
    • fixed cost
    • rate (cost/cycle)
    • lower/upper bounds (cycles)
    Transportation Link Parameters
    • rate (cost/unit)
    • transshipment time
    Product Handling Parameters
    • fixed cost
    • handling rate (cost/unit)
    • lower/upper bounds
    • throughput/inventory relation
    • storage rate
    Product Process Facility Demand Region Transportation Link Key:
  • 33. Serial Processes - Cereal Production MIX Plain Cereal Coated Cereal Mixed Cereal Packed Cereals PLANTS Corn, Bran, Oat, Wheat Sugar, Maple, Honey, Raisins, Cinnamon Packaging Materials S U P P L I E R S With SCS I can reflect the required details of our operations! PACK COOK COAT
  • 34. Process Components - Bill of Materials Many to One (automobile assembly) One to Many (petroleum cracking) Many to Many (flour production) Zero to One (raw material sourcing) One to Zero (consumption/disposal)
  • 35. Supply Chain Strategist Product Demonstration