Supply Chain Planning


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Supply Chain Planning

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Supply Chain Planning

  1. 1. Supply Chain Planning 19 th September 2004 Dusit Dubai SCLG - Dubai
  2. 2. Seminar Agenda <ul><li>Supply Chain Planning – Theory and Best Practice </li></ul><ul><li>Coffee Break – Opportunity to network </li></ul><ul><li>Supply Chain Execution–The latest trends in WDMS </li></ul><ul><li>Open Forum - Questions to the panel </li></ul><ul><li>Dinner – Opportunity to network </li></ul>
  3. 3. Presented by Krishnan Sugavanam Mantis
  4. 4. Corporate Profile of Mantis <ul><li>Established in Athens, Greece in 1996 </li></ul><ul><li>Specialize in Supply Chain Planning & Execution </li></ul><ul><li>Logistics Vision on 100% Dot Net – Comprising of </li></ul><ul><ul><li>Inventory Vision (Powered by Syncron) </li></ul></ul><ul><ul><li>Warehouse Vision </li></ul></ul><ul><ul><li>Transportation Vision </li></ul></ul><ul><ul><li>Mobile Vision </li></ul></ul><ul><ul><li>Plant Vision </li></ul></ul>
  5. 5. Corporate Profile of Vedasys BPR, BE, STRATEGY, ISO
  6. 7. Supply Chain Planning The Theory and Best Practice
  7. 8. Presentation Agenda <ul><li>Syncron International – Corporate Overview </li></ul><ul><li>What is Supply Chain Planning (SCP) </li></ul><ul><li>Supply Chain Planning Challenges (interactive) </li></ul><ul><li>The Basic Theory of SCP </li></ul><ul><li>Recent SCP Trends and the Syncron SCP Vision </li></ul><ul><li>Best Practice Case Studies and Benefits Achieved </li></ul>
  8. 9. SYNCRON International Syncron Systems Syncron Integration Syncron Management England Sweden Finland France Greece Singapore Benelux Hungary USA Italy India UAE Malaysia
  9. 10. Syncron Customers
  10. 11. Define Supply Chain Planning Production Planning Replenishment Planning Demand Planning ERP Systems OEM Manufacturer Distributor Dealer Retail Consumer
  11. 12. Supply Chain Planning Art and a Science Demand Driven & Service Driven SCP OEM Manufacturer Distributor Dealer Retail Consumer
  12. 13. Supply Chain Planning Challenges Interactive
  13. 14. Some of the Challenges <ul><li>How many Stocking Locations; Where they are? Where to Stock? </li></ul><ul><li>One Supplier or Multiple Suppliers? </li></ul><ul><li>Multiple Lead Times? </li></ul><ul><li>Variability in Supply? </li></ul><ul><li>Variability in Demand? </li></ul><ul><li>Centralised or Decentralised planning? </li></ul><ul><li>How often to order? Weekly, Daily, Monthly, Quarterly? Or a combination? </li></ul><ul><li>What forecasting methods to use and why? </li></ul><ul><li>How to classify products for effective inventory control? </li></ul><ul><li>What target service levels to set and why? </li></ul><ul><li>How much buffer stocks to hold and where? </li></ul><ul><li>How to measure the achieved service levels? </li></ul>
  14. 15. Theory of Demand Planning
  15. 16. Demand Patterns Lumpy Slow Erratic Fast Positive Trend Negative Trend Obsolete New Dying
  16. 17. FORECAST COMPONENTS Forecast Components Cyclical variation External factors Trend Base level
  17. 18. Seasonality Profiles Year Two Year One
  18. 19. Manual Intervention <ul><li>Forecast adjustments </li></ul><ul><li>Reason codes </li></ul>
  19. 20. Forecasting Demand
  20. 21. Some Additional Considerations
  21. 22. Automatic Demand Filtering Flier? 0 10 20 30 40 50 60 1 3 5 7 9 11 13 15 17 19 21 23 Period Demand
  22. 23. Volume Density 1998 1999 2000 2002 2003
  23. 24. Theory of Replenishment Planning
  24. 25. How do you classify an Item from an Inventory angle? Interactive
  25. 26. Multi Dimensional Pareto Analysis ABC based on Volume ABC based on Frequency ABC based on Turnover
  26. 27. The Role of Buffer Stocks in the Supply Chain The Cushion Typical Sources of Supply Stocks The Customer Demand
  27. 28. Buffer Stock <ul><li>Forecast accuracy </li></ul><ul><li>Target service level </li></ul><ul><li>Replenishment frequency </li></ul><ul><li>Lead time & its variability </li></ul><ul><li>Seasonality </li></ul>The amount of safety stock held to cover random variations in demand
  28. 29. What is the Relationship between Inventory and Service Level?
  29. 30. Service Driven Buffer 92% 94% 96% 98% 100%
  30. 31. <ul><li>Fixed order quantity </li></ul><ul><li>Fixed order cycle </li></ul>Basic Systems For Stock Reviews
  31. 32. TIME THE FIXED ORDER QUANTITY SYSTEM              <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><ul><li> </li></ul></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>** REORDER QUANTITY (Q) LEAD TIME (L) MAXIMUM RATE OF USAGE WITHOUT STOCK-OUT Q Q STOCK LEVEL * REORDER LEVEL POINT (A) EXPECTED RATE OF USAGE (R) BUFFER STOCK LEVEL *ROL= Forecast over lead -time + buffer stock **ROQ can be determined by EOQ or Coverage Analysis
  32. 33. THE FIXED ORDER CYCLE SYSTEM         *ORDER UP TO LEVEL ** REORDER QUANTITY Q1 STOCK LEVEL BUFFER STOCK LEVEL TIME Q2 Q2 Q3 Q3 LEAD TIME (L)               LEAD TIME (L) REVIEW PERIOD (T) REVIEW PERIOD (T) Cover period ** REORDER QUANTITY *OL=Forecast of Demand in cover period + Buffer Stock **ROQ=Order Level-Effective Stock + Back Orders
  33. 34. Coverage Analysis The objective of coverage analysis is to identify the optimum ordering frequency for each product within a group to minimise the overall turnover stock capital investment.
  34. 35. Coverage Analysis Example
  35. 36. DFRP Models <ul><li>Warehouse Forecasts </li></ul><ul><li>Branch Demand </li></ul><ul><li>Branch Forecasts </li></ul><ul><li>Branch Orders </li></ul><ul><li>Branch Order Schedules </li></ul><ul><li>Warehouse Stocks </li></ul><ul><li>Warehouse Stocks Only </li></ul><ul><li>National Stocks </li></ul>Branch forecasts and order schedules based on local demand
  36. 37. Theory of Production Planning
  37. 38. Throughput Operating Costs Inventory Realistic Order Release Shorter Lead Times Smaller Lot Sizes Outsourcing Accurate Delivery Dates Responsive to Market Competitive Pricing Product Development Optimised Sequencing Dynamic Buffers High Resource Utilisation THE RIGHT BALANCE THEORY OF CONSTRAINTS
  38. 39. Recent Supply Chain Planning Industry Trends
  39. 40. eCollaboration OEM Supplier Distributor Warehouse Retail Information Flow Product Flow C P F R Supplier Collaboration Internal Collaboration Customer Collaboration
  40. 41. VMI – Vendor Managed Inventory
  41. 42. Virtual Stock Management
  42. 43. Companies moving more and more towards centralized inventory planning and away from decentralization of planning activities
  43. 44. Syncron Supply Chain Planner OUR SUPPLY CHAIN CONCEPT
  44. 45. Local Optimisation
  45. 46. ERP Myth JDE SAP R/3 SAP R/3 Movex Oracle Baan Inhouse IFS IFS IFS WEB JDE Inhouse
  46. 47. Supply Chain Planning Global Warehouse Divisional Warehouse Shop Manufacturing Supplier
  47. 48. Manufacturer Supplier Region Warehouse Central Warehouse Sub Supplier Store Syncron SCP and eCollaboration Forecasting Replenishment Production plan POS data Forecast Stock level (safety stock) Replenishment plan Forecast Stock level (safety stock) Replenishment plan Forecast Replenishment plan Production planning Capacity/material need Forecast Replenishment plan Production planning Capacity need Material need Forecast Replenishment plan Production planning Capacity need Material need Integration
  48. 49. Questions? Break
  49. 50. Some Quotes from the Boss!!! <ul><li>What I need is a list of specific unknown problems we will encounter </li></ul><ul><li>Doing it right is no excuse for not meeting the schedule </li></ul><ul><li>Quote from the Boss: &quot;Teamwork is a lot of people doing what I say” </li></ul>