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Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
Planning Optimization and Automation in Manufacturing
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Planning Optimization and Automation in Manufacturing

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  • In manufacturing companies, managers face numerous challenges every day. Some are listed here – in no particular order. This is assortment of business challenges faced by various departments and in different management levels. Based on which management function you are handling, - Top, middle, or operational level - you might be directly dealing many of these problems.
  • The root cause of many of these challenges are linked to one or more of these areas. This evening, we will look at - how effective PLANning, using scientific methods – such as optimization and analytics – and Information Technology (IT) can be used to address some of the challenges.
  • Poll ? What kind of planning system your company has? No planning Manual planning – done separately for each function – paper & pencil Excel based planning – done separately for each function Planning using ERP extension tools. Advanced planning tools – separate for each function Integrated Planning Platform
  • Planning is all about resource allocation and task allotment across time and space to achieve certain objectives. Many of these challenges are attributed to lack proper planning. We fail to get best plans for various reasons: [1] – the data is not fully available. [2] – The data is there is many places, in different forms and formats, and not sure how to use it effectively for planning. [3] – We have the data, but it is so large that we are not sure where to start. [4] – Business goals and objectives are not clear. [5] – Problem size too large and complex to handle manually. Many of these issues can be resolved by using Optimization and Automation in planning. Optimization is about - how to achieve the business objectives with minimal resources. Automation in planning deals with how to get these plans in minutes using computers and software rather than spending hours or days to get such plans manually.
  • There are different types of plans That are done for different time periods, And by different management levels. Strategic Planning – done once a year or once in every two to five years, By the top management. And the impact of the plan is felt for many years.
  • In a Manufacturing company, manager undertake various planning exercises, Some of which are listed here. [1] – Supply Chain Network Optimization This is a planning exercise, undertaken yearly or once in every few years, to find out the best places to locate plants and warehouses, considering Various cost, supply and demand patterns, so that the Overall production and distribution cost is minimized. [2] – Sourcing selection Given a demand pattern and production target, and various suppliers location, cost, transportation, Taxes, and service level, whom to pick and how much To order, and in what lot sizes. [3] – Production Planning Given a production target and resources, Come up with a production plan and schedule that leads to overall least production cost. [4] – Revenue / Yield management Based on flucation in demand, competition, and The inventory build-up, identify best prices, discounts, and Commissions to increase the sales and profit. [5] – Transportation scheduling
  • << Two clicks>> With respect to planning, what does optimization mean? Optimization is a decision making process. It employs mathematics and algorithms. It can generate better plans, which requires less resources for a given business objective. And, It can come up with plans faster than humans.
  • Demand - location - Quantity - change over time Risk << on the right sode International Natural calamities War Oil Crisis Local Political Regulatory Employee relationship DONE
  • Have a new slide....
  • http://www.optiriskindia.com/vehicle-route-planner-scheduler-video
  • Transcript

    • 1. © 2010-13 OptiRisk India (P) Ltd, All rights reserved Bala. Padmakumar Director & CEO, OptiRisk India
    • 2. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 2© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 3. Uncertain DemandUncertain Demand Unhappy CustomersUnhappy Customers Bloated InventoryBloated Inventory Production-line stoppageProduction-line stoppage Stock OutageStock Outage LTL FleetsLTL Fleets Lower ROILower ROI Higher InvestmentHigher Investment Competitive PressureCompetitive Pressure Subpar Revenue GrowthSubpar Revenue Growth Escalating CostEscalating Cost Shrinking MarginsShrinking Margins Supply-Demand GapSupply-Demand Gap Too far from CustomersToo far from Customers Too far from SuppliersToo far from SuppliersRegulatory ChangesRegulatory Changes Product ObsolesceProduct Obsolesce Higher Cost of CapitalHigher Cost of Capital Uncertain NPVUncertain NPV Discounted Stock PriceDiscounted Stock Price Unnecessary tripsUnnecessary trips Delayed DeliveriesDelayed Deliveries Angry InvestorsAngry Investors Stressed EmployeesStressed Employees Quality IssuesQuality Issues 3© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 4. Integration PlanProcess People Culture Quality Communication Policy 4© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 5. 5© 2010-13 OptiRisk India (P) Ltd, All rights reserved What kind of planning system your company has? 1. No planning 2. Based on Gut feeling 3. Manual planning – done separately for each function – paper & pencil 4. Excel based planning – done separately for each function 5. Planning using ERP extension tools. 6. Advanced planning tools – separate for each function 7. Integrated Planning Platform
    • 6. 6© 2010-13 OptiRisk India (P) Ltd, All rights reserved - Winston Churchill Achieve Business objective with minimal resources Generate Plans in minutes rather than hours or days
    • 7. Long Term 1+ yearsStrategic Supply Chain Network Design Medium Term Monthly / QuarterlyTactical Production Planning and scheduling Short Term Weekly/ DailyOperational Transport Planning and Scheduling Resource Acquisition (Capital) Resource Allocation (Machine and labors) Resource Scheduling 7© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 8. SC Network optimization Locate facilities Match Supply & Demand Managing seasonality, and Reduce carbon footprint. Benefits: 5-15% reduction in SC costs Better service level Sourcing Selection Select Suppliers Determine Order Quantities Benefits : Enhanced S&OP capability, 2-5% reduction in mfg costs Transportation Scheduling Fleet Selection Route Plan / Schedule Benefits : 10-30% reduction in Transport cost Increased on-time deliveries Production planning Optimal production schedule Meet plant floor constraints. Benefits : Improved throughput Reduced costs, Reduced inventory Leaner plants Operational Inventory Management Order quantity Order time Supplier identification Benefits : 10-30% reduction in inventory Improved service level Demand Planning Choose best price Indentify Optimal Commission Benefits : Higher sales volume Better Margins 8© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 9. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 9© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 10. Optimization is a decision making process and a set of related tools that employ mathematics, Algorithms, and computer software not only to sort and organize data, but to use that data to make Recommendations faster and better than humans can. - The Optimization Edge, Steve Sashihara 10© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 11. 11© 2010-13 OptiRisk India (P) Ltd, All rights reserved Route # Possible Routes Distance(KM) 1 A – B – C 245 2 A – C – B 315 3 B – A – C 370 4 B – C – A 315 5 C – A – B 370 6 C – B – A 245 Example : Find the shortest path for delivery Deliveries Possible Routes Time to process manually 3 3! = 6 10 10! = 3,628,800 13 13! = 6,227,020,800 3 centuries 20 20! = 11 billion centuries 10 seconds to calculate each route manually A B C Warehouse 80 35 115 60 70 105 Best Routes
    • 12. Wherever decisions are made !Wherever decisions are made ! Where, Decisions require resources for implementation !!Where, Decisions require resources for implementation !! Capital AllocateCapital Allocate People Acquire, schedule, assign, TrainPeople Acquire, schedule, assign, Train Equipment Acquire, schedule, LocateEquipment Acquire, schedule, Locate Facilities Locate, scheduleFacilities Locate, schedule Vehicles Acquire, route, scheduleVehicles Acquire, route, schedule Raw Material Acquire, assignRaw Material Acquire, assign Time Allocate, ScheduleTime Allocate, Schedule 12© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 13. FacilityLayoutPlanning OR Key Areas Production Planning Allocation Job, Machines Inventory Optimization Transportation (Routing, Scheduling) Network Optimization 13© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 14. 14© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 15. What-If Analysis Collaboration Courtesy: IBM Limited 15© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 16. 2 Chilean Forestry firms* Timber Harvesting $20M/yr + 30% fewer trucks UPS* Air Network Design $40M/yr + 10% fewer planes South African Defense* Force/Equip Planning $1.1B/yr Motorola* Procurement Mgmt $100M-150M/yr Samsung Electronics* Semiconductor Mfg 50% reduction in cycle times SNCF (French RR)* Scheduling & Pricing $16M/yr rev + 2% lower op ex Continental Airlines* Crew Re-scheduling $40M/yr AT&T* Network Recovery 35% reduction spare capacity Grant Mayo van Otterloo* Portfolio Optimization $4M/yr Indeval* Securities Trade Settlement $150M/yr financing costs Midwest ISO* Energy Grid Management $2.1B to $3B savings over 4 years *Franz Edelman Competition Finalists, Science of Better, http://www.scienceofbetter.org , Published Case Studies 16© 2010-13 OptiRisk India (P) Ltd, All rights reserved 16© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 17. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 17© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 18. Warehouse Production Facility Consumer Highway 10 – 30% reduction in overall Supply chain and Logistics Cost 18© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 19. Input What-if Analysis Output 19© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 20. Software GUI * *Courtesy : IBM ILOG LogicNet+ XE MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU MANU 20© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 21. 21© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 22. What we Delivered OptiRisk developed SCN model suggested reconfiguring order delivery to reduce out-bound transportation cost, overall taxes, and inventory level. In addition, it suggested potential warehouse locations, plants, and their optimal capacity for future growth. At the end, "what-if" analysis is done to study the impact of proposed Goods & Services Tax (GST) on the existing and proposed Supply Chain Network. What we Delivered OptiRisk developed SCN model suggested reconfiguring order delivery to reduce out-bound transportation cost, overall taxes, and inventory level. In addition, it suggested potential warehouse locations, plants, and their optimal capacity for future growth. At the end, "what-if" analysis is done to study the impact of proposed Goods & Services Tax (GST) on the existing and proposed Supply Chain Network. 22© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 23. 23© 2010-13 OptiRisk India (P) Ltd, All rights reserved Existing Supply Linkage Optimal Supply Linkage 23© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 24. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 24© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 25. Dr. Ramasubramaniam M © 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 26. 26© 2010-13 OptiRisk India (P) Ltd, All rights reserved • Production: Transformation of raw materials to finished goods. • Planning: Looks ahead, anticipates possible difficulties and decides in advance as to how the production, best, be carried out.
    • 27. 27© 2010-13 OptiRisk India (P) Ltd, All rights reserved Three Planning Horizons 1. Strategic (Long term) 2. Tactical (Medium term) 3. Operational (short term)
    • 28. 28© 2010-13 OptiRisk India (P) Ltd, All rights reserved Work CenterWork Center Routing (Track List) Routing (Track List) Bill of Materials (BOM) Bill of Materials (BOM) Aggregate Production Plan Aggregate Production Plan Master Production Scheduling Master Production Scheduling Materials Requirement Planning Materials Requirement Planning Manufacturing Schedule Manufacturing Schedule
    • 29. 29© 2010-13 OptiRisk India (P) Ltd, All rights reserved • Maximises throughput • Improved efficiency • Cost reduction • Improved visibility
    • 30. 30© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 31. 31© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Headquartered at Munich, Germany  Focus on premium-class car segments  2004 sales 1.25 million Cars
    • 32. 32© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Production at eight plants including Germany, US, UK, Austria and South Africa  Engines at four more sites  CKD assembly at six sites
    • 33. 33© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Plans of products & sales before production capacities  Plant loading & allocation of products to plants & determine production capacities
    • 34. 34© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Market trends  Market dynamics  Globalization of suppliers, production and markets  Requirement for launching new models frequently
    • 35. 35© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Manual planning procedure requires a great deal of effort  Mostly done in excel spreadsheets  Manual planning considers only capacity at FG level whereas capacities at each of stages required
    • 36. 36© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Development of MIP based model  Developed and implemented in a commercial software systems  Later extended to include even financial variables  Used IBM ILOG CPLEX to Solve the problem.
    • 37. 37© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Reduction in Production Cost by 7%  Increased Throughput  Increased Visibility  User friendly decision support system
    • 38. 38© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 39. 39© 2010-13 OptiRisk India (P) Ltd, All rights reserved  One of the largest cereal producer  1999 sales totalled 7 billion  100’s of products, 1000’s of SKUs  5 plants in US, Canada  7 core DCs in LA & Chicago  15 Co-packers (Contractors) Background: Kellogg’s Operations: 80 Products 600 SKUs in 27 locations 90 production lines 180 packaging lines Cereal Business
    • 40. 40© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Some products have to be coordinated across plant.  Production, packaging & shipping operations need to be synchronised with assembly.  Use of constituents across different plants to produce a single product.
    • 41. 41© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Current Planning Model Using Manual Spreadsheets  Inconsistency in data  Decentralized planning - Inconsistency across different plants
    • 42. 42© 2010-13 OptiRisk India (P) Ltd, All rights reserved Minimize total cost of production & operation by coming up with suitable production plan.
    • 43. 43© 2010-13 OptiRisk India (P) Ltd, All rights reserved  User friendly decision – support system called KPS.  Basically a multi-period linear program that makes production, packaging, inventory and distribution decisions at a weekly level.  Used IBM ILOG CPLEX to Solve the problem.
    • 44. 44© 2010-13 OptiRisk India (P) Ltd, All rights reserved  Savings 45 million / year in 1995.  Estimated future savings of $25 million / year.  Increased visibility across the supply chain.
    • 45. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 45© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 46. Logistics Transportation Planning & Scheduling Product: ORPSS (OptiRisk Route Planner & Scheduler Studio) 46© 2010-13 OptiRisk India (P) Ltd, All rights reserved Product Concept Video available at http://www.optiriskindia.com/vehicle-route-planner-scheduler-video
    • 47. Shareholder Value ROI Profit Investment Cost Revenue # Trucks BusinessLess mileage (10 to 30% ) Service Level . Lead time (5 to 10%) Planning Errors 47© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 48. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 48© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 49. Intranet SPSS Server (Optional) Optimization Server External Data Server (Optional) Database DB2 Firewall External Router Planning & Execution Staffs Top Management Internet . . ..Web Server Other RDBMS Suppliers Dealers 49© 2010-13 OptiRisk India (P) Ltd, All rights reserved • Ubiquity • Visibility • Recency • Agility • Optimality • Ubiquity • Visibility • Recency • Agility • Optimality Advantages
    • 50. 50© 2013 OptiRisk India (P) Ltd, All rights reserved Assessment Analysis Saving Realization Plan • PoC Report covering benefit analysis • Recommendation on business improvement projects • Solution proposal Typical Duration: • 1 – 2 Months Typical Duration: • 1 – 2 Months  Understanding • Business • Business Processes • Pain Points  Identify quick-hit opportunities  Opportunity prioritization: time, cost, risk, benefits Assessment  Focus on 1 or 2 most promising opportunities  Business Case Overview  Current & Desired Situation  Success Factors  Timeline  PoC/ Prototype Development Analysis  Key Findings  Use Cases  Benefit Analysis  Solution and Project Approach  Resource Charts  Suggested Next Steps & Timeline Recommendation Budget • 3 to 6 man months Budget • 3 to 6 man months Deliverable:
    • 51. 51© 2013 OptiRisk India (P) Ltd, All rights reserved Assessment Analysis Saving Realization Plan Blue-Print  Each iteration must bring Business Value  Plan / Do / Check / Act methodology  Plan : Detailed Design, KPIs, Data Required, How to mitigate the top risks. Do : Implement functional requirements Check : Test functional requirements, measure KPIs Act : Tuning Iterative & Incremental Implementation Deployment  Kick-Off  High-Level Design : Project scope, Risks.  Training  Go-Live Support • Incremental build • Minimize risks • Go / No Go at each iteration Deliverable: • Fully functional solution Deliverable: • Fully functional solution Typical Duration: • 6 – 12 months Typical Duration: • 6 – 12 months Benefits of this approach:
    • 52. 1. Business Challenges 2. Optimization 3. SCN Analysis & Redesign 4. Production Planning & Scheduling 5. Transportation Scheduling 6. Solution Approach 7. Summary 52© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 53. ___________________________________________________________________________________________________________________________ 53© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 54. 54© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 55. 55© 2010-13 OptiRisk India (P) Ltd, All rights reserved
    • 56. Bala. Padmakumar Ph: +91 98406 18472 / +91 44 4501 8472 Email: optimize@optiriskindia.com Web: http://www.optiriskindia.com/ 56© 2010-13 OptiRisk India (P) Ltd, All rights reserved Asia Pacific, Africa, Australia & Middle East: Europe & America: Corporate Head Quarters: No 1/4 , Justice Dwarkanath Road, Kolkata - 700020, India. Development Center: No 12, 25th Cross Street Thiruvalluvar Nagar , Thiruvanmiyur, Chennai –600041, India OptiRisk R&D House, One Oxford, Uxbridge, Middlesex, UB9 4DA, United Kingdom Corporate Office:

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