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INTELLIGENT INVENTORY CONTROL
Behaviors & Tools
May 22, 2013
FLOW
 The Theory
 Forecasting Right
 Bullwhip
 Laws of Logistics
 Case Study – IRAQ
 Q&A
INVENTORY THEORY
WHAT DOES IT CONSTITUTE?
 that is sold day in day out - cycle stock
 which is on the move - frozen stock
 built for an ...
IT DEPENDS ON …
α Lead Time
α Demand Forecast
α Service Level
α Frequency of Sale
α EOQ’s
β Shelf Life
β Distance from Sou...
BULLWHIP EFFECT
It creates large swings in demand on the supply chain resulting
from relatively small, but unplanned, variations in consum...
LAWS OF LOGISTICS
Circular References
Volatility is attributable to time lags
Time lags are inserted to optimise functional cost
Cost is not...
LAW # 2: TOTAL COST
“The total cost of sourcing, converting and delivering
product is seldom the sum of the lowest functio...
ULTIMATELY: COUNTER-INTUITION
“The normal human response to the effects inefficiency
is to introduce delay in an attempt t...
CASE STUDY - IRAQ
LANDSCAPE
 33 million people growing at almost 3%
 Half the population is under 21 years of age
 GDP of over USD 130 bi...
CHALLENGE
 Acute power shortages
 Electricity supply fulfills only about 2/3rd of demand
 Transport network both insuff...
TOOLS
 VMI / SMI / JIT
 Kanban to achieve JIT (mfg)
 iLog for Design of your SC
 inFlow, Inventoria, Stock it Easy for...
QUESTIONS?
Acknowledgments
Cranfield University
Accenture
Kellogg School of Management
Procter & Gamble Ltd.
AFRIS. AsianFoodRegulationInformationService.
We have the largest database of Asian food regulations in the world and it’s...
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Intelligent Inventory Control

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Covers (1) The theory of managing inventory, (2) How to forecast; (3) The bull whip effect; (4) The Law of Logistics; and (5) Case studies

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Intelligent Inventory Control

  1. 1. INTELLIGENT INVENTORY CONTROL Behaviors & Tools May 22, 2013
  2. 2. FLOW  The Theory  Forecasting Right  Bullwhip  Laws of Logistics  Case Study – IRAQ  Q&A
  3. 3. INVENTORY THEORY
  4. 4. WHAT DOES IT CONSTITUTE?  that is sold day in day out - cycle stock  which is on the move - frozen stock  built for an event or season - anticipation stock  kept for protection against variability - safety stock  But most importantly it is $$$ blocked
  5. 5. IT DEPENDS ON … α Lead Time α Demand Forecast α Service Level α Frequency of Sale α EOQ’s β Shelf Life β Distance from Source β Logistics Cost β Customer Tolerance β Supplier Reliability β Capacity β Profitability β Lost Sales Acceptance
  6. 6. BULLWHIP EFFECT
  7. 7. It creates large swings in demand on the supply chain resulting from relatively small, but unplanned, variations in consumer demand that escalate with each link in the chain.
  8. 8. LAWS OF LOGISTICS
  9. 9. Circular References Volatility is attributable to time lags Time lags are inserted to optimise functional cost Cost is not necessarily lowered by slowing things down Slowing things down is a function of variety and complexity Variety and complexity mean it all gets ‘too difficult’ which is why we don’t trust anyone & we slow things down more adding more time creates volatility volatility costs money so we add more time adding more time makes us careless and unreliable unreliability requires focus so we form BUs and add more complexity
  10. 10. LAW # 2: TOTAL COST “The total cost of sourcing, converting and delivering product is seldom the sum of the lowest functional costs of each element in the supply chain”  lowest cost manufacturing programs are not enough  Driving down cost in specific area can have impact in other
  11. 11. ULTIMATELY: COUNTER-INTUITION “The normal human response to the effects inefficiency is to introduce delay in an attempt to increase certainty which simply makes the situation worse - effective distribution design can be counter intuitive”
  12. 12. CASE STUDY - IRAQ
  13. 13. LANDSCAPE  33 million people growing at almost 3%  Half the population is under 21 years of age  GDP of over USD 130 billion growing at 10%  Food consumption to grow ahead of population  Major consumers of yoghurt and cheese  A very important market for us!
  14. 14. CHALLENGE  Acute power shortages  Electricity supply fulfills only about 2/3rd of demand  Transport network both insufficient and old  Low purchasing power with one fourth population below poverty line  Volatile regulatory environment  A very fragile cold chain!
  15. 15. TOOLS  VMI / SMI / JIT  Kanban to achieve JIT (mfg)  iLog for Design of your SC  inFlow, Inventoria, Stock it Easy for inventory management  GT Nexus for In Transit Info  Slingshot, Forecast Pro, Epicore, JDA for demand forecasting
  16. 16. QUESTIONS? Acknowledgments Cranfield University Accenture Kellogg School of Management Procter & Gamble Ltd.
  17. 17. AFRIS. AsianFoodRegulationInformationService. We have the largest database of Asian food regulations in the world and it’s FREE to use. We publish a range of communication services, list a very large number of food events and online educational webinars and continue to grow our Digital Library. We look forward to hearing from you soon! www.asianfoodreg.com adrienna@asianfoodreg.com

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