Supply Chain Planning

19th September 2004 Dusit Dubai

SCLG - Dubai

Presented by
Krishnan Sugavanam Mantis

Corporate Profile of Mantis

Established in Athens, Greece in 1996

Specialize in Supply Chain Planning & Execution

Logistics Vision on 100% Dot Net Comprising of Inventory Vision (Powered by Syncron)

Warehouse Vision
Transportation Vision Mobile Vision

Plant Vision

Supply Chain Planning The Theory and Best Practice

Define Supply Chain Planning

OEM

Manufacturer Production Planning

Distributor

Dealer

Retail

Consumer

Replenishment Planning

Demand Planning

ERP Systems

Supply Chain Planning

OEM

Manufacturer

Distributor

Dealer

Retail

Consumer

Art and a Science Demand Driven & Service Driven SCP

Supply Chain Planning Challenges

Interactive

Some of the Challenges

How many Stocking Locations; Where they are? Where to Stock?

One Supplier or Multiple Suppliers? Multiple Lead Times? Variability in Supply?

Variability in Demand?
Centralised or Decentralised planning? How often to order? Weekly, Daily, Monthly, Quarterly? Or a combination? What forecasting methods to use and why? How to classify products for effective inventory control? What target service levels to set and why? How much buffer stocks to hold and where?

How to measure the achieved service levels?

Theory of Demand Planning

Demand Patterns
Lumpy Slow Erratic

Fast

Positive Trend

Negative Trend

New

Dying

Obsolete

Forecast Components
Base level

Cyclical variation

FORECAST COMPONENTS

Trend

External factors

Seasonality Profiles

Year One

Year Two

Manual Intervention

Forecast adjustments

Reason codes

Forecasting Demand

Some Additional Considerations

Automatic Demand Filtering

60
50

Flier?

40

Demand

30 20 10 0
1 3 5 7 9 11 13 15 17 19 21 23

Period

Volume Density

1998

1999

2000

2002

2003

Theory of Replenishment Planning

How do you classify an Item from an Inventory angle?

Interactive

Multi Dimensional Pareto Analysis

STOCK TURNOVER

V O

ABC based on Volume ABC based on Frequency ABC based on Turnover

LU M E
FREQUENCY

The Role of Buffer Stocks in the Supply Chain

Typical Sources of Supply Stocks The Customer

Demand

The Cushion

Buffer Stock
The amount of safety stock held to cover random variations in demand Forecast accuracy

Target service level

Replenishment frequency

Lead time & its variability

Seasonality

What is the Relationship between Inventory and Service Level?

Service Driven Buffer

92%

94%

96%

98%

100%

Basic Systems For Stock Reviews

Fixed order quantity Fixed order cycle

THE FIXED ORDER QUANTITY SYSTEM

**REORDER QUANTITY (Q) MAXIMUM RATE OF USAGE WITHOUT STOCK-OUT

STOCK LEVEL

.. .. . . . ... Q . ... Q .. . .. . .. . .. . .. .. . . .. . LEAD TIME . .. . .. . (L) TIME

*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

THE FIXED ORDER CYCLE SYSTEM

*ORDER UP TO LEVEL
**REORDER QUANTITY **REORDER QUANTITY

Q3

STOCK LEVEL

Q2 Q1
. . . . . . . .

. . Q2 . . . Cover period . . . . . . LEAD TIME (L) LEAD TIME (L) . . . REVIEW

PERIOD (T)

Q3

BUFFER STOCK LEVEL

TIME

REVIEW PERIOD (T)

*OL=Forecast of Demand in cover period + Buffer Stock **ROQ=Order Level-Effective Stock + Back Orders

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.

DFRP Models
Warehouse Stocks Warehouse Forecasts
Branch Demand
Branch Forecasts Branch Orders Branch Order Schedules Warehouse Stocks Only National Stocks

Branch forecasts and order schedules based on local demand

Recent Supply Chain Planning Industry Trends

eCollaboration

Supplier Collaboration

Internal Collaboration

Customer Collaboration

OEM

Supplier

Distributor

Warehouse

Retail

Information Flow Product Flow

VMI Vendor Managed Inventory

Virtual Stock Management

Companies moving more and more towards centralized inventory planning and away from decentralization of planning activities

Syncron Supply Chain Planner OUR SUPPLY CHAIN CONCEPT

Local Optimisation

ERP Myth
JDE

IFS WEB Shop.com Oracle Inhouse

IFS Baan

SAP R/3

JDE IFS SAP R/3 Movex

Inhouse

Supply Chain Planning

Shop

Divisional Warehouse

Global Warehouse

Manufacturing

Supplier

Syncron SCP and eCollaboration

Store Region Warehouse Central Warehouse
POS data

Forecast Stock level (safety stock) Replenishment plan Forecast Replenishment plan Production planning Capacity need Material need Supplier Sub Supplier

Manufacturer

Forecast Stock level (safety stock) Replenishment plan

Forecast Replenishment plan Production planning Capacity/material need

Integration

Forecasting Replenishment Production plan

Forecast Replenishment plan Production planning Capacity need Material need

Questions?
Break

Some Quotes from the Boss!!!

What I need is a list of specific unknown problems we will encounter Doing it right is no excuse for not

meeting the schedule

Quote from the Boss: "Teamwork is a lot of people doing what I say