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Supply Chain Planning

Supply Chain Planning. 19 th 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

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Supply Chain Planning

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  1. Supply Chain Planning 19th September 2004 Dusit Dubai SCLG - Dubai

  2. Presented by Krishnan Sugavanam Mantis

  3. 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

  4. Supply Chain PlanningThe Theory and Best Practice

  5. OEM Manufacturer Distributor Dealer Retail Consumer Define Supply Chain Planning Production Planning Replenishment Planning Demand Planning ERP Systems

  6. OEM Manufacturer Distributor Dealer Retail Consumer Supply Chain Planning Art and a ScienceDemand Driven & Service Driven SCP

  7. Supply Chain Planning Challenges Interactive

  8. 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?

  9. Theory of Demand Planning

  10. New Dying Demand Patterns Erratic Lumpy Slow Positive Trend Negative Trend Fast Obsolete

  11. Cyclical variation Base level External factors Trend Forecast Components FORECAST COMPONENTS

  12. Seasonality Profiles Year One Year Two

  13. Manual Intervention • Forecast adjustments • Reason codes

  14. Forecasting Demand

  15. Some Additional Considerations

  16. 60 50 Flier? 40 30 Demand 20 10 0 1 3 5 7 9 11 13 15 17 19 21 23 Period Automatic Demand Filtering

  17. 1998 1999 2000 2002 2003 Volume Density

  18. Theory of Replenishment Planning

  19. How do you classify an Item from an Inventory angle? Interactive

  20. Multi Dimensional Pareto Analysis ABC based on Volume ABC based on Frequency ABC based on Turnover

  21. The Role of Buffer Stocks in the Supply Chain Typical Sources of Supply Stocks The Customer Demand The Cushion

  22. 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

  23. What is the Relationship between Inventory and Service Level?

  24. Service Driven Buffer 92% 94% 96% 98% 100%

  25. Basic Systems For Stock Reviews • Fixed order quantity • Fixed order cycle

  26. THE FIXED ORDER QUANTITY SYSTEM MAXIMUM RATE OF USAGE WITHOUT STOCK-OUT **REORDER QUANTITY (Q) *REORDER LEVEL POINT (A) . . . . . . . . . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . • . STOCK LEVEL Q Q EXPECTED RATE OF USAGE (R) BUFFER STOCK LEVEL . . . . LEAD TIME (L) TIME *ROL= Forecast over lead -time + buffer stock **ROQ can be determined by EOQ or Coverage Analysis

  27. THE FIXED ORDER CYCLE SYSTEM *ORDER UP TO LEVEL **REORDER QUANTITY Q3 **REORDER QUANTITY Q3 Q2 STOCK LEVEL . . . . . . . . . . . . . . Q2 Q1 Cover period . . . . . . . . BUFFER STOCK LEVEL LEAD TIME (L) LEAD TIME (L) REVIEW PERIOD (T) TIME REVIEW PERIOD (T) *OL=Forecast of Demand in cover period + Buffer Stock **ROQ=Order Level-Effective Stock + Back Orders

  28. 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.

  29. DFRP Models • Warehouse Stocks • Warehouse Stocks Only • National Stocks • Warehouse Forecasts • Branch Demand • Branch Forecasts • Branch Orders • Branch Order Schedules Branch forecasts and order schedules based on local demand

  30. Recent Supply Chain PlanningIndustry Trends

  31. Supplier Collaboration Internal Collaboration Customer Collaboration eCollaboration C P F R Supplier Distributor Warehouse Retail OEM Information Flow Product Flow

  32. VMI – Vendor Managed Inventory

  33. Virtual Stock Management

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

  35. Syncron Supply Chain PlannerOUR SUPPLY CHAIN CONCEPT

  36. Local Optimisation

  37. JDE JDE IFS WEB Shop.com Inhouse Oracle SAP R/3 IFS Baan SAP R/3 Inhouse Movex IFS ERP Myth

  38. Supply Chain Planning Global Warehouse Divisional Warehouse Shop Supplier Manufacturing

  39. Syncron SCP and eCollaboration Forecast Stock level (safety stock) Replenishment plan Forecast Replenishment plan Production planning Capacity need Material need POS data Forecast Stock level (safety stock) Replenishment plan Forecast Replenishment plan Production planning Capacity/material need Forecast Replenishment plan Production planning Capacity need Material need Integration Forecasting Replenishment Production plan Region Warehouse Store Central Warehouse Manufacturer Supplier Sub Supplier

  40. Questions? Break

  41. 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”

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