Diagnostic and Decision Support Technology For Supply … · Diagnostic and Decision Support Technology For Supply ChainsDiagnostic and Decision Support Technology For Supply Chains

Diagnostic and Decision Support Technology For Supply ChainsDiagnostic and Decision Support Technology For Supply Chains

December 10th, 2003December 10th, 2003

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Copyright © 2003 Flextronics. All Rights Reserved

Today’s Challenges

Demand fluctuation and seasonalityMaterial price fluctuations

Component availability

Variation of delivery times

Customs delays

Currency fluctuations

Labor costs escalations

Changes in duties, customs

Changes in tax codes

Energy shocks impact transportation costs

Macro Factors

Strikes

Micro Factors

Capacity constraints

Suppliers’ constraintsForecast errorsPoor serviceability

Production constraints

New product launchesShorter product life cycle

Cost pressures

Changes in supply chain networks

Inbound variations

Order processing

High variability in customer demand

High inbound variability

Material price & component

availability

CapacityVariation of delivery time

Variation of delivery time

Daily fluctuating inventories

Customs delays

Customization requirementsHigher customer service

Lower costs

In today’s environment, only one thing remains constant: Change.

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Companies’ Needs

To remain competitive companies need:

!Flexible supply chains- to quickly respond to a constant changing market environment

!Efficient supply chains- to achieve overall cost reductions and savings

!To analyze their supply chains holistically- when planning and making strategic decisions on their supply chain

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What is SimFlex? A Diagnostic Decision Support Technology for Supply Chains

SimFlex is a Supply Chain Analyzer and Planner

!Provides a multi-dimensional dynamic analysis of the “Total” supply chain

!Enables advanced trade-offs analysis - cost vs. service- inventories vs. lost sales- risk vs. cost

SimFlex determines the optimum supply chain strategy to maximize profits and serviceability

Environmental Impact Analysis

Time ServiceQuality

Financial Ratios

Total CostsResource UtilizationCustomer Demand

Material Variability

TradeOff

TradeOff

Environmental Impact Analysis

Time ServiceQuality

Financial Ratios

Total CostsResource UtilizationCustomer Demand

Material Variability

TradeOff

TradeOff

- End to end supply chain visibility

- From sub-tier suppliers to end customers

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SimFlex: Analyzer & Planner

! Analyze/understand, optimize and simulate today’s complex and dynamic supply chains.

! Analyze different what-if scenarios to design the optimal supply chain which helps meet each product sectors marketing and business objectives.

! Analyze simultaneously critical operating characteristics and performance metrics throughout the entire supply chain.

! Understand and analyze the “total” supply chain cost and performance from sub-tier suppliers to end customers.

! Analyze the Reverse Logistics flows and processes.

! Analyze/understand, optimize and simulate today’s complex and dynamic supply chains.

! Analyze different what-if scenarios to design the optimal supply chain which helps meet each product sectors marketing and business objectives.

! Analyze simultaneously critical operating characteristics and performance metrics throughout the entire supply chain.

! Understand and analyze the “total” supply chain cost and performance from sub-tier suppliers to end customers.

! Analyze the Reverse Logistics flows and processes.

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SimFlex: Analyzer & Planner

• Determine new market strategies• Plan new product launches• Determine new distribution strategies• Determine new manufacturing strategies

• Determine impacts of customer demand changes • Plan alternative inventory strategies• Determine impacts of capacity constraints• Plan serviceability improvements

• Determine impacts of escalating costs• Determine alternative suppliers strategies• Determine alternative tax strategies• Determine financial/operational planning

• Plan throughput variations• Determine impacts of forecasts changes• Determine impacts of in-bound material• Sales projections

SimFlex is used forSimFlex is used for

Strategic planning for the next 3 to 12+ months

Operational planning for the next 1 to 12 weeks

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SimFlex Capabilities Overview

SimFlex is a Supply Chain Analyzer and Planner that helps determine the best supply chain network & strategy, reduce the total supply chain costs and improve serviceability. SimFlex is based on a proprietary dynamic simulation technology.

!Network design

!Supply chain optimization

!Reverse logistics

!Integrated tool (optimization & simulation)

!Module structure (network, demand, supplier, inventory, transportation, cost and finance)

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Sensitivity Analyses Capabilities

Demand- xx% increase or decrease in demand? Spike in demand?-Changes in customer locations or concentrations?

Inventory- My FGI strategy on serviceability measures?- My sub-tier inventory strategy?

Capacity- xx% increase or decrease of my capacity levels?- Capacity constraints and lack of flexibility of my supply chain?

Costs- xx% material cost increase?- xx% labor cost increase?

Sub-Tier Supplier and Supply Flow- Changes in my supplier locations?

- Poor delivery performance?

Forecasting and Planning Process- xx% or greater forecast error?

- Different forecasting and planning processes?

Transportation- Transportation mode trade-offs?-Transportation provider change?

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SimFlex Reverse Logistics Capabilities

SimFlex can analyze the Reverse Logistics flows of a company.

! Test & Repair Lead Time! Test & Repair Capacity ! Assets (test/repair capacity investments) ! Quarterly Buys! Inventory strategy for parts ! Replenishment Policies! Different Stock types! Demand and returns ! Transport Modes and Services ! Location of depots ! Roles of individual depots (repair capabilities) ! Multilevel depots network ! Customer segments and product groups served by depots

RL Capabilities

Quarterly Returns by Region

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Type Of Problems SimFlex Can Solve

!Evaluate different demand forecasts/patterns

!Evaluate impacts of different costs fluctuations

!Evaluate different networks strategies

!Evaluate different procurement strategies

!Evaluate alternative manufacturing strategies

!Evaluate alternative distribution strategies

!Evaluate alternative transportation strategies

!Evaluate different inventory strategies

!Evaluate different capacity/investments strategies

!Evaluate different tax strategies

!Ability to see the cause, effects and interdependencies between different variables

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Case Studies

!Handheld Device OEM

!Reverse Logistics Strategy for Mobile Phones

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Small Handheld Device OEM

!Centralized mfg and regional value-add/distribution strategy reduced total SC costs

!Consolidation of sub-tier suppliers on industrial campus reduced lead time and increased flexibility

!High volume of products on certain transport lanes lead to reduction in freight costs

!$12M total savings over two products (Major savings: material and production costs)

!Reduced inbound SC costs by $1.5M (Major savings: in in-transit inventory and inbound freight)

!Increased SC responsiveness to demand fluctuations!Centralized SC planning

!Long SC with multiple sub-tier suppliers for raw materials!Hi-Tech products with short product life-cycle

!To find the best global manufacturing, pack-out and distribution strategy for handheld devices !What is the optimal SC solution for high-end and low-end products?

Centralized manufacturing with

Regional Pack-Out and Distribution

Scenarios 2 and 7 achieve the greatest savings per unit (based on a total volume of 1.2 million units)

ObjectivesObjectives

ChallengesChallenges

SolutionsSolutions

BenefitsBenefits

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Reverse Logistics strategy For Mobile Phones

! Develop alternative scenarios and strategies to the current reverse logistics network to increase speed and efficiency and reduce costs while upholding world class customer service

! How to have a low TAT for the customer with the lowest total cost for Flex?

! How can we lower the B stock without affecting TAT?

! Co-location of L1 (NTF/Swap. No advance swap) and L2 (Light Repair Operations) in Memphis and L3 in Guad ( heavy repairs operations) for NA and performing all operations in Zala for EU

! Co-location of certain processes leads to lower inventory levels in the supply chain without compromising on serviceability

!Average B-Stock inventory could be reduced by more than 50% when L1 and L2 are co-located at one site, without

affecting serviceability

ObjectivesObjectives

ChallengesChallenges

SolutionsSolutions

BenefitsBenefits

Note: All numbers are in thousands

Savings are indicated as positives on the graph

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Diagnostic and Decision Support Technology for Supply Chains

SimFlex’s Objective:To Determine The “Best” Cost/Performance

End to End Solution

It’s all about results…

Diagnostic and Decision Support Technology For Supply … · Diagnostic and Decision Support Technology For Supply ChainsDiagnostic and Decision Support Technology For Supply Chains

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