Supply Chain Planning 19 th September 2004 Dusit Dubai SCLG - Dubai
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 PlanningThe Theory and Best
Practice
Define Supply Chain Planning
OEM Manufacturer Distributor Dealer Retail Consumer
Production Planning
Replenishment Planning
Demand Planning
ERP Systems
Supply Chain Planning
OEM Manufacturer Distributor Dealer Retail Consumer
Art and a ScienceDemand 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
ObsoleteNew Dying
Cyclical
variation
External factors
FORECAST COMPONENTS FORECAST COMPONENTS
Trend
Forecast Components
Base level
Year Two
Year One
Seasonality Profiles
Manual Intervention
• Forecast
adjustments
• Reason codes
Forecasting Demand
Some Additional Considerations
Automatic Demand Filtering
Flier?
0
10
20
30
40
50
60
1 3 5 7 9 11 13 15 17 19 21 23
Period
Dem
and
1998 1999 2000 2002 2003
Volume Density
Theory of Replenishment Planning
How do you classify an Item from an Inventory angle?
Interactive
Multi Dimensional Pareto Analysis
ABC based on VolumeABC based on FrequencyABC based on Turnover
STOCK TURNOVER
FREQUENCY
The Role of Buffer Stocks in the Supply Chain
TheCushion
Typical Sources of
Supply
Stocks The Customer
Demand
Buffer Stock
• Forecast accuracy
• Target service level
• Replenishment frequency
• Lead time & its variability
• Seasonality
The amount of safety stock held to cover random variations in demand
What is the Relationship between Inventory and Service Level?
92% 94% 96% 98% 100%
Service Driven Buffer
• Fixed order quantity
• Fixed order cycle
Basic Systems For Stock Reviews
TIME
THE FIXED ORDER QUANTITY SYSTEM
**REORDERQUANTITY (Q)
LEAD TIME(L)
MAXIMUM RATE OF USAGEWITHOUT STOCK-OUT
Q Q
STOCK LEVEL
*REORDER LEVELPOINT (A)
EXPECTED RATEOF USAGE (R)
BUFFER STOCKLEVEL
*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
Q1
STOCK LEVEL
BUFFER STOCKLEVEL
TIME
Q2
Q2
Q3
Q3
LEAD TIME (L)
LEAD TIME (L)
REVIEW PERIOD (T)
REVIEW PERIOD (T)
Cover period
**REORDER QUANTITY
*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 Forecasts
• Branch Demand
• Branch Forecasts
• Branch Orders
• Branch Order Schedules
Warehouse Stocks
• Warehouse Stocks Only
• National Stocks
Branch forecasts and order
schedules based on local
demand
Recent Supply Chain Planning
Industry Trends
eCollaboration
OEM Supplier Distributor Warehouse Retail
Supplier Collaboration
Internal Collaboration
Customer Collaboration
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 PlannerOUR SUPPLY CHAIN
CONCEPT
Local Optimisation
JDE
SAP R/3
SAP R/3
Movex
Oracle
Baan
Inhouse
IFS
IFS
IFS
WEB Shop.com
ERP Myth
JDE
Inhouse
Supply Chain Planning
Global Warehouse
Divisional Warehouse
ShopManufacturing Supplier
Manufacturer
Supplier
Region Warehouse
Central Warehouse
Sub Supplier
Store
Syncron SCP and eCollaboration
ForecastingReplenishmentProduction plan
POS data
ForecastStock level (safety stock)Replenishment plan
ForecastStock level (safety stock)Replenishment plan
ForecastReplenishment planProduction planningCapacity/material need
ForecastReplenishment planProduction planningCapacity needMaterial need
ForecastReplenishment planProduction planningCapacity needMaterial needIntegration
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”