Miscellaneous
John Vande Vate
Spring, 2007
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Agenda
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Bull Whip
IT
Summary
Project Presentations
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The Bullwhip Effect…
… describes the phenomenon in which
order variability is amplified as it
moves up the supply chain from endconsumers through distribution and
manufacturing to raw material
suppliers.
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Example
Procter & Gamble: Pampers
• Smooth consumer demand
• Fluctuating sales at retail stores
• Highly variable demand on distributors
• Wild swings in demand on manufacturing
• Greatest swings in demand on suppliers
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Illustration
Consumer Sales at Retailer
Consumer demand
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Retailer's Orders to Distributor
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Retailer Order
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Illustration
Retailer's Orders to Distributor
1000
Retailer Order
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Distributor's Orders to P&G
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Distributor Order
1000
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Illustration
Distributor’s Orders to P&G
Distributor Order
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200
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P&G's Orders with 3M
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P&G Order
700
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Illustration
Consumer Sales at Retailer
Consumer demand
1000
900
800
700
600
500
400
300
200
41
39
37
35
33
31
29
27
25
23
21
19
17
15
13
9
7
5
3
1
0
11
100
P&G's Orders with 3M
1000
900
800
600
500
400
300
200
100
40
37
34
31
28
25
22
19
16
13
10
7
4
0
1
P&G Order
700
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Efforts to Resolve
• CPFR: Collaborative Planning, Forecasting &
Replenishment
– Share forecasts, plans for promotions, etc.
• VMI: Vendor Managed Inventory
– Let the supplier manage the inventory (consigned to
the customer)
• Visibility:
– ASN (Advanced Shipment Notices)
– Track & Trace
– Event-driven notifications
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Events Opposing
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SKU Proliferation
Shorter product life cycles
Consignment Inventory practices
Globalization
Tight global transport capacity
Supply Chain Disruptions
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IT
• Y2K Threat helped justify revamp of corporate
software
• By 2000 companies were spending nearly 50% of
capital investment $ on technology, up from 30%
in the early 90’s.
• Consequences
– Internet bubble and ill-considered investments in IT
applications much of it in the SC arena
– Huge investments in ERP systems
– Emergence of the CIO role
– Prominence of Supply Chain Mgt
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Post Mortem
• Consolidation in ERP providers
– SAP and Oracle
• Standardization and Integration
– Diminishing role for CIO
• Evolving cloud of bolt-on technologies
– APS: Advanced Planning & Scheduling Systems
• I2, Ilog, Manugistics, Aspen Technologies, SAP, Oracle
– S&OP: Sales & Operations Planning
• Balance supply and demand
• Interlace, Steelwedge, Logility, …
– TMS: Transportation Management Systems
• Consolidation, Carrier Selection, Routing, Tracking, Invoice
Audit, Labeling, Export compliance, …
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• I2, Manugistics, Red Prairie, Tranzact, …
More Bolt-ons
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WMS: Warehouse mgmt systems
CRM: Customer relationship management
Procurement solutions
…
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Evolving Architecture
• Layered approach
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Client
Decomposes complexity
Reuse functionality
Presentation
Separate evolutin
Layer
Less reliance on single provider
Business
Logic Layer
Data
Layer
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Projects
• Deliverables:
– Presentation to the Class
– Presentation to the Client
– Documented CD to the client and to me
• Presentation to the Class < 30 minutes
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What is the Issue and business context
What value does your approach provide
How does it fit/fail to fit the context
Some technical details (and backup slides)
A proposed exam question
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Projects
• Presentation to the Client
– Can be combined with class presentation or
separate
– Can be via teleconference
– What the client wants
– Focus on value, fit, requirements and
limitations
– Be prepared to discuss techniques
– CLARITY
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Projects
• Documented CD
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Index and explanation
Data
Models
Tools
Presentations
…
• Imagine a similar team will be asked to
extend the project. What will they need?
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Some Basics
• Remember to do the simple thing first
• Process is as important as result
• Fit with context is more important than
“optimality” and “technology”
• Is your process worth the effort, as simple
as possible, sustainable, supportable, …
• Why, Value, What,
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Course Review
• Introduction to modes and transportation rates
– There are economies of scale in transportation costs
– Consolidation helps us capitalize on these economies
of scale
• Introduction to Finance & SCM
– Focus on Working Capital
• Transportation & “Deterministic” Inventory
– The “magic” of consolidation
– The EOQ: Balancing Transport & Inventory costs
• Consolidation
– Multi-Stop
– Load-Driven
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Review
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Location:
Retail Pricing: Pricing what you have
Sport Obermeyer: Sourcing what you need
Inventory Management:
– Techniques
– Pooling
– Postponement
• SCM: BMW Case Study
• IT: Lightening overview
• Projects
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Projects
• April 12: NS
– Mikac
– Lai
– Dayagi
• April 17: Coca Cola
– Solveling
– Lee
– Kwan
• April 19: XYZ & GE Appliances
– Meidl
– Green
– Tandon
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Projects
• April 24: GE Energy
– Walker
– Sanchez
– Gupte
• April 26: BMW & Children’s Hospital
– VPS
– Ship-to-Average
– Children’s Hospital
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