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
Distributor
Dealer
Production Planning
Replenishment Planning
Demand Planning
ERP Systems
Retail
Consumer
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
Fast
New
Slow
Erratic
Positive Trend
Negative Trend
Dying
Obsolete
Forecast Components
Cyclical
variation
Base level
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?
Demand
40
30
20
10
0
1
3
5
7
9
11
13
15
Period
17
19
21
23
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
E
M
LU
O
V
FREQUENCY
ABC based on Volume
ABC based on Frequency
ABC based on Turnover
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)
STOCK
LEVEL
MAXIMUM RATE OF USAGE
WITHOUT STOCK-OUT
...
. ...
. ..
Q . ...
Q
..
.
..
.
..
.
..
.
..
..
.
.
.. .
LEAD TIME . .. .
.. .
(L)
TIME
*ROL= Forecast over lead -time + buffer stock
**ROQ can be determined by EOQ or Coverage Analysis
*REORDER LEVEL
POINT (A)
EXPECTED RATE
OF USAGE (R)
BUFFER STOCK
LEVEL
THE FIXED ORDER CYCLE SYSTEM
*ORDER UP TO LEVEL
Q3
**REORDER
QUANTITY
STOCK
LEVEL
**REORDER
QUANTITY
Q3
Q2
Q1
.
.
.
.
.
.
.
.
.
.
Q2
.
.
.
Cover period
.
.
.
.
.
. 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
BUFFER STOCK
LEVEL
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
Branch forecasts and order schedules
based on local demand
• Warehouse Stocks Only
• National Stocks
Recent Supply Chain
Planning
Industry Trends
eCollaboration
Supplier
Collaboration
OEM
Information Flow
Product Flow
Internal
Collaboration
Supplier
Customer
Collaboration
Distributor
Warehouse
Retail
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
Inhouse
WEB Shop.com
Oracle
IFS
Baan
SAP R/3
JDE
IFS
SAP R/3
Inhouse
Movex
Supply Chain Planning
Shop
Divisional
Warehouse
Global
Warehouse
Manufacturing
Supplier
Syncron SCP and eCollaboration
Store
Region
Warehouse
Forecast
Stock level (safety stock)
Replenishment plan
Central
Warehouse
Manufacturer
POS data
Forecast
Stock level (safety stock)
Replenishment plan
Integration
Forecasting
Replenishment
Production plan
Forecast
Replenishment plan
Production planning
Capacity need
Material need
Supplier
Forecast
Replenishment plan
Production planning
Capacity/material need
Sub Supplier
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”