Enterprise 7.1 Supply Chain Planner

Transcription

1 KAMATSOFT Enterprise 7.1 Supply Chain Planner White Paper Girish N. Kamat 10/28/2009 This white paper provides review of the capabilities and technical details of Supply Chain Planning module of Enterprise/ Kamat Information Systems Private Ltd

2 Introduction Supply chain encompasses all the operations required to service the customer profitably and plays critical role in contribution maximisation along with customer service while maintaining low inventory levels. Therefore it is critical that the goals of supply chain planning are aligned with organisational goals by optimising the supply chain planning so as to derive best out of available resources. In past due to limitation in available technology, the supply chain optimisation was limited to individual functional components of supply chain like production planning, raw material planning, logistics planning etc. Though organisation always attempted to align these plans, planning for total optimisation was rarely done. Further most of these attempts were aimed at cost minimisation and factoring of customer service was always subjective. However true potential for supply chain planning lies in contribution maximisation carried out on holistic basis across all the functions. This planning can be carried out for the month, quarter and year for annual budget. Monthly planning can be on rolling basis using multi-period lp. Capabilities Enterprise Supply Chain Planners models total supply chain of the company covering customer demand, production of finished goods and intermediates, distribution/logistics and raw material procurement. 1. Supply Chain Planner can generate supply chain for any defined period (monthly, quarterly, annual) using mixed integer programming (LP with binary variables). Supply Chain Planner can also be run on ad-hoc basis for optimising or scenario evaluation. Every supply chain plan can be viewed as Demand Plan, Production Plan, Distribution/Logistics Plan and Raw Material Plan. 2. Supply Chain Planner supports both single and multi-period MIP. 3. To solution always offer optimal plan even in case of infeasible constraints by ignoring infeasible constraints. 4. Planning can be made for contribution maximisation or cost minimisation as may be required by the user. 5. Multiple scenario can be generated for given period can compared for the same period by using multiple forecast versions or varying constraints. 6. Detailed simulation of revenue/expense heads and also capacity. 7. Network design for factories, depots and outsourcing. 8. Strategic long term planning. 9. Multi-currency support especially for exports, imports and purchases linked to international rates. 10. Incorporate opening and desired closing stocks in the plan. Enterprise Supply Chain Planner supports detailed contribution and cost modelling including central sales tax and VAT. For network design the fixed costs can be modelled at nodes. The supply chain plan can model customer service requirement in details. Product templates can be used in defining product lines in different ways for different purposes. Benefits

3 Regular planning aligned to the organisational objectives. Support for contribution maximisation as well as minimisation. Generates optimal Supply Chain Plan covering demand satisfied, production plan, distribution plan, logistics plan and raw material plan. Factoring customer service, along with information about additional cost of customer service, if any. Unlimited what if scenario for comparison, by simulating virtually every aspect of planning to provide deep insight into business. Support for regular as well as strategic planning. Network design with fixed costs at factories, depots and other network nodes. Totally configurable cost and contribution modelling. Intermediate requirement automatically worked out from bill of material with capability to configure buy vs. make decision. Capability to incorporate resource requirements like labour, dies & tools which may be in limited supply. Product mix optimisation on regular or ad hoc basis. Identifying performers and laggard products for marketing focus. Overall optimisation of company s resources along with identification of bottlenecks and inefficient operations. Constraints Modelling Apart from hard constraints like production capacity, plant shutdowns, production rates, Enterprise/7 provides users to define and use constraints for supply chain planning. These constraints help you to ensure that the final solution can be implemented with or without minor changes. Further by using different set of constraints you can generate multiple versions of the plan which then can be compared to gain deep insight in the business. Supply Chain Planner supports following type of constraints. 1. Availability constraints specifying minimum and/or maximum availability of different raw materials to be factored in the plan. 2. Detailed Production Constraints specifying soft constraint for minimum/maximum production of particular product/material group on individual machine/factory. 3. Detailed Marketing Constraints specifying soft constraints for minimum/maximum sales for particular product/material group in particular region or distribution channel.

4 4. Detailed Supply Chain Constraint specifying soft constraints directing movement of particular material/material group from certain factory to certain regions/distribution channels. 5. Material Handling constraint at installations specifying the throughput which can be handled at particular installation. 6. Joint Material Constraint indicating the ratio (with or without tolerance) in which two different materials are to be used. 7. Link constraints at Installations specifying minimum/maximum material that can be moved from particular installation to different locations based on the availability of transport at that location. 8. Link constraints at locations specifying minimum/maximum material that can be moved from particular location to different locations based on the availability of transport between those locations. 9. Joint Product Constraints specifying minimum/maximum ratio in which two products must be producted. Cost & Contribution Modelling Supply chain planning is normally carried out for contribution maximisation or cost minimisation at acceptable level of customer service. Supply Chain Planner can be modelled both for maximisation or cost minimisation. The cost modelling is completely configurable to incorporate manufacturing costs, selling expenses, taxes for different types of movements (direct factory sales vs. depot movements) and selling prices. Bill of material along with raw material prices can be used to estimate raw material costs. Simulation Supply Chain Planner provides large number of options for generating what if scenario for providing deep insight into enterprise operations. Simulation is provided on: Demand Simulation: Apart from using different versions of forecast simulation can also be carried out at controlling office, distribution channel for product or group of products by specifying percent or absolute change. Demand simulation can also be used for analysing various strategic plans for expansion. Production Capacity: Simulation can be carried out at level of utilisation or production rates. Currency Rates : In days of volatile currency movement simulation can be carried at various currency rates. Material requirement can be varied to view the impact on alternative material, product mix, costs or contribution. Facilities: Facilities can be enabled or disabled to view the impact on the plan. Expenses: Different expenses can be varied to measure the likely impact on costs, contribution, buy vs make decision, outsourcing, movements and product mix.

5 Income Heads: Different income heads can be varied to measure likely impact on contribution, movements, product mix. Reports Enterprise/7 Supply Chain Planner has rich set of reports for optimal supply chain planning These reports can provide deep insight into operations to improve overall supply chain for reduced costs, higher contribution and customer service. Some of these reports are: 1. Summary comparison of multiple versions for given model. 2. Detailed/Summary/Product wise/template wise/customer wise contribution for the plan. 3. Detailed/Summary/Template wise contribution comparison of multiple versions of the plan. 4. Production Plan with costs. 5. Planned Production Capacity Utilisation 6. Raw Material (Procurement) Plan with costs. 7. Detailed raw material consumption report with costs. 8. Installation wise/destination wise/inter installation logistics plan. 9. Overall material balance 10. Scenario Evaluator. 11. Unsatisfied constraints due to infeasibility. 12. Reduced cost variables. Product Architecture Enterprise Supply Chain Planner uses mixed integer programming to generate optimal supply chain plan. To manage very complex and large supply chain plans with multiple periods, it uses stage variables which are constrained with appropriate material balance constraints. The main variables types used are 1. Demand Variables 2. Demand Flow Variables 3. Production Variables 4. Production Flow Variables 5. Material Variables 6. Material Flow Variables All these variables are continuous variables. Apart from this Enterprise Supply Chain Planner uses minimum production size variables and network variables which are binary. Apart from individual constraints on these variables the system has material balance constraints at every stage to generate optimal plan. Many times constraints used by user can make solution infeasible. To ensure that this never happens, Supply chain planner creates dummy /pseudo variables, which makes it feasible and are

6 reported as infeasible constraints by isolating from the feasible solution which results into valid supply chain plan. The generation of variables and problem presented to the solver is transparent to the user, though the system can generate log of the problem definition and solution generated for debugging inconsistent solutions especially at the time of initial modelling or when major change to the modelling is made. Technical Details Supply Chain Planner is web based solution which can be used over wide area network including internet (normally tunnelling through VPN for security reasons). Since uses proprietary active based technologies (which uses internet explorer as container) developed in Visual C++ for web interface even interactive optimisation can be carried out with low bandwidth at user level. Optimisation using multi-period mixed integer programming is carried out using DCOM component developed in Visual C++ which runs on the server. Component heavily uses parallel processing to speed up generation of large scale multi-period models. Supply Chain Planner is developed in Visual C++ using Visual Studio optimiseris capable of working with different solvers like LINDO, FrontLine etc. Enterprise/7 uses SQL Server (2005 onwards) as backend database.