Supply Chain Design Software. Overview of Supply Chain Design Software. The Logistics Council of Milwaukee February 19, 2015

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1 Supply Chain Design Software Overview of Supply Chain Design Software By Greg Jarosinski of LLamasoft The Logistics Council of Milwaukee February 19, LLamasoft, Inc. All Rights Reserved

2 Agenda Why the need for Supply Chain Design capability? How are others responding? Questions answered by today s Supply Chain Design Software Network Optimization Example 2014 LLamasoft, Inc. All Rights Reserved

3 The Supply Chain Challenge Volatility and change is the new normal External Factors Internal Factors 2014 LLamasoft, Inc. All Rights Reserved

4 Did someone design your supply chain, or did it design itself? Photo by Leo Reynolds - Creative Commons Attribution-NonCommercial-ShareAlike License

5 How Market Leaders Are Responding Supply chain design is now a must-have capability to keep up with the pace of change and sustain a competitive advantage Leaders have created centers of excellence and put in place an integrated supply chain design platform and business process 2014 LLamasoft, Inc. All Rights Reserved

6 The Third Discipline of Supply Chain Management Supply Chain Management Design Planning Execution Network Strategy Route Modeling Demand Segmentation Enterprise Simulation Inventory Policy Analysis Product Flow-path Design Service-level Optimization Enterprise Resource Planning Production Planning & Scheduling Inventory Management & Planning Sales & Operations Planning Demand Forecasting Sourcing & Procurement Integrated Business Planning Transportation Management Warehouse Management Workforce Management Yard Management Tracking & Tracing Global Trade Management 3 rd Party Scheduling & Billing 2014 LLamasoft, Inc. All Rights Reserved

7 With Volatility and Change... Come More Questions to Answer Network Structure Should I lease or build new sites? Who should source each customer? When do I need more capacity? How do I consolidate assets? Service & Performance Metrics How does a change in inventory policy effect my service rates? How many shipments will be late? Am I at risk of hitting capacity constraints? Will this new schedule improve throughput? Inventory How much inventory do I need? How much does it cost to increase my service levels? Where should I stock each product? There is Seemingly No Limit to the Questions Product Flow How much does it cost to serve each customer? Which ports should I be using? Should I consolidate my inbound through a cross-dock? 2014 LLamasoft, Inc. All Rights Reserved Production Footprint When should I pre-build? Where should I make each product? Do I have the right balance of capacity? Should I be outsourcing production? Transportation How many routes & assets do I need? What if I change delivery frequency? How can I reduce my empty miles? Can I combine inbound/outbound shipments? Product Demand How are customers buying our products? How should I segment different customers and products?

8 Technology Integrated Analytical Solvers Network Optimization Enterprise Simulation Inventory Optimization Only application to integrate multiple design technologies: Product Flow Path Optimization Production Optimization Transportation Route Optimization Demand Classification 2015 LLamasoft, Inc. All Rights Reserved

9 Supply Chain Design Key Questions Answered How robust, responsive, and flexible is my supply chain design to changes in key drivers? How should my supply chain react to disruptions and special events? What are the patterns and characteristics of demand my Supply Chain must support? Supply Chain Risk Design Demand Segmentation & Classification Customer & Product Cost to Serve Which customers and products are profitable? Which are not? What are the total supply chain costs to serve? What is the impact of serving unprofitable demand? How much, where, and in what form should inventory be held in the supply chain? What build ahead strategies are required to meet seasonal demands? Inventory Strategy & Policy Infrastructure Strategy & Capacity Planning Where should facilities be located? What is their mission? What is their capacity? What is the timing of investments? 2014 LLamasoft, Inc. All Rights Reserved How many assets should be in my fleet by type, by domicile? What shipments/lanes should be moved by my fleet vs. 3 rd party? Fleet Sizing & Mode Selection How should shipments be routed? What time/day should deliveries and pickups be made? Can orders be combined in multistop/multi-pick? How and where should shipments be consolidated/ deconsolidated? Transportation Strategy & Policy Sales & Operations Planning Product Flow Path Design How should demand be served when insufficient capacity exists? Fulfillment Strategy & Service Area Design From where should materials and products be sourced/replenished? How often? From where should customers be served? How should individual SKU s flow through the supply chain given alternative paths?

10 Advances in Supply Chain Design

11 What Does My Supply Chain Look Like? 2014 LLamasoft, Inc. All Rights Reserved

12 Four Regional Distribution Centers 2014 LLamasoft, Inc. All Rights Reserved

13 Customers Throughout the Country 2014 LLamasoft, Inc. All Rights Reserved

14 Widely Varying Demand by Customer 2014 LLamasoft, Inc. All Rights Reserved

15 As-Is Costs and Operations 2014 LLamasoft, Inc. All Rights Reserved

16 2014 LLamasoft, Inc. All Rights Reserved Optimized Baseline

17 New Optimal Structure 2014 LLamasoft, Inc. All Rights Reserved

18 Service Coverage 2014 LLamasoft, Inc. All Rights Reserved

19 Thank You! Please welcome Paul Kramer from Johnsonville Sausage LLamasoft, Inc. All Rights Reserved

20 Supply Chain Design at Johnsonville Sausage The Logistics Council of Milwaukee February 19, 2015

21 Agenda Johnsonville Sausage Company Overview Supply Chain Design Software Justification Center of Excellence Modeling Projects 21

22 Company Overview 1945: Founded by Ralph F. and Alice Stayer in Johnsonville, WI 1950 s: Sells bratwurst to grocery stores in surrounding communities 1970 s: Distribution throughout Wisconsin 1978: Ralph C. Stayer became President of the company and distribution expanded outside of Wisconsin 22

23 Company Overview Today Privately owned #1 Brand of Sausage in the U.S. Annual sales of over 360 million pounds 450 SKUs Distribute in all 50 states and export to over 30 countries including Japan, Korea, Canada and Mexico Over 1,300 employees in 3 states 23

24 Company Overview Products 24

25 Company Overview Manufacturing Plants 25

26 Company Overview Customer Locations 26

27 Company Overview Northeast DC Americold in Fogelsville, PA 27

28 Company Overview Southeast DC Americold in Atlanta, GA 28

29 Company Overview Western DC - Americold in Clearfield, UT 29

30 Company Overview Midwest DC - Preferred Freezer in Chicago 30

31 Company Overview CPU DC - Interstate Warehousing in Franklin, IN 31

32 Company Overview Johnsonville s Total DC Network 32

33 Supply Chain Design - Software Justification Why did Johnsonville purchase LLamasoft s Supply Chain Guru? It was past time to perform another network study: The last network study was done in 2005 Sales volume doubled since then No longer owned a network optimization tool: in 2005 used Manugistics NetWORKS Strategy and hired a consultant to run it Running out of major savings opportunities 2005 Network Optimization Implementation TMS Implementation Inbound Transportation 33

34 Supply Chain Design - Software Justification Why did Johnsonville purchase LLamasoft s Supply Chain Guru? Build in-house supply chain modeling competency Own the modeling software tool Johnsonville members trained on running the modeling software Refresh the model often with current demand and cost data Increase the frequency and speed of network studies Full network studies Small what-if s A single, credible source for all network design questions Optimize our end-to-end supply chain, from major raw material source to slaughter/manufacturing (line level) to customer DC Design the supply chain network of the future to meet Johnsonville s anticipated growth 34

35 Supply Chain Design - Center of Excellence Johnsonville s COE is comprised has three teams Steering Team Core Team Ad-Hoc Team Core Team Role: Building and running models and validating results Interpret model results and make recommendations to Steering Team Project portfolio management Charter process Prioritize the opportunities Project execution support Core Team members are the project team members Meet weekly 35

36 Supply Chain Design - Center of Excellence Core Team Members: Director of Logistics Manager, Cost Accounting Master Scheduler Engineering Manager (Capital Projects) Modeler Manufacturing Cost Analyst Modeler Delivery & Supply Chain Cost Analyst Modeler Transportation Manager Project Manager 36

37 Supply Chain Design - Center of Excellence Steering Team Members: VP Engineering CFO VP Operations Director Supply Chain VP R&D/Quality/Procurement Core Team Director of Logistics & Manager, Cost Accounting Steering Team Role: Review and approve recommendations Feedback and direction on project prioritization Meet every 2 months and as-needed 37

38 Supply Chain Design - Center of Excellence Ad-Hoc Team Members: Plant Managers (or designates) Plant Accountants Plant Engineers Co-Pack Manager Director Purchasing Environmental Engineer Ad-Hoc Team Role: Support of Building and validating models Assist in determining feasibility of output, defining the tradeoffs and fixed cost impact Project implementation 38

39 Supply Chain Design Modeling Projects Projects Since Obtaining LLamasoft Supply Chain Guru Distribution Center Network Sheboygan Falls Plant Warehouse Capacity Modeling Johnsonville s End-to-End Supply Chain Building-out the model Baseline Optimized Baseline Optimized/Unconstrained Baseline Determine next projects from priority list 39

40 Thank you & now Q&A