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Creating Value in Your

Organization Through
Optimal Supply Chain
Design

What Well Cover


Business conditions that are driving a change in
supply chain management
How leading companies are addressing these
business changes
Supply chain design use-cases
Organizing for success:
Technology
People
Process

Client examples
Question and answer session

The Business Challenge

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The Supply Chain Challenge

Volatility and change is


the new normal
External Factors

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Internal Factors

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?

Inventory
How much inventory do I need?
How much does it cost to
increase my service levels?
Where should I stock each product?

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?

There is
Seemingly No
Limit to the
Questions

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?

Product Demand
How are customers buying our
products?
How should I segment different
customers and products?
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?

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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?

The Third Discipline of


Supply Chain Management

Supply Chain Management


Design

Network Strategy
Route Modeling
Demand Segmentation
Enterprise Simulation
Inventory Policy Analysis
Product Flow-path Design
Service-level Optimization

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Planning

Enterprise Resource Planning


Production Planning & Scheduling
Inventory Management & Planning
Sales & Operations Planning
Demand Forecasting
Sourcing & Procurement
Integrated Business Planning

Execution

Transportation Management
Warehouse Management
Workforce Management
Yard Management
Tracking & Tracing
Global Trade Management
3rd Party Scheduling & Billing

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

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Leaders have created centers of


excellence and put in place an
integrated supply chain design
platform and business process

An Integrated Supply Chain Design


Platform Enables Businesses To:

Quickly generate models to help visualize and


analyze the current supply chain operations

Validate potential supply chain changes and


continuously test new what-if scenarios
Optimize the supply chain for the right balance
between cost, service, sustainability, & risk
React rapidly to unplanned disruptions, market
fluctuations, or new business strategies

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A System for Continuous


Supply Chain Design
CURRENT OPERATIONS

FUTURE OPERATIONS

Analysis of Existing Supply Chain

Strategy for New Supply Chain

VISUALIZATION

SCENARIO ANALYSIS

RAPID RESPONSE

What is my current
supply chain profile?

What if we try this?


What if this happens?

How should I react


to an unplanned event?

Supply Chain Optimization & Simulation Solvers


Sourcing & Production Footprint Product Flowpaths Transportation Routes Inventory Placement

Reference Data

Enterprise Data

Transportation Costs Risk Metrics Labor Rates


Facility Costs Emissions Benchmarks

Parts Bills of Material Costs Facilities


Suppliers Demand Lead Times - Capacities

Supply Chain Design Use Cases

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What Does My Supply Chain Look Like?

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Six Regional Distribution Centers

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Customers Throughout the Country

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Widely Varying Demand by Customer

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Distribution Center Reach

8 hour service
4 hour service
2 hour service

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Distribution Center Reach

8 hour service
4 hour service
2 hour service

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As-Is Costs and Operations

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Product Flowpath Optimization

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As-Is Supply Chain Structure

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New Optimal Structure

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New Transportation Routes

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Port Flow Balancing

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Cost-to-Serve Optimization

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Capacity Modeling & Optimization

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Supply Chain Segmentation

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Safety Stock Optimization


Multi-Echelon Safety Stock Optimization

Transport Time
Variability

Transport Time
Variability

Increasing OTIF to 97%


increases working capital
by 14% while Decreasing
OTIF to 93% decreases
working capital by 10%

Transport Time
Variability

$
$

$
Finished Goods
Holding Costs

Sourcing
Variability

Production
Variability

Demand
Variability

Demand & Lead Time Profiling


Key Benefits and Usage

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Multi-Echelon Safety Stock optimization allows the model to achieve savings


in working capital while simultaneously maintaining or increasing service
level to stores

Scientifically quantify cost or benefits of service level, sourcing, and


contractual lead time agreement changes.

Combine with network optimization to set optimal inventory planning


policies. ie Reorder point, order quantities by site by product

Model can automatically profile historical sales data or use forecast and
forecast error as inputs

IO Select functionality allows automated filtering of products with nonnormally distribution demand

Organizing for Success


Technology
Process
People

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Achieving Excellence in Design

TECHNOLOGY

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PROCESS

PEOPLE

Technology
A System for Continuous Supply Chain Design
CURRENT OPERATIONS

FUTURE OPERATIONS

Analysis of Existing Supply Chain

Strategy for New Supply Chain

VISUALIZATION

SCENARIO ANALYSIS

RAPID RESPONSE

What is my current
supply chain profile?

What if we try this?


What if this happens?

How should I react


to an unplanned event?

Supply Chain Optimization & Simulation Solvers


Sourcing & Production Footprint Product Flowpaths Transportation Routes Inventory Placement

Reference Data

Enterprise Data

Transportation Costs Risk Metrics Labor Rates


Facility Costs Emissions Benchmarks

Parts Bills of Material Costs Facilities


Suppliers Demand Lead Times - Capacities

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Process
Identifying and Prioritizing Initiatives

Each initiative is mapped


onto the matrix according to:

Relative business benefit


Relative ease of implementation

This process is in itself an


extremely effective way of
promoting valuable
interactive and focused
discussion among the team
Prioritization Matrix
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Process
Identifying and Prioritizing Initiatives
1. Baseline and greenfield
2. Strategic sourcing
3. M&A analysis
4. Cost to serve analysis
5. End user segmentation
6. Omni-channel analysis
7. GHG scenarios
8. Raw material staging
9. Production capacity planning
10. S&OP integration
11. Inventory optimization

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Process
The Supply Chain Design Roadmap

Use the prioritization matrix to develop a project


roadmap from which to set team modeling priorities
Change Initiatives

Q3

2014

Q4

Q1

Q2

2015

Q3

Q4

Responsibility

Initiative 1
Initiative 2

Initiative 3
Initiative 4
Initiative 5
Initiative 6
Initiative 7
Initiative 8
Initiative 9
Initiative 10
Initiative 11

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Allocated sponsor from


within the top team responsibility to
instigate agreed action
in agreed time.

People
Supply Chain Design Mastery Progression
Program Leader

Sr. Analyst

S
C

Modeling & data


integration
Analytical &
Technical skills

Business Acumen
Influencing Skills

Subject Matter Expert


Project Delivery
Tech Team Assignment
Training/Career Coaching

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Project Management

Training &
Presentation skills
Project Portfolio
Management

New/Advanced
Technologies

Project Shadowing

M
a
s
t
e
r
y

Onboarding

D
e
s
i
g
n

Thought
Leadership

Jr. Analyst

Engagement
Leadership

New-hire

People
Skills Roadmap Example

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People
Competency Matrix Template Example

Track skills across


technologies,
industries, and
leadership metrics
Establish career track
expectations for
positions within center
of excellence
May have technical and
leadership tracks within
center of excellence
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Supply Chain Design Maturity Levels


Stage 2

Stage 1
-

Ad hoc
Project Centric
Outside Expertise sought
Loose, if any connection
across functions, businesses,
GEOs

People

Individual analysts have fundamental


skills; some may be advanced. Roles
and standards are not defined.

Team has common set of basic knowledge and


skills. Core skills and competencies are identified.

Advanced skills applied. Defined hiring and


growth path for analysts. Analysts are seeded
throughout organization.

Process

Processes, methodologies
institutionalized
Businesses drive initiatives,
not projects
Embedded design teams with
businesses, GEOs
Supply Chain design skills and
career paths defined

Project focus. Select best practices


may be used, but are applied
inconsistently. Templates are created
and used by individuals.

Business unit focus. Templates, guidelines and


standard examples have been created. Best
practices are actively applied.

Enterprise focus. Practices are followed


consistently throughout organization. Enterprisewide portfolio management in place.

Technology

Processes, methodologies
defined COE created
Project portfolios
Formal collaboration across
functions, businesses, and
GEOs
Internal expertise initiated

Stage 3

Modeling and optimization software


may be used, but by individuals or
small team. No corporate
architecture in place.

Modeling and optimization software is used.


Some data management and automation may be
in place.

Comprehensive suite of modeling and


optimization tools in place. Sophisticated data
management and automation implemented.

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Thank You
Booth # 706
www.llamasoft.com
info.latam@llamasoft.com

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