SOMOSIERRA, Jovit S.

BSIT 2A

IT 120: Fundamentals of Business Analytics

MIDTERM EXAM

Instructions: Kindly read and understand carefully the article below (link). You can
read related article. Please indicate your references after your answer.

1. What are the problems indicating in the article?

Lumileds, a global lighting solutions company, has indeed faced several manufacturing
challenges. One of the primary difficulties was future planning. It was hard for the company to
identify what to plan for the next following weeks, months, or years. Their absence of a long-
term strategy impacted their efficiency (IBM, 2021).

Another significant challenge is balancing the optimization of inventory with the need for
just-in-time manufacturing runs. Lumileds’ products are highly configurable, means it can
customize the products they manufacture in many different ways based on the customer’s
needs, such as orders from customers that might have combinations of over 4,000 product
performance characteristics. This complexity in their supply chains made it difficult to locate and
process materials quickly. Lumileds is dedicated to confirming and scheduling product runs
within 48 hours of receiving an order, adding to the pressure (IBM, 2021).

These challenges resulted in longer runtimes, slower delivery timelines, and higher costs for
the company (IBM, 2021).

References:

IBM. (2021). Lumileds Holding B.V. Optimizes Business with Fact-Driven Decisions. Retrieved
from https://www.ibm.com/case-studies/lumileds-holding-bv-optimizes-business-with-
fact-driven-decisions
2. How Lumileds give solution (two components of solution by IBM).

Lumileds implemented two components of IBM’s solution to address its manufacturing

challenges.

The first component is IBM Decision Optimization Center software. This software
enables Lumileds to manage its worldwide demand-supply chain matching efforts. With the
assistance of this software, Lumileds has the capability to make data-driven choices concerning
the types of production runs to be executed across its global factories. It focuses on the balance
between optimizing the inventory and implementing manufacturing processes that operate on a
just-in-time basis (IBM, 2021).

The second component is IBM ILOG CPLEX Optimization Studio software. This software
aids in the coordination and administration of the intricate process of identifying and processing
materials for orders that involve over 4,000-plus product performance characteristics. This
software has been used by Lumileds for years to manage this challenging task (IBM, 2021).

These tools have assisted Lumileds in tackling their manufacturing issues by creating a
smoother and more efficient procedure. They have allowed Lumileds to make smarter choices,
enhance their inventory, and refine their manufacturing operations (IBM, 2021).

References:

IBM. (2021). Lumileds Holding B.V. Optimizes Business with Fact-Driven Decisions. Retrieved
from https://www.ibm.com/case-studies/lumileds-holding-bv-optimizes-business-with-
fact-driven-decisions
3. What do you mean when we say “Supply Chain”?

A Supply Chain refers to the whole system of making and delivering a product or
service, starting with getting the materials needed and ending when the product or service
reaches the people who use it (CFI Team, 2023).

The supply chain consists of different parts that work together to create products that
people buy. It includes the ones who produce or cultivate the raw materials for products,
vendors who purchased and sell materials, and manufacturers who transform these materials
into finished goods. Additionally, it involves logistics providers who transport these goods
globally, supply chain managers who ensure smooth operations from planning to sourcing raw
materials, production, delivery, and handling returns. It also includes retailers who offer goods
for sale either digitally or in physical stores, and finally, the consumers who purchase and utilize
these goods and services (McKinsey, 2022).

In summary, it covers all every step in the process of getting a product or service from
the provider to the consumer, including obtaining raw materials, production, shipping, storing,
and delivering.

References:

CFI Team. (2023, April 17). Supply Chain. Corporate Finance Institute. Retrieved October 10,
2023, from https://corporatefinanceinstitute.com/resources/management/supply-chain/

McKinsey. (2022, August 17). What is supply chain? McKinsey & Company. Retrieved October
10, 2023, from https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-
is-supply-chain
4. What are the results of the Lumileds.

The implementation of the IBM Decision Optimization Center software has greatly
enhanced the way Lumileds operates. One of the key outcomes is a 50% reduction in the time
it takes to create sales and operations plans. This efficiency has allowed Lumileds to respond
more quickly to market changes and customer demands (IBM, 2021).

In addition, the software has enabled Lumileds to optimize their resource planning and
utilization. This optimization has resulted in significant reductions in delivery times, ensuring
quicker product deliveries to customers. This not only improves customer satisfaction but also
gives Lumileds a competitive edge in the market.

Furthermore, the software has helped Lumileds maintain low operational costs. This is
achieved through centralized inventory management, which reduces the costs associated with
holding and managing stock. Additionally, the implementation of just-in-time manufacturing
practices enhance efficiency by producing goods exactly when they are required during the
production process. These cost-saving measures contribute to Lumileds’ overall financial health
and sustainability (IBM, 2021).

References:

IBM. (2021). Lumileds Holding B.V. Optimizes Business with Fact-Driven Decisions. Retrieved
from https://www.ibm.com/case-studies/lumileds-holding-bv-optimizes-business-with-
fact-driven-decisions