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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 PlanningThe Theory and Best

Practice

Define Supply Chain Planning

OEM Manufacturer Distributor Dealer Retail Consumer

Production Planning

Replenishment Planning

Demand Planning

ERP Systems

Supply Chain Planning

OEM Manufacturer Distributor Dealer Retail Consumer

Art and a ScienceDemand 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 Slow Erratic

Fast Positive Trend Negative Trend

ObsoleteNew Dying

Cyclical

variation

External factors

FORECAST COMPONENTS FORECAST COMPONENTS

Trend

Forecast Components

Base level

Year Two

Year One

Seasonality Profiles

Manual Intervention

• Forecast

adjustments

• Reason codes

Forecasting Demand

Some Additional Considerations

Automatic Demand Filtering

Flier?

0

10

20

30

40

50

60

1 3 5 7 9 11 13 15 17 19 21 23

Period

Dem

and

1998 1999 2000 2002 2003

Volume Density

Theory of Replenishment Planning

How do you classify an Item from an Inventory angle?

Interactive

Multi Dimensional Pareto Analysis

ABC based on VolumeABC based on FrequencyABC based on Turnover

STOCK TURNOVER

FREQUENCY

The Role of Buffer Stocks in the Supply Chain

TheCushion

Typical Sources of

Supply

Stocks The Customer

Demand

Buffer Stock

• Forecast accuracy

• Target service level

• Replenishment frequency

• Lead time & its variability

• Seasonality

The amount of safety stock held to cover random variations in demand

What is the Relationship between Inventory and Service Level?

92% 94% 96% 98% 100%

Service Driven Buffer

• Fixed order quantity

• Fixed order cycle

Basic Systems For Stock Reviews

TIME

THE FIXED ORDER QUANTITY SYSTEM

**REORDERQUANTITY (Q)

LEAD TIME(L)

MAXIMUM RATE OF USAGEWITHOUT STOCK-OUT

Q Q

STOCK LEVEL

*REORDER LEVELPOINT (A)

EXPECTED RATEOF USAGE (R)

BUFFER STOCKLEVEL

*ROL= Forecast over lead -time + buffer stock

**ROQ can be determined by EOQ or Coverage Analysis

THE FIXED ORDER CYCLE SYSTEM

*ORDER UP TO LEVEL

**REORDER QUANTITY

Q1

STOCK LEVEL

BUFFER STOCKLEVEL

TIME

Q2

Q2

Q3

Q3

LEAD TIME (L)

LEAD TIME (L)

REVIEW PERIOD (T)

REVIEW PERIOD (T)

Cover period

**REORDER QUANTITY

*OL=Forecast of Demand in cover period + Buffer Stock**ROQ=Order Level-Effective Stock + Back Orders

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 Forecasts

• Branch Demand

• Branch Forecasts

• Branch Orders

• Branch Order Schedules

Warehouse Stocks

• Warehouse Stocks Only

• National Stocks

Branch forecasts and order

schedules based on local

demand

Recent Supply Chain Planning

Industry Trends

eCollaboration

OEM Supplier Distributor Warehouse Retail

Supplier Collaboration

Internal Collaboration

Customer Collaboration

Information Flow

Product Flow

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 PlannerOUR SUPPLY CHAIN

CONCEPT

Local Optimisation

JDE

SAP R/3

SAP R/3

Movex

Oracle

Baan

Inhouse

IFS

IFS

IFS

WEB Shop.com

ERP Myth

JDE

Inhouse

Supply Chain Planning

Global Warehouse

Divisional Warehouse

ShopManufacturing Supplier

Manufacturer

Supplier

Region Warehouse

Central Warehouse

Sub Supplier

Store

Syncron SCP and eCollaboration

ForecastingReplenishmentProduction plan

POS data

ForecastStock level (safety stock)Replenishment plan

ForecastStock level (safety stock)Replenishment plan

ForecastReplenishment planProduction planningCapacity/material need

ForecastReplenishment planProduction planningCapacity needMaterial need

ForecastReplenishment planProduction planningCapacity needMaterial needIntegration

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”