Professional Documents
Culture Documents
to satisfy customer
requirements
Northern
Cal OAUG Training Day
Sridhar Hoskote
Partner, Inspirage
LLC
January
21, 2009
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 1
Agenda
Introduction
Business Challenges
Supply Chain
Need for System Support
IO implementation
Integrating IO with constrained ASCP
Cutover process
Results and Summary
Q&A
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 2
Page 3
Inspirage Customers
Copyright Inspirage LLC, 2008. Private and confidential. All rights reserved
Page 4
S&OP
DM
Demand
Management, Stats
Forecast, Multi-tier
Collaboration
Workflow, AF/DM,
Chaining, Member
Management
CP
Trading Partner
Collaboration
SNO
Strategic
Sourcing
IO
Inventory
Strategy
PS
Detailed
Scheduling
GOP
Schedule,
Un-schedule orders
Schedule orders
Collect Planning
Data
ASCP
Consume
Forecast
Constrained /
Optimized Planning
ERP
Release orders
Distribution/ Service
Parts Planning
Copyright Inspirage LLC, 2008. Private and confidential. All rights reserved
SO History
Page 5
Introduction
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 6
2006
2007
Summer 08
November 08
Gl
o
Pr ba
om l O
is rde
in r
g/
Pi
lo
tC
P
iz
at
io
n-
In
v
Ph ent
as or
e yO
2
pt
im
iz
at
io
nIn
v
Ph ent
as or
e yO
1
pt
im
Or
pr acle
od E
uc xe
ts cu
tio
n
Co
ns
tra
in
ed
AS
CP
Oracle footprint
Feb 09
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 7
Business
Challenges
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 8
Business Challenges
Customers
Scheduled Ship
Date
Request Date
14 wks LT
Page 9
Business challenges
Not able to satisfy requirements by request date with
current inventory levels
Need to determine and add inventory strategically
Need flexibility in using common materials into large
number of finished goods
Customers do not always provide enough lead times
Lead times can be up to 14 weeks
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 10
Business challenges
Forecast accuracy and demand stability are quite poor
Supplier delivery performance contributes to
uncertainty
Need to rely upon key trading partners to fulfill
demands
Exploit the natural build lead times to push inventory
away from finished goods
Complex supply chain structure makes it very difficult
to plan for inventory levels
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 11
Supply Chain
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 12
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 13
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 14
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 15
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 16
Multiechelon
Y
B
A
A
I
E
D
J
Pooling
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Postponement
Page 17
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 18
Modeling
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 19
Modeling
Demand Variability
Via simple
probability
distribution
of lateness
Lead Time
Variability
Strategic
Strategic
Inventory
Inventory
Service
Levels
Page 20
Modeling
Demand Uncertainty
MAPE calculated by comparing history to actual
Default MAPE where there was no history
Varied MAPE to calculate reasonable inventory levels
Supplier Delivery Performance
Set up dummy supplier
In IO plan all purchased parts were sourced using above
dummy supplier
Lateness distribution associated with dummy supplier
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 21
Implementing
Inventory
Optimization
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 22
Page 23
Page 24
Plan options
IO runs with 36 weekly buckets and no period
buckets
Penalty factors chosen to derive stable results
No existing supplies or scheduled receipts
considered
DP scenarios used to feed MAPE numbers
into the plan
Enforce service level plans
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 25
Enhanced postponement
X
X
A
LT= 65
days
LT= 5
days
LT= 65
days
LT= 5
days
Postponed SS is in
matched sets
Both A and B will get SS
based on max LT which is A
NORMAL POSTPONEMENT
Postponed SS is based on
LT for each component
A and B will get SS based
on their LTs
ENHANCED POSTPONEMENT
Page 26
Page 27
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 28
Plan facts
Plans very intricate and a long supply chain up to 120
days cumulative lead time.
Each end item can have to 300 items
We avoid planning all substitute and alternate paths in IO
Demand variability modeled via MAPE measure
Postponement used to push safety stocks through all levels
of BOM (max of 8 levels)
Used enhanced postponement logic lead time specific
safety stock for sibling items
We use supplier lead time variability to model delivery
performance
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 29
Plan facts
Enforce Service Level plans
IO plans approximately 7300 items in 2.5 hours
Safety Stocks calculated for about 4000 items
Plan horizon is 36 weeks
Demand variability specified via MAPE
Includes both demand and supplier LT variability
Do not consider scheduled receipts
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 30
IO Integration with
Constrained ASCP
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 31
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 32
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 33
Cutover Process
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 34
IO plans
Page 35
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 36
ASCP plans
Constrained ASCP
Constrained ASCP
Plans
Plans
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 37
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 38
Results &
Summary
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 39
Results
The overall safety stock planned is in line with expectationsapproximately 6 weeks of inventory in the system
The inventory value matches with the current levels in plan with
no postponement
Plans with postponement shows improvement up to 20% in
inventory value
Satisfaction of orders by customer request date is expected with
a comprehensive execution of IO plans
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 40
Summary
Needed a comprehensive inventory planning system to plan
and satisfy requirements by request dates
Utilized Oracle Inventory Optimization to plan inventory
levels
Used demand and supplier lead time variabilities to
influence safety stock requirements
Significantly improved customer fulfillment and inventory
reduction
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 41
Sridhar Hoskote
Sridhar.hoskote@inspirage.com
Copyright Inspirage LLC, 2009. Private and confidential. All rights reserved
Page 42