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Miscellaneous

John Vande VateSpring, 2007

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Agenda

• Bull Whip• IT• Summary• Project Presentations

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The Bullwhip Effect…

… describes the phenomenon in which order variability is amplified as it moves up the supply chain from end-consumers through distribution and manufacturing to raw material suppliers.

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Example

Procter & Gamble: Pampers• Smooth consumer demand• Fluctuating sales at retail stores• Highly variable demand on distributors• Wild swings in demand on manufacturing• Greatest swings in demand on suppliers

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IllustrationConsumer Sales at Retailer

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IllustrationRetailer's Orders to Distributor

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IllustrationDistributor’s Orders to P&G

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P&G's Orders with 3M

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IllustrationConsumer Sales at Retailer

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Efforts to Resolve• CPFR: Collaborative Planning, Forecasting &

Replenishment– Share forecasts, plans for promotions, etc.

• VMI: Vendor Managed Inventory– Let the supplier manage the inventory (consigned to

the customer)• Visibility:

– ASN (Advanced Shipment Notices)– Track & Trace– Event-driven notifications

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Events Opposing

• SKU Proliferation• Shorter product life cycles• Consignment Inventory practices• Globalization• Tight global transport capacity• Supply Chain Disruptions

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IT• Y2K Threat helped justify revamp of corporate

software• By 2000 companies were spending nearly 50% of

capital investment $ on technology, up from 30% in the early 90’s.

• Consequences– Internet bubble and ill-considered investments in IT

applications much of it in the SC arena– Huge investments in ERP systems– Emergence of the CIO role– Prominence of Supply Chain Mgt

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Post Mortem• Consolidation in ERP providers

– SAP and Oracle• Standardization and Integration

– Diminishing role for CIO• Evolving cloud of bolt-on technologies

– APS: Advanced Planning & Scheduling Systems• I2, Ilog, Manugistics, Aspen Technologies, SAP, Oracle

– S&OP: Sales & Operations Planning• Balance supply and demand• Interlace, Steelwedge, Logility, …

– TMS: Transportation Management Systems• Consolidation, Carrier Selection, Routing, Tracking, Invoice Audit, Labeling, Export compliance, …• I2, Manugistics, Red Prairie, Tranzact, …

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More Bolt-ons

• WMS: Warehouse mgmt systems• CRM: Customer relationship management• Procurement solutions• …

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Evolving Architecture

• Layered approach– Decomposes complexity– Reuse functionality– Separate evolutin– Less reliance on single provider

Client

Presentation Layer

Business Logic Layer

Data Layer

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Projects• Deliverables:

– Presentation to the Class– Presentation to the Client– Documented CD to the client and to me

• Presentation to the Class < 30 minutes– What is the Issue and business context– What value does your approach provide– How does it fit/fail to fit the context– Some technical details (and backup slides)– A proposed exam question

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Projects

• Presentation to the Client– Can be combined with class presentation or

separate– Can be via teleconference– What the client wants– Focus on value, fit, requirements and

limitations– Be prepared to discuss techniques– CLARITY

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Projects• Documented CD

– Index and explanation– Data– Models– Tools– Presentations– …

• Imagine a similar team will be asked to extend the project. What will they need?

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Some Basics

• Remember to do the simple thing first• Process is as important as result• Fit with context is more important than

“optimality” and “technology”• Is your process worth the effort, as simple

as possible, sustainable, supportable, …• Why, Value, What,

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Course Review• Introduction to modes and transportation rates

– There are economies of scale in transportation costs– Consolidation helps us capitalize on these economies of

scale• Introduction to Finance & SCM

– Focus on Working Capital• Transportation & “Deterministic” Inventory

– The “magic” of consolidation– The EOQ: Balancing Transport & Inventory costs

• Consolidation– Multi-Stop– Load-Driven

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Review• Location: • Retail Pricing: Pricing what you have• Sport Obermeyer: Sourcing what you need• Inventory Management:

– Techniques– Pooling– Postponement

• SCM: BMW Case Study• IT: Lightening overview• Projects

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Projects• April 12: NS

– Mikac– Lai– Dayagi

• April 17: Coca Cola– Solveling– Lee– Kwan

• April 19: XYZ & GE Appliances– Meidl– Green– Tandon

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Projects

• April 24: GE Energy– Walker– Sanchez– Gupte

• April 26: BMW & Children’s Hospital– VPS– Ship-to-Average– Children’s Hospital