GUARANTEE CUSTOMER SERVICE LEVELS - INCREASE PROFIT AND ROA Profit Optimizing the Manufacturing Chain MANUFACTURING SECTOR GAINS Manufacturing Success Most successful manufacturers have already enacted serial improvement initiatives to decrease costs and improve through- put while preserving customer service. In many cases, additional cost reductions prove unsustainable due to requirements for significant manual planning efforts, expediting, risk of customer dissatisfaction or some combination thereof. To unleash the next level of improvement, robust optimization methods are required that consider a comprehensive set of parameters, constraints, and costs across the enterprise utilizing techniques that cannot be emulated manually or in ‘2-dimensional’ procedures like Excel or typical ERP rules-based procedures. Since its inception over 40 years ago, GAINSystems has consistently focused on optimization-driven innovation in its solutions and management methods. Our product, GAINS TM , (General Adaptive, INventory Solution), is a direct result of that focus. GAINS is a leading edge planning and optimization solution that provides companies with dynamic, profit-optimized inventory policies and production schedules. Based on such profit-optimized policies and plans, executives are able to document the following in addition to any improvements from prior initiatives: ▶ 20-30% decrease in working capital requirements ▶ 10-20% improvement in customer service levels and dra- matic reductions in stockouts ▶ 30-40% improvement in ROA ▶ 2-4% improvement in pre-tax profits The leading manufacturer and marketer of bowling and amusement products. ▶ 20% reduction in active inventory in first 8 months ▶ Raised customer service levels from 91% to 95% ▶ More than 80% reduction in back orders ▶ 45% reduction in receiving activity over prior year “The GAINS project provided one of the greatest ROI of any IT project in the history of the company…” – President, QubicaAMF Manufacturer of handling and measuring equipment for fluid & viscous materials ▶ 26% Reduction in Finished Goods Inventories. ▶ 100% complete order to customer date fill rate at 98%. ▶ Provides near real time visibility across the entire enterprise. “Not only have we reduced inventories and operating costs with GAINS, but it has provided us with a funda- mental S&OP support solution across the enterprise. The S&OP tools that bolted on to our ERP systems provided data, but GAINS provides accurate and profit optimal analysis. That is critical for both short and long term strategic and executive decision making.” – Vice President, Operations. continue
Transcript
GUARANTEE CUSTOMER SERVICE LEVELS - INCREASE PROFIT AND ROA
Profit Optimizing the Manufacturing Chain
M A N U F A C T U R I N G S E C T O R
GAINS Manufacturing Success
Most successful manufacturers have already enacted serial improvement initiatives to decrease costs and improve through-put while preserving customer service. In many cases, additional cost reductions prove unsustainable due to requirements for significant manual planning efforts, expediting, risk of customer dissatisfaction or some combination thereof. To unleash the next level of improvement, robust optimization methods are required that consider a comprehensive set of parameters, constraints, and costs across the enterprise utilizing techniques that cannot be emulated manually or in ‘2-dimensional’ procedures like Excel or typical ERP rules-based procedures.
Since its inception over 40 years ago, GAINSystems has consistently focused on optimization-driven innovation in its solutions and management methods. Our product, GAINSTM, (General Adaptive, INventory Solution), is a direct result of that focus. GAINS is a leading edge planning and optimization solution that provides companies with dynamic, profit-optimized inventory policies and production schedules. Based on such profit-optimized policies and plans, executives are able to document the following in addition to any improvements from prior initiatives:
▶ 20-30% decrease in working capital requirements ▶ 10-20% improvement in customer service levels and dra-matic reductions in stockouts ▶ 30-40% improvement in ROA ▶ 2-4% improvement in pre-tax profits
The leading manufacturer and marketer of bowling and amusement products.
▶ 20% reduction in active inventory in first 8 months
▶ Raised customer service levels from 91% to 95%
▶ More than 80% reduction in back orders ▶ 45% reduction in receiving activity over prior year
“The GAINS project provided one of the greatest ROI of any IT project in the history of the company…”
– President, QubicaAMF
Manufacturer of handling and measuring equipment for fluid & viscous materials
▶ 26% Reduction in Finished Goods Inventories.
▶ 100% complete order to customer date fill rate at 98%.
▶ Provides near real time visibility across the entire enterprise.
“Not only have we reduced inventories and operating costs with GAINS, but it has provided us with a funda-mental S&OP support solution across the enterprise. The S&OP tools that bolted on to our ERP systems provided data, but GAINS provides accurate and profit optimal analysis. That is critical for both short and long term strategic and executive decision making.”
GAINSystems, Inc. 1200 North Ashland Avenue • Suite 300 • Chicago, IL 60622
Tel: 872.206.8500 • www.GAINSystems.com
Manufacturer of products for the automotive, diesel, agricultural, industrial and specialty filter markets
“By using GAINS to drive our factory with optimized inventory policies and customer service levels, we were able to reduce set ups by 38%, exceed our targeted customer service levels, and drop over a $2.5 million to our bottom line in the first year. I was amazed at how quickly GAINSystems was able to install and interface their technology to our ERP solution so that we were live and tracking financial benefits in 8 weeks.”
– Distribution Manager, WIX Filters
Demand and Supply Analyzed Continuously GAINS is capable of assessing the significance of demand or supply changes in near real time. It dynamically determines which changes have a material impact on the company’s ability to achieve targeted customer service levels for each and every order. Where stockout or surplus is likely, GAINS dynamically suggests revised inven-tory policies and/or replenishment plans that ensure customer service levels are achieved at the lowest total cost.
Example of the GAINS Forecast Detail Screen
Multi-Echelon Planning OptimizationDriven by total (independent and dependent) demand, GAINS dynamically determines the profit-optimal stocking strategy for each SKU at every level in both the BOM (e.g., raw materials, components, semi-finished, and finished items) and, where applicable, distribution network. The method accounts for delivery time goals as well as inventory and set-up costs so that targeted customer service levels are achieved with least total cost.
Production Plan OptimizationDriven by customer demand, GAINS ensures production policies, schedules, and set-ups are profit optimally synchronized to customer orders, considering all constraints, dependencies, comprehensive errors, total annual costs, and business rules, so that targeted customer service levels are achieved at least total cost. This can include strategic pre-building to accommodate seasonal demand with less-flexible production constraints.
Make-to-Stock/Make-to-Order (‘Postponement’) Optimization GAINS dynamically determines profit-optimal trade-offs between various inventory policy scenarios. This same capability allows management to simulate such trade-offs to assist with tactical and strategic planning in support of SI&OP (Sales, Inventory, & Operations Planning). For example, if one core item is pack-aged in multiple ways, it may be worthwhile to nearly-complete production and then package-to-order but only for lower-volume items; GAINS optimally determines these thresholds.
Examples of GAINS Manufacturing Optimization CapabilitiesExample Production Schedule Optimization Screen
Optimization Capabilities Only GAINS Provides
1. Dynamic Forecast Model Selection that automatically tests for pattern plausibility and accuracy to provide an objective demand plan baseline and eliminate as much human bias as possible.
2. Dynamic Analysis of Supply and Demand for every SKUL (SKU by Location) across the enterprise that consider all error sources including the variability in supply and user variance from plan. The goal is to achieve precisely the cost-minimizing or profit-maximizing Service Level (not more or less).
3. Profit-Optimized Inventory Policies (e.g., Replenishment Order Sizing & Safety/Service Stock) calculated at the SKUL level, considering total annual cost (e.g., change-over versus carrying), comprehensive error, targeted service levels, BOM demand, and production constraints.
4. Leading Indicator, Extrinsic Variable, and Viability Analysis to ensure forecasts and plans are not just ‘rearward-looking’ but incorporate trade partner data (e.g., customer forecasts, POS data) as well as macro data (e.g., housing starts, interest rates).
5. Multi-Echelon Inventory Optimization (MEIO) algorithms that determine whether to stock items and at what service level. These solve for interdependencies within the bill-of-materiel (BOM) & among locations to devise inventory & postponement strategies while meeting customer delivery expectations at minimum total cost.
6. Dynamic Production Optimization that automatically creates capacity and material-feasible Master Production Schedules that sequence SKU work order requirements optimally given change-over costs, inventory carrying costs, and on-time delivery goals; also provides strategic determination of target capacity, trade-offs of pre-build versus overtime, etc.
To learn more how GAINS can Profit Optimize your supply chain -Visit our website: www.GAINSystems.com, orEmail us: [email protected]
