supply chain analytics with simulation

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Supply Chain Analytics

Michael J RiceDirector | Manufacturing & Logistics

Eastern US & Canada

mrice@promodel.com

O: 207.406.4993

M: 845.781.3514

Andy SchildDirector | Manufacturing & Logistics

Central US & Canada

aschild@promodel.comO: 585.398.8178M: 585.507.8499

Mike TownsendDirector | Manufacturing & Logistics

Western US & Canada

mtownsend@promodel.com

405.850.7610

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ProModel Story ◦ Founded in 1988 by Dr. Charles Harrell.

◦ Developed and distributed easy to use simulation products

for use of standard PC’s with focus on manufacturing/logistics

◦ Expanded Simulation to the Planning Domain in the late 90’s

◦ Expanded Simulation to Custom Decision Support Applications in early 2000’s

3 Major US Offices◦ Allentown, PA – Admin, Marketing & Sales

◦ Orem, UT - Development, PM, Sales & Support

◦ Ann Arbor, MI – Development, PM & Sales

90 Direct employees

24+ VARs with offices world wide.

Over 7000 users world wide, 50%+ Fortune 500

Main Offices Remote Employees

24 VARS

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ProModel Provides Simulation-Based Decision Support Solutions that

allow organizations to understand system performance in a low-risk

environment

ProModel combines a Powerful Suite of Simulation Technology with 28

years of delivering training and consulting solutions enabling our

clients to:• Maximize Throughput

• Control Operational Costs

• Increase labor productivity

• Understand effects of budget system constraints (bottlenecks)

Understand the Impact of Critical Business Decisions…

Prior to Implementation

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Definition of analytics

“Data analytics is the science of examining raw data to help draw conclusions about information. It is used in many industries to allow companies and organization to make better business decisions and in the sciences to verify (or disprove) existing models or theories.”

Definition of supply chain

” the sequence of processes involved in the production and distribution of a commodity.”

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• Seasonal Fluctuations

• Oscillations in demand / “Bullwhip” effect

• Ineffective forecasting methods/data

• Cost of holding inventory vs. cost of stock outs

• Logistics Systems

• Limited visibility to suppliers

• Customer satisfaction

• Responsiveness to market changes

• Synchronizing ordering to inventory levels

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Forecast VolumesDesign SpecsShift Setups

Productivity RatesVolume SplitsConversion Factors

Process Throughput% UtilizationProductivity ImpactKanban Requirements

Headcount PlanningEquipment RequirementsYard Capacity

“In other words, we convert information we do have into the answers we want to have…”

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Dynamic platform that predicts/explains current and/or future behavior

Accounts for Variability

Real World Complexities and Constraints

Reports on Key Metrics Throughput, inventory, lead times and resource utilization

Reduce Risks Test changes prior to implantation

Quantify costs and changes to flow

Quantify the impact of change

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Variation: “Averages” are Dangerous

How muchRisk can

you affordto take?

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Trying to optimize a

complex supply

chain/logistic systems is

like trying to solve the

Rubik's cube.

Simulation can

help understand

the trade-offs!!

Maximize Resilience

Reduce Fulfillment Times

Right Size Inventory

Minimize CapEx

Interdependencies: The Domino Effect

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Supplier Disruptions

Equipment Failures

Resource breaks / days off

Staffing

Transportation Delays

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Facility Design

Slotting Analysis

Material Handling Analysis

Labor Analysis

Process Improvement Support

Throughput / Capacity

CapExValidation

Pick & Put-away Strategies

Effects of Seasonality

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System Logistics

Transportation Network Design

Supply Chain “Optimization”

Optimize Location of Facilities

Process Improvement Support

Material ReplenishmentStrategies

Determine Quantity of Facilities

Service Level

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• How Robust is the Supply Chain

• What are the dynamics of the supply chain?

• What strategies will best mitigate against undesirable effects?

• How will a supply chain react to fluctuations in demand?

• How will customer behavior affect supply?

• Financial Performance

• How can we improve system performance and cut costs?

• Supply Chain Design

• Placement factories, distribution centers. wholesalers, & retailers

• What inventory rules should be engaged at various places in the network?

• How Do we Minimize Risk

• Can Risks be mitigated?

• Can changes to the system be made without affecting supply?

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“Profits for your company can rocket upward if you achieve sufficient savings in supply chain costs. It's not uncommon for a concerted effort to yield annual savings of between US $2 million and $10 million, depending on the size of the company.” (Supply Chain Quaterly)

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OptimizeScenarios & KPI

Comparisons

Analyzethe Results

Visualizethe Process

• Demand & Mix• Process times• Qty Personnel• Qty Equipment• Yields• Batch Sizes

• Utilizations• Inventory Levels• Throughput• Lead Times• Costs

• Manufacturing Facility• Value Stream Map• Warehouse• Supply Chain• Business Process

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Large Big Box Retailer Distribution Center

Physical PILOT was underway testing a Flat Flow concept favored

by management

Additional VIRTUAL Simulation PILOT was run to validate results

Flat Flow Layout Original Layout

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Physical Pilot Results

Physical Pilot being tested in an actual facility under intense MANAGEMENTscrutiny yielded 17% productivity Improvement

Validated a spend of $1,000,000 x 6 facilities to recreate in all of their facilities

Simulation Pilot Results

ProModel modeled current (to validate model) and proposed designs

Surprisingly, model showed the OPPOSITE of the observed improvement

Model showed A LOSS in productivity (-2.4%) by implementing the proposed flat flow

After further study, it was realized that the initial gain in productivity was due to the “Hawthorne Effect”, i.e the intense scrutiny drove higher than normal levels of productivity among the worker.

Client was able to cancel the proposed $6M investment and led to the future mandate that all projects above specific $ values would be modeled and to validate the spend

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Multi-phased project to support new production facility

The focus of the study was to look at Line-Side & Market Place Inventory Levels, Reorder Points and Reorder Quantities while taking into account variable lead times from their supplier to minimize the WIP held onsite

The material handling types and quantities were analyzed to right-size the labor and equipment for the specified frequency of deliveries

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The Company was able to assess multiple scenarios around material replenishment strategies and assess their viability with regards to meeting production demands

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Company was able to

evaluate the scenarios and

understand how the

decisions they made

regarding replenishment

frequencies, and amounts

affected the subassembly

availability Line-side, over

time

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Simulation Analysis was able to

show the utilization levels of the

various material handling

equipment (Tuggers & Fork

trucks

Model showed that the

replenishment strategy that was

most cost effective and

manageable from a supplier

standpoint would require an

additional resource

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Takeaways:◦ Established minimum SAFE level of inventory the client could

keep Lineside and in their Marketplace to support assembly 50% reduction in inventory holding costs for the client based on the

proposed design

◦ Space for the subassemblies lineside was reduced making room for future growth (and was used for future expansion)

◦ Planned MHE level could NOT support the level of deliveries Client avoided potential bottlenecks by identifying in the model the

specific number of MHE needed to support the replenishment strategies

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• Supply Chain Modeling and Simulation can

provide organizations with ability to design, test

and deploy robust networks that create value.

“Organizations can gain competitive advantage by running supply chain network scenarios, evaluating and proactively implementing changes in response to dynamic business scenarios like new product introduction, changes in demand pattern, addition of new supply sources, and changes in tax laws.”(Industry Week, 2013; L.N. Balaji)