ibm log differentiators for strategic network planning 2011 v6
TRANSCRIPT
© 2011 IBM Corporation
What Differentiates The IBM ILOG Strategic Network Planning Solution
© 2011 IBM Corporation2
Network Optimization with Multiple Objectives
Only software solution with the unique ability to optimize multiple objectives simultaneously
Better Route and Backhaul Planning 10+ years of routing optimization experience:
5% better routes than other routing tools
All-in-one inventory planning and integration
Continuous improvements through rapid ERP integration and automated workflows
IBM ILOG Supply Chain Solutions
Link to Execution
IBM’s complete suite includes TMS, Supply Chain Visibility, WMS, Distributed Order Management, SPSS, and Cognos
© 2011 IBM Corporation3
IBM Has a Complete Strategic Supply Chain Planning Suite
HD200D-TU CG40CD-BA G248754-TU G248739-TU HD200D-WO G459950-BA PD300D-WO G248754-WO G248739-WO G248730-TU PD758KD-WO G248730-WO G182638D-BA G182665D-BA PD210CD-BA CG42CD-BA HD400D-TUG182649D-BA WD962KCD-BA
PD612D-WO G248735-WO PD612CD-BA PD752CD-BA G248735-TUWD822KCD-BA G182671D-BA
HD900D-TUWD832KD-WO HD600D-WO PD432D-WO HD175D-TU HD600D-TU
($100K)
$0K
$100K
$200K
$300K
$ Optimized $ Target - Hist Avg
"Optimized Target Inv - Historic Avg Inv" for each SKU
IBM ILOG Inventory and
Product Flow Analyst for Enterprise multi-echelon inventory optimization and strategic analysis: integrated inventory planning within your ERP system.
Value : 10-30% reduction in inventory costs, better fill rates. And fo analysis to determine strategic shifts in your inventory policies and practices.
IBM ILOG Transportation
Analyst for Transportation optimization: routing analysis, backhaul, mode selection, and fleet sizing.
Value: 10-30% decrease in trans costs
IBM ILOG LogicNet Plus XE for Network and sourcing optimization: location of facilities, assignment of stores, managing seasonality, and carbon foot printing.
Value: 5-15% reduction in supply chain costs, better service to stores and for on-going multi-plant production sourcing and capital investment decisions; Enhanced S&OP capability; 2-5% reduction in ongoing manufacturing costs
© 2011 IBM Corporation4
How Leading Firms Get Value from Network Design
Pepsi – $6M reduction in inventory; 2% reduction in growth of transportation miles; increase in the return on invested capital
from 7.6% to 7.8%; and less out-of-stock leading to 12.8m cases available to be sold
3M– Speaking with IBM at SCOPE East (2011) about how they are organized to deploy network modeling capability
MillerCoors– Mention $750m in synergies from merger; spoke at CSCMP (2010) and about ½ synergies come from supply chain;
using modeling to make seasonal sourcing decisions
The Home Depot– Annual report (released in early 2010) mentioned progress towards significant supply chain transformation
Fonterra (one of the world’s largest Dairies)– Reduction in transportation costs (removing 4,000 trucks annually), removed 12 warehouses from network, analysis of
supply chain risk
Whirlpool– Used LogicNet Plus to help quickly manage the merger with Maytag; $40M savings per year from the logistics and
supply chain
Walgreens– Discussed importance of correctly locating highly automated warehouses
Mars/Wrigley– Spoke at CSCMP (2009), mentioned $10M savings in initial modeling alone, ability to test for results for impact on
carbon emissions and oil price risks
Dow– Spoke at LogicTools symposium (2008) and mentioned rapid modeling approach and connecting to capital expense
justification– Recently won an award for reducing $5M in costs with the support of LogicNet Plus XE
© 2011 IBM Corporation5
Complimentary Tools Have Complete Functionality Ensuring Credibility of Your Results to Experts in these Areas
All-in-one strategic as well as tactical. You can implement the inventory results
– Web based interface to give access to multiple inventory planners and provide true integration
– Built-in work flows, data maintenance, auto review– Different views for different users– Planners have a
home page and a 1-page view of the results
Full set of inventory features and multiple optimization– Multi-echelon, buffer location, mix optimization, and
flow path
HD200D-TU CG40CD-BA G248754-TU G248739-TU HD200D-WO G459950-BA PD300D-WO G248754-WO G248739-WO G248730-TU PD758KD-WO G248730-WO G182638D-BA G182665D-BA PD210CD-BA CG42CD-BA HD400D-TUG182649D-BA WD962KCD-BA
PD612D-WO G248735-WO PD612CD-BA PD752CD-BA G248735-TUWD822KCD-BA G182671D-BA
HD900D-TUWD832KD-WO HD600D-WO PD432D-WO HD175D-TU HD600D-TU
($100K)
$0K
$100K
$200K
$300K
$ Optimized $ Target - Hist Avg
"Optimized Target Inv - Historic Avg Inv" for each SKU
IBM ILOG Inventory and Product Flow Analyst IBM ILOG Transportation Analyst
Routing problems are not trivial to solve well. ILOG has an optimization advantage that allows us to solve these problems better
– Better routes and fleet sizing– Backhauls and Continuous moves– Sophisticated mode selection– Multiple pick-ups and deliveries
Allows for full range of features– Detailed time windows and availability
calendars, Rest requirements, multiple capacity measures, etc.
Links to Sterling TMS and uses the same optimization engine
© 2011 IBM Corporation6 6
IBM Has a Full Offering of Analytics Solutions
ILOG ODME and CPLEXILOG ODME and CPLEX
© 2011 IBM Corporation7
More Firms are taking Optimization Deeper into their Organizations
A recent book discusses the value of optimization:– “"One of [the book’s] most interesting arguments is that a great deal of
the effort spent on information gathering and analysis is wasted — or, at least, used sub-optimally — when it’s used to feed business intelligence systems that produce reports that ultimately wind up with being fed into spreadsheets and PowerPoint slides. Managers then sit around in a conference room listening to presentations and debating what the data means and what decisions should be made about it — when, in many cases, good software could make the decision itself."
– David F. Carr, Forbes
The value of optimization is proven– A U.S. Bank reduced its outstanding cash balance by $2B by optimizing
the replenishment of ATMs– Netherlands Railway reduced cost by $30M USD and captured $57M
USD by using optimization to improve efficiency and improve customer service
– Indeval, Mexico's Central Security Depository, clears $250B a day with optimization, saving $240M in interest payments
– MillerCoors used optimization to help with their $750M in savings from the merger of the two organizations
– Mars and Wrigley talked about the value of optimization and supply chain modeling, savings $10M just in the initial modeling, and much more with detailed modeling
© 2011 IBM Corporation8
LogicNet Plus: Built to be Easy for Business Users to Get Results Clean Design
– Menu’s organized to facilitate understanding of the model– Easy to build simple models and add complexity– Easy to move scenarios between models
Tight Integration with Excel and Access– Import wizards that pull data from Excel or Access files– Edit in Excel within the application– Edit multiple scenarios at one time– Easy to compare and merge forms from different scenarios– Easy to get data back out to Excel and Access for analysis
Robust Product with Helpful Feedback – Backend SQL Server database– Ability to run in multiple scenarios in parallel; Ability to run a single scenario on
multiple threads– Robust Referential Integrity– Advanced error messages with strong partial solution analysis
Good Visualization – Detailed mapping with the ability to add views– Site sizing, site coloring, ability to shade map– Quickly change between a number of graphical displays
Links to Other Systems– CZAR LITE, UPS– PC*Miler
© 2011 IBM Corporation9
Ribbon Control with Navigation Tree Expanded Access
Parent form Icons are now displayed within Category Ribbons along the top of the application. An Associated Navigation Tree then shows in the bottom left hand corner for quick access to all other related data forms within.
NOTE: These can be moved around the interface or hidden from view by users.
Interface and Usability
© 2011 IBM Corporation10
Data Forms now in Tab Format
Data forms are now in tab format and align themselves directly below the Ribbons. Each form maybe be dragged to the right or the left according to user preference.
NOTE: Forms maybe enlarged to a single full screen view by clicking on the ‘Maximize Button’ in the upper right hand corner.
Interface and Usability
© 2011 IBM Corporation11
Data Forms now in Tab Format
Interface and Usability
Tabs may then be dragged and dropped around the interface using the crossbar in the middle to dock them according to user preference.
NOTE: Users may also edit forms from within other scenarios in this format while the optimization runs for a previous scenario.
© 2011 IBM Corporation12
Lane Visualization
Lane Visualization now allows users to create all allowable flows visually by dragging and dropping icons representing Site and Product Groupings around the visualization screen and then connecting as appropriate.
Note: Users may also edit these lanes below in the heritage Lanes form in Table Format below the visualization.
Interface and Usability
© 2011 IBM Corporation13
In-depth functionality with Innovative Features
Multi-time period for multi-year or seasonal planning
Unlimited network echelons with detailed transportation modeling including min/max volumes on lanes for groups of sites
Unlimited BOM, including multiple recipes and by-products
Detailed sourcing rules for customers and warehouse (single source, dual source, grouped single sourcing, etc)
Detailed process modeling including lot sizes, overtime, yield, tooling, tanks, and production moves
Tax modeling and currency exchange rates
Economies-of-scale modeling
Carbon footprint modeling:– Report on supply chain carbon emissions– Set carbon emission constraints– Set costs/credits for carbon trading
integrated Tableau® configurable reporting:– Configure customized reports with simple drag
and drop functionality– Create and Save report setup for instant updated
display after each new ‘what if’ analysis
China - Line 1 China - Line 2 China - Line 3 Mexico - Line 2 Mexico - Line 3 Mexico Line 1Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
0K
20K
40K
60K
80K
100K
120K
140K
160K
180K
Line Production by Comp Product
Plant Scenario
0M 20M 40M 60M
RT Production Cost
0M 10M 20M 30M
OT 1 Production Cost
0M 5M 10M 15M
OT 2 Production Cost
Mfg 1 - China Baseline
Optimal
Mfg 2 - Mexico Baseline
Optimal
Overall Comp Capacity Utilization
Product / Scenario
Prod 60 Prod 61 Prod 62 Prod 63 Prod 64 Prod 65 Prod 66 Prod 67 Prod 68 Prod 69 Prod 70
BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal BaselineOptimal
0
500
1000
Units Produced
1,1491,2591,215 1,2151,254 1,254
936
1,285
350
1,030
188
1,2181,189 1,1891,130 1,130
536
1,275
739
701
404
1,105
468
794
1,2631,270 1,270
FG Product Source Comparison
© 2011 IBM Corporation14
Multi-Objective Optimization - Breakthrough in Network Modeling
LogicNet Plus XE 7.2
• Solve multiple objectives at once• Examine entire trade-off curve and
see all possible solutions
Traditional Approach
• Solve only one objective at a time• Approach better solutions only by
trial and error
What’s New in LNP XE 7.2?
© 2011 IBM Corporation15
Multi-Objective Optimization - Breakthrough in Network Modeling
15
Automatically create trade-off curves and explore the solutions
User-Defined Primary Objective
User-Defined Secondary Objective
What’s New in LNP XE 7.2?
© 2011 IBM Corporation16
Gain more insight and develop better business plans by directly balancing critical objectives
Trade-off Examples:
– Total Cost vs. Service Level
– Service to Top Customers vs. Overall Service
– Variable Cost vs. Capital Investment
– Paid Freight Cost vs. Customer Pick-up Cost
– Internal Manufacturing Cost vs. 3rd Party spend
– Manufacturing Cost vs. Transportation Cost
– Parent Company Cost vs. Acquired Company Cost
What’s New in LNP XE 7.2?
© 2011 IBM Corporation17
Output Data
© 2010 IBM Corporation
Scenario Set 1 – Best 1, 2 and Regional DCs
Optimal 1 DC
18
Additional 5% Cost Decrease
Indianapolis, IN
Optimal 2 DCs
Rockford, MI (Current)Salt Lake City, UT
Regional DCs
Indianapolis,INCharlotte, NC
Salt Lake City, UT
Output data can be analyzed and displayed in many different formats after solutions are created….
© 2011 IBM Corporation18
Output Data
High level Summary Reports
Scenario
1 - Baseline
2 - Mexican plant
3 - Best 5 DCs
Scenario
1 - Baseline 2 - Mexican plant 3 - Best 5 DCs
0M
20M
40M
60M
($) Cost
25,654,53526,879,53521,279,535
19,200,45617,798,86019,170,917
21,045,01418,247,85829,152,077
Totals Across Scenarios Description (group)
Transportation Costs
Production Costs
Warehousing Costs
1 - Baseline 2 - Mexican.. 3 - Best 5 D..
Production CostsFixed Costs
Line Fixed Costs
Production Cost
Line Item Cost
Tooling Cost
Series Set Up Cost
Set Up Cost
Tank Cost
Total
Warehousing CostsFixed Costs
Holding Cost
Inbound Variable Cost
Outbound Variable Cost
Storage Variable Cost
Total
$19,200,456
$0
$0
$0
$0
$0
$19,200,456
$0
$0
$17,798,860
$0
$0
$0
$0
$0
$17,798,860
$0
$0
$19,170,917
$0
$0
$0
$0
$0
$19,170,917
$0
$0
$25,654,535
$0
$7,957,727
$0
$6,821,807
$10,875,000
$26,879,535
$0
$7,957,727
$0
$6,821,807
$12,100,000
$21,279,535
$0
$7,957,727
$0
$6,821,807
$6,500,000
Summary Table
2 - Mexican plant
Map Solution
Warehouse
Dallas
Des Moines
Dover
Orlando
Phoenix
Sacramento
© 2011 IBM Corporation19
Output Data also provides unique features like the landed cost visualization
Scenario
Best 1 DC
Best 2 DCs
Regional DCs
Warehouse
Charlotte
Indianapolis
Salt Lake City
Wolverine WarehouseBaltimore-Line 1 Baltimore-Line 2 Baltimore-Line 3 Baltimore-Line 4 Chicagoland-Line 1 Chicagoland-Line 2 Chicagoland-Line 3 Chicagoland-Line 4 Juarez Mexico-Line 1Juarez Mexico-Line 2Juarez Mexico-Line 3
7a 7a 7a 7a 7a 7a 7a 7a 7a 7a 7a0K
100K
200K
300K
400K
500K
600K
700K
Units Produced
Line Production by top 50 Agg Prod
Product
Product 0006
Product 0008
Product 0015
Product 0016
Product 0018
Product 0022
Product 0025
Product 0031
Product 0032
Product 0033
Product 0037
Product 0042
Product 0044
Product 0045
Product 0049
Product 0051
Product 0059
Product 0064
Product 0066
Product 0069
Product 0075
Product 0076
Product 0077
Product 0078
Product 0079
Product 0090
Product 0092
Product 0094
Product 0095
Product 0097
Product 0099
Product 0102
Product 0104
Product 0105
Product 0108
Product 0111
Product 0112
Product 0115
Product 0117
Product 0122
Product 0124
Baltimore-Line 1 Baltimore-Line 2 Baltimore-Line 3 Baltimore-Line 4 Chicagoland-Line 1 Chicagoland-Line 2 Chicagoland-Line 3 Chicagoland-Line 4 Juarez Mexico-Lin.. Juarez Mexico-Lin.. Juarez Mexico-Lin..
7a 7a 7a 7a 7a 7a 7a 7a 7a 7a 7a0K
100K
200K
300K
400K
500K
600K
Units Produced
49,890
64,266
97,072
180,645
166,569
32,893
72,576
42,848
70,139
187,975
28,394
32,259
136,491
58,412
32,884
32,929
77,160
44,551
168,312
296,498
140,135
77,457
61,704
58,002
232,660
56,190
36,528
144,125
68,920
140,652
53,994
114,585
152,027
37,233
40,195
67,535
114,469
114,497
143,612
145,849
65,061
67,157
79,868
108,520
309,930
58,213
243,145
156,599
32,912
75,936
86,317
179,280
203,190
97,779
91,845
64,213
Line Production by BU
Product Grouping by Bus..
Bus Unit 1
Bus Unit 2
Bus Unit 3
Bus Unit 4
Bus Unit 5
Bus Unit 6
Bus Unit 7
Bus Unit 8
© 2011 IBM Corporation20 20
How does optimization work?
Targets
Limits
Data
Choices
© 2011 IBM Corporation21
Importance of a world-class optimization engine
Strategic Supply Chain planning has huge implications for the organization.
Decisions based on the optimization will impact profits, costs, customer service and more
The business needs to trust the optimization engine produces results that are:– Accurate– Consistent– Robust– Scalable – Optimal
IBM ILOG CPLEX is the gold standard in optimization– Used by over 50% of the world’s largest companies– 1000s of Universities– 1000s of application providers
© 2011 IBM Corporation22
Modeling and Optimization
CPLEX’s History of Performance Enhancement
CPLEX 7 (2000): 60% on “hard mixed integer problems”
CPLEX 8 (2002): 40% overall, 70% on “difficult problems”
CPLEX 9 (2003): 50% on “difficult customer models”
CPLEX 10 (2006): 35% overall, 70% on “particularly difficult models”
CPLEX 11 (2007): 15% under one minute, 3X on 1-60 minutes, 10X on one hour and up
IBM ILOG CPLEX 12.0 (2009): 30% overall, 2X on 1000 seconds and up
IBM ILOG CPLEX 12.2 (2010): 50% overall, 2.7X on 1000 seconds and up
IBM ILOG CPLEX 12.3 (2011): 20% overall, 2X on 1000 seconds and up
IBM’s continuing commitment to performance leadership
Drivers:– Improved
heuristics– Improved cuts– Reduced parallel
overhead– General software
engineering
Upgrade to CPLEX 12.3 at the core of Optimization
© 2011 IBM Corporation23
IBM ILOG is the only software vendor that provides a network optimization solution and creates the industry leading mathematical engine
Why is this an advantage to you?
– Direct development coordination: LogicNet Plus XE development team and ILOG CPLEX development team work side-by-side within IBM
• LogicNet Plus XE always benefits from the latest & greatest version of CPLEX• Work directly with CPLEX team to “tune” the engine to address supply chain network
problems• Work directly with CPLEX team to increase scalability & performance• Directly report any problems and ensure quick resolution
– Single vendor responsibility• Any issues with optimization can be addressed directly by IBM and fall under IBM
service agreements• Best and brightest minds in optimization directly available to you• No finger pointing between application provider and mathematical engine provider
– Access to greater ILOG Optimization Solutions as needs may arise• ILOG’s experience and depth in optimization is without peer in the industry• As your organization faces additional business problems that optimization can
address, you have a trusted partner to work with–
© 2011 IBM Corporation24
IBM Continues to Invest in LogicNet Plus:Plays a Critical Role in Smarter Commerce Initiative
Major IBM Releases of LogicNet Plus XE– LogicNet Plus XE 7.0 Released in June 2009– LogicNet Plus XE 7.1 Released in June 2010– LogicNet Plus XE 7.2 will ship on Dec 9, 2011
The LogicNet Plus XE development philosophy remains the same– Continue to improve the speed and increase model size– Add additional modeling capabilities– Continue to invest and leverage new technology to make the too easier to use
• Ensure that people can build simple models without having to touch advanced modeling capabilities
LNP XE works on either 32 or 64 bit machines
LNP XE continues to leverage CPLEX engine
LNP XE allows parallel optimization runs and multiple threads
R&D continues to improve memory consumption for model footprint and reporting
LNP XE 5.0 to 6.0– Significant jump in the run times--- 3 hour models down to 45 minutes– Significant improvement in memory footprint– allowing you to solve models not solved before
LNP XE 7.0 and 7.1– Another increase in run time– 30 minute models in 5 minutes, 2 hours models in 1 hours, etc
© 2011 IBM Corporation25
We also provide services within our team. Our Services expertise is a key component of our overall supply chain solutions offering
Expertise– Leader in supply chain strategic planning with a focus on how to maximize leverage from client’s
assets (both capital and inventory)– Unparalleled experience across various industries – CPG, Chemical, Retail, Hi-Tech, Pharma,
Government, Automotive– Over 100 large projects in last 3 years – all around the world
Experienced Consultant base– 100% of our consultants have a Master’s degree or above– Strong industry / logistics background– In-depth knowledge of ILOG technology suite, with core focus on supply chain planning problems– Provide subject-matter expertise to other consulting firms on their engagements
Time to Value– Our consultants’ experience and knowledge enables us to deliver quick time-to-value– Enable client teams on software and help build modeling expertise
TechnologyTechnology ServicesServices
Supply Chain Planning & Optimization SolutionsSupply Chain Planning & Optimization Solutions
© 2011 IBM Corporation26
Value of IBM to Your Business
Ability to address business problems– Used by hundreds of companies in every industry– Provide solutions that can be validated by experts in different areas– Provides all-in-one strategic and tactical inventory solution for implementation
Ability to achieve return on investment– Well documented high ROI’s for numerous customers
User acceptance– Highly satisfied customer base– Monthly user group events regularly attended by 75-100 users
Low risk– Quality
• IBM employs the highest standards of support for all software products.• IBM has high standards for preventing un-authorized code (reducing your risks)
– Support• 24 hour local support throughout the world. Experienced professionals to answer your questions
with defined service agreements and performance tracking.– Company stability
• Publicly traded company celebrating 100th anniversary
Vendor long-term relationship– IBM can support your business in numerous ways in addition to network design. Within our group we
offer additional supply chain planning applications as well as optimization solutions tailored specifically to your business. In addition, IBM is a world leader in commerce solutions, analytics solutions, and solutions for IT. Finally, IBM’s deep, diverse, and experienced professional services resources can support your team to drive business results.