© 2002 i2 technologies, inc. confidential optimizing the steel business updated by jose favilla...
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© 2002 i2 Technologies, Inc. CONFIDENTIAL© 2002 i2 Technologies, Inc. CONFIDENTIAL
Optimizing the Steel Business
Optimizing the Steel Business
Updated by Jose Favilla Oct/02
Michael HilbrichMichael HilbrichVice PresidentVice President
i2 Technologiesi2 Technologies
Michael HilbrichMichael HilbrichVice PresidentVice President
i2 Technologiesi2 Technologies
© 2002 i2 Technologies, Inc. CONFIDENTIAL2
i2 in Metals i2 in Metals
In metals since 1988, first i2 Customer – Timken Steel
60 + Customers in all segments
Eight of the top ten steel producers worldwide are i2 customers Presence in all geographies - Americas, EMEA, APAC, Japan
Dedicated Metals team Over 300 years of combined metals experience
i2 and Metals Customers have documented hundreds of millions dollars in recurring annual savings
More than 200 million tons/year are planned using i2 software
© 2002 i2 Technologies, Inc. CONFIDENTIAL3
Some i2 Customers in MetalsSome i2 Customers in Metals
Integrated Steel Producers Non-Integrated Steel Producers
Aluminum Producers Pipe Mfg & other Fabricators
Arcelor* JFE*/** POSCO*/** Nippon* Thyssen Krupp* LNM (Inland)* Corus USS* ISG (Bethlehem-
LTV) National Weirton CSN
Sweden Steel BHP Iscor Rautarrukki Kobe Mannesmann Vitkovice a.s. Nova Hut, a.s. AHMSA Lucchini AvestaPolarit Salzgitter
Alcan Logan Kaiser Pechiney-Rhenalu
VAW Elval RusAl
Timken Nucor Carpenter ACME Walsin Lihwa Timken-Latrobe Vaccumschmelze Worthington Galvak APM Lusosider
Edelstahl Witten-Krefeld (EWK)
J & L Specialty Thyssen-Mexinox Republic
Technologies Gerdau MRM Integris Metals MacSteel Wheeling-Pitt
Sharon Tube V&M Star Copperweld Timken Tubing MacSteel Timken Bearings Southwire
RMI Titanium Hitchnier Mfg Phifer Wire Roberts Industries CSS Industries AngloGold Hanna
*Top 10 Steel Producers WW** Ken Sharma Award Winner
© 2002 i2 Technologies, Inc. CONFIDENTIAL4
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL5
Key ConceptsKey Concepts
Synchronizing demand and supply
Within the metals enterprise
Across the value chain
Demand
Supply
Demand
Supply
MetalsProducer
AutoManufacturer
Raw Materials &Parts Suppliers
ServiceCenters
Fabricators(stamping, etc.)
© 2002 i2 Technologies, Inc. CONFIDENTIAL6
Key Concepts Key Concepts
MetalsProducer
AutoManufacturer
Raw Materials &Parts Suppliers
ServiceCenters
Fabricators(stamping, etc.)
Monitoring Monitor orders, inventories and
shipments against plans
Monitoring Monitor orders, inventories and
shipments against plans
Integration Integrate planning and execution
Integration Integrate planning and execution
Collaboration Collaborate between the players of the
value chain to synchronize supply and demand
Collaboration Collaborate between the players of the
value chain to synchronize supply and demand
Optimization Best in class business processes Optimize business goals under
constraints
Optimization Best in class business processes Optimize business goals under
constraints
How can this synchronization be enabled?
© 2002 i2 Technologies, Inc. CONFIDENTIAL7
Key ConceptsKey Concepts
time
PRESENT
ERP / Legacy:
Captures what is going-on at presentmoment and keep history
Does not provide any forward visibilityinto future
SCM:
Provides forward visibility into the future
Supports decision-making processes that can influence the future
past future
Why ERP doesn’t solve the Supply Chain problem…
© 2002 i2 Technologies, Inc. CONFIDENTIAL8
i2 solutions: mature and proven technologyi2 solutions: mature and proven technology
14 years of investment in R&D and software development Over $1 Billion in Intellectual Property
Largest number of optimization experts working on real business optimization problems of any other software company
LP, MIP, Genetic Algorithms, Simulated Annealing, A-teams Framework, Advanced search techniques, Specialized Heuristics, Network Optimization, Hill Climbing
Proven in the Metals Industry
Flexible: allows detailed modeling of YOUR business requirement
Allows focus on the business problem not on the technology – shortest time to value
© 2002 i2 Technologies, Inc. CONFIDENTIAL9
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL10
Revenue and Profit Optimization Revenue and Profit Optimization
How to determine with accuracy market demand
How to create a unified sales and production plan that maximizes the total profitability for the company
What is the best product mix? What is the right level and positioning of steel inventories?
How to guarantee that the supply is synchronized with demand
How to control the booking of orders to the sales plan
How to adjust the plan rapidly based on changes in plant operations or the market
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL11
Revenue and Profit OptimizationRevenue and Profit Optimization
Demand Planning
Master PlanningProfit Optimization
Allocation Planning
Collaboration Planner
Metals Supplier
Customer
Web Browser
Customer Forecast (1)
Consensus Forcast (3)
Customer Allocation (6)
Customer Forecast (2)
Customer Allocation (5)
i2 Solution
Consensus Forecast (3)
SupplyPlan (4)
© 2002 i2 Technologies, Inc. CONFIDENTIAL12
Exception driven workflows with visual classification of problems
Collaboration support across the sales and order forecasting process
Collaboration ExampleCollaboration Example
© 2002 i2 Technologies, Inc. CONFIDENTIAL13
© 2002 i2 Technologies, Inc. CONFIDENTIAL14
Profit Optimizer: “Practical Margin Optimization”Profit Optimizer: “Practical Margin Optimization”
© 2002 i2 Technologies, Inc. CONFIDENTIAL15
Revenue and Profit OptimizationRevenue and Profit Optimization
Allocation PlanningAllocation Planning
Hot Roll
Cold Roll
Galvanize
Plate
Billet
Shape1 2 3 4 5 6
Customer A
Customer B
Order receiptsare monitoredto assure compliance toallocation.
Time Periods (weeks)
Customer B
i2 Solution
time
product
seller
© 2002 i2 Technologies, Inc. CONFIDENTIAL16
Revenue and Profit Optimization Revenue and Profit Optimization
Higher synchronization of supply and demand thru an unified market-sales-production plan
Improved profitability due to superior product mix decisions
Considering margin andproductivity simultaneously
Position the enterprise to the “best business” – eliminating first come first served.
Some Key Performance Indicators
Forecast Accuracy
Asset Utilization
Profit margin
Planned vs Actual Mix
Planned vs Actual Inventory Levels
Planning Cycle Time
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL17
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
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mersS
up
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL18
Order Fulfillment Optimization Order Fulfillment Optimization
Inaccurate and slow order capturing, processing and quoting – slow response to customers – missing sales opportunities
Long lead times for inquiry validation and quality design
Inaccurate delivery promise
Order acceptance outside of sales plan
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL19
Customer View Internal View
Customer Order 1
Purchase Order 1
Purchase Order 2
Purchase Order n
Line Item 1
Line Item mLine Item m
Line Item 2
- Date p- Quantity …- Ship to …
- Date 2- Quantity …- Ship to …
Buyer’s Order Specification- Item id (if in a catalog)- Product (galvanized sheet)- Shipment date (dd/mm/yy)- Quantity (x tons)- Ship to (address1) - Buyers spec number (TOT123)- End Use (automotive)- Buyers Process (stamping)- Dimensions (40” x 58” x 0.2”)- Standard1 JIS1234 (but Carbon = [0.3 0.45] - Standard2 JIS5678
Criteria:- Product- Date- Quantity- Ship from- Ship to
(one seller and one buyers only)
Seller’s Order Specification- Internal Spec (TOT123-01)- Customer (Toyota)- Product (galvanized sheet)- End Use (automotive)- Dimensions (40” x 58” x 0.2“)- Standard1 (version 3) C=[0.3 0.45] Mn=[0.2 0.4], etc…- Standard2 (version 2) surface quality: A1 width tolerance [-0.2 +0.4] length tolerance [-0.2 +0.4] hardness = max 770HB- etc. etc.
Routing 1- operations- attributes at each route step
Routing 2
Routing r
Seller’s Order Spec 2
Seller’s Order Spec 2
(the specification canto be done at a BU or
plant level)
ABOC: Enables an effective
order capturing, embedding the intelligence from
metallurgists on what is feasible
ABOC: Enables an effective
order capturing, embedding the intelligence from
metallurgists on what is feasible
Quality Design: Translates customer
spec into manufacturing spec, generates
multiple production routings and calculates
manufacturing cost
Quality Design: Translates customer
spec into manufacturing spec, generates
multiple production routings and calculates
manufacturing cost
Order Fulfillment OptimizationOrder Fulfillment Optimization
Order Capturing and ProcessingOrder Capturing and Processing
© 2002 i2 Technologies, Inc. CONFIDENTIAL20
Standards
Order Fulfillment OptimizationOrder Fulfillment Optimization
Specific Customer Agreements
Context Sensitive Defaults
Technical Restrictions
Equipment Restrictions
Process Rules
Process Parameters (yields, costs, etc)
Customer Order: 982034Customer: Acme Co.End-use: Home AppliancesCustomer Process: Stamping
Product: Galvanized SheetDimensions: 40”x 58” x 0.2”Standard: ASTM XXXXC = [0.3 , 0.45]
Internal Spec: 982034-01Customer: Acme Co.
Product: Galvanized SheetDimensions: 40”x 58” x 0.2”Standard: ASTM XXXX - Jul/97
Surface Quality: A1C = [0.3 , 0.45]Mn = [0.2 , 0.34]width tolerance = [-0.2 , +0.4]length tolerance = [-0.2 , +0.6]max pile weight = 3 ton
Routing: 982034-01-01Customer: Acme Co.
Product: Galvanized SheetDimensions: 40”x 58” x 0.2”Standard: ASTM XXXX - Jul/97
Op1: Melt - grade 948Op2: HotRoll - min gauge = 2.5”Op3: Pickle - Pickler 2Op4: Thermal Treat - cycle T-3Op5: Pack - packing class B2
Quality Design Quality Design
© 2002 i2 Technologies, Inc. CONFIDENTIAL21
Hot Roll
Cold Roll
Galvanize
Plate
Billet
Tin1 2 3 4 5 6
Customer A
Customer BMasterPlanning setsATP by product.
Orders and Inquiressearch dynamicallyFor booking space.
Time Periods
Allocated Available to Promise
Order Promising: “Real time delivery quote”Order Promising: “Real time delivery quote”
AllocationPlanning reservesbookingspace.
Sales
Domestic Export
Cust1 Cust2 Regions
© 2002 i2 Technologies, Inc. CONFIDENTIAL22
Hierarchies and AdjustmentsHierarchies and Adjustments
Simple Price Rule is Adjustment to base price. Adjustment are rules between the nodes of multidimensional hierarchies of customer, product and user.
If the customer is in Europe and the product is a laptop computer, the max discount is $100
Marketing Hierarchy
Europe
Customer XXX
USA
Products
Laptops
Lap 2000
Desktops
The Customer to whom we are quoting
The Product that we are quoting
Max discount = $100
© 2002 i2 Technologies, Inc. CONFIDENTIAL23
Order Fulfillment Optimization Order Fulfillment Optimization
Increased revenues due to improved customer service level
Single face Accurate delivery date
promises Accurate pricing Visibility into order status Faster order response times
Reduced cost of order fulfillment Lower error rates Reduced order cycle times
Execution to planned product mix / sales allocation
Some Key Performance Indicators
Order Promising Time
Order Capturing Accuracy
Order to Cash Cycle
Customer Satisfaction
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL24
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL25
Order and Material Optimization Order and Material Optimization
Poor due date performance, unhappy customers
Long lead-times
High level of work in process and finished good inventories
Lack of visibility to potential future problems
Inability to quickly react to unexpected events, such as equipment breakdowns
Difficult in exploiting available inventories across the mill to fulfill order needs to due complexity of attribute-based matching
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL26
Order and Material OptimizationOrder and Material Optimization
DueDate
S
S
EPST
M
EPST
M
EPSTM
S
Material Required
Material Available
LPST
TEMPER MILL
COATING
COLD MILL
PICKLE
HOT MILL
EPST
LPST
LPST
LPST
EPST
M
LPST
TimeTime
HOT MILL
PICKLE
COLD MILL
TEMPER MILL
COATING
Compute the criticality for all over utilized resources.
Select the most critical resource.
Find over utilized resources.
Balance anchor resource.
Propagate and post constraints to other
resources.
Reconcile PSTs to constraints based on
parameters.
Time
HOT MILL
PICKLE
COLD MILL
TEMPER MILL
COATING
Factory PlanningFactory Planning
© 2002 i2 Technologies, Inc. CONFIDENTIAL27
Mill OptimizationMill Optimization
O 1
O 2
O 3
O 4
O n
S 1
S 2
S 3S 4
S 5
S 6
S m
Some factors considered during matching
• Order due date
• Rush Order
• Age of Material
• Grade matching
• Width matching
• Routing priority
– slab yard
• Min/Max Coil
• Delivery weight
•Others can be specified
Order
2 0 5 0 2 0 2 1
0 0 0 0 0 0 0 0
0 0 3 0 0 2 0 4
0 3 0 0 0 4 3 01 0 0 0 1 0 0 1
0 3 4 0 0 0 2 0
0 4 0 0 3 3 0 9
3 0 0 0 1 0 3 0
Slabs
No Match
Matching Priority Table
Slab AllocationSlab Allocation
Infrastructure Real-time matching Built-in generic optimizer User friendly interface
© 2002 i2 Technologies, Inc. CONFIDENTIAL28
Order and Material OptimizationOrder and Material Optimization
Factory PlanningFactory Planning
Enterprise PlanningEnterprise Planning
Inventory AllocationInventory Allocation
Factory PlanningFactory Planning
Inventory AllocationInventory Allocation
Factory PlanningFactory Planning
Inventory AllocationInventory Allocation
Factory PlanningFactory Planning
Inventory AllocationInventory Allocation
Factory PlanningFactory Planning
Inventory AllocationInventory Allocation
Primary Operation Hot Mills Cold Mills / Finishing
© 2002 i2 Technologies, Inc. CONFIDENTIAL29
Order and Material OptimizationOrder and Material Optimization
Multi-Plant Order PlanningMulti-Plant Order Planning
Factory Planner Domain
Enterprise Planning Domain
Order planning across multiple plants Order sourcing based on customer location, capacity and material
availability
© 2002 i2 Technologies, Inc. CONFIDENTIAL30
Order and Material Optimization Order and Material Optimization
Improved delivery performance and customer service
Reduced manufacturing lead time
Reduced work in process and finished good inventories
Ability to react to unexpected problems
Reduced operating expenses Lower inventory carrying costs Reduced cost of expedites Better utilization of existing
capacities Higher planner productivity
Some Key Performance Indicators
On-time delivery
Work-in-process inventory Levels
Finished Good Inventory Levels
Manufacturing Lead Time
Plan versus Actual
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL31
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL32
Mill Optimization Mill Optimization
Sub-optimal utilization of assets due to complexity of the operation
Balancing of hot metal across multiple casters Excessive grade transition High number of turnarounds Production of excess inventory Lack of coordination caster-hot mill Inefficient allocation of slabs to orders Low productivity due to partial rounds and re-heating
requirements Inefficient utilization of finishing mills due to complex scheduling
rules Poor due date performance
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL33
Mill OptimizationMill Optimization
G6/ 1300/ B
G6/ 1050/ B
G4/ 1300/ A
Grade/ Width/ Round_Type Network
Grade/ Width/ Round_Type Network
Slab DesignSlab Design
OrdersOrders
Slab Designs1
Ch 1Ch 1
Ch 3Ch 3
Ch 5Ch 5
Ch11Ch11
Ch 5Ch 5
Ch 7Ch 7
Ch 1Ch 1
Ch 3Ch 3
Ch 9Ch 9 Ch 9Ch 9
Ch11Ch11
Ch 2Ch 2
Ch 4Ch 4
Ch 6Ch 6
Ch 8Ch 8
Ch 2Ch 2
Ch 4Ch 4
Ch 8Ch 8
Ch 10Ch 10
Ch 12Ch 12
Ch 10Ch 10
Ch 12Ch 12
Ch 13Ch 13 Ch 13Ch 13
CC 1 CC 2
Ch 7Ch 7
Ch 6Ch 6
Strand 1 Strand 2 Strand 1 Strand 2
Blank Heat SolverBlank Heat Solver
Network
2
S 1
S 5
S 6S 7S 10
S 11
S 15
S 19
S 21
S 22
Strand 1 Strand 2
S 51
S 24
S 25S 63
S 70S 104
S 41S 64
S 96S 33
S 26
S 23S 29S 49
S 37
S 44
S 53S 124S 46
S 36
S 42
CC 1
Detail Heat SolverDetail Heat Solver
Blank HeatSchedule
3
Strand 1
Strand 2
O 2O 6O 3
O 13O 19
O 17
O 11O 18
O 27
O 33O 49
Strand 1
Strand 2
O 25O 41O 32
O 43
O 2O 6O 3
O 13O 19
O 17
O 11O 18
O 27
O 33O 49
O 25O 41O 32
O 43
Post ProcessingPost Processing
Cast / SlabSchedule
4
Final CasterSchedule
5
Nextslide
Caster SchedulingCaster Scheduling
© 2002 i2 Technologies, Inc. CONFIDENTIAL34
Mill OptimizationMill Optimization
S12
S65
S26
S1
S4
S9
S8
S6
S5
Ch 1 Ch 2
S2
S3
S5
2
S53
Make-to-Stock slabsMake-to-Stock slabs
Ch 3 Ch 4 Ch 5
S18
S69
S24
S3
S4
S9
S8
S6
Cast 1 Cast 2
Ch 6
CC1Strand 1
CC1Strand 1
S19
S45
S35
Ch 1 Ch 2 Ch 3 Ch 4 Ch 5
S22
S66
S29
S14
Cast 1 Cast 2
Ch 6
CC1Strand 2
CC1Strand 2
Grade ChangeGrade Change
Final Caster SchedulingFinal Caster Scheduling
© 2002 i2 Technologies, Inc. CONFIDENTIAL35
Mill OptimizationMill Optimization
S12
S65
S26
S1
S4
S9
S8
S6
S5
Ch 1 Ch 2
S2
S3
S5
2
S5
3
Make-to-Stock slabsMake-to-Stock slabsSlab overlaps heat
boundariesSlab overlaps heat
boundaries
Cast Slab Schedule
time
Hot Mill Roll Campaign
S1 – O1S1 – O1
S5 – O1, O2S5 – O1, O2
S11 – O1S11 – O1
S4 – O2,O3,O4S4 – O2,O3,O4
S13 – O5S13 – O5
S15 – O8S15 – O8
S6 –O6,O7S6 –O6,O7
Applied Slabs from Slab Yards
Detailed Round Solver : Compute sequence of slabs within each roll, get slab rolling times. Uses hill-climbing optimizer
Hot Mill SchedulingHot Mill Scheduling
© 2002 i2 Technologies, Inc. CONFIDENTIAL36
Mill OptimizationMill Optimization
time
time
time
HSM 1
HSM 2
HSM 3
Hot Mill Campaigns
Hot Mill SchedulingHot Mill Scheduling
© 2002 i2 Technologies, Inc. CONFIDENTIAL37
Mill Optimization Mill Optimization
Improved utilization of critical resources
Better synchronization of resources
Inventory reduction due to scheduling inefficiencies
Better asset utilization due to optimized grouping and sequencing
Improved utilization of existing inventories
Some Key Performance Indicators
Hot Metal Dumping
Caster Operating Ratio
Percentage of Hot Charging
Tundish utilization
HSM round WKM
Planned vs Actual Rolling Date
Number of setups / turnarounds at key facilities
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL38
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL39
Logistics Optimization Logistics Optimization
Critical component in delivering the order to the customer
Difficult to determine the transportation needs Seasonality of equipment availability (trucks) Vessel schedules
High logistics costs How to reduce the number of vehicles and use the least
expensive mode of transportation
Complex operation Placement of products in the warehouses Load formation and load building considering dock constraints Availability of equipment (truck, trains, etc) and synchronize with
vessel schedule at ports How to proactive identify and correct problems
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL40
Logistics OptimizationLogistics Optimization
Create the loads and load sequences. Schedule cranes
tasks. Provide estimated task start time and end time
MillWarehouse 1
MillWarehouse 2
MillWarehouse n
domestic
Schedule the trucks
Schedule unloader at port. Provide
estimated task start time and end time
Executes and monitor the entire lifecycle of the shipment process
Consider Ship schedules and
route
international
© 2002 i2 Technologies, Inc. CONFIDENTIAL41
Logistics Optimization Logistics Optimization
Reduce logistics cost Minimize number of equipments
(trucks, trains, etc.)
Reduced inventory at mill dock and ports due to better synchronization of products with vessel availability
Improve customer service by delivering on time
Allow proactively managing exceptions
Some Key Performance Indicators
On-time delivery
Inventory levels (dock, ports)
Average load weight per vehicle type
Loading time (vehicle assigned to load complete)
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL42
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL43
Distribution Network Optimization Distribution Network Optimization
Complex decisions with dramatic impact on the business What are the costs and service tradeoffs of alternative sourcing,
manufacturing and distribution strategies? When capacity should be added? What types of logistics facilities are required to support finished
goods distribution? As a result of a recent or proposed merger, what would an
optimal, combined distribution network look like? Which ports should be used to bring product into and out of a
country? Into what new markets or marketplaces should I expand or from
which should I withdraw?
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL44
Distribution Network Optimization Distribution Network Optimization
i2 Solution
Combines Simulation with Optimization
Simulation Further validates the
operational feasibility and robustness of the optimized solution accurate picture of the
expected performance of the network
create confidence in the solution more likely to be implemented
Optimization Allows searching
through a very large number of solutions to identify the optimal one that best satisfy the constraints and business conditions/scenarios
Optimization
Simulation
Use i2 Supply Chain Strategist and i2 Transportation Modeler toolsDelivery as a Consulting Engagement
© 2002 i2 Technologies, Inc. CONFIDENTIAL45
Distribution Network Optimization Distribution Network Optimization
Optimized supply chain network
Improved ability to serve YOUR markets and customers at lowest possible cost
Some Key Performance Indicators
Utilization of processes and facilities
Fill rates
Average fulfillment time
Inventory quantities and resulting costs
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL46
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
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MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL47
Spend Optimization Spend Optimization
How to create, execute and sustain global sourcing strategies that reduce both supply risk and total cost and allow strategic win-win relationships with suppliers
How to avoid the proliferation of MRO parts to avoid unnecessary capital investment in parts
How to negotiate the best price and terms & conditions
How to leverage on the terms and conditions negotiated in corporate contracts
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL48
Spend Optimization Spend Optimization
0%
5%
10%
15%
20%
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
FROM 20 SUPPLIERS TO JUST 3 SUPPLIERS
$ Sourced per Supplier Price of Material Transaction Cost
© 2002 i2 Technologies, Inc. CONFIDENTIAL49
Spend OptimizationSpend Optimization
Strategic Sourcing
Product Sourcing
Procurement
i2 Negotiate
i2 Contract Management
i2 Explore Catalog
Common Integration Framework
ERPERP PDMPDM LegacyLegacy
© 2002 i2 Technologies, Inc. CONFIDENTIAL50
Spend Optimization Spend Optimization
Eliminates redundant parts and suppliers for product cost & sourcing efficiency
Global visibility into enterprise spend by part, category, site and supplier to aggregate leverage
Commodity or Product line negotiation to secure optimal price and terms
Single-instance global procurement system for cost effective purchasing
Increased contract compliance to plug post-contract leakage
Some Key Performance Indicators
Purchasing Volume Preferred Suppliers
Purchasing Transaction Cost
Inventory Cost (MRO and direct materials)
Spot versus planned purchasing
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL51
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
stom
ersC
usto
mersS
up
pli
ers
Su
pp
lier
s
MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
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Maintenance Optimization Maintenance Optimization
Complex and high cost of maintenance operations
Un-balanced spare parts inventory across multiple facilities
Uncertainties in MRO needs causing high inventory levels of parts
Facility downtime affecting production Difficult to finish work in allowed down time due to
Unavailability of parts Labor Repair equipments
Business Problem
© 2002 i2 Technologies, Inc. CONFIDENTIAL53
Maintenance OptimizationMaintenance Optimization
How to reduce MRO parts inventories while achieving the target service levels for each production facility at minimum cost.
Pa
rt C
riti
calit
yP
art
Cri
tica
lity
Lo
wL
ow
Hig
hH
igh
ReliabilityReliabilityHighHighLowLow
Part Criticality Matrix
C1 C2 C3
D1 D2 D3
M1 M2 M3
• Boards• Motors• Bearings
• Drives• Switches• Relays
• Seals• Shafts• Keyboards
• Monitors• Pistons• Sensors
• Gears• Assemblies• O-Rings
• Belts• Relays• Probes
• Plugs• Gauges• Kits
• Bolts• Couplings• Breakers
• Fuses• Washers• Frames
Classifying the parts based on their criticalityClassifying the parts based on their criticality
© 2002 i2 Technologies, Inc. CONFIDENTIAL54
Maintenance OptimizationMaintenance Optimization
Enterprise Asset Management (Indus, Maximo, Legacy Systems, etc.)
i2 Maintenance Optimization
ï2 Solution enables:
Optimal budget planning considering target service level
Inventory balancing across multiple mill
Plant wide maintenance planning
Parts forecasting and replenishment
Service scheduling
Inventories, Capacities and
Maintenance Rules Work Orders
Purchase Order
© 2002 i2 Technologies, Inc. CONFIDENTIAL55
Maintenance Optimization Maintenance Optimization
Reduce maintenance costs
Reduced spare parts inventory
Improved asset service level – part available when needed
Synchronized maintenance operations across the mills
Better utilization of maintenance resources (equipments, parts and personnel)
Some Key Performance Indicators
Asset up time
Cost of spare parts inventory
% of time spare parts are available when needed
Benefits
© 2002 i2 Technologies, Inc. CONFIDENTIAL56
i2 Metals Solution Suitei2 Metals Solution Suite
SpendSpendOptimizationOptimization
Order & Material Order & Material OptimizationOptimization
Order Fulfillment OptimizationOrder Fulfillment Optimization
Revenue Revenue & Profit& Profit
OptimizationOptimization
Logistics OptimizationLogistics Optimization
Cu
stom
ersC
usto
mersS
up
pli
ers
Su
pp
lier
s
MaintenanceMaintenanceOptimizationOptimization
Mill OptimizationMill Optimization
Distribution Network Optimization Distribution Network Optimization
Supply Chain Operating ServicesSupply Chain Operating Services
ERP/legacy systemsERP/legacy systemsERPERP ERPERP
© 2002 i2 Technologies, Inc. CONFIDENTIAL57
Supply Chain Operating ServicesSupply Chain Operating Services
Application neutral integration infrastructure
© 2002 i2 Technologies, Inc. CONFIDENTIAL58
Supply Chain Operating ServicesSupply Chain Operating Services
Role-basedUIs
Buyers Planners Order
Management Sales Rep
BusinessProcess Workflows
Manufacturing Procurement Transportation
FunctionalServices
SCM, SRM Embedded 3rd Party Services
InfrastructureServices
Data Integration App. integration SSO Monitoring Data Management Analytics/ Reporting Transaction
ManagementLegacy/ERP
Legacy 2
Service-Based Architecture Service-Based Architecture
© 2002 i2 Technologies, Inc. CONFIDENTIAL59
Open Standards FoundationJ2EE XML
JMS WSDL
SOAP
JMx
JAAS
RMI
JCA
UDDI
Infrastructure ServicesSecurity
Logging
Exception Handling
Monitoring
Management
Load Balancing
Directory/Registry
Transformations
Authentication/Authorization
Workflows
3rd party Adapters
Introspection/Execution
Service-based architectureService-based architecture
Sourcing Order Mgmt TransportationPlanning Promising
Application Services
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Supported Hardware/OS StacksSupported Hardware/OS Stacks
Key vendor platform stacks are supported for 5.2 HP – HPUX 11.0, 11i Sun – Solaris 8 IBM – AIX 4.3.3
Oracle DB2
Microsoft – NT 4.0, 2000, XP
© 2002 i2 Technologies, Inc. CONFIDENTIAL61
Stack Components Stack Components
Application Server: Weblogic Web Server: IIS, iPlanet Web, IBM
HTTP Database: Oracle, DB2 LDAP: iPlanet, IBM Secureway Corba: Visibroker
Security: Siteminder EAI: webMethods, Informatica Thin Client Browser: IE, Netscape
The stack components are based around the following categories of middleware components: