Bruce Palmer

SCOR Modeling

and

Simulation Case Studies

Copyright 2000 by Gensym Corp.

Introduction

• Supply Chains and e-SCOR

• e-SCOR Quick Tour

• How e-SCOR has been used

Supply Chain Trends

• Worldwide dispersion of manufacturing and distribution facilities

• Multiple, volatile channels• Responsiveness versus internal efficiency• Lower margins and higher market share• New products, services, and delivery options• Friction-free and Internet-time information flow

Companies are differentiating on the basis of their supply chain models

What’s Driving Supply Chains Today?

Customers

Capacity /Constraints

Costs

Collaboration /Communication

Change

How do you make supply-chain decisions?

• Analyze alternative configurations that meet organizational goals– customer service levels

– costs

– capacity

• Build confidence in new configurations (make sure you don’t “break the business”)– responsiveness

– limitations

– financials

• Facilitate communication and coordination among all members of supply chain

e-SCOR for supply-chain modeling and simulation

• Quickly models all the 5 Cs of the supply chain

• Simulates alternative configurations to:– identify best configuration for achieving critical business goals

– “what-if” analyze supply-chain robustness

– communicate required service levels across chain

– handle constant changes of players and game rules (such as auctions to bid consolidators to future formulas)

What is e-SCOR?e-SCOR is a software product developed by Gensym for

dynamic modeling and simulation of supply chains. • Implements SCOR including the implementation specific

details

• Provides a time based transaction-level simulation of a supply chain

• Is driven by parameters of the plan, source, make, and deliver functions

• Represents the players, functions, products and resources of a supply chain

e-SCOR -- Supply Chain Design & Configuration

Where Does e-SCOR Fit In?

Time Horizon

Pla

nn

ing

Lev

el

Strategic

Tactical

Operational

Seconds/Minutes

Hours/Days

Weeks/Months

Quarters Years

exec

utio

npl

anni

ng

Order/WarehouseManagement

Transportation/InventoryManagement

Production Scheduling

Manufacturing & DistributionPlanning

Supply Planning

Demand Planning &Forecasting

e-SCOR Offers Analysis for Everyone

CFO:How can I dramatically reduce

working capital within our supply chain?… are there any policy or practice changes that

will help?

CEO: What are the best

strategies for adapting our supply-chain to

e-business?

What’s the overall impact of any major

supply-chain configuration changes?

CIO: What kind of

e-communication will improve my multi-

vendor supply chain?

Supply Chain Manager: How can I configure my supply-chain to ensure

the high-levels of performance needed to

succeed within a world of virtual suppliers and

customers?

VP Operations: How will unexpected

delivery delays impact my overall supply-chain

service quality?

Where are the bottlenecks -- and how

can I reduce their impact?

What are e-SCOR’s Capabilities?

• Development of SCOR models in a graphical user interface

• Animated discrete event simulation of the supply-chain

• Computation and tracking of SCOR standard performance metrics to support comparative analysis and benchmarking

• Support for multiple models, allowing side-by-side comparison of alternative supply-chain configurations, policies, and practices

• Extensibility, enabling development of custom functions and interfaces to real data sources

e-SCOR Models SCOR Levels 1 to 4...

…and can customize beyond Level 4

Level 1

Level 2 Level 3

Level 4

e-SCOR Automatically Quantifies Performance

• Inventories– fulfillment

– fill rates

– days of supply

• Times– cycle times

– lead times

– utilization rates

• Financials– cash flows

– asset turns

… and much more

e-SCOR “Level 1” Roles

e-SCOR aggregates Make, Source, Deliver process categories

into four distinct roles to create Level 1 models

– Base Manufacturer: Front end generator of parts for products

• Make & Deliver categories

– Distributor: Intermediate passer of parts and products

• Source & Deliver categories

– Manufacturer: Turns parts into products

• Source, Make, & Deliver categories

– Consumer: Back end consumer of products

• Source category

S

MD

S D

M DS

ACME ConsumerSupplier/Distributor

BaseManufacturer

RFQs, POs and $ flow this way

Quotes, Goods and Invoices flow this way

Top-down Graphical Modeling

ACMETaiwan

SemiconductorManufacturer

SemiconductorDistributor

ACMELaptop

LaptopRetailer

e-SCOR ComponentsSimulationControls

ModelBrowsers

Resources

Process Role Blocks

Process Parameters

With e-SCOR, You Model Your Level-1 Supply Chain

ACME ConsumerDistributorsBase

Manufacturer

RFQs, POs and $ flow this way

Quotes, Goods and Invoices flow this way

e-SCOR Creates the Level 2 categories ...

e-SCOR Creates Levels 3 and 4 as well!

Make Infrastructure

Make to Stock

Make to Order

Engineerto Order

Define the Products and BOM

e-SCOR Financials

e-SCOR Projects

• Electronics Inventory Management• e-Commerce addition• Order Fulfillment• Electronics Distribution

Hitachi

• Hitachi’s TFT production uses e-SCOR to assess alternative supply-chain configurations with the goals of:– maintaining on-time sourcing

deliveries across varying demands

– lowering inventory costs

Electronics Inventory Management

• Large Asian electronics manufacturer wants to reduce inventory costs by $50M/year

• Currently use “Push” strategy, running all facilities at full capacity

• Using e-SCOR to explore and compare two approaches– Make adjustments to current strategy

– Undertake major effort to switch to “Pull” strategy

Electronics Inventory Management

• e-SCOR is enabling manufacturer to quantify value of Push adjustments like:

– More frequent planning cycles

– Requiring suppliers to cut lead times

– Modifying replenishment strategies• Replenishment thresholds

• Re-order quantities

What if we add the Web to our

distribution channel?

We should expect some erosion in our usual retail

sales.Will we eventually be profitable?

...when?

e-Commerce Addition

e-SCOR visualized the future...

$(1,000)

$(500)

$-

$500

$1,000

$1,500

15-Mar 23-Jun 1-Oct 9-Jan 19-Apr

Web Net Retail Net Margin Trend

start web service

retail erosion

web expansion

profitable

web salesoutpace retailweb

retail

• European communications equipment manufacturer using e-SCOR

• Evaluate suitability of centralizing fulfillment activities

• e-SCOR is quantifying– Cost of facility

– Cost of operations

– Cost of inventory

• e-SCOR is identifying impacts upon manufacturing operations

Order Fulfillment

• Gensym is helping a North American manufacturer to create an e-SCOR model of its global distribution function

• Decisions such as: Where should inventory be kept to meet desired delivery times and minimize costs?– De-centralize inventory

– Manage multi-point transportation

– Estimate costs

Electronics Distribution