logistical applications and optimizations

h_DA WS 2011 Logistical applications and optimizations Slide 1

Matthias Mekschrat

Logistical applications and optimizationsLogistical applications and optimizations


Matthias Mekschrat

overview

Introduction

October 28 - definition of business processes

November 11 - overview of logistical business processes

December 02 - functionality of production processes

January 20 - special problems within the supply chain handling

December 16 - functionality of sales and distribution processes

November 18 - functionality of purchase and supply processes


Matthias Mekschrat

Review on the last session

You have learned about tools to integrate and control process, such as supply chain event manager

You have learned about the structure of supply chain processes1. Sales and distribution2. Production planning and sceduling3. purchasing

You have learned about the main business support processes1. Controlling2. Budgeting3. Reporting

You have seen an overview on supply chain planning

You have learned about sequential and network supply chains

You have developed a supply chain planning model

You have seen QM as an example for an logistical crossover process

You have discussed reactions on disturbences within the supply chain


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About this lecture

All sessions are split into 2 blocks: from 08:30 to 10:00 and from 10:15 to 11:45Each session starts with a short review of the last lectures subjects

Next I will give you a short theoretical overview of the days subject

Each group will then present the results of their discussions

I will present theoretical explanations for the discussed subjects

Then I will show a example solution for a potential written test question

Finally I will give a summary of the key messages for this session

Next you probably will develop 3 different subjects in a brainstorming session in 3 groups


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overview

Introduction

October 28 - definition of business processes

November 11 - overview of logistical business processes

December 02 - functionality of production processes

January 20 - special problems within the supply chain handling

December 16 - functionality of sales and distribution processes

November 18 - functionality of purchase and supply processes


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Functionality of purchase and supply processes

Purchase support

Purchase execution

Short break

Part 1

Disposition processes

Supply optimization

Part 2


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Purchase support

Purchase execution

Short break

Part 1


Supply optimization

Part 2



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Functionality of purchase and supply processes, Part 1

Integration of purchase processes into the supply chain results in lower costs by reducing stocks and delivery time

Problems and potentials

Delivery „just in time“ is one major demand for an optimal supply chain. This is only possible with the integration of purchase processes into the total supply chain process in order to provide appropriate informations


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Understand the difference between purchase support processes and purchase execution processes

Understand the important inputs and outputs of each component

Understand the main functionality of purchase applications system

Learning targets

Understand the involved acting logical business units

Understand the calculation of purchase quantities


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Plant CustomerStore TransportSupplier

Supply chain processes

Supply chain processes represent all main logistical activities for creation of value according to the business definition


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SalesProduction

planning andscheduling

Shipment and distribution

Purchasing

Logistical crossover processesLogistical crossover processes

Business support processesBusiness support processes

Supply chain processes


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Purchase support

Purchase execution

Short break

Part 1


Supply optimization

Part 2



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Order Management

ERP System Customer X

Supplier A

Purchase order

Catalog

Supplier A

Catalog Supplier B

WEB-Browser

Business Connector

Purchase support processes

Catalog Supplier C

Supplier B

Supplier C

ERP System Customer Y


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Purchase support processes

Supplier relationship management

Vendor evaluation

Market places and e-procurement


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Purchase support

Purchase execution

Short break

Part 1


Supply optimization

Part 2



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Materials requirements planning (MRP)


Purchase requirementsPurchase requirements

Bidding Bidding Purchase order Purchase order

DeliveryDelivery

QM on delivered materialQM on delivered material

MRP lists

Goods Receipt

Purchase execution processes

PaymentPayment

Material &

Quantity

Delivery

schedule

Release Certificate

Supplier

Invoices


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Generated automatically by the MRP

Internal planned purchase according to disposition needs

Purchase requirements

Material, due date and quantities are known

Supplier is still not named at this phase

Quantities are calculated according to the given demand and the lot sizes in the master data

Lot sizes can be customized by giving a fixed size or by calculating a dynamic lot according to defined rules

Purchase requirements are transfered to purchase orders by decision of the purchase department


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Potential suppliers are requested to place an offer for a certain potential purchase order

Bidding

Material, due date and quantities are known (usually equal to the purchase requirement)

Potential supplier offer a certain price and certain conditions

An offer usually has a period af validity

If an offer is accepted by the customer, the supplier is bound to that offer

Purchase requirements and offerd conditions are jointly transfered to purchase orders


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Generated in the purchasing department by transferring the purchase requirement

Purchase orders

Material, due date and quantities are clear according to the purchase requirement

The actual supplier has to be named according to the best offer or other restrictions ( Availability, „A-Supplier“ or contingents)

Material availability at favoured suppliers might lead to splitted purchase orders

Supplier‘s lot sizes or delivery schedules might lead to a change in the purchase order

Purchase orders are transfered to the choosen supplier by different ways of communication


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The ordered material is physically delivered to the requested point of receipt

Delivery

The received amount - if still subject to an incoming goods inspection - is booked into a special check inventory

The received amount - if accepted - is booked into the customers inventory

The material will become customers property with the booking into the inventory

The purchase order will be closed or partly closed depending on the received amount an the rules to accept variations


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This step is only needed, if no agreements are made with the supplier that quality checks are done at the suppliers plant

Quality checks on delivered material

Normally the customer only receives a certificate together with the delivered material

Quality ckecks can be done permantly for each delivery, at random according to a check plan in the master data or only in certain cases (e.g. damaged package)

If a quality check is required, the delivered material will only be taken into the customers stock and property, if all requirements are fullfilled according to the customized check plan


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After the material was accepted by the customer, the supllier gets a material receipt

Payment

The supplier than sends his invoice to the customer

The invoice is compared with the purchase order data and the results of the quality checks

If the invoice is accepted, payment will be activated

Material receipts and invoices are transfered to the choosen supplier and to the customer by different ways of communication

The purchase process than is completed


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Practical part: developing the subjectsGroup A: A customer needs 100 pieces of a certain material. 50 pieces

today and 50 pieces in 10 days. Supplier A: minimum lot 100 pieces, Price: 50 ct/p. Available immediately. Supplier B: minimum lot 50, steps of 50, Price: 60 ct/p, Available immediately Supplier C: no minimum lot, steps of 10, Price: 50 ct/p, Available in 5 days Each day on stock costs 20 ct/p.Each day delay costs 20 ct/p.What is your supply plan ?What are the overall costs ?

1. you have 20 minutes for group discussion and writing down your ideas2. afterwards each group has 5 minutes for the presentation of your ideas3. your are free to use any presentation medium

Group B: A customer needs 200 pieces of a certain material. 100 pieces today and 100 pieces in 5 days.

Supplier A: minimum lot 50, steps of 50, Price: 80 ct/p, Available immediately Supplier B: no minimum lot, steps of 10, Price: 50 ct/p, Available in 5 daysSupplier C: minimum lot 200 pieces, Price: 50 ct/p. Available immediately. Each day on stock costs 10 ct/p.Each day delay costs 10 ct/p.What is your supply plan ?What are the overall costs ?


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Example solution for a potential test task, Part 1

A customer needs 100 pieces of a certain material. 50 pieces today and 50 pieces in 10 days.

Supplier A: minimum lot 100 pieces, Price: 50 ct/p. Available immediately. Supplier B: minimum lot 50, steps of 50, Price: 60 ct/p, Available immediately Supplier C: no minimum lot, steps of 10, Price: 50 ct/p, Available in 5 days Each day on stock costs 10 ct/p.Each day delay costs 30 ct/p.1. What is your supply plan2. What are the overall costs

Supplier Amount today

Formula Costs today

Amount in 10 days

Formula Costs in 10 days

Total

A 100 100*50+10*50*10 10000 0 0 10000

B 50 50*60 3000 50 50*60 3000 6000

C 0 50*5*30 7500 100 100*50 5000 12500

Mix 50 ( B ) 50*60 3000 50 ( C ) 50*50 2500 5500


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Summary and key messages, Part 1

The purchase execution components are purchase requirement, bidding, purchase order, dilivery and payment

Literature1. Stadtler, Kilger – Supply chain management and advanced planning,

Springer Verlag, Berlin Heidelberg, 20002. Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain

Management, Gabler Verlag, Wiesbaden, 5/2004 3. Silver, Pyke, Petersen – inventory management and production planning

and scheduling, New york et al.

Examples for purchase support functionality are SRM, e-procurement and marketplaces

A supply plan is the result of considering all customized suppliers restrictions

The entry for purchase demand is the MRP


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purchase support

Purchase execution

Short break

Part 1


Supply optimization

Part 2



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Disposition is the main part of supply calculation and timing

Problems and potentials

The usage of all SC modules within an application system is mandatory to achieve a reasonable disposition results

Distribution of information in case of disturbances is a challenge a high potential

Disposition in application system is done by the MRP


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Understand the important inputs and outputs of each component

Understand the needed components for a MRP

Learning targets

Understand the involved acting logical business units

Understand the importance to customize the actual restrictions


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Purchase support

Purchase execution

Short break

Part 1


Supply optimization

Part 2



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MRP list per material


ForcastForcast

Sales ordersSales orders

Stock minusStock minus

Production ordersProduction orders

Purchase ordersPurchase orders

Stock plusStock plus

Development of stock on the timeline

ReservationReservation


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Date Type Amount Stock

today Stock 1000

10.07. Sales order - 500 500

17.08. Production order 100 600

10.09. Purchase order 200 800

10.09. Sales order - 700 100

10.10. Forecast - 1000 -900

15.10. Production order 100 -800

16.10. Purchase order 1000 200

10.11. Reservation for production of material 4711 - 400 -200

15.11. Production order 200 0


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Purchase support

Purchase execution

Short break

Part 1


Supply optimization

Part 2



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Collaboration One-to-many Communication Synchronous/asynchronous

Communication Synchronized Planning Cycles Automated Decisions Tracking and Tracing

Supplier networked Supply Chains.

2 nd Supplier

Carrier

3 rd Supplier

1st Supplier


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Settlement

FP

Consignment

Collaboration

t–1 month t+x days t+1 month t+1 year

time

Step Time Horizion Remarks/Tools

Collaboration 1 year APS DP Tool

Consignment 1 month+ APS or Core ERP

Frozen PeriodPicking, Packing and Transit

Lead TimeCore ERP

Settlement 1 month Core ERP

A typical vendor managed inventory szenario

T = today


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Advantages of Collaboration

Customer Supplier

No safety stock More precise demand planning

No purchase ordersAutomated consignment fill-up and

consignment issue orders

No quality inspection No printing of CofA‘s

„Pay only what you have used“ No printing of invoices

No incoming invoice No invoice verification


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Practical part: developing the subjects

Group A: Stock today (1.6.) is 50 piecesForecasts 50 pieces on each first of the month beginning 1.8. ending 1.12.Reservations on 15.8. and 15.9. 50 pieces each for material x Sales orders on 10.6. and 10.7. 20 pieces eachPurchase orders take 5 days and have min 50 pieces and max 100 piecesProduction orders take 10 days and have fixed 10 piecesPlease develop the MRP list !! MRP Period is 4 month

1. you have 20 minutes for group discussion and writing down your ideas2. afterwards each group has 5 minutes for the presentation of your ideas3. your are free to use any presentation medium4. group A starts the presentation

Group B: Stock today (1.6.) is 100 piecesForecasts 200 pieces on each first of the month beginning 1.8. ending 1.12.Reservations on 15.8. and 15.9. 100 pieces each for material x Sales orders on 10.6. and 10.7. 50 pieces eachPurchase orders take 5 days and have min 100 pieces and max 200 piecesProduction orders take 10 days and have fixed 50 piecesPlease develop the MRP list !!


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Stock today (1.6.) is 100 piecesForecasts 100 pieces on each first of the month beginning 1.8. ending 1.12.Reservations on 15.8. and 15.9. 50 pieces each for material x Sales orders on 10.6. and 10.7. 80 pieces eachPurchase orders take 5 days and have min 50 pieces and max 100 piecesProduction orders take 10 days and have fixed 20 pieces

Please develop the MRP list !! MRP period is 4 month


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Date Type Amount Stock

01.06. Stock 100

10.06. Sales order - 80 20

01.07. Production order + 20 40


10.07. Purchase order + 50 110

10.07. Sales order - 80 30




01.08. Forecast - 20 100

15.08. Reservation - 50 50

01.09. Forecast - 50 0


15.09. Reservation - 50 0

01.10. Forecast - 50 - 50

01.11. Forecast - 100 - 150

01.12. Forecast - 100 - 250



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Summary and key messages, Part 2

Literature1. Stadtler, Kilger – Supply chain management and advanced planning,

Springer Verlag, Berlin Heidelberg, 20002. Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain

Management, Gabler Verlag, Wiesbaden, 5/2004

MRP Disposition lists are the main elements of SC Planning

Collaborative planning optimizes purchase processes

Vendor managed inventory is a collaborative planning method


Matthias Mekschrat

Thank you very much for your participationThank you very much for your participation

…… and see you on Friday, 2nd of December…… and see you on Friday, 2nd of December

logistical applications and optimizations

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