supply chain analytics with simulation
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Supply Chain Analytics
Michael J RiceDirector | Manufacturing & Logistics
Eastern US & Canada
O: 207.406.4993
M: 845.781.3514
Andy SchildDirector | Manufacturing & Logistics
Central US & Canada
[email protected]: 585.398.8178M: 585.507.8499
Mike TownsendDirector | Manufacturing & Logistics
Western US & Canada
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)