Archive for the ‘Alan Kosansky’ Category

This article written by Alan Kosansky and Jim Piermarini was originally published in Supply Chain Brain.

More than a decade has passed since businesses started using Enterprise Resource Planning (ERP) for managing data and transactions throughout the supply chain. Traditionally, ERP systems have provided transparency and insight into transaction-level data in the supply chain that support important business planning activities. Now, a new generation of applications is being developed to help fill the gaps between general business planning and business-specific, tactical and strategic decisions. These ERP-connected applications offer supply chain executives previously unavailable analysis and insights into the decisions that directly impact customer service, profitability and competitive advantage.

Supply Chains Differences

Supply chains are as different as the companies and people that run them. Some companies view their supply chain operations as a “utility” that is expected to function without any investment in intellectual capital. These organizations are content to rely on industry best practices in their supply chain operations and follow the leaders (or the features that are added by ERP software providers) in supply chain improvement. Other organizations see their supply chain operations as a strategic opportunity to develop a competitive advantage and increase market share. They know that with some small departures from the norm and a modest investment in intellectual capital, supply chains can provide enhanced performance to the business. These companies understand that there are opportunities for creative and unique ideas in the supply chain to improve company performance and achieve business strategy objectives.

Today, many C-level executives see their ERP systems as key enablers to company productivity, and for the most part, they are correct. Since ERP systems perform many valuable functions, there is a natural assumption that they can handle whatever business strategy the company adopts. However, new business ideas by definition run the risk of stressing the ERP system features beyond their ability to cope. Usually these failures are discovered only during the implementation of a new business strategy. So what happens when the ERP system fails to support the new business strategy in certain critical details? Those working in the trenches know this scenario all too well. But, what can be done to implement strategic supply chain initiatives when ERP is not equipped to handle business-specific initiatives?

Making the ERP Work

There are three possible approaches for implementing supply chain planning activities that offer a company a competitive advantage:

1. Figure out how to get the ERP system to do it. This approach works well if the company’s needs align well with current industry practices supported by ERP systems. Otherwise, companies may find themselves going down a path that consumes significant resources for a poor fit in the end. Companies that adhere to this path typically do so in part because there is a strong C-level edict in favor of simple, clean upgrades for the ERP system. Faced with this, the IT organization has enormous power to shape the nature of the supply chain operation to fit within the established ERP norms, and thus can act as a barrier for business innovation and supply chain improvement.

2.Modify the ERP system to provide new functionality. This is an approach often promoted by IT organizations committed to supporting the fewest number of tools. While this is an important cost management objective, it is important to understand the full cost to implement and support the system over the long term. What can be accomplished is often limited by the lack of flexibility in large ERP systems and IT organizations. Since ERP systems are mission-critical systems, the support and maintenance of the core functions are of paramount importance. This task, placed on a limited IT staff, leads to large backlogs of enhancement work and long queue times. And while IT departments are well-equipped to manage their primary assets, few if any IT departments have the requisite domain knowledge to cross over into supply chain optimization. Given long wait times, organizations will often choose the simplest approximation of the business change that can be ushered to the top of the queue. This approach can result in a quick-fix style of strategy implementation, rather than a priority-based feature development, and may leave the most important aspects of the initiative lingering in the queue.

3. Add an integrated solution to the ERP system that replaces one or more functions that are needed to achieve the business strategy. This could be from an out-of-the-box third-party provider, or for full competitive advantage, a targeted or custom supply chain application that integrates with the company’s ERP data. This approach has the benefit of including priority-based features that the current ERP system lacks, and the additional benefit of avoiding the ERP enhancement queue. The downside, however, is that it suffers from the stigma of being yet another application and not the ERP system itself. This usually presents a hurdle that requires a careful analysis to understand the total cost relative to the strategic benefit. While not all business changes will overcome this roadblock, there are good reasons to look at this approach. These include:

• Ensuring a tight fit between the business strategy and the tool execution
• Minimizing the cost, overhead, and extra setup and maintenance in un-needed functions from a shrink-wrapped general purpose tool
• Providing the marketplace with a specialized and unique operation of the supply chain for competitive advantage.

Example from the Field

A leading consumer electronics company with about $2bn in annual sales implemented an integrated solution to its ERP system to manage its order fulfillment process for competitive advantage. The company had recently modified its corporate strategy to increase retail sales through its “big box” customers (Walmart, Best Buy, Staples, etc.). However, key service level agreements were not being met for these customers due to lower than expected order fulfillment measures. A simple inventory analysis recommended large increases in the stock required at the warehouse, with some method of segregating inventory for each big-box customer so it could not be taken by orders from other customers.

In this case, one of the leading causes of low service for customers was that they ordered “just-in-time”. These JIT orders were not being given any priority over other customers’ orders with longer lead times. The company noted that these important customers may have provided accurate plan information, but that was not being used to assure them any better service. The analysis recommended that separate stocks of inventory be set up based on the big-box planning information, and that other customers not be allowed to take from those inventory locations. This would result in a large increase in overall stocks, but should achieve the desired increase in service levels.

One manager questioned this recommendation, wanting to know why the ERP system did not use the big-box planning information to appropriately manage the company’s service levels. She also questioned what could be done to avoid increasing her inventory risk and yet still achieve the business strategy. This is a question many managers face when their analysts say that to improve service you need to increase inventory levels. Often there are alternatives. This key manager’s insight set the path for her company to make a significant shift in their supply chain operations, with remarkable benefits. What follows will answer the question: Can I raise the service level of my key customers without increasing my inventory and capital risk? The short answer is, “yes”. Significant service benefits and risk reductions can be achieved, but only if you are willing to deviate from your ERP’s standard approach to implementing key supply chain initiatives.

The industry standard approach for assigning available inventory to open orders is to use a FIFO (first in, first out) approach. This approach prioritizes orders based on when the order was received and assigns on-hand inventory to those orders that were received and entered into the system first. While this approach has a degree of fairness to it, and is available in all ERP systems, it did not align well with the business objectives of this company. It actually penalized key customers who issued JIT purchase orders while giving ample planning information. These JIT orders would have to wait until all the older orders, from non-key customers, were allocated before they would be assigned any inventory.

The standard ERP process does not take into consideration the customer’s strategic importance or their planning information. Given this FIFO process, the internal recommendation makes sense: set up separate safety stocks for each big-box customer (based on their planning information), in separate inventory locations, and make a rule that directs big-box orders to their separate inventory.

But having separate safety stocks violates the principle that more customers need lower inventory together, than each does individually. Pooling the inventory helps to avoid unnecessary capital risk. The standard ERP FIFO inventory assignment process could be replaced with one that met customer needs more effectively.

The company embarked on a project to take into account several important factors when deciding how much inventory to assign to each order:

• The priority of the customer
• The amount of inventory actually in the sales channel of the customer, and
• The planning information that the customer shared with the company.

Customer priority is a key and strategic factor in deciding which customers receive product, when inventory availability is limited or delayed. This business need meant that strategic and high-volume customers should typically be serviced before others. However, this may not be the case if a strategic or high-volume customer happens to be sitting on a lot of inventory in their channel. In these cases, it may be preferable to share the wealth with smaller volume resellers to maximize the sell-through to retail customers. Moreover, these rules may apply differently for each SKU in a manufacturer’s product line.

The business rules to implement these sorts of complex trade-offs can get complicated. If one wants to retain a certain amount of flexibility in these rules, then the ERP system is a poor place to make these decisions. However, since most, if not all, of the data resides in the ERP system, these decisions must be tightly integrated with the data and transaction handling within the ERP system. So an application was constructed to manage the inventory assignment process in this way to more closely match the business strategy. The new application is run several times a day, extracting needed info from the ERP system, making the assignment of inventory to all open orders, and sending back the info to the ERP system.

Using this integrated solution, overall service levels for these key customers were sharply increased, prompting several supply chain awards from these big-box customers. As a result of the increase in service level, Walmart (a strategic customer) was so pleased they chose to increase their orders of all this company’s products by 100 percent. The overall inventory did not increase.

The new method demonstrated that pooled inventory was an effective approach to containing inventory levels. In subsequent versions of this application, the integration of point of sale data has allowed even more control over the inventory in the various channels to market. As a result, this company has declared this application a business-critical application. It overcame the hurdle, and the application can defend its spot on the chart of critical business applications alongside the ERP system.

Integrated Solution Success

Using an integrated solution to the ERP system was a win-win approach that allows the business the flexibility to manage order fulfillment for competitive advantage while maintaining the benefits of centralized data and the strong transactional handling capabilities delivered by ERP.

But order fulfillment is not the only area where there is opportunity to supplement the strengths of ERP with flexible and powerful business optimization processes and tools. Other areas where leading companies have decided to enhance their ERP capabilities include optimization-based infrastructure planning, sales and operation planning, distribution route and territory planning, transportation bid optimization, transportation fleet planning, and production scheduling.

These are just some examples of where complex and/or strategic business rules can provide competitive advantage through improved supply chain performance. While ERP systems remain the backbone of all successful large business operations today, they are not the only path available to companies who desire to apply innovative approaches to their business and supporting supply chain activities. Global enterprises that seek a competitive advantage now have the opportunity to leverage their ERP investments by integrating optimization-based solutions to key business strategies.

This article written by Alan Kosansky and Ted Schaefer originally appeared in Industry Week.

“Network structure, which determines 75%-80% of total supply chain costs, offers the biggest opportunity to reduce those expenditures.”

A recent study of supply chain activities indicated that as much as 80% of total supply chain costs are determined by the network in place and not by the decisions the supply chain team makes on a daily basis within that network. The cause can be attributed to infrastructure, which significantly determines the types of decisions and degrees of freedom that are available to supply chain decision makers. As a result, many companies have literally stumbled into pitfalls associated with warehouses, distribution centers and sources of supply (manufacturing, supplier locations, etc.) because they lacked thoughtful design.

There is help available for vigilant executives in the form of 10 guidelines to implement necessary cost saving measures. All are applicable whether the company is pursuing a growth strategy or struggling with underutilized assets in a challenging economy. Keeping these guidelines at the forefront of consideration can create opportunities to ease pressures on margin and the bottom line.

1.  Network structure, which determines 75%- 80% of total supply chain costs, offers the biggest opportunity to reduce those expenditures.

That’s because when manufacturing and distribution assets are in place, and major transportation contracts are negotiated, actions to improve operations and efficiencies in the supply chain are limited. The time to discover the biggest supply chain improvement opportunities is during assessment or reassessment of the infrastructure in place; e.g. manufacturing capability, raw material sourcing, major transportation lanes, distribution facilities and delivery to customers.

2. Optimize supply chain infrastructure to realize maximal cost savings.

A company’s existing supply chain infrastructure is a primary cause of daily disruptions and short-term challenges. Those companies that experience the smoothest and most profitable operations are the ones who routinely re-evaluate both operations and infrastructure. Those who reevaluate as a matter of procedure tend to become supply chain and profitability leaders. A recurring evaluation of infrastructure should be considered a necessity.

3. Understand the changes that can be impacted.

Change is inevitable, and the response to it will determine a company’s profitability. First assure that the processes and tools are in place to recognize the changes occurring in the supply chain. Then identify and analyze potential courses of actions and communicate the execution plan.

4. Consider technological analysis to make the supply chain decisions.

Spreadsheet analysis can evaluate a potential change in a business plan or supply/demand balance and perhaps project the impact of a given course of action. However when decisions involve multiple products made across multiple manufacturing sites, shipping and distribution point issues while serving thousands of customers, companies need sophisticated tools to effectively consider all the options to assure maximization of every supply chain infrastructure.

5. Modern infrastructure planning requires a collaborative effort.

Good supply chain operations happen because the people in charge of different aspects (sales, manufacturing, logistics, procurement and finance) are effectively communicating by:

• Providing the critical data necessary to make the best overall decisions.
• Understanding how each critical decision \impacts them.
• Informing each department of every decision and the steps they need to implement.

6. The planning process needs to include many different scenarios to ensure a robust solution.

Even with collaboration across all of the stakeholders, the supply chain infrastructure design process depends on forecasts of the future that will not all prove to be accurate; e.g. customer demand, competitors’ actions, cost of raw materials and transportation. Those who recognize the uncertainty of the data that drives their business planning can use supply chain tools to explore different possible futures and evaluate a course of action. That way they can confidently make decisions that will perform well across a wide range of possible futures and position themselves for a positive return.

7. Consider hybrid solutions to ensure low-cost, high level customer service.

Simplified assumptions are quite common during evaluation and analysis of complex supply chain operations. These may cause managers to overlook opportunities that are combinations or hybrids. For example, instead of sourcing 100% of a raw material from a low-cost country, perhaps optimal customer service at lower costs can be achieved by sourcing 80% to the low-cost provider and 20% to a higher cost and more reliable alternate supplier. Another example is demand variation by day of the week, which may warrant different operations on different days. Hybrid solutions are frequently solutions for optimal mix of customer service and cost, however they are often difficult to identify and evaluate.

8. Models and analysis mean nothing without implementation.

A good supply chain infrastructure planning process begins with solid analysis and evaluation of various scenarios to identify an optimal course of action. However, it is not complete without implementation planning, which must address the cultural and organizational issues that too often prevent companies from achieving the gains that have been projected. If there is resistance within the organization to change, it may be necessary to stage the implementation in increments to gain credibility before tackling the more strategic approach.

9. Optimized supply chains minimize inefficiencies.

A good supply chain infrastructure planning process goes beyond elimination of waste to analysis of benefits and tradeoffs among the different drivers of sustainability in the supply chain. This by definition means that you are creating a greener and more sustainable operation. One example is analysis of tradeoffs between profit and other sustainability measures (for example CO₂emissions). Using tools to analyze the total impact of different courses of action can optimize decision making to meet the overall objectives.

10. The answer is in the data.

Assure the accuracy of the data, and then present it to the right people (See #5).

Roadmap for the Future

Supply and logistic executives recognize the importance of developing new and improved ways to understand and use the volumes of data to help them find and utilize the best approach. It is incumbent upon them to ensure that each aspect of the operation is fully aligned to business strategy and goals, which is the purpose of these guidelines. They should be considered a roadmap combining sound business management practices with the newest technologies and tools as a path to success.

Alan Kosansky, Ph.D., is president and Ted Schaefer is director of logistics and supply chain services of Profit Point Inc.. Profit Point, based in North Brookfield, Mass., is a provider of supply chain optimization systems providing such services as infrastructure and supply chain planning, scheduling, distribution and warehouse utilization improvement.

The summer issue of Manufacturing Today includes an article authored by Ted Schaefer and Alan Kosansky entitled Face Complexity – Making Sound Business Decisions.

“With every passing year, the amount and variety of information available to make business decisions continues its exponential growth. As a result, business leaders have an opportunity to exploit the possibilities inherent in this rich, but complex, stream of information. Alternatively, they can continue with the status quo, using only their good business sense and intuition and thereby risk being left in the dust by competitors. Top-tier companies have learned to harness the available data with powerful decision support tools to make fast, robust trade-offs across many competing priorities and business constraints.”

Read the complete article here: Face Complexity – Making Sound Business Decisions

Just this week, IBM’s “Watson” computer showed off its impressive language processing capability by handily beating the best humans at the game Jeopardy!. This was of interest because Jeopardy is filled with tricky language such as puns, slang and wordplay; and Watson was able to process it all, figure out the context, and take it to the humans in winning handily. You can read about Ken Jenning’s firsthand account at http://www.slate.com/id/2284721/.

This story reminds me of the 1997 chess competition between Deep Blue and Gary Kasparov. I was fortunate to hear Kasparov speak at a supply chain conference just days after he had lost to Deep Blue. Despite the fact that he was deeply upset about having lost, Kasparov was able to share important insights that were relevant to the supply chain industry and business in general. What he pointed out was that the competition missed the real point. He described how machines were better at certain kinds of tasks (memorization of massive data, fast processing through the data, etc..), and humans were better at other tasks (certain kinds of inferences and relationships), and that in the future he would hope to see man-machine teams compete against one another to see who could create the best combination of person and machine to be the best at Chess.

Clearly this was an insightful comment to a room filled with supply chain experts. It is our job, every day, to make the best possible decisions in the face of an overwhelming amount of data in front of us. We know for sure, that we cannot rely completely on technology to make these decisions. We know equally well that experience and business savvy are not enough in today’s world to consistently make the best decisions for our business. So our challenge is the one of which we are once again reminded: how best to combine human ingenuity, experience and insight with the power of modern technology to make our business and supply chain be the best they can be. At Profit Point, this is our passion.

As Profit Point celebrates 15 years in business this week, we are reflecting on the many dimensions that has made our journey successful. One aspect of our company that too often flies below the radar, is our commitment to participating in, and giving back to, the communities where we work and live.

In order that you may better understand this aspect of our company, we’ve recently posted a summary of both our philosophy on this subject, and our accomplishments. Like all aspects of our business we set a clear strategy early, identified the appropriate tactics to support that strategy, and then implemented quickly and effectively.

We hope you will enjoy reading about our history of philanthropy.

Why do our customers come back to us over and over again? More than anything, I believe it is because they value the collaboration with our innovative team of creative supply chain thinkers.

There are two key concepts here: Collaboration” and “Innovation”. Let me say a few words about each.

Some companies are looking for external consultants to provide a roadmap, out of the box solution or tell-me-what-to-do best practices. Those companies typically are not our customers. Our customers are the ones who recognize the best partnerships are those that are collaborative: they actively bring unique knowledge and insights of their business and we provide best practices from across many industries, deep supply chain optimization expertise, and state of the art solutions that are practical, implementable and useable in all kinds of supply chain organizations. Together, we define, design and implement solutions that significantly improve supply chain operations in a sustainable and long-lasting way. Read the rest of this entry »

If you like a challenge, then you probably think of 2009 as the best of times. Whether you are a manufacturer, transporter, or supply chain service provider, 2009 was a year filled with change. These changes, compounded by reduced access to capital, probably meant that you had to do more with less. Creative solutions were rewarded; business as usual probably didn’t cut it.

So what can we expect for 2010? Many of the same challenges will persist: Shifting demands, volatile expenses (especially those related to fuel), and continued pressure to be prudent with capital expenditures. At the same time, some industries will lead the way out of the recovery, while other will struggle with recessionary pressures.

Like a homeowner after a hurricane, many companies will take the time to assess the damage, and begin the re-building effort. What they are likely to find is that their operations have become out of sync with their supply chain network and infrastructure.

2010 will see many companies working to re-align their supply chain infrastructure with the needs of their customers and their recession driven changes to supply chain operations. This might include things like re-aligning manufacturing capability to geographic demand, rationalizing your distribution network and channels to current demand patterns, or re-negotiating supplier arrangements to more appropriately reflect new supply chain realities.

As spring cleaning prepares you for sunny times after a long cold winter, the supply chain work ahead will allow the industrious to excel. Change typically causes supply chain infrastructure and supply chain operations to become mis-aligned. Severe change, like most of us have experienced over the past 18 months only exacerbates the problem. The year ahead will be the time to re-align our supply chains and get the most out of the limited capital we will have available to us. Some specific actions to consider include:

• Determine if your distribution network has been re-aligned to meet the changes in your demand.
• Analyze your transportation strategy – are you leveraging your volume to negotiate the best rates from a strategic carrier base?
• Re-evaluate your manufacturing strategy – Are you sourcing the right products from the right locations to minimize your total delivered cost, including manufacturing costs, raw material supply costs, transportation costs and inventory?

Good luck in your work ahead!

If you would like to learn more about our Supply Chain Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

Contributed by Dr. Alan Kosansy, Profit Point’s President.

This month’s issue of Supply & Demand Chain Executive features a supply chain “best practices” article entitled The Changing Landscape of Optimization Technology. The article, which was co-authored by Profit Point’s Director of Sales, Rich Guy, and the company’s President, Dr. Alan Kosansky, reviews the optimization tools that are empowering today’s leading supply chain decision makers.

If you would like to learn more about our Supply Chain Optimization services, please call (866) 347-1130 or contact us here.

“Companies are increasing their local supply capabilities while reducing the costs and risks of highly centralized, offshore production and procurement strategies.“

This month’s issue of Supply & Demand Chain Executive features an informative article entitled The Future of Network Planning. The article, which was co-authored by Profit Point’s President, Dr. Alan Kosansky, and the firm’s Director of Supply Chain Services, Ted Schaefer, looks at the emerging trend towards a more “local” supply chains.

You can read the complete article here.

To learn more about Profit Point’s Global Supply Chain Design services, please contact us.

This month’s issue of Manufacturing Today features an informative article entitled You Can Go Green. The article, which was co-authored by Profit Point’s President, Dr. Alan Kosansky, and the firm’s Director of Supply Chain Services, Ted Schaefer, reviews the trade-offs and consequences of improving financial performance of the supply chain footprint, while also reducing the environmental impact.

You can read the complete article here.

To learn more about Profit Point’s Supply Chain Optimization services, please contact us.

Posted with permission from Manufacturing Today.

Profit Point’s optimization expertise will be available to users of Excel Solver and other leading Frontline products.

North Brookfield, MA (PRWEB) August 4, 2009

Working to deliver state-of-the-art analytics to Microsoft Office users around the world, Profit Point and Frontline today announced a partnership to bring Profit Point’s optimization consulting expertise to the large community of Solver users. Frontline Systems is the worldwide leader in spreadsheet solvers with more than 500 million copies of Solver distributed to users, in every copy of Microsoft Office sold since 1990. Profit Point is a leading supply chain and business optimization consultancy with deep expertise across a range of optimization technologies.

“We are excited to further extend our reach into supply chain business processes and applications,” stated Dan Fylstra, Frontline’s founder and CEO. “Profit Point’s consultants can deliver expertise to our customers in several key areas, including model design, application development and deployment, and integration of our advanced technologies into sophisticated supply chain business processes.”

Frontline, which was the original developer of the solvers/optimizers in Microsoft Excel, Lotus 1-2-3 and Quattro Pro, has now moved far beyond competitive offerings, to deliver the first and only commercial software that can solve the full range of optimization models with uncertainty, using the new methods of robust optimization, as well as classical stochastic programming and simulation optimization methods. The company is also a technology leader in the emerging fields of convex, conic, and global optimization.

“Frontline provides a rich array of leading technology solutions that integrate optimization and simulation,” noted Alan Kosansky, Profit Point’s President. “The breadth of their installed user base enables us to provide clients the right technology to improve the difficult decisions they need to make to continue to improve profitability in challenging times.”

Profit Point, which has supported Solver users for years, has deep expertise and experience in using Solver and the associated optimization techniques to implement practical business solutions. Although specializing in supply chain optimization, the firm’s experience covers a broad range of business problems including planning, scheduling, routing, risk management and financial optimization.

To learn more about Profit Point’s Excel Solver services, visit www.profitpt.com/solver or call us at (866) 347-1130.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Logitech, Rohm and Haas and Toyota.

About Frontline Systems:
Frontline Systems is the worldwide leader in spreadsheet Solvers — advanced software used for optimization and simulation of business and engineering models in Excel. Frontline developed the solvers/optimizers in Microsoft Excel, Lotus 1-2-3 and Quattro Pro. Over 500 million copies of Frontline’s Solvers for optimization have been distributed to users, in every copy of Microsoft Office sold since 1990, and Frontline’s Excel Solver upgrade products, sold directly to advanced users, are by far the market leaders in their field.

Profit Point’s transportation procurement optimization service reduces outsourcing costs by quickly analyzing multiple carrier bids and provides insightful data for decision makers

Profit Point, a leading Supply Chain Optimization company, today announced the introduction of Transportation Procurement, an optimization service that will cut costs for manufacturers and distributors that outsource some or all of their shipping to third-party carriers. The service provides transportation analysts and procurement managers unsurpassed ability to quickly analyze carrier bids and evaluate the best combination of carrier discounts, enabling them to negotiate rates to ship at the lowest total cost.

“Our clients are looking for new ways to reduce costs and gain productivity in every aspect of their business.” said Alan Kosansky, Profit Point’s President. “With the constant fluctuations in the transportation market, this service enables clients to manage their core carrier base and make effective decisions quickly, negotiating with carriers from a position of strength.”

The company’s optimization service and technology provide the analytical horsepower to the transportation or procurement professional to quickly evaluate different mixes of carriers and lane assignments, making trade-offs among both quantitative and qualitative business goals. The service’s richness and flexibility enables clients to dictate constraints to enforce site-specific, regional or global limits on the number and types of carriers that are included in the awarded lanes.

“We have deployed carrier bid optimization software to our clients in the past; however we have found that many of our clients prefer to leverage our deep analytical expertise. By partnering the client’s negotiating team with the analytical insights we provide them, they are able to reach the best possible outcomes in their negotiations with carriers,” said Kosansky. “And when our clients are ready to bring the analysis in house, we readily provide our Profit Procurement for Transportation software.”

Most large manufacturers have hundreds of carriers and thousands of lane options available to ship products from their manufacturing and distribution centers to their customers. The firm’s procurement optimization service addresses all inbound and outbound transportation routes, including rail, truck (bulk, packaged, and LTL), and marine bids, and simplifies the selection process while lowering the overall transportation costs.

To learn more about Profit Point’s transportation procurement optimization services, call us at (866) 347-1130 or visit www.profitpt.com.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Logitech, Rohm and Haas and Toyota.

By Dr. Alan Kosansky, President of Profit Point

There is certainly a lot of change in the business optimization world today. From the significant changes at optimization software companies, to the growing areas of business optimization implementation, the world of optimization is a fast changing and exciting place.

In 2008, two of the leading software providers of mathematical optimization engines – both Profit Point partners – were acquired by much larger companies: ILOG, and their CPLEX optimization software, was acquired by IBM. Dash Optimization, and their XPRESS optimization software, was acquired by Fair Isaac. In addition, 2008 saw the launch of a new significant player into the market: Gurobi Optimization, with a management team that was involved with the initial launch of CPLEX.

Each of these players has the potential to lead the market over the long term, yet each presents their own uncertainty looking forward. How optimization technology fits into the long term strategies of acquiring companies IBM and Fair Isaac is the topic of much speculation. How quickly Gurobi is able to release competitive products and how well they are able to compete for customers is the topic of much anticipation. We will be keeping a close eye on these situations as they unfold, and will be back to share with you our insights in the future.

From the business and application perspective, business optimization and the software applications that act as enablers for better business decision making continues to explode in the marketplace. Leveraging the fact that more and more data is available to businesses and the key decision makers in their organization, those companies that are incorporating advanced decision technologies are realizing significant competitive advantages.

We have had recent success with a number of these industry leaders. They include a retailer using optimization to determine how best to manage their backlog of orders and fulfill customer needs, a production equipment leasing company managing the a delivery of capital intensive assets to maximize utilization and throughput, and a transportation delivery company minimizing customer wait times and maximizing the satisfaction of their customers’ experience.

Each of these success stories were driven by data, elevated by optimization, and guided by thoughtful and forward thinking management. Are you the next success waiting to happen?

If you would like to learn more about our Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

This month’s issue of Supply & Demand Chain Executive features an informative article entitled Understanding the Four Pillars of Supply Chain Technology. The article, which was co-authored by Profit Point’s SC Planning Practice Leader, Ted Schaefer, and the firm’s President, Dr. Alan Kosansky, lays out “What you need to know about the information technology that drives your supply chain – and ensures that your supply chain drives profitability”.

You can read the Complete article here.

If you would like to learn more about our Supply Chain Optimization services, please contact us.

Green Network software is recognized for its role in helping to build environmentally sustainable businesses.

Supply & Demand Chain Executive magazine honored Profit Point, a leading supply chain optimization company , with a 2008 Green Supply Chain Award. The company and its Green Network supply chain design software was recognized as a Green Supply Chain Enabler. Profit Point is showcased with other award winners in the latest issue of Supply & Demand Chain Executive.

Profit Point has been delivering supply chain optimization services and software to Fortune 500 companies for more than a decade. Earlier this year, the company introduced Green Network when it recognized that its clients needed a robust tool to account for and optimize away manufacturing waste, such as industrial pollutants and green house gas emissions.

“Profit Network software has been helping large companies around the world build more robust and profitable supply chains for more than 10 years,” said Jim Piermarini, Profit Point’s CTO. “From our clients’ perspective it makes sense to incorporate environmental byproducts in to the network design to evaluate opportunities and costs and conduct scenario testing in advance of these critical infrastructure decisions.”

The company’s software products are now used to help companies manage the tradeoffs associated with environmental resource constraints, such as limited water supplies in developing countries. Profit Point’s transportation and distribution clients achieve more efficient territory planning and vehicle routes, which mitigates unnecessary fuel consumption and carbon dioxide emissions.

The Green Supply Chain Awards recognize small, midsize and large organizations that are taking steps to realize eco-efficiency goals. Submissions were judged based on the clarity and content of each program’s goals and strategy, the extent of the steps being taken, the impact of the results to date and projected results, and the form and presentation of the information submitted.

“We are honored to be recognized by Supply & Demand Chain Executive for our focus on sustainability and we’re delighted to play a role in helping business managers define and reach environmental sustainability objectives across their supply chain,” said Alan Kosansky, President of Profit Point. “We look forward to any opportunity to help create a more sustainable business environment.”

To learn more about Profit Point’s supply chain software and services, visit www.profitpt.com.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Logitech, Rohm and Haas and Toyota.

Leveraging Profit Point’s supply chain optimization methodologies, Toyota North American Part Center California improves efficiency and quality of their workload planning sequencing process to receive containers from Japan.

North Brookfield, MA (PRWEB) October 6, 2008

Profit Point today announced that Toyota Motor Sales (TMS), U.S.A., Inc.’s North American Part Center California (NAPCC) has improved its receiving sequencing processes using advanced mathematical optimization techniques. NAPCC is one of the parts distribution centers among TMS’ North American Parts Operations network, which was established to improve local parts sourcing and manage a parts distribution network that supplies all North American Toyota distributors, U.S. Toyota, Lexus and Scion dealers as well as export to parts centers in Japan. NAPCC turned to Profit Point to apply mathematical optimization techniques to further improve their supply chain operations.

“We turned to Profit Point to apply mathematical optimization techniques to further improve our supply chain operations,” Johnnie Garlington, NAPCCs warehouse operations manager. The program supported the increase in daily offload by 16% resulting in labor savings, off-site storage costs and detention expenses.

Profit Point, the leading supply chain optimization company, combines proprietary software with proven optimization techniques to help business managers improve their operations. Profit Point supported NAPCC’s objective to redesign their workload planning process to improve the efficiency and quality of their sequencing processes. Profit Point carried this out by designing and building custom supply chain software to optimize their sequencing processes.

“We were asked to investigate a mathematical approach to solving Toyota NAPCC’s container receiving sequencing process,” said Joe Litko, Profit Point’s Business Optimization Practice Leader. “This was an interesting challenge for several reasons. We needed a cost-effective solution using legacy tools, the model needed to run quickly, be flexible, and give robust solutions that consider several performance measures simultaneously.”

NAPCC had been using a traditional spreadsheet to manually achieve an hourly workload plan. Profit Point reviewed the sequencing process and designed a stand-alone application to smooth out the flow of containers to maximize the daily unload capacity.

“Like most businesses, Toyota NAPCC was using good, traditional operations practices,” said Dr. Alan Kosansky, Profit Point’s President. “But, by combining the right mathematical optimization methods with a clear understanding of the business requirements, we were able to achieve a superior supply chain process for Toyota.”

To learn more about Profit Point’s supply chain optimization software and services, visit www.profitpt.com.

About Profit Point:

Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Rohm and Haas and Toyota.

Contact:
Richard Guy
Profit Point
(866) 347-1130
http://www.profitpt.com

You’re patting yourself on the back. You’ve sorted through the Marine Shipping chaos. In the face of volatile Marine Transportation rates, you just negotiated great prices to transport your North American produced bulk liquid via tank containers to ten Pacific region countries. The contracts are signed and locked in for the next year, holding costs to a known level. A month later you discover there may be a better way. Rather than transport your bulk liquid separately to each of your ten Pacific region customers, you can send all the product on a parcel tanker to a terminal in Singapore, drum it, and ship the drums from Singapore to each of your customers. And you can do this at considerable savings without a reduction in customer service. You looked at so many options, why didn’t you consider this one?

How do you make sure your business is aiming before it fires? The business process of supply chain network analysis and design will help you ensure that you are using the best modes of transportation, the best routes, and the right mix of intermediate assets (e.g. storage, inventory, etc.), to get your products where they need to be to meet your business goals. And the icing on the cake is that it is a relatively easy and cost effective process.

So how does it work? Here is a proven process to design a supply chain network that best meets your business objectives.

1) Clearly define your objectives. No logistics manager is likely to improve all aspects of their logistic and distribution network all at once. The most critical step of the network analysis and design process is to identify your primary objectives. A partial list of critical decisions you might consider is:

• What level of customer service does my market demand?
• What modes of transportation should be used to balance cost vs customer service objectives?
• Which warehouses should supply product to which customers?
• How many warehouses do I need and where should they be located?
• Where should inventory be stored and how much inventory should I be carrying of each product?
• Which manufacturing plants should be making product for which customers/warehouses?
• What routes should I be using to get product from source to destination?
• Are there opportunities for pooling resources that have been overlooked?

Identify your objectives as those decisions that are most important to the bottom line and those that you can do something about.

2) Gather supporting data. In order to make intelligent decisions, you need solid data to support those decisions. This step is usually the most time consuming part of the process. The good news is that the data is available and reusable. Most likely it exists in your new ERP or legacy system. Typical data elements include: demand by product and container type, transportation rates, transportation lead times, warehousing costs (both fixed and variable costs), and inventory costs. If your objectives include determining the manufacturing source of products, you will also need data like manufacturing and raw material costs.

3) Model your supply chain network. Today’s technology can help you make better decisions as there are many vendors offering supply chain network optimization tools. Alternatively, you can cost efficiently configure your own. Choose wisely, as all software is not created equal. Make sure the software you select fully addresses the decisions you need to make and can represent your unique business and logistics network. Typical model components include capacity limitations, customer service requirements, lead times by mode, operating capabilities and the cost of different options.

4) Analyze your supply chain network. There is no silver bullet. Using supply chain optimization tools to make better decisions for your business requires good old-fashioned analysis. Relying on people to leverage the benefits of technology is the path to success. A good supply chain analyst will be both an expert about your business and an expert with the supporting technology. They will need to review many “what if” scenarios with the business management to finalize the supply chain network design.

5) Implement and refine. The supply chain network analysis and design process is not a static process. Successful ideas are implemented and cost savings are realized. And then things change: a large new customer is added at a new location, more production capacity is added, demand takes a nosedive, or raw material prices swing dramatically. Thus, like all good planning processes, the supply chain network analysis and design process must be on going. This process should be revisited regularly (annually/quarterly,) and/or when big things happen within the business.

How do you measure the success of this business process? Firstly, it must generate bottom line savings in your supply chain operations. Secondly, the business process must embed itself firmly in the corporate culture. Treating supply chain analysis as a one-time effort limits your business from fully reaping the fruits of your labor.

“Although we have achieved cost savings between 4% and 11% of our total logistics costs in our network designs, the biggest value that we’ve seen from this type of analysis is a common understanding of the delivery chain among Manufacturing, Marketing, Sales, Logistics, and Planning. This common understanding of cost and customer service trade-offs results from the more complete “picture” of the network that emerges from this analysis and the ability to churn out “what-if” analysis to cover most credible business scenarios. It is this understanding and the ability to quickly understand and exploit changes in the market that is the enduring value of a continuing network analysis process”, says Ted Schaefer, Global Logistics Strategy & Design Manager at the Rohm and Haas Company.

Those businesses that integrate the supply chain network analysis and design process into their corporate culture will reap the benefits of efficient and focused logistics operations year after year. With a process like this in place you can be assured that you aim before you fire.

Dr. Alan Kosansky received his Doctorate in Applied Mathematics from The Johns Hopkins University in 1991. He is the co-founder and president of Profit Point Inc. He has taught at Villanova University and has shared his expertise at many national conferences. Dr. Kosansky has pioneered the application of advanced analytic techniques to transportation procurement, dynamic scheduling, supply chain management and financial optimization. His methods have repeatedly helped manufacturers to reduce their transportation, manufacturing, and inventory costs, and businesses to realize higher profits.

Ted Schaefer is the Global Logistics Strategy & Design Manager at the Rohm and Haas Company. He has been with Rohm and Haas for 18 years, spending the last 12 years in the operation or redesign of various segments of the Company’s Supply Chains. He has done network analysis and designs for the Rohm and Haas Monomers Business in North America, Europe, and Asia. He is a member of the Council of Logistics Management and APICS.

To learn more about how Profit Point can help you get the most out of your Supply Chain Infrastructure Planning, call us at (866) 347-1130 or send us an email.