We just finished the fall soccer season in my home. I was thinking about watching my children play soccer when they were younger after a conversation with one of our consultants. He had just come back from visiting a prospective client where he was doing an assessment of their supply chain work processes and systems. Speaking frankly, this prospective client really did not have well defined work processes and certainly didn’t have systems implemented to enable good work processes. Mostly they seemed to run from one fire to the next and tried to do their best in tamping out the flames enough to be able to move onto the next crisis. Our consultant came back feeling dizzy from observing how they operated.
When my kids were younger and playing soccer, their style of play could be characterized as “kick and run”. They really either didn’t understand the concept of trying to possess the ball or couldn’t execute this strategy. If you have the ball, you have the opportunity to score. If your opponent does not have the ball, they can’t score. It’s a simple as that. After watching my kids play on Saturday mornings with this “kick and run” style, I would really enjoy going to see a local college team play. They have won numerous national championships and play at a very high level. They understand and are able to execute this “possess the ball” style of play. It was always helpful to see how the game should be played and get my perspective straightened out.
Perhaps the “possessing the ball” analog in the operation of a supply chain is “possessing the key information.” In soccer, you have to get the ball to your attackers at the right time and in the right place in order to score. Likewise, in the supply chain, you have to get the right information to the right people at the right time to beat the competition. If you are feeling dizzy from fighting fire after fire (playing “kick and run”) in your supply chain operations and don’t seem to be making any progress on making things better and more stable, it would be our privilege to help assess where you are at and work together to move your organization toward operating in championship form.
A company I recently visited relies entirely on only one supplier for a major component for their product. This is an obvious supply chain risk, and the company requires huge stocks of this component (which comes in several sizes and colors) to mitigate their risk. However, what about the less obvious risks that lurk in a supply chain? A basic business tenet that equates the greatest supply-chain risk with suppliers of highest annual expenditure was debunked in a new MIT study on supply chain risk.
That study was conducted by Professor David Simchi-Levi of MIT at Ford Motor Company. The study points out that traditional methods of identifying the highest risk to the supply chain rely on assessing a probability that a risk will occur and knowing the magnitude of the problems that would result. Since frequency and impact of risk are difficult to predict and quantify, conventional wisdom has been to assume the greatest supply-chain risk is tied to biggest suppliers.
Rather than looking at probabilities of disruptions, the study examined the impact to the company’s operations given the occurrence of any disruption. The reasoning behind this is that no matter what type of disruption companies’ mitigation choices are the same: maintain high amounts of inventory; find an alternative supply source, etc. The model uses Ford’s multi-tier supply network incorporating part mappings to product lines, supplier relationships, operational and financial impact measures and supplier recovery time to a problem. By successively removing nodes in the network and evaluating how to best reallocate inventory and analyze alternatives, the financial impact of each “disruption” was evaluated.
The model results showed that a short disruption at 61% of the tier 1 firms would not cause profit loss, but if only 2% of suppliers with the cheaper components experienced a disruption to production, Ford’s profits would be significantly impacted.
What if you could not only have visibility to your tier 1 suppliers, but your supplier’s suppliers, and so on and so on on…. Technology is emerging that enable companies to visualize their supply chains and the history behind them beyond the first tier. By employing crowd-sourcing technology companies can go beyond exposing their tier 1 suppliers. When used in conjunction with a network optimization study, supply chain risk is elevated to a whole new level of exposure. Profit Point experts are uniquely positioned to leverage both experience and technology to conduct Supply Chain network design and entire life-cycle analysis.
Supply chain experts agree that one of the greatest challenges to Global Supply Chain in 2014 is disruption either in technology or physical outages. Those companies who have prepared for these challenges will be best positioned in the coming year to be successful.
Logitech is a world leader in personal peripherals, driving innovation in PC navigation, Internet communications, digital music, home-entertainment control, gaming and wireless devices. With a history of fast-growing distribution channels and a product line that is frequently being updated, Logitech’s key supply chain challenges are similar to those of many other consumer electronics heavyweights. Its product life cycles are relatively short and consumer demand can be fickle. But when Logitech gained global, mass market status with customers ranging from Walmart and Best Buy to direct online sales, its supply chain challenges were compounded.
With mounting distribution challenges, Logitech engaged Profit Point to bridge the gap between their ERP and their real world need to compete. Click the link below to access the case study:
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.”
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.
The article, titled Reconnecting With Your Network, reviews the assumptions that motivated the recent shift towards offshoring and the global market changes that have occurred since.
The rush to reduce costs in manufacturing and procurement fueled a surge in outsourcing and offshoring over the last decade that has almost taken on a life of its own. While “low cost” manufacturing has proven a compelling factor, new evidence supports a more detailed understanding of a products total delivered cost.
Read the complete article here.
To learn more about how Profit Point’s supply chain consultants can help improve your supply chain network and infrastructure, contact us here:
(866) 347-1130 or
LQM Petroleum Services is one of the largest international marine fuel oil brokers in the world, with core competencies in marine fuel oil brokerage, futures markets and outsourced bunker procurement solutions. With its deep expertise in marine refueling, LQM recognized that marine operators lacked a comprehensive refueling and inventory management system.
When it came time to build the system, BOptimumTM, LQM partnered with Profit Point to optimize the software algorithm in its bunker refueling recommendation software system. Read our case study to learn more about how LQM partnered with Profit Point to optimize its BOptimum bunker refueling recommendation software system.
Business Problem: Dole Food Company, Inc. is a producer and marketer of high-quality fresh fruit, fresh vegetables and fresh-cut flowers, and markets several lines of packaged foods. Dole globally purchases containerboard from several paper companies to manufacture containers to transport and inventory their products.
Dole uses an MS Excel spreadsheet to optimize the variables and constraints to develop an annual strategic purchasing plan and on-going monthly tactical purchase plans for the year to minimize the total costs of buying paper products.
Dole had a desire to improve the optimization tool by using Profit Point’s supply chain consultants to:
- Validate the current optimization methodology and algorithms
- Investigate if there might be a better approach or tool to solve this problem
One of Dole’s purchase challenges was developing dynamic monthly plans that were consistent with the annual plan as they move through the year. The terms and conditions offered by the containerboard manufactures include variable costs and constraints that were non-linear. The monthly plan needed to consider these conditions to produce a purchasing plan that provided Dole an optimal cost minimization solution as they reach year-end.
Profit Point’s Solution: Validation: Profit Point reviewed Dole’s data inputs, assumptions, optimization process and validated that the current spreadsheet model was operating correctly and that the spreadsheet was providing Dole an optimal answer. A few modifications were made to the model which allowed Dole’s purchase managers to quickly update and run the tool, and review the output reports. This provided them the ability to confidently make a purchase decision by using the model output or a variant of the output or change the input and re-run the Optimization Tool.
Improved Process and Tool: Profit Point provided Dole with an improved Containerboard Optimization Tool using Frontline Systems‘ solvers that gave management the ability to:
- Dynamically solve the optimization problem on a monthly basis and consider all the contractual terms associated with optimizing annual tonnage purchase levels.
- Easily develop strategic plans that include multiple prices and programs offered by suppliers.
- Improve the current optimization performance.
A better model and process created value to Dole by:
- Reducing management’s time to analyze multiple scenarios each month
- Improving management’s confidence in making purchase recommendations
- Reducing total paper purchase costs through use of better management practices and model resources
And creating the opportunity for Dole to:
- Decrease paper purchase costs
- Increase management productivity
- Provide Dole’s container production plants with improved purchase plans