It’s that time of year when supply chains that support the retail sector are tested. Planning, Procurement, Inventory Management and Logistics teams all have to work together to be successful. It all starts with placing bets on what, where and when consumers are going to buy during the holiday season months in advance. Some of the questions that have to be answered are: What will be the hot items for the holiday season? Will consumers purchase in-store or on-line? When during the period between November 1st and December 31st will consumers make their purchases?
As an example companies that have manufacturing capacity constraints in the fall, the Demand Planners have to lock in their forecasts in May or June. Once the demand plan is locked in, then the downstream supply chain teams can make their plans and weigh options to fulfill the forecast. Supply Planners weigh In-House versus Contract Manufacturing. Securing contract manufacturing early is less expensive and can be the difference between being in-stock and out of stock. In addition, if there are any long lead time raw materials needed to produce the final products they have to be bought by the Procurement team as early as summer time. You can increase the lead times needed if any raw materials or finished products have to be imported from overseas.
Once the products are produced, they have to be stored in warehouses until they need to be delivered to your local store shelf or your doorstep. Sometimes the standard warehouse that a producer uses runs out of capacity during peak season, so overflow warehouses have to be contracted. Determining where to stage inventory is one challenge that Logistics professionals have to handle in an evolving environment with on-line shopping continuing to increase in comparison to in-store shopping. Cyber Monday sales this year hit a record of $3.45B and is almost on par with in-store purchases made on Black Friday. The analysis can get murky because some consumers purchase on-line and pick-up in-store.
When you shop this holiday season either in-store or on-line, think of the Supply Chain “elves” behind the scenes making your products available at your local store or delivering them to your doorstep. The products don’t get to you by accident, it takes months of work to make every purchase possible. Happy Holiday Shopping!!
December 1st, 2015 5:11 pm Category: Distribution, Global Supply Chain, Green Network, Inventory Management, Network Design, Optimization, Optimization Software, Scheduling, Solver Optimization, Supply Chain Improvement, Supply Chain Optimization, Supply Chain Planning, Transportation, Vehicle Routing, Warehouse Optimization, by: Gene Ramsay
Profit Point has been helping companies apply mathematical techniques to improve their business decisions for 20 years now, and it is interesting to review some of the advances in technology that have occurred over this time that have most enabled us to help our clients, including:
• The ability for companies to capture, store and access increasingly larger amounts of transaction and anecdotal data that quantify the behavior and motivation of customers, manufacturers, suppliers and other entities
• The improvement in analytical capabilities that help make optimized choices, in such areas as the solving mixed integer optimization problems, and
• The improvement of computing technology, allowing us to perform calculations in a fraction of the time required just a few years ago
A recent post on the Data Science Central website highlights the use of advanced techniques based on these advances by on-line marketplace Amazon, which is generally acknowledged as one of the most tech-savvy companies on the planet. 21 techniques are listed that Amazon uses to improve both their day-to-day operations and planning processes, including supply chain network design, delivery scheduling, sales and inventory forecasting, advertising optimization, revenue / price optimization, fraud detection and many others. For a complete list see the link below:
Like our customer Amazon, Profit Point is committed to using these techniques for the benefit of our clients – we have been concentrating on implementing business improvement for our clients, including optimization in various forms, since our very beginning. Are you, like Amazon, using the best methods to seize the opportunities that are available today?
July 21st, 2015 2:58 pm Category: Global Supply Chain, Network Design, Operations Research, Optimization, Optimization Software, Profit Network, Publications, Supply Chain Agility, Supply Chain Optimization, Supply Chain Planning, Warehouse Optimization, by: Ted Schaefer
Profit Point’s recent article in Industry Today, “The Future of Supply Chain Network Design,” describes how to fully leverage the new advances in a traditional supply chain optimization process to include not only your internal supply chain, but the supply chains of your competitors, as well.
Supply chain network design optimization tools have become well integrated into modern business decision-making processes at leading edge companies. The tools are used to rigorously analyze and make the best decisions in response to both short-term events such as weather disruptions, spot sales opportunities, utility outages and to longer-term strategy issues, such as capacity expansion or mergers and acquisitions. These analytical approaches and technologies can be game changers. The newest versions of SCND tools have been expanded: businesses can now analyze not just their own operations, but also the sum of multiple supply chains in the competitive marketplace, creating a new way to integrate competitive risk into the design of your supply chain.
Please contact us if you’d like to learn more about new ways to leverage traditional ideas.
A few weeks ago, Steve Westphal with Edge Network posted a piece on our blog about the benefits of SKU Optimization. This past week, Packaging Digest posted the results of a survey of the beverage industry that suggests new packaging may be one of the key drivers for profitability this year. The survey also illustrates how new packaging can cause the proliferation of SKU’s. One more reason why industry leaders maintain an ongoing SKU Optimization process within their supply chain.
If you’d like to to know more about SKU Optimization and how it can impact your bottom line, please contact us.
Profit Point, a leading supply chain optimization company, today announced the introduction of Profit Fulfillment, a robust and highly-configurable software tool to help business managers determine an optimal backorder fulfillment and product shipping schedule.
“Just-in-time manufacturing has seen significant growth in the past 15 years, but the challenge of balancing inventory, backlog and service levels persists,” noted Jim Piermarini, Profit Point’s Chief Technology Officer. “Our clients were looking for a solution to help analyze these trade-offs and after real-world testing, we have a cost-effective solution that enables business managers to improve their distribution processes immediately.”
Profit Fulfillment can improve any distribution channel, but it is particularly useful when there are backlog orders to multiple customers, and it is important to determine which customers should get their orders filled immediately and on time, and which customers should enter the backlog queue and for how long. Ensuring that order fulfillment and shipment scheduling departments are executing designated functions consistently with a company’s overall business objectives can have a significant impact on profitability and customer satisfaction.
“Our clients include high-demand, short-cycle product manufacturers as well as more traditional long-cycle manufacturers,” said Piermarini. “And with unpredictable economic conditions, it was essential that we design this application to be highly configurable.”
Profit Fulfillment enables distribution managers to optimize order fulfillment processes consistent with a company’s overall strategic business objectives. It allows decision makers to prioritize customers, implement complex allocation rules amongst customers, dynamically change the allocation rules by region or segment of customers and minimize total backlog days across all customers, or over specific customer segments. And, the application provides forward-looking visibility to quickly and easily view the impact of different allocation rules on customer order fulfillment.
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.
Profit Point developed an optimization model to trade off transportation and warehousing costs while meeting product demand. The model included the top 100 distribution locations in the US along with Carlisle’s existing warehouse sites as potential locations for the model to consider.
Profit Point was able to identify achievable annual savings of $1 million by showing them how to use their existing network more efficiently and by adding one new warehouse location next to the new manufacturing plant being built. The model showed that Carlisle’s existing warehouses were located in desirable areas regarding operating cost and proximity to vendor, manufacturing and customer locations, but also identified business changes to the way Carlisle manages their inventory at several warehouses, allowing them to realize larger savings. The study also confirmed which new manufacturing plant location out of several candidates was the most cost efficient in regards to transportation costs.
“Profit Point did not come to Carlisle with a pre-determined answer to our logistics issues. They did an excellent job of listening to our needs, working with our personnel to extract the necessary information, and formulating recommendations to reduce our costs.” said Bob Stout, Vice President in charge of Purchasing and Logistics at Carlisle SynTec Inc.
Profit Network allows the user to model their existing or proposed supply chain for a geographic area, with its locations, flow limits and costs. Input data include raw material sources and costs, plant locations, plant production rates and costs, warehouse and distribution center locations and costs and customer locations and anticipated demand. You will be able to solve detailed supply chain network design problems in a few moments with optimal results.
To learn more about Profit Network, go to: http://www.profitpt.com/software/network-design/network-design-software/