Network Design Team

In the very competitive hydrogen peroxide market, Arkema’s objective is to continuously improve product availability and customer service across North America, while simultaneously managing costs throughout the supply chain. Profit Point examined Arkema’s distribution options from manufacturing to the end customer to develop supply chain options to provide the right level of customer service at the best total delivered cost.

“The team at Profit Point developed an understanding of our business and they analyzed complicated data and made it easy to understand,” noted Ed Gertz, Arkema’s Director of Supply Chain for hydrogen peroxide. “They made it easier for us to see how different distribution infrastructure options impacted our cost and our service, which gave us the confidence we needed to make significant changes in our terminal network.”

The solution combined Profit Point’s supply chain design software, Profit Network^TM, and the consulting team’s supply chain optimization expertise. By leveraging existing enterprise data, Arkema was able to develop an actionable infrastructure plan that meets the business’ strategic objectives.

“This is a classic example of the type of benefits large manufacturers can see when they bring together the right stakeholders and the right process, ” added Ted Schaefer, Director of Logistics and Supply Chain Services at Profit Point. “It reminds me a lot of what my Italian grandmother used to say about cooking, ‘If you choose the best ingredients, you will like the result.”

To learn more about Profit Point’s supply chain network design software and services, call us at (866) 347-1130 or contact us here.

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 Dow Chemical, Coca-Cola, Lifetech, Logitech and Toyota.

About Arkema
A global chemical company and France’s leading chemicals producer, Arkema is building the future of the chemical industry every day. Deploying a responsible, innovation-based approach, we produce state-of-the-art specialty chemicals that provide customers with practical solutions to such challenges as climate change, access to drinking water, the future of energy, fossil fuel preservation and the need for lighter materials. With operations in more than 40 countries, some 14,000 employees and 10 research centers, Arkema generates annual revenue of $8.3 billion, and holds leadership positions in all its markets with a portfolio of internationally recognized brands.

The post Arkema and Profit Point Optimize the Distribution of Hydrogen Peroxide appeared first on Profit Point.

With complicated systems with many interacting features and business rules, answering this question can be daunting. In fact, evaluating the answer can be daunting too, from the perspective of the customer. Having the sales guy check some boxes in a questionnaire, or watching a demo just doesn’t leave you with the assurance that the application with handle all the business requirements, from either perspective, the vendors or the customer. Everyone I have spoken to who has sold complex software, or who has participated in the purchasing process of software has expressed the same doubt. They are just not sure that the tool will be a good fit. As we all know, that doubt does not always prevent the purchase of the software, as each organization has its own level of risk tolerance, and trust in the vendor’s brand or reputation. Often these other considerations can outweigh the amorphous doubt that some folks might feel. How can one quantify that doubt? Frankly, it’s a quandary.
This thought got us at Profit Point thinking… Wouldn’t it be great if there was another way to evaluate the goodness of fit or an application, or the appropriateness of the parameter settings, to match the business needs of an organization. Would it be great if there was a way to eliminate (or greatly reduce) the doubt, and replace it with facts. Either a business rule is obeyed or it is not. Either a decision is made according to the requirements, or it is not. Let’s eliminate the doubt, we thought, and the world would be a better place. (well a little bit anyway).
There are many processes for testing an application as it is being developed, with writing test scripts, and evaluating the results. All these are based on testing little pieces of code, to ensure that each function or sub routine does what it should do in each case of input data. These processes work fine in our opinion, but only when the sub of function is able to be considered independently form the others. When the system has functions that interact heavily, then this approach doesn’t reduce the doubt that the functions may conflict or compete in a way that the whole system suffers. How then to evaluate the whole system? Could we treat the entire application as one black box, and evaluate the important business cases, and evaluate the results? This is exactly what we have done, with the effect of reducing the doubt to zero about the suitability of the application for a business.
With several of our clients we have worked out what seems to be a great process of testing a complex software solution for suitability to the business requirement. In this case, the detailed level function testing methods were not open to us, since the solution relied on a Linear Programming technique.
This process is really just an amplification of the standard testing process.

1. Define the test case, with the expected results
2. Construct the test data
3. Build or configure the application
4. Run the Test using the Test Data and Evaluate the results – Pass or Fail

This is the standard process for testing small functions, where the expected results are clear and easy to imagine. However, in some systems where there many interacting rules and conflicting priorities, it may not be simple to know what the expected results should be without the help of the tool’s structure to evaluate them. Such is the case with many of our application, with layer upon layer of business rules and competing priorities… The very reason for using an LP based approach makes testing more complex.
In the revised process, we have, for each new business requirement:

1.  Construct the test case with the test data
2. Build or configure the application
3. Set the expected results using the results of the first pass build
4. Re-factor the code and test until all test are passing

Profit Point’s Testing Process

In my next blog I will show you the simple excel based tools we use to facilitate the test evaluation.

In practice, the process works well, new versions of the application go into production without any surprises, and with full confidence of the application management team that all the business requirements are 100% met.

No doubt – no doubt a better process.

By Jim Piermarini

The post No Doubt a better process for testing an application appeared first on Profit Point.

The post Communications Technology and Supply Chains appeared first on Profit Point.

I can’t help but liken this to a manufacturing supply chain, without a business process to chart the way, without software helping to navigate and support the process and without people in place trained to captain the process, the business, like an unanchored sailboat, drifts into sometimes dangerous territory.   Yet, this scenario is not atypical for many companies.

How do you know if the anchor is set on your supply chain?  Here are some attributes:

1. A clear and documented business process that serves as the guide to how you operate under normal conditions as well as defines flows for unexpected changes and events.  As conditions change, the process should be reevaluated and assessed in an ongoing fashion.
2. Software that supports the business process and enables users to react quickly to unexpected events making your business adaptable and flexible.  Software should be tailored to your business needs, one that is one size fits all does not necessarily work for all products and customers.
3. Trained people who are living the business process and using the software giving your business a competitive edge.  Additionally, attention to detail and data driving the software is crucial and can have a big impact on the business.

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

The post Supply Chain Smooth Sailing (Scheduling) appeared first on Profit Point.

TRANSCRIPT:

Interviewer: What’s the future of supply chain management? Many companies have implemented ERP software solutions, but if you’re relying on well-traveled, standardized software to manage your supply chain, you could actually be eroding your competitive edge. Joining us now to explain why is Dr. Alan Kosansky, co-founder and President of Profit Point. Alan, welcome!

Now, Alan—ERP Software has definitely become commonplace as a solution in supply chain management—it’s certainly convenient, but is the software on its own enough?

Kosansky: ERP software plays a critical role in the enterprise. From its inception it has provided the backbone for accounting and financial functions. As it has extended into supply chain functions, it allows us to quantitatively manage the supply chain. All these systems have enabled significant efficiencies for companies over the past 20 years. And they have become commoditized. Leading companies are both leveraging what these ERP have to offer AND ALSO defining complementary supply chain processes that offer competitive advantage. For those supply chain processes for which being as good as the marketplace is enough, out of the box ERP and APS solutions are great. However, for those supply chain processes where your company believes they can create and maintain competitive advantage, using the solutions that the marketplace is using is not enough.

Interviewer: At Profit Point you believe that the future of supply chain management is in optimization based decision making – what is optimization based decision making?

Kosansky: Supply Chain profitability is based on the price you sell your goods minus the total delivered cost of making and getting those products to your customers. While this may seem like simple arithmetic, it is actually very difficult for companies to accurately predict profitability and then make supply chain planning decisions that maximize their profitability. Firstly, Computing the total delivered cost is difficult. Secondly, even those companies that are have a centralized way to view all this data typically have difficulty making the tradeoffs implicit in their supply chain costs: Inventory or customer service? Manufacturing, warehousing or transportation costs? Optimization based decision making allows supply chain planners to both see all the relevant data and make the tradeoffs that lead to maximum profitability.

Interviewer: … and how can optimization based decision making help ‘unlock’ a company’s competitive edge?

Kosansky: Companies that identify supply chain processes where they have developed some sort of competitive advantage need to embody those processes in enabling technology that support this better decision-making. Most often, this includes some form of optimization decision technology that quickly evaluates alternative scenarios and identifies those decisions that lead to maximum profitability. By combining the big data that is available today, with leading edge decision making technologies, leading companies are beating their competitors in every aspect of their operations, including the supply chain.

Interviewer: Well Alan this is great news – thanks for coming on and telling us about it! That was Dr. Alan Kosansky, President of Profit Point. For more information go to ProfitPT.com… that’s ProfitPT.com.

The post The Future of Supply Chain Management appeared first on Profit Point.

In my last blog post, I talked about the waterproof boots I received as a gift and how I never knew what I was missing out on until I received and started using those boots.  In this blog post, I’d like to continue my story.

My waterproof boots were working just great for me.  Our dog, Blue, loved walking out in the wet fields behind our house and I didn’t mind that my boots were getting muddy since I could easily wash them off.  Several months after using my boots, I made an unfortunate discovery.  My right foot was getting wet!  Turns out my boots had developed a crack in the tread.  While my boots had several features I really liked and duct tape worked as a temporary repair, I decided I had to replace my boots.

I thought about getting a new pair of the same brand / model but was concerned that there was a design flaw and that these boots were not sturdy enough to walk with on a regular basis.  I decided to switch to a boot with a much better and stronger designed tread as well as one with the other features I really liked.

If I had gone to the store before owning and using the first pair of boots, I don’t think I could have articulated exactly what features I needed / wanted in a boot.  It was only after having an extended real world experience with the boots that I was able to much more clearly and confidently articulate what I wanted in a boot.

This is a common theme with our supply chain change projects.  Often these projects are a discovery process for us and our clients because neither of us definitively know a priori all the functionality that will ultimately end up in the finished tool.  That is why our typical approach is to begin with a pilot project that includes the minimum scope required to implement the basic functionality.  This allows for this process of discovery to unfold and while starting to deliver on the stream of anticipated benefits sooner rather than later.  This allows for the future releases of the tool to have a very tight scope on only those items that we are both confident can be delivered and will achieve the anticipated benefits.

Are you ready to get started on this journey?

Here I am with Blue and my new waterproof boots

The post What My Waterproof Boots Taught Me About Supply Chain Change Projects (Part 2) appeared first on Profit Point.

The Old Road Is Rapidly Aging

This musical detour has a purpose: there is crucial wisdom in that song for small businesses and entrepreneurs. While five short years ago “going green” was an optional choice for workplaces, now even the biggest companies have committed to more sustainability in their operation. In fact, not going green can put your operation at a competitive disadvantage.

Who Went Green!?

Wal-Mart is leading the charge in business sustainability. A week ago, the corporate giant released a 126-page progress report on its efforts to be a more socially responsible and sustainable company, something they’ve done annually since 2008. These reports can be found here, if you’re interested. However, the company’s biggest step may be the inclusion of a “Sustainability Index Score” (SIS) on their products near the price tag. These scores rate the environmentally-friendly factor of product packing and production.

Make no mistake; Wal-Mart has not gone soft. While they enjoy their greener status, they’re most excited about how the changes have affected their bottom line. Consumers want to feel good about the products they buy, and want to feel like they’re making environmentally responsible purchases. Wal-Mart believes these SIS scores will give customers peace of mind when they shop in the retail chain.

Wal-Mart has also installed skylights in their stores and painted the roofs of their buildings with reflective white paint, which shaved a cool $1 million from their electricity bills last year.

In a few short years, the once villainous company has become a model for sustainability, and their commitment has made them more profitable.

Now Is The Time

Wal-Mart’s sudden obsession with sustainability is a microcosm of a larger trend showing that running a green business is no longer only a strategy for courting progressives: it is the new norm. Yet, it has always been admittedly easier to want to be sustainable than it is to be sustainable, especially since many business owners already have their hands full with the usual challenges of day-to-day operations in a less-than-stellar economy.

Nevertheless, things have changed from the way they were a few years ago. Many of the obstacles that were deal-breakers are no longer there, or at least they’re not so insurmountable. Since more businesses have committed to being environmentally conscious, collectively, they’ve learned how to be better at it. Here are some tricks other small business owners and entrepreneurs have picked up along the way that can help make your green transition go smoothly, save money, and make your business more attractive to potential customers:

• Commit – If you’re serious about becoming more sustainable, you have to commit. This applies especially to small businesses with multiple employees. Putting a recycling can next to the garbage is a good start, but you can go further. If you’re a small business leader, you must communicate to your employees “this is the way we do things here from now on.” Successful conversions require strong leadership.
• Self-Audit – Do an energy/waste audit of your business. Take a look at your business on a macro-level, and look for ways you can be more efficient. This could be as small-scale as better using the timer on your thermostat, or as large as finding distribution routes for deliveries with less stop signs and stop lights.
• Upgrade – Upgrade your building where you can. Many hot water heaters and toilets, for example, are decades old and are very inefficient. They use loads of water and run for a long time. Newer units can drastically reduce water bills. Newer air conditioning and heating units are also much more efficient than their predecessors. Note: do some research on government rebates. Sometimes there are some pretty awesome kickbacks for upgrading to more efficient technologies.
• Track Your Progress – Tracking your energy savings is wonderful for everyone at a business. It’s nice for you when you’re paying the bills at the end of the month, but it also gives your employees ownership of the company’s green growth. This gives them proof that their hard work has paid off and gives them motivation to keep it up in the future.

Continuing with the theme of ownership, encourage your employees to be innovative and creative, always looking for ways to be more sustainable. After all, someone had to think of Wal-Mart’s sustainability scores.

Now

Yes; for the past decade the terms “green” and “sustainable” have been used ad nauseum, but it is unfortunate if this dilutes their importance. Sustainable businesses are not part of a fad that will soon disappear; they’re the new standard. Not only are they more ethical, but they’re also more profitable. Times have changed, indeed.

Hopefully, upon reading this, something you can change has already popped into your mind. What are some of the new ways you’ve come up with to go green? Have you already instituted changes in your small business that are providing a profitable return?

Author: Brent Hardy is Vice President of www.extraspace.com, responsible for all corporate construction & facilities management. He writes about corporate sustainable practices at blog.extraspace.com/category/sustainability.

The post No Longer an Alternative: Green Is The New Norm For Small Businesses and Entrepreneurs appeared first on Profit Point.

My wife bought me a pair of waterproof boots and gave them to me 2 Christmases ago.  Admittedly, I was not the most gracious gift recipient.  I uttered the customary thank you but at that moment I had no idea what I was going to use these boots for.

As it turns out these boots were a great gift!  I often take our dog, Blue, out for a walk over lunch time in some fields behind our house.  Prior to receiving these boots as a gift, when the fields were wet and muddy, I would end up walking Blue on the street in our neighborhood.  Blue much preferred our jaunts in the fields and the waterproof boots enabled me to trudge through the mud without ruining my sneakers which is what was happening before if I ventured into the wet fields with them on.

My problem was that I was so into the groove of walking in the neighborhood when it was wet out that I really couldn’t conceive of another way.  I thought that Blue and I would just have to grin and bear it when it was wet out and walk in the neighborhood.  Receiving and then using these waterproof boots was kind of eye opening for me.  I didn’t know what I was missing out on until I received the boots.

We find that the same thing can be true with our clients.  They may just be doing things the way they have always been done and have a hard time believing that there is a better way.  The way they have done things has worked so far so why bother to change when you can stay the same!  While the old adage “If it ain’t broke, don’t fix it” may be applicable, how about changing so you can operate on a different plane.

Next week I’ll post Lesson 2.

The post What My Waterproof Boots Taught Me About Supply Chain Change Projects (Part 1) appeared first on Profit Point.

The year 2012 is behind us. If you are like me, you may not have accomplished all the goals that you had in mind at the beginning of the year. No worries, the year 2013 is before us.

Here are Seven Rights of Fulfillment taken from the CSCMP website, which I believe are relevant for our industry, but also can be adopted as a framework for your goals for this year:

1. The right product
2. To the right customer
3. At the right time
4. At the right place
5. In the right condition
6. In the right quantity
7. At the right cost

The ability to meet customer requirements is built upon the expectation that everything is done correctly in the supply chain. In the quest to provide quality service and satisfy customers, world-class companies along the supply chain are guided by these Seven Rights of Fulfillment.

Goal setting involves establishing specific, measurable, achievable, realistic and time-targeted goals. Take a moment right now and think of one goal that you want to accomplish in 2013. Done? You just primed your subconscious.

The post Goals and Subconscious Priming appeared first on Profit Point.

For supply chain processes for which performing at the industry standard is sufficient, standard technology solutions are sufficient as well. However for processes here there is an opportunity for competitive advantage, out of the box standard solutions will not do. Often mathematical optimization is a critical enabling technology for those supply chain processes that are a source of competitive advantage. Furthermore there is typically some level of customization required in order to uniquely capture the ideas and processes that embody the competitive advantage.

For example, consider the order fulfillment process in consumer electronics. Products in this industry become obsolete very quickly. For this reason, electronics suppliers to “big box” retailers like Best Buy and Walmart often operate in a back-order situation to reduce the probability of getting stuck with returns and obsolete stock. While standard solutions most commonly use a traditional first-in, first-out (FIFO) method to allocate inventory to orders, more advanced consumer electronics companies use more sophisticated approaches to determine how best to assign limited inventory to their customers. These approaches take into account customer priority, in-transit inventory and inventory already in the channel to determine algorithmically in what sequence and quantity to assign inventory to orders. Since they cannot simply fill all the orders of their biggest customers at the expense of the rest of their customer portfolio, they apply sophisticated business rules to balance the needs of all their customers while making sure their most important customer’s feel the pinch of inventory shortfalls the least. In this case, a custom solution for deploying in-transit inventory helps to “score” orders based on customer priority as well as on the inventory in the channel. This approach, which uses logic and algorithms well beyond the capabilities of standard ERP solutions, reduces the seller’s total supply chain costs and improves its performance scorecard relative to its most important customers.

Mature supply chain organizations typically identify about 80% of their process as “standard” and are able to use out of the box standard ERP and supply chain solutions here. In addition, they are identifying about 20% of their processes as being a source of competitive advantage and are developing and implementing solutions that capture that advantage.

If your organization is engaged in these strategic management practices, we commend you for your leadership in supply chain maturity. If not, let’s work and grow together.

For a more detailed discussion of this topic, read the Supply Chain Quarterly magazine article by Dr. Alan Kosansky and Ted Schaefer entitled Is standardized software eroding your competitive edge?

The post Optimization and Competitive Advantage appeared first on Profit Point.