Posts Tagged ‘Distribution’

3D Printing and the Global Supply Chain

Additive manufacturing or 3D printing is a process of making three-dimensional solid objects from a digital model.  It is achieved by laying down successive layers of material, as opposed to the traditional machining techniques of removing material by drilling and cutting.  3D printing is usually performed by a materials printer using digital technology.

Taking a digital image of a toy and printing out a near-perfect replica of it seems sci-fi and surreal, but rapid technological advances in 3D printing being developed make this and even more possible.  Printing metal parts with increased strength makes machines even more viable and cost-effective in manufacturing.  Additionally, an entire part can be 3D printed in a single machine, eliminating multiple touch points in traditional manufacturing and reducing failures.  The newest futuristic trend in 3D printing is to go huge:  using robotics to deposit building materials in an orchestrated and precise way to build large structures made up tons of interconnecting parts.

3D printing is a reality.  A recent Forbes magazine article, “What Can 3D Printing Do? Here are 6 Creative Examples” lists several ways in which 3D printing have been used:

  • In 2012, doctors from University of Michigan developed a tracheal splint made from a polymer and created directly from a CT scan of a baby’s trachea/bronchus using image-based computer model with laser-based 2D printing to product the splint.
  • Both General Motors and Ford Motor Company have used 3D printing to make prototypes of vehicle parts used in testing and design.
  • Nasa has used 3D printing recently to make a rocket engine injector and use it for major hot fire testing.
  • Defense Distributed, a high tech gunsmith group, created the world’s first 3D printed gun called the “Liberator”.
  • Prosthetics including a 3D printed bionic ear created by Princeton University scientists have been developed.

3D Printing of Consumer ProductsAlthough 3D printing has been around since the 1980’s, a differentiating trend has emerged this year that could make 2014 pivotal:  3D printing machines are now being used to manufacture a large variety of consumer products not just heavy machinery and structural components such as aircraft parts.  The printers are expensive and the 3D pictures required to print are difficult for most – a mainstream breakthrough in 3D printing could be seen in the near future as printers become cheaper and easier to use.

What could the Supply Chain of tomorrow look like if and when 3D printing takes off?  It has the potential to transform certain parts of manufacturing and supply chains over the long term. Traditional supply chains are often characterized by mass production of products driven by forecasts and pushed to customers through a warehouse distribution network, with long lead times, high transportation costs and large carbon footprints.  A 3D supply chain would be distinguished by having customized production, be “pulled” by customer demand, locally printed and distributed, have short lead times, low transportation costs as well as low carbon footprint.  It will create a demand for smaller factories that would take offshore manufacturing and bring it close to the consumer.  Goods will be cheaper to reproduce domestically versus manufactured offshore and shipped from low-wage countries.  Because new technologies currently being developed result in a significant proportion of manufacturing becoming automated large and costly work forces would be reduced.  In addition to distribution cost reduction, storage would also be a reduced as products could be made quickly in response to demand as opposed to meeting service levels via inventory and safety stocks.

Although it is a huge leap to go from printing a single object on a 3D printer to replacing an entire manufacturing enterprise and thus allowing any business or individual to become its own homegrown factory, Gartner Group calls it the “beginning of the Digital Industrial Revolution which threatens to reshape how we create physical goods”.  If that “threat” becomes reality, then it promises to reshape how we consider and optimize our current Supply Chain.

The global economy hangs in a tenuous balance. U.S. growth has been slow, but steady, while the global economy has been mixed.  The survey data suggests that logistics planners are most concerned with meeting service levels, driven by capacity concerns, rising costs and the need to increase productivity.

 This year, we conducted a Transportation and Distribution Survey of decision makers to learn more about their concerns and expectation for 2013. Supply chain professionals from a variety of companies and industries were polled. Here’s what we learned:

  • A slow and uncertain economic recovery has begun to put pressure on transportation/distribution planners to plan for multiple scenarios.
  • Rising fuel and driver costs remain a key long-term concern.
  • Capacity is a significant concern. While trucking capacity has tightened, rail capacity is available.
  • Planners are equally concerned with meeting service levels, perhaps, caused  by rising costs and capacity constraints.

To read the complete report, including our conclusions, click the link below:

Transportation and Distribution Survey 2012

Download the Transportation
and Distribution Survey

To learn more about Profit Point’s Transportation Optimization services and Distribution Planning software, call (866) 347-1130 or contact us here.

 

Upgraded Vehicle Route Planner Software Improves Decisions in Distribution Planning, Fleet Sizing, Driver Productivity and Transportation Cost Reduction  

Profit Point announces the introduction of Profit Vehicle Planner™ 3.1, a major upgrade to our distribution analysis and design software. Profit Vehicle Planner is designed for Strategic Logistic and Transportation Managers that have large fleets with multiple daily delivery stops and changing logistics processes. The software update includes a combination of new features and technical enhancements which combine to support richer scenario modeling for larger large fleets with multiple daily delivery stops and changing logistics processes.

Designed to be highly accessible and customizable, Profit Vehicle Planner (PVP™) uses standard Microsoft business tools for calculation and display of information, including Excel, Access and MapPoint. The software automatically creates and designs the optimal sales/distribution territories. It does this by dividing customers into territories and days of service, with each territory representing the volume delivered by one delivery vehicle and one driver over the course of the planning horizon. The objective of the proprietary heuristic algorithm used in Profit Vehicle Planner is to assign customers to territories that will minimize the number of trucks required to serve the customer volumes while delivering within the various common and business-specific constraints, including customer frequency of service, hours available per day, volume available per truck, unique equipment requirements and virtually any other custom constraint required.

“With 12 years in the field, Profit Vehicle Planner has been put to the test against some of the world’s largest supply chain distribution problems,”  noted Jim Piermarini, Profit Point’s Chief Technology Officer. “Transportation best practices have expanded over time, so decision makers are looking for more comprehensive strategic logistics and transportation modeling solutions.”

With the new release, PVP’s expanded features include extensive customization of the software to tailor the territory planning solution to be cost and time effective to meet your unique and specific distribution requirements and the ability to use imported address data to automatically geocode customers for whom lat/long data is missing.

For companies that perceive distribution as mission critical, users have the option to integrate PVP deeply into their supply chain systems to import and export data in to their ERP system. Companies that seek the most cost-effective solution have the ability to import virtually any relevant data from an Excel template that includes the following:

  • Customer data such as address, location, frequency of service, volume per stop, time required per stop, other data as needed
  • Truck data such as size, days of the week that it is available, order in which it is to be scheduled, hours available each day, special equipment, other data as needed
  • Warehouse and district data such as location and characteristics of associated trucks and drivers
  • Time related data such as start date of planning horizon and number of weeks in the planning horizon.
  • Product specific data such as unit of measure of the product being delivered
  • Any other data required to accurately model unique constraints

Once optimized, users have the ability to review and assess the characteristics of the territories that are created using tables and maps to provide an enhanced visual experience. And to ensure the optimal distribution plan, users can manually move customers from one territory to another or from one service day pattern to another (e.g. from Monday-Thursday to Tuesday-Friday), if desired.

To learn more about Profit Vehicle Planner and Profit Point’s distribution planning services, visit www.profitpt.com.

Profit Point, the leading supply chain optimization software and services company, today announced a partnership with TBB Global Logistics, a leading domestic and international transportation management provider. The two companies have partnered to provide an integrated solution of logistics and supply chain optimization software and services to provide global manufacturers and distributors an integrated supply chain network and distribution plan.

As a logistics industry leader since 1946, TBB Global Logistics has the knowledge and expertise to develop and manage the most complex supply chain strategies for your company. Together Profit Point and TBBGL can deliver a complete solution to provide increased efficiency, lower total costs, superior customer service and a more competitive position in a dynamic global marketplace. TBB Global Logistics is a non-asset based, supply chain management company that relies on superior, web-based technology and relevant expertise to enable clients’ ability to effectively and profitably compete in a global marketplace.

“Large domestic and international clients are pursuing deeper integration of their supply chain strategies into their day–to-day operations,” noted Dr. Alan Kosansky, Profit Point’s CEO. “Partnering with a company like TBB, provides our clients the ability to develop a seamless transportation and distribution strategy and implementation plan.

Profit Point now has access to global transportation data resources and 3PL expertise insight to deliver the entire package: the strategic supply chain plan along with an operational solution covering supply chain distribution, logistics and transportation engagements. Together, the two companies deliver a unified team of dedicated professionals to meet the demands of global manufacturers and distributors by helping customers design and implement an optimal supply chain.

To learn more about Profit Point’s supply chain 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’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 Dow Chemical, Coca-Cola, Toys “R” Us, Logitech and Toyota.

About TBB Global Logistics:

Founded in Baltimore in 1946, TBB Global Logistics provides complete supply chain management services. TBB provides domestic and international transportation management and supply chain solutions through its Supply Chain GuardianSM brand. Supply chain support services include sourcing, procurement, customized warehouse logistics, inventory management and reverse logistics. TBB offers web-based supply chain management applications and supply chain consulting. Headquartered in New Freedom, Pennsylvania, TBB Global Logistics also has offices in Maryland, located in Hanover by BWI Airport and sales teams throughout the United States. TBB Global maintains a network of agents in countries around the world. TBB is a third generation, family-owned company.

The following is a guest blog post from Sam Polakoff, President, TBB Global Logistics.

Sam PolakoffNow sit down and think about it for a moment. Exactly when did your company establish its current distribution network? In all likelihood, the answer is three or more years. Is your business the same as it was three years ago? Probably not. What factors commonly drive change necessitating a shift in supply chain strategy? There are many including, but not limited to, the addition of key customers,  product introductions, changing sources of supply, competitive threats, mergers, acquisitions, natural disasters and shifting demographics. So how do you rationalize using yesterday’s supply chain for today’s business needs? At best, you are getting by with higher costs and lower margins. You may feel as if you are losing the battle to stay competitive in a difficult economy.

To compete effectively in a dynamic business environment, continuous evaluation of the marketplace is a critical success factor. Once knowledge is in-hand, your supply chain must be built in an agile manner allowing for efficient shifts to accommodate expected and unexpected change.

I recently spoke to the owner of a U.S. manufacturing company that dates back to the early 20th century. He was explaining how he was in the final stages of divesting the company of all its hard assets. They had long ago moved manufacturing offshore. They had evolved into a substantial importer managing a series of company-owned distribution centers. Today, all of the distribution is outsourced and the old company headquarters building is up for sale. The shift to a virtual company is near complete. The executives are now free to work on product innovation and the related sales and marketing. They still compete effectively but with higher margins and more agility. This old line company has adapted and overcome, multiple times, aligning and realigning supply chain process with strategic business objectives and changing marketplace conditions. The results are higher profits, supply chain flexibility and happier customers.

Establishing and using key performance indicators will serve as confirmation of effective supply chain process or as a red flag requiring attention. Aligning supply chain with strategic business objectives and keeping your finger on the pulse of the customer will propel you forward on the road to prosperity.

Supply Chain Café

December 22nd, 2010 2:45 pm Category: Optimization, Supply Chain Agility, Supply Chain Improvement, Supply Chain Software, by: Richard Guy

Okay. I am an anomaly. I live in Utah and drink coffee. The majority of the people that live in Utah do not drink coffee, and that is OK, but I do. So, is there a shortage of coffee Cafés in Utah? No. There are many cafés and several that serve outstanding coffee.

We have an exceptional espresso café downtown, located on a side street off of Main. They roast their own coffee and use triple certified organic grown beans. It is the type of place the local coffee lovers go to hang out and have good conversation over a morning or afternoon latté or espresso. Possibly the best coffee I have ever had. What is interesting to me is that a large percentage of the residents in my area do not even know that this café exists.

So what is my point? When it comes to outstanding services or products most people are unaware of what is available, primarily because it does not fit into their lifestyle or what they’re accustomed to. I believe you can transfer this similarity to the business world. Manufacturing logistics and transportation people become accustomed to doing things a certain way. Over time they may become blind to ideas for improving the supply chain. They are unaware of an exceptional Supply Chain Café, even when it is located just seconds from a combination of keystrokes and Google.

It is not their fault they are missing the best latté available. We, as consultants, who prepare those delightful solutions from the Supply Chain Café menu, have probably not done the finest job of promoting our services and software to your neighborhood, but that is changing.

There are many empty cups in the supply chain, waiting to be filled with successful solutions. Supply Chain and Logistic managers tackle difficult supply chain problems every day, but they are so focused on getting their job done and making it through the day that they have little time to think of alternatives that may improve their processes and well being. I am not sure how we can help everyone, so let’s focus on the window shoppers. These are the ones that are aware of the café, but have never been inside. Maybe you are one?

If you are reading this blog, then you must be a window shopper. I am guessing you are looking for a better espresso. OK, you found “Profit Point”, although you may not know what we do. Guess what? Help is on its way. We can share our menu with you. We just published four videos that will introduce you to the Profit Point team and what we do. Embrace three minutes out of your day, select one of the videos, and watch it. Learn how we help companies improve their supply chain, by serving the best coffee with a smile.

Yes, you can improve your supply chain with our help. The supply chain solution that you are looking for, is about to be yours. And if you place an order, we can fill your cup to the top, with the “good triple certified” stuff. If you cannot seem to find that special item on our Supply Chain menu, then no fear, we love special orders.

So, is there a shortage of Supply Chain Cafés? No. You just need to find the one that serves the optimal latté. I know it’s out there somewhere.

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

“Companies that use advanced routing and scheduling optimization
solutions that are designed specifically for the transportation industry
can reduce transportation costs by up to
20%. “

Profit Point’s supply chain consultants have seen decades of economic boom and bust. Learn about the essential steps that you can take today to cut costs in the near term and prepare for future economic scenarios. Click the link below to access our new white paper:

Despite our egalitarian mindset in the U.S., when it comes to customers, let’s face it: They have never been ‘created equal.’ Certainly for decades, manufacturers and distributors have offered better pricing to some customers than others. We’re all familiar with quantity break pricing, column pricing with different discount levels for different categories of customers, and contract pricing. And who doesn’t visit the local supermarket today and notice the ‘buy 3 get 1 free’ offers to encourage us to increase our purchases?

Volume is valuable and warrants better pricing, we are in the habit of believing. And most often this is true. Not only does a high-volume customer drive our buying power with suppliers by helping us reach the next price break level on the purchasing side, but it can make each sale more profitable: The cost of servicing 10 orders that result in a sale of 100 units can be 10 times as great as the cost of servicing a single order for those 100 units.

This bias towards volume underlies traditional customer ranking methods. But many manufacturers today are taking a closer look at these policies and finding them lacking. Instead, they are engaging in a detailed cost analysis effort called ‘cost-to-serve.’ While cost-to-serve can be a very broad subject covering product costs, location costs, transportation costs and service costs, to name a few, this article will take a look primarily at customer costs.

It’s not that heretofore companies have ignored factors that shade the degree of profitability of a large client. Many firms, presented with the opportunity of doing business with, say, Wal-Mart or the federal government, may question whether it’s really worth doing. They’re thinking about the overhead of handling such a client and the cost of meeting client demands – with slim price margins.

What’s different today is that companies are trying to measure these costs precisely and to make informed, scientific decisions based upon them. Whether they engage consulting firms who have developed methods for tackling this measurement, purchase software to help them out, or devise their own internal approach, more and more manufacturers and wholesalers are gathering detailed costs and trying to apply them to decisions about their customers.

Consumer goods companies, for instance, are recording metrics such as the true cost of customer service. How much support time does this customer require of the customer service organization? How much sales time to we devote to him? Does the customer frequently return merchandise, and if so, what is the cost of processing that return? In the case of consumer goods manufacturers, we might also look at custom-branded merchandise: What is the true cost of providing private labeling for a retailer? Are we really capturing in the product cost all of the special handling required by the purchasing and distribution organizations? All of these costs are very important is assessing a customer’s true profitability.

On the other side of the equation, there may be some sales and marketing benefits that a customer brings, and these, too, should be weighed. Does the name ‘Wal-Mart’ on our client list provide positive benefit to the organization? Is another client who doesn’t seem to purchase very much an outstanding reference for us who sends other potential customers to us? If a business can establish a process and gain agreement across the organization on measuring true costs and benefits, it can define policies to more precisely control bottom-line revenue.
Certainly, one of the first decisions that can be made, once true costs are measured and accepted by an organization, is to eliminate customers who are really unprofitable. But cost-to-serve can also come into play in other ways. We may want to devise strategic programs that nurture our best clients to safeguard their business. We may hold special events for them or assign dedicated reps, for instance.

One of the situations where cost-to-serve becomes a critical tool is in inventory allocation, particularly in an inventory shortage situation. When there is insufficient inventory to meet demand, most manufacturers will want to serve the most valuable customers first.

This frequently comes into play in segments of the technology industry, such as computer peripherals, typically with the launch of a popular new consumer product. An extreme example of this might be the launch of a new Wii game player at the start of the holiday season. Armed with true cost-to-serve data, manufacturers could make allocation decisions scientifically to spread the available inventory across the order pool while maximizing profit.

You might ask whether this process can be automated today. The answer is ‘partially.’ Allocation can certainly be automated, but collecting cost-to-serve data on customers usually involves some manual steps, because most companies don’t have all the systems in place to collect this data automatically (and even with sophisticated systems, the data may not be collected in exactly the way you wish.) Some spreadsheet work may be required. Once the spreadsheet is in place, however, the process becomes straightforward.

Perhaps you want to rank customers sequentially from top to bottom, or group them into ‘profit’ segments. Once that is done, an algorithm can be designed to optimize the allocation of inventory according to the rules tied to those rankings or segments. The allocation algorithm might be designed to work directly from the spreadsheet, as well, automating even more of the process. In any case, executing the service decisions in accord with true costs ensures we are protecting our most valuable customers.

The application of cost-to-serve to inventory allocation takes on an even more interesting aspect for consumer goods manufacturers who ship to retailers. As those of us familiar with this industry are aware, most large retailers have very specific guidelines defining how suppliers must do business with them. The retailers specify how an order must arrive – shipped complete, packed by store, etc.; when it must arrive – ‘arrive by’ date; and a variety of paperwork details including design, content and placement of shipping labels and bills of lading. Associated with each of these requirements is a dollar penalty the supplier will incur, taken as a deduction from the supplier’s invoice, for violation of the guideline.

For a consumer goods manufacturer, these penalties or ‘chargebacks,’ can mean the difference between a profitable client and an unprofitable one. In this situation, the ability to allocate inventory defensively, to minimize chargebacks (or at least make an informed scientific decision to incur them) is critical. A powerful allocation engine, in an inventory shortage situation, can maximize profit by factoring potential chargeback costs for late or partial shipment into the equation. In this case, the allocation engine ensures that the cost to serve the retailer is as low as possible.

In addition to retailer penalties, another aspect of ‘allocation-according-to-true-cost’ involves inventory fulfillment location choices. If a company operates a single distribution center in Los Angeles and imports all its product from Asia, there may be only a single fulfillment option. But for the wide majority of consumer goods manufacturers who import from Asia, service clients nationwide, and operate either multiple distribution centers or a distribution center located in, for instance, the Midwest, there are several options and a variety of questions
arise.

If inventory is constrained at the facility that would normally handle a particular customer’s order, should the order be fulfilled from an alternate facility? To make this decision, we need to factor in not only the additional shipping cost but also to weigh that cost against the value of the customer. There may be low profit customers, viewed from the perspective of cost-to-serve, for whom we do not want to make this investment. In the case of a retailer where a potential penalty is involved, the decision might be made dynamically based on a comparison of the chargeback incurred against the additional cost of shipping. If the chargeback fee would be higher than the additional shipping cost, it may be worthwhile to use the alternate distribution center.

This type of on-the-fly fulfillment decision is often called ‘dynamic allocation.’ Another example of dynamic allocation involves intercepting shipments in transit to, say, our hypothetical Midwest distribution center. Least cost fulfillment might dictate fulfilling west coast orders by pulling off inventory required to fulfill them at a deconsolidation facility near the port – before a shipment heads out to the distribution center in the Midwest. Under what conditions is this the least-cost choice? An inventory allocation algorithm based on cost-to-serve can make this decision mathematically, using rules the manufacturer defines.

It’s important to emphasize that the decisions on exactly how to apply cost-to-serve data to inventory allocation will depend on the philosophy of the individual company. For this reason, such allocation solutions are often unique and are adjuncts to the standard capabilities of order management systems. Leading-edge firms who are structuring allocation based on true costs typically do so via point solutions that supplement their central transactional systems.

Profit Point, as the name suggest, provides these point solutions and integrates them into SAP, Oracle, and other order management systems to help clients make the best, most profitable allocation and customer decisions. Our expertise in this area can help clients drive maximal profit to the bottom line.

This article was written by Cindy Engers, a Senior Account Manager at Profit Point.

To learn more about our supply chain data integration and business optimization services, contact us here or call (866) 347-1130.

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