Enterprise Simulation Planning - Igniting Supply … Simulation Planning (ESP) ... Incorporating ESP...

Enterprise Simulation Planning (ESP) for the Supply Chain

© 2014 LLamasoft, Inc. All Rights Reserved


What If You Could…

See how your supply chain will perform in the future?

Know exactly how a strategy change will affect service levels and costs?

Predict when you will stock out or reach production capacity?

What impact would this have on your business?


It’s Possible With Simulation Technology

Advanced simulation technology enables companies to artificially “run the clock” to execute the supply chain in a digital environment


for continuous supply chain improvement and innovation

Simulation Provides:

A way of testing potential network changes before enacting them, reducing risk of strategy changes

A solutionthat truly factors time and variability into each individual transaction, decision and movement throughout the supply chain at SKU-level detail

Support


How is Simulation Different from Optimization?

Simulation is

Optimization is

PredictivePlays out each transaction and resulting decision as it would happen in the actual supply chain, within given parameters

PrescriptiveGiven a variety of options, optimization provides the optimal answer


Enterprise Simulation Planning (ESP)Simulation technology is the tool of choice for planning and testing different variations of current and potential supply chain networks and demand levels


The Four Quadrants of ESP

Quantification• Validation• Cost Avoidance

Innovation• Strategic Planning• Gamification

Baselining• Visualization• Communication

Forecasting• S&OP/Capacity

Planning• Sensitivity Analysis

Futu

reC

urre

nt

Current Future

Net

wor

k

Demand


Baselining: Current Network / Current Demand

Visualization• Visualize the current structure

of the supply chain

• Identify inefficiencies, capacity constraints, cost imbalances

Communication• Help analysts communicate to

stakeholders what is actually happening in the supply chain

• Creates consensus and confidence in model data and minimizes challenges to the results


Quantification: Future Network / Current Demand

Validation• Data-driven proof of how a

strategy will play out

• Predict metrics like on-time deliveries, capacity utilization, stock-outs

Cost Avoidance• Avoid costs associated with bad

decisions by predicting costs in advance

• Compare results of alternate network decisions


Forecasting: Current Design / Future Demand

S&OP/Capacity Planning• Identify where bottlenecks or

capacity limitations will be hit

• Determine where and when to add more manpower, pre-build product, or pre-position inventory

Sensitivity Analysis• Run multiple scenarios, varying

demand up or down to determine where and when operational changes are needed


Innovation: Future Demand / Future Structure

Strategic Planning• M&A, new product launches,

new market entries carry heavy risk

• Test multiple potential scenarios to predict performance and mitigate risk

Gamification• Turn analysts loose to create

and test new supply chain designs

• Encourage innovation and entrepreneurship


Putting ESP to Work: Case Examples

Quantification• Validation• Cost Avoidance

Innovation• Strategic Planning• Gamification

Baselining• Visualization• Communication

Forecasting• S&OP/Capacity

Planning• Sensitivity Analysis

Futu

reC

urre

nt

Current Future

Net

wor

k

Demand


Case Example: Baselining

Using Simulation for Railcar Fleet Sizing

Challenge:Company needed to understand its current railcar utilization and quantity required to support alternate future scenarios

Solution:Baseline simulation model was validated and then alternate scenarios created

Results:Model provided visual, data-driven look at utilization, movements, service levels and costs. Numerous new scenarios showed the team what their fleet would need to look like under a variety of future assumptions


Case Example: Quantification

Challenge:

Solution:

Results:

Using Simulation to Smooth Production Planning & Order Variance

Ordering and scheduling instability caused inefficient machine usage and poor plant utilization

Company used simulation to test a new segmentation strategy prior to making network changes

Simulation showed these strategies could result in a 40% improvement in stock levels and dramatic improvements in work center change-overs


Case Example: Forecasting

Challenge:

Solution:

Results:

Using Simulation to Support S&OP

Company wanted to test potential network and sourcing decisions

Simulation was used to introduce business logic and lead time and demand variability to quantify how susceptible potential production plans were to unexpected changes

Simulation results showed the actual predicted on-time rate for customer orders, work center utilization and lost sales caused by raw material delays and production plan deviations


Case Example: Innovation

Challenge:

Solution:

Results:

Using Simulation to Test 100 Network Improvements

Company needed to test the effects of different sourcing decisions

An SKU- and order-level simulationmodel enabled company to prove out the effectiveness of nearly 100 network improvement ideas

The retailer is now able to evaluate detailed service, transportation cost and inventory metrics for different network configurations before implementing in the real world


Incorporating ESP into Supply Chain Design Platform

ESP ERP ROIEnterprise Simulation

PlanningEnterprise Resource

PlanningReturn on Investment

• Simulating new productionstrategies

• Playing ahead future demand• Experimenting with new routes• Running forecasted operational

tests

• Corporate master product data• Site and supplier locations and

lead times• Historical orders, shipments

and costs• Production capacities and

flows

• Rapid validation of new strategy decisions

• Early prediction of future capacity challenges

• Location of supply chain risk points

• Prevention of costly mistakes


Wrap-Up

ESP provides a way to reduce risk and

encourage continuous supply chain

improvement and innovation

Part of an integrated supply chain design

process and technology platform

In use at many multi-national

businesses today

LLamasoft is the only supply chain design provider with integrated simulation engine


Jeff MeterskyVP, Solutions StrategyLLamasoft, [email protected]

Thank you!

Enterprise Simulation Planning - Igniting Supply … Simulation Planning (ESP) ... Incorporating ESP...

Documents

Transcript of Enterprise Simulation Planning - Igniting Supply … Simulation Planning (ESP) ... Incorporating ESP...