Supply Chain Planning Blog

Attribute-Based Planning for a Green Supply Chain

Posted by Cyrus Hadavi on Wed, Dec 07, 2016

d0863753-41c8-405a-884f-eef4cc8755d8.jpgAdexa solutions deploy attributes to define the characteristics of machines, processes customers and suppliers, in order to mold the solution to a particular environment. Furthermore, as the supply chain changes and business or business priorities change then attributes are used to adjust to the new conditions. This has been extensively covered in a number of white papers that can be referenced by clicking HERE.  In this paper, we discuss the use of attributes for a greener supply chain and how they may be deployed to improve on the carbon footprint and use of hazardous materials.

Consider a process or an equipment that has more CO2 emission than other alternatives. The value, or relative value of the CO2 emission becomes one of the attributes of that process. On the other hand, cost might be another attribute of the process in a way that the lower cost process may contribute more to CO2 emission. Attributes, once defined, form dynamic constraints that are used by the system’s search strategy to find the optimal solution. The optimal solution can vary depending on the region, government regulations, carbon use quotas and even customer. Within the framework of such restrictions as defined for the attributes, the system can recommend the highest use of lower cost process without going over the CO2 emission limits as decided by the company policy. As alternatives, the system may recommend higher cost processes, use of substitute materials or manufacturing in a different region.

Another example, is the use of different transportation means in order to deliver gas or oil to different regions in Europe. The choices are by sea or land as well as pipelines. Each has attributes of cost, carbon footprint (depending on the distance travelled) and of course time to destination as well as associated risks. For example, it is imperative that oil gets from A to B if it is to be used for heating in the middle of North European winter. Land delivery has a much higher risk of road closures in certain regions.

As a final example, some customers or retailers may have a preference to sourcing products that are eco-friendlier. This kind of requirement is sent to the suppliers as an attribute that is then built into the BOM of the product. On the manufacturing side, the use of such embedded materials in the product is treated as an attribute of the material as well as the product. This attribute is then taken into account and honored as a constraint when plans are made by the system for making and delivery into those customers.

As it can be seen, attributes can be used in order to define local and global constraints on the operations of the entire supply chain including tariffs, carbon usage, supplier types, transportation means and material properties depending on the regions, government/international regulations, and company policy. For instance, a company can reduce the global value of an attribute (say, CO2 emission) by 10% per year by region and product. The system would then plan production of the entire supply chain by making sure that the local attributes used in every region does not exceed the maximum defined by the management of the company. We welcome your feedback and sharing innovative uses of attributes in your supply chain operations.

Topics: Supply Chain Planning, Attribute Based Planning, Attributes, Green Supply Chains

Planning Proliferation Of Products In A Fabless World

Posted by kameron hadavi on Wed, Oct 13, 2010

Semiconductor Supply Chain Palnning“Complex” is the common word we hear from many of our Fabless Semiconductor customers in describing their supply chains.  We talked a bit about that in our last blog posting entitled: Fabless Semiconductor Planning: Between a-rock-and a-Hard-place!  In this article, I want to touch on another culprit in complexity of a Fabless enterprises (or Semiconductors in general), proliferation of products

It’s no secrete that Fabless supply chain are faced with ever increasing number of products, and with that comes a lot more part#’s.   It’s one thing to deal with 3 products, and another thing to deal with 30.  The part#’s involved increases exponentially with every end-product.  Imagine this, in most cases our fabless customers are dealing with 100’s of end-products.  This makes crunching through the numbers for a supply chain “plan” very difficult and slow.  Remember, in planning the entire supply chain, these part#’s have to be used for demand planning (when the customers order it), operations planning (how to build it), inventory planning (what to keep on hand), and Supply planning (which suppliers to use and when).   The level of complexity is mind-boggling.

One of the new trends in dealing with this level of complexity is through Attribute Based Planning.  We have written a lot about this in the past but it seems like our readers can’t get enough of it, and for good reason--it works.  Attributes really simplify modeling the entire supply chain by utilizing the “characteristics” of products to describe them, rather than using unique part#.  For example, you may have a grade A, B, and C chips, at speeds of 1.66Ghz, 2.66Ghz, and 3.0Ghz.  You can give all 9 potential combinations a unique product name, or you can have only 3 product names by referring to the attributes of (Grade + Speed).  This is a very simple example, but you can learn a lot more about this by either reading the Attribute Based Planning ePaper or watching the “What is Attribute Based Planning” video on the Supply Chain Planning Channel

You can apply attributes to all levels of planning but there is a catch--your planning system has to be able to handle attributes for the process its intended for.  For example, for Demand Planning, the customer orders have to be described by their attributes within the system.  For Production planning, the product routes have to defined by attributes within the same system, and so on.  Basically, the entire logic and algorithms of your planning system has to be attribute-based, or you are stock with the unique part#’s. 

For fabless companies, who deal with massive product proliferations, attributes will make life a lot easier on your many planners.  They get to collaborate together much faster, and avoid a lot of clutter.   Below, see how Silicon Laboratories is using attributes in their planning environment.  Also, For more information on this topic download: Overcoming The Shortcomings Of Fabless Planning Systems ePaper.

 

Kameron HadaviAbout the Author:  Kameron Hadavi is the Vice President of Marketing & Alliances at Adexa, for more information about him please click here.

Topics: Supply Chain Planning, Demand Planning, Attribute Based Planning, Fabless, Attributes, Semiconductors

Worried About Integration Of Your Supply Chain Planning System?

Posted by Bill Green on Wed, Jul 28, 2010
Supply chain WorriesPlanning a supply chain is a complicated task and requires a lot of complex calculations.  However, it does not require a lot of different kinds of data.   This is an important point to remember.   In this blog posting I want to discuss what to worry about when it comes to getting data for your supply chain planning system, and what not to worry about.

Basically, planning calculations need to consider all kinds of different data elements at the same time so the system needs to utilize a data architecture that is separate from the ERP system’s.  This means that all planning systems, whether they are offered by an ERP provider or a Best-of-Breed provider, need to be bolted-on to the ERP system with integration middleware.  I know that even the thought of integration to an ERP system makes many IT folks nervous, but when it comes to supply chain planning systems the integration should not be the biggest worry.   

Let’s break it down; there are 3 data factors for IT folks to think about when a new planning system is being launched.  In the order of easiest to hardest, they are:

1)     Integration to ERP Transactional system

2)     Getting the planning data complete and clean

3)     Making sure the planning system will scale and be reliable 

Integration to the ERP Transactional System

This is the one that everybody spends most time worrying about, but it really is not that hard and it’s the easiest to get passed.  First, there are only about 15-20 data tables that are required for supply chain planning.  The ERP transactional system will only contain about 10 of the key data elements.  Things like process routes, resource alternatives, resource capacity and resource availability, demand planning hierarchies do not have strong representations in ERP transactional systems.  These need to be defined in the Manufacturing Execution System (MES) or the supply chain planning system, itself.   Second, there has been a standardization of the data integration in-and-out of ERP systems.  The data-exits have been set up and well documented.  Both Best-of-Breed and the ERP vendors use the same data-exits.  Third, there are standard interfaces for supply chain planning that have been standardized over the years in major ERP systems, like in SAP® and Oracle®. So to sum it all up, a small set of data needs to be interfaced using a method that has been worked on for over 10 years.  So, not much to worry about here.

Getting the Planning Data Complete and Clean

This is one of the factors to worry about.  You must pay attention to the Master Data Management (MDM) part of the application that comes with your supply chain planning system. The data for planning needs to be verified carefully to get the best results, so strong master data management is critical.  This means that the MDM part of the supply chain planning system needs to be able to identify errors in data, its structure, and also make sure its correct in context with other data.  The contextual checks are what make MDM for supply chain planning systems so important.  Basically, The MDM for planning needs to take the data from other systems and clean it up with input from the user.  It also needs to make it so that it is easy for the user to add data to the system that does not exist anywhere else.  Note that attribute-based master data management makes this easier, by enabling data definition based on product characteristics.

Making Sure the Data Structure Can Scale

This is another thing to worry about.  Even if the data is clean and complete, the system will not work properly if it is not structured to be efficient and reliable.  If the system is slow, the users will not be able to complete the needed steps in the process and will give up.  Make sure to check how the data is structured for scalability.  A point to remember, memory-resident cache is critically important for planning systems.  Understand how this is architected for all the planning modules needed.  Is there a single point of failure?  Can you add user-defined attributes in the memory resident cache?  Can you change the imbedded logic in the memory resident cache?  If the answers do not show that the system is scalable, configurable, and reliable, then the system will fail because the IT staff does not have the ability to change any of this. 

In summary, data integration between ERP and a new planning system is the easiest part of its implementation but most IT folks seem to focus most of their worries on it.  Maybe because its under the control of the IT staff to fix.  What you should really be concerned about is the part that is not under their control, which is the underlying power of the planning systems’ data management capabilities.   This has a big impact on the data runs and takes more effort to fix.  Even a bigger concern should be the questions related to scalability and configurability of data cache within it.  If that is not right you are dead in the water.  

About the Author:  Bill Green is the Vice President of Solutions at Adexa, for more information about him please visit http://adexa.com/company/green.asp    

 

For more information about different types of Supply Chain Planning systems visit: Demand Planning, Inventory Planning, or Sales and Operations Planning.

Topics: Planning Analytics, Attribute Based Planning, Supply Chain Data, Integration, Adexa

Run Your Supply Chain Like You Are Selling Diamonds!

Posted by Cyrus Hadavi on Tue, Mar 02, 2010

Demand Planning with AttributesI want to encourage you to plan and sell your products like Diamonds!

Allow me to elaborate. Diamonds are sold based on attributes, not product-ID (i.e. SKU-number). Nobody goes to a jeweler asking for a piece of rock, spends lots of money, and walks out of the store with a smile. Instead they ask for a diamond based on the 4C's (Carat, Color, Clarity, and Cut). So the bigger, brighter, cleaner and nicer cuts get priced higher and higher. As logical as this may seem, it amazes me to see how many manufacturers still sell their products like a commodity--giving away valuable things for free. And the root cause is usually the fact that their supply chain planning systems are not capable of handling attributes, in the first place. We see many manufacturers that don't utilize attributes when it comes to planning their supply chain and inventories, and yet work with a mind-boggling number of SKU's. Most of them also complain about high inventory costs, and poor customer service, too. Let's see why that is the case, and how attributes can apply to your products and supply chain-unless you manufacturer the first generation Model-T cars.

The fact is that just about everything has attributes, people do (e.g. kind, tall, smart), Products do (e.g. red, non-combustible, fast), machines do (e.g. speed, efficiency, precision), customers do (e.g. VIP, International, new), materials do (e.g. high surface tension, low grade, hazardous), countries do (e.g. tariffs, sanctioned, no-child labor), Logistics do (e.g. Rail only, Air Express, hazardous route), etc. etc. Adding attributes to all of these objects is not too hard; just add new fields to your data base.

What is important is the ability to plan with these attributes for your entire supply chain, beginning with demand planning, to operations and inventory planning. The ability to have an algebra by which attributes are used and planned with is critical in supply chain planning systems. Imagine having an inventory of sweaters without knowing how many of them are Large, Med, or Small, and how many of them are Red, Yellow, or Green. Clearly you could not make efficient use of this inventory, or forecast and build the right products. As mentioned, there are a lot more attributes than just style, size and color. The following is a typical scenario for a top-retailer:

"A NEW customer is interested in a NON-COMBUSTIBLE product made using a HIGH PRECISION machine, from SOUTHEAST ASIA region. Also, it can not be built in any country with CHILD LABOR, and can only be transported using RAIL or SEA."

Can you imagine having hundreds of customers, with thousands of products, and then trying to forecast and commit with so many different attributes involved. Don't forget, raw material and inventories also need to be planned with just as many attributes. In its full sense, Attribute-Based planning means the ability to take all the relevant product parameters into account when forecasting, planning, sourcing, selecting, pricing, promoting, differentiating, allocating, building, storing, committing, transporting, pegging and more. Without a planning system that considers the attributes, it would be impossible to do the math, plan the supply chain, and commit orders accurately. In fact, lack of attributes in the planning process causes some level of "commoditization," which reflects a company's inability to correctly distinguish its products from the others. In turn, customer requests are undermined, and products' costs and prices are not represented accurately. In most cases, this hurts the profitability of the enterprise in the long run, even if it has a monopoly over the market.

There are a lot more benefits to Attribute-Based planning. I highly recommend reading the more comprehensive ePaper that we just published on this topic: Attribute-Based Planning: How to Avoid Commoditization. Also, Feel free to comment on how you use attributes in your supply chain, or if you are looking for any ideas on how to make better use of attributes specific to your environment.

 

Dr. Cyrus HadaviDr. K. Cyrus Hadavi is the president and CEO of Adexa, for more information about the author please click here

 

 

For more information about different types of Supply Chain Planning systems visit: Demand Planning, Inventory Planning, or Sales and Operations Planning.

 


Topics: Supply Chain Planning, Demand Planning, Inventory Planning, Attribute Based Planning, Manufacturing Planning, Operations Planning, Differentiate

From The CEO: Adaptable Supply Chain Management Software

Posted by Cyrus Hadavi on Thu, Jul 16, 2009

 

Enterprises are subject to a constantly changing world.  Survival and growth depends on their ability to adapt to the new environment. As witnessed recently, the state of the economy can have a drastic impact on the business and its survival. Competition, new products, strikes, and government regulations are a few of the influencing factors. However, changes to an enterprises' supply chain can be even more erratic and frequent: Shortages of supply, changes in demand parameters, such as color and style, and changes in suppliers' cost and quality, etc.

Given that almost all companies and their supply chains have to change and adapt, there is a great deal of  emphasis on their ability to implement and communicate the change. This involves design of the business processes, the new rules, and the ability to enforce these rules, while constantly monitoring the status of the business in an almost real-time fashion.  The main challenges are:

1- Define the best rules for the company?e.g. where, what and when to build and allocate

2- Communicate and enforce these rules-monitor and adjust

3- Make sure that rules are compatible-to avoid conflict

In order to know what is the best for the company, one needs to define what the "best" is. There are often conflicting objectives and difficult to have a universal set of guiding indices. Even profitability of the company may not be appropriate depending if you are taking a short term or long term view. In certain cases cash flow may prove to be more important than profitability. Many companies build predictive models that can show the future and the outcome of their options.  Spreadsheets are amongst the most popular model building tools. However, such spreadsheets are "back of the envelope" calculations based on some static criteria and fail to show the interaction of all the different factors including suppliers, capacity, inventory, mix of products, demand and, more importantly, the link between operational decisions and financial outcomes. Today, the planning technology is moving toward a new breed of modeling tools called adaptable SCM (ASCM) solutions that can help the management in making the right decisions. Adaptable SCM solutions are a parametric and attribute-driven approach to development of Supply Chain Management Software. They take into account the new business rules and present the users with optimized alternatives. They are capable of presenting multiple scenarios that have different merits and trade-offs so that the management can make an intelligent choice.  When and if something goes wrong, ASCM solutions can almost immediately make corrections to the plan.

The second point that was raised above has to do with communicating and enforcing the new business rules by monitoring the real-time status of the supply chain. Every system by itself can be very intelligent and adaptable, however it requires to collaborate and monitor progress or else all the intelligence in the world would be of no consequence.  The collaborative aspect of ASCM is a necessary and critical part of the solution. In a collaborative environment, the system obtains information from shop floor, suppliers, people, and other systems. Systems may also revise their decisions as new information becomes available. The key here is to recognize that the system has to do it in a time-critical manner and inform the right entities based on exception. In other words ASCM solutions have the intelligence of who should be informed and when based on the nature of the exception.

Any real organization faces many conflicting rules and opinions. Consider the following two objectives: "make sure the order is delivered on time" and "minimize transportation cost". What do we do when air transportation becomes necessary because of late production? In the absence of more information, systems and people may make a decision one way or the other. But what if we called the customer and it was OK to deliver late? Detection of such conflicts imply exceptions that can be flagged. In this example, exceptions are "late delivery" and "premium transportation. An intelligent system would bring such instances to the attention of the right person(s). In our example, Sales VP, Finance and Logistics Manager need to be notified of what the conflict is and decide on a resolution. The final outcome may not necessarily the best for the company.  However, Adaptable SCM systems remember such instances and look for trends. The system would detect the number of air shipments and how it is correlated with cost of transportation as well as late delivery of orders. So one conclusion is: production is the cause. The next question is why is production late? Is it a trend? Is it because of lack of capacity, late material, certain product quality issues, seasonal variations, or a surge in demand? All such possible causes can be analyzed by the system and users can be notified of the outcome.

ASCM solutions are the next generation of supply chain management software that combine supply chain planning with Business Intelligence and Causal reasoning.  This is an exciting area of research and development for planning technology today and we'll be posting more related information about this topic in the future.  

Dr. K. Cyrus Hadavi is the president and CEO of Adexa, for more information about the author please click here.

 

Topics: Supply Chain Planning, Attribute Based Planning

Attribute-Based Supply Chain Planning-- Is It For You?

Posted by kameron hadavi on Thu, Jan 29, 2009

Attribute Based PlanningAttributes have traditionally been used as a way to manage the supply chains of products that are sold in order to meet some kind of manufacturing or engineering specifications. Examples of these are types, speeds and grades on CPU processors, electrical properties on high tech components, and chemical properties on specialty chemicals. These products command higher margins and premium prices because they meet the specific needs of customers and resist the profit-eroding effects of commoditization.  To make the pint, imagine if Diamonds were sold all under one specification, e.g. size, rather than size, color, clarity, cut, etc.

Adexa customers are using Attributes more and more to manage their supply chains for Demand Planning and Supply Planning at both the S&OP level and the order level. For S&OP, planning-attributes can be used to translate market demand into demand for a sub-segment of the products that a company sells. At the order level, it can control which products are used to satisfy different demands, or select which resource or routing is appropriate for processing different SKU's. Furthermore, Adexa customers are using attributes to describe the engineering product specification, code-date of manufacture, lot id, color, etc. to target specific customer needs. Other special services that can be sold to a customer include how or where a product is manufactured. The location of manufacture using a qualification matrix, defining the process used to build a product; even naming the resource used to manufacture a product for a customer could be used to sell products at a premium price. Environmental concerns, safety concerns, and quality concerns can drive customers to prefer specific suppliers for a product. Attributes have helped some of our customers to sell their products for higher prices, while better managing their supply chains.  

Is Attribute-based planning important to you and how it may help your profit-margins?  We like to hear from you.  If you want to learn more about this topic, download the Attribute-Based Planning Whitepaper, or view the Webinar: Using Attribute-based Planning to Make Your Business more profitable, or visit http://www.adexa.com/

Topics: Supply Chain Planning, Demand Planning, Attribute Based Planning