Supply Chain Planning Blog

In-Memory Computing—Only the beginning

Posted by Cyrus Hadavi on Thu, Jul 21, 2016

In-Memory_Computing.jpgIn a few recent sessions with industry analysts, we were surprised that we were asked if our software is in-memory computing! Given the fact that for over 20 years we designed our applications to have all the data in-memory for computation, our immediate response was: Is there any other way of doing it? The response was, yes, there are others which bring in the data from the database when they need it but now they are changing and they are getting orders of magnitude improvement in speed! This improvement in speed must have caught the attention of the analysts which brings us to the core subject of this article. There is more to speed of application than just having all the data in memory. The latter is the easy part. There are also some vendors, try to improve speed by abstraction and over-simplification. I am sure you are aware of quite few who deploy “Spread-sheet” type of capacity planning in their S&OP applications. That is forming weekly or monthly buckets with fixed lead-times! This approach typically either dumbs down how to deal with capacity, or ignores it altogether. It is the old method, with NO notion of product mix and real processing time, that has been around for decades but with a new user interface which makes it slightly more attractive. Therefore, any gain in speed is offset by a very inaccurate and unrealistic plan. In addition, it has no order level information OR any order level pegging functionality. You might as well use your spreadsheets since they give you even more control!

 

To gain real improvement in speed with proper representation of capacity of resources and equipment, deep modeling capability is needed and the mix of products must be taken into account. In addition, to IMC, one needs to have data representations and algorithms that provide real-time answers to very complex supply chains at order level. As an example, if one material is not available, does the system go back to search all over again for a new method of making or will it just backtrack one step to find an immediate substitute pegged to that order? If a resource is a bottleneck, will it look for a whole new routing or will it look for an alternative, process or equipment. How this data is represented and how the algorithms divide and conquer in parallel processing is what makes the application fast. Just using IMC is only the beginning, there is a lot more that goes into a comprehensive planning system that can analyze tens of millions of data points from material availability to resources and tools and skill levels, to say a few, in almost real-time.

Topics: Supply Chain Performance Management, Planning Data Integration, Supply Chain Data, Spreadsheets, Attributes, Sales & Operations Planning, SCP System, S&OP, Adexa

Multi-Echelon Inventory Planning — Is it for you?

Posted by kameron hadavi on Tue, Oct 06, 2009

Inventory PlanningInventory is insurance against the unknowns in the supply chain. It protects you if surprises occur with demand or supply. Just like the insurance you buy for yourself, it is important to spend the right amount of money in the right points of your supply chain in the form of inventories (i.e. safety stocks).

If spent wisely, inventory dollars will have a beneficial impact on a company's ability to service its customers properly and help keep direct and indirect costs low. Too much inventory wastes capital, and increases the risk of obsolete goods.  With too little inventory, you are risking lost sales, stock outs, and increased direct costs from disruptions in operations.  There are many stakeholders that worry about inventory positions at many different levels of the supply chain, and their objectives are not always the same; in fact it may be contradictory.  For example, sales people love to cushion themselves with lots of inventories in order to make sure they will always have product to sell, while the CFO wants to cut inventories as much as possible in order to save capital and improve the Return-on-Asset ratio.  So optimized management of inventories can be become a very difficult issue and its complexity can skyrocket as the number of tiers in your supply chain increases.   

In the recent past, a whole new breed of supply chain planning solutions have been developed and dedicated to better management and optimization of inventories.  They are called Multi-Echelon Inventory Optimization (MEIO) systems and there are a handful of vendors that provide them.  Of course different systems use different algorithms and techniques to address this highly complex issue, so you definitely need to do your homework before jumping into purchasing one.   

Adexa includes multi-echelon inventory planning as an option in its Sales & Operations Planning (S&OP) platform. We like to think we have a distinct advantage in this area due to our holistic approach to planning the entire supply chain, not just parts of it.  Naturally, that is very important since inventory planning is not done in isolation.  It should heavily consider factors such as demand forecasts, manufacturing capacities, and supplier capabilities, within one integrated planning environment.  But Adexa actually throws in one more advantage.  We tie all of this planning data to key financial measures.  That basically means, you can review your supply chain planning decisions based on their financial impact, especially when it comes to revenue, profitability, and return-on-assets.  

Many supply chain managers are looking to learn more about MEIO and trying to understand if their company should be utilizing this type of inventory planning solution. The simple answer is if your enterprise has a multi-tier supply chain (e.g. more than one plant, DC feeding regional DC's or customer hubs, etc.), or if your products have key components that are used commonly across multiple end-items, then you should be considering MEIO as a way to cut costs and increase customer service levels. 

For more information you may want to check out one of our latest webcasts on this topic by visiting our Supply Chain Planning Webcast Library.

Topics: Supply Chain Planning, Demand Planning, Inventory Planning, Planning Data Integration, Sales & Operations Planning, S&OP, Multi-Echelon Inventory Planning

Cost of ERP vs. Best-of-Breed Supply Chain Planning Systems

Posted by Bill Green on Wed, Jul 22, 2009
Cost of Supply Chain PlanningWe have posted before about comparing the costs of Best-of-Breed vs. ERP's supply chain planning systems and readers are asking for more specifics on what to look for when doing the comparison.  Here are three of the top issues to consider when comparing the cost of implementing SAP APO and ORACLE SCP with B-o-B offerings.

Data Integration

The majority of the cost associated with integrating ERP systems with supply chain planning systems comes from the effort of getting the data out of the core ERP system.  This has to be done even if the supply chain system is being provided by the ERP vendor, itself (e.g. data from SAP R/3 to SAP APO).  A much smaller effort goes into getting the data mapped into the planning system.  The reason for this is that the ERP systems are usually customized and each customized transaction can cause a hole in the integration.  Also ERP's transactional interfaces are more expensive to set up than interfaces that run in batch.  Before deciding on using a transactional interface (such as SAP's CIF Interface) make sure that you really need it.  Ask how often will the planning system run?  And how fast you need the data to transfer in order to run it?  With the exception of real-time Available-to-Promise capability, most planning modules will work fine with batch integration.   

Planning Analytics

A second overlooked but costly area in implementing a planning system is the use of analytic views (bucketed views of the plan that can be aggregated, sliced, and diced).  They are very important for analyzing a plan, but they are not part of the core ERP-based supply chain planning systems.  Both ORACLE and SAP rely on their generic business warehouse for analytic views since they are not part of their supply chain planning module.  In both demand planning and supply planning, users require accurate analytical views to make timely decisions.  Make sure you understand the cost of setting up SAP Business Warehouse or ORACLE Analytics.  Not only do the views need to be set up in the warehouse, but you also need to integrate to it.  Typically best-of-breed systems include analytics views as a memory resident capability.  To pick the right planning system you have to find out what information is most important to your users and what it takes, in terms of cost and effort, to provide it to them.    

Configuration Costs

One of the biggest cost areas in setting up a planning system is the configuration of the algorithm parameters and business logic, i.e. your business model.  This is where the rubber hits the road for a planning system.  If the system is not set up to properly handle the key business constraints you could easily end up with a useless plan and serious consequences, e.g. rising inventory, or bad commit dates.  The configuration effort involves getting the knowledge out of your head and into the system. Think of all the constraints and business rules that you need to incorporate, and ask how they will be managed within the planning system.  Ask how to customize the planning logic and enter custom constraints.  Naturally, the system with the most flexibility and ease in setting up your business rules and constraints will be the one that will be most useful and least costly in terms of implementation.   

We have noticed many times that companies struggle with a decision to go with either a Bolt-on planning system or their own ERP's planning system.  Are there any other points that you are concerned about when it comes to this dicision?

For information about the author please click on Bill Green, VP of Solutions, at Adexa.  Or email him at wgreen@adexa.com. Or visit www.adexa.com.

Topics: Planning Analytics, Planning Data Integration, Implmentation Cost, ERP Planning systems, best of breed planning systems, b-o-b, Configuration costs