IBM Decision Optimization
MichaelWatson 270002K5FS Tags:  supply_chain_strategy supply_chain ilog flexibility 2,879 Visits
In a previous post, we mentioned David Simchi-Levi's new book, Operations Rules. We've received a lot of questions about the book and the concepts.
Now, the official website for the book is up and running. Click here for the link.
The website highlights why the concepts from the book are important. For example, Jim Champy, the coauthor of Reengineering the Corporation says:
"Companies today are faced with an increasing number of choices in operational and supply chain strategies. This book goes beyond just showing how to make the right operational decisions. It makes the critical link between operations and providing more value to customers. It's a must read for anyone involved in operations and strategy."
Also, a key concept discussed is the fact that many companies offer different value propositions through different channels or brands. These different value propositions imply that the company may have different supply chains. However, the company cannot simply operate their supply chains separately. They need to take advantage of synergies where it makes sense. Click on the S&OP video in this link for more information
The May 22, 2012 edition of the Wall Street Journal featured an article about manufacturing moving back to the US. (Click here for the article-- it may be restricted to subscribers). The article cited statistics from David Simchi-Levi of MIT stating that 39% of companies surveyed were considering moving production back to the US.
Of course, several factors were mentioned for this trend including changes in the relative cost of labor, the price of oil, and the ability to respond faster. Although not touched on in this article, making product closer to the demand can reduce the required inventory.
What is also interesting is that over the last 5 years, China has become a market where companies sell product. It used to be that companies just received product from China. Soon, firms found that their China plants were well-suited to cover the demand in China.
From a network design perspective, this brings up some interesting questions: should you make product for each region of the world in that region? Which products should you make in China and which ones in the US? And, what is the break-point for the price of labor and oil where it makes sense to move product from China to the US?
MichaelWatson 270002K5FS Tags:  cognos ilog s&op optimization analytics logicnet_plus_xe 2,867 Visits
As data becomes more available, firms are revisiting their S&OP process to add more analytics to the process. In fact, the lack of analytics and optimization is often a reason that firms do not get the full value from their S&OP process. That is, without optimization-based technology, the S&OP process can become just a demand planning exercise with minimal analysis of the operations and supply.
By combining the Cognos S&OP solution with integration to LogicNet Plus XE, firms can now create optimized plans. That is, Cognos provides the descriptive analytics, an S&OP dashboard, the detailed reporting, the platform for demand consensus, the ability to standardize data from multiple sources to create a single S&OP view, and the ability to tie it back to financial systems. Cognos becomes the enterprise level platform for S&OP. LogicNet Plus XE then receives data from Cognos, allows the planner to run multiple scenarios, and feed the operations plan back into Cognos.
The operational plan considers capacity of the facilities, starting inventory positions, the demand plan from the S&OP process, and alternatives for meeting demand. Using this capability, it creates integrity in the process by coming up with operational plans that match the demand plans.
We have a short video available for additional information.
aeortiz 2700024WMF Tags:  analytics financial optimization management london optimisation ibm services banking ilog portfolio uki smarter_commerce finance asset 2,861 Visits
Don't miss the IBM Optimisation Forum for Financial Services Sector at IBM South Bank, London, United Kingdom on 13th November, 2012
SCOPE AND FOCUS:
As banks and financial institutions start to emerge from a prolonged financial downturn, they face a host of challenges. Disruptive forces continue to ripple through the finance industry changing the market and impacting the businesses, such as:• New technologies
• New regulations
• New capital requirements
Optimisation technologies have become key tools in making important business decisions that increase competitive advantage. Optimisation, through the use of advanced mathematics and computer science techniques, is used to assist organisations with solving their complex business problems. The models which capture trade-off between optimum resource allocation and risk minimisation are gaining increasing importance in Banking, Portfolio Construction, Asset and Liability Management, Trade Settlement and Clearing and Cash Management. Recent developments and growing applications of quadratic optimisation, stochastic optimisation and robust optimisation in these domains and the role of modelling systems and solvers will be presented and discussed.
BENEFITS OF ATTENDING:Understand the role of optimisation in financial analytics and gain an understanding of the leading issues of financial analytics
Learn about the latest thinking and practices in the domain of Portfolio Optimisation and Asset and Liability Management
Learn how companies have been able to use optimisation technology to help determine how to most effectively allocate capital, balance business risks, uncover novel solutions for their customers and gain insights into their toughest challenges for maximum return with limited risk
WHO IS IT FOR?• Quantitative Analysts
• Credit Risk Analysts
• Financial Engineers
• Quantitative Developer
• Trade & Cash Solutions Managers/Analysts
• Corporate Treasurers
• Investment Managers/ Investment Strategists
• Financial Analysts
aeortiz 2700024WMF Tags:  in commerce virtal supply chain linked scm optimization linkedin ilog group user ibm management 2,832 Visits
Join our monthly IBM ILOG Supply Chain Management Virtual User Group (VUG) sessions. These 1-hour meetings are a quick way to brush up on your IBM ILOG supply chain modeling skills, meet other people using the products, ask questions to the community, and learn about what's new. These sessions will be led by our experts and have plenty of time for discussions and Q&A.
May 4th 2001:
Topic: "Applying Supply Chain Analytics: Benefits of a Central Group"
This talk addresses the value firms can achieve by deploying advanced supply chain analytics and how a group should be structured. We will use case studies and recent events to highlight the value from business analytics such as network and inventory optimization. We will discuss how 3M Corporation is organized to deploy this capability.
Join our LinkedIn Community to receive updates, more detailed information, and Dial-up/Web Meeting access.
May 4th - Wednesday
June 1st - Wednesday
August 2nd - Tuesday
September 1st - Thursday
October 7th - Friday
November 2nd - Wednesday
December 2nd - Friday
In the January 2011 edition of Inbound Logistics, Navistar's Ed Melching, Director of Global Logistics discusses their supply chain transformation and selection of Menlo as their 3PL partner.
In 2008, after undergoing a grueling third-party logistics provider (3PL) selection process, Navistar chose San Mateo, Calif.-based Menlo Worldwide Logistics, the global supply chain management subsidiary of Con-way Inc., to support it in improving its global logistics network, including managing global transportation providers and regional warehouses, planning lead times, and modeling net landed costs.
He reports that one of their goals was a 25% reduction in supply chain costs. He reports that at "the end of the partnership’s second year, we will have achieved 11-percent cost savings, out of the 25-percent goal we set for the next five years."
When discussing the reasons Navistar selected Menlo, he mentioned their "global coverage, cross-network planning, and optimization capabilities."
This is a very interesting article discussing the challenges of building a new global supply chain from the ground up. It is also interesting that modeling net landed cost and optimization capabilities were mentioned as key factors in the transformation of the supply chain. This mirrors some other findings that leading supply chains are relying on optimization-based technology to help drive improvements.
Gartner recently assessed their view of IBM's acquisition of the ILOG supply chain products In the report, "The IBM ILOG Acquisition: A Progress Report Card, August 4, 2010."
Click here for a link to the report. You will need to be a Gartner member to see this article.
MichaelWatson 270002K5FS Tags:  ilog inventory inventory_optimization optimization analytics 2,749 Visits
While doing some research for an upcoming white paper, I came across a nice article from Nov 2009 from Dan Gilmore at the SupplyChainDigest, "The Real Value of (Less) Inventory." A key line from the article is:
"...permanently reducing your level of inventories relative to sales and sales growth can have a dramatic impact on a company’s share price."
The article quotes research and cases to back up this claim. This certainly fits with what our customers are telling us-- they are seeing significant inventory savings through inventory optimization.
The word "permanent" is a great choice of words. Inventory optimization technology, by itself, will not lead to a permanent reduction. As we noted in an earlier post, we have developed an inventory planning playbook to help firms make the right inventory decisions with the right cadence and considering important strategic factors.
aeortiz 2700024WMF Tags:  technology what-if ilog optimization redbook scheduling scenarios odm odme planners enterprise best ibm decision 2,738 Visits
Want to build more effective business applications using
optimization? Check out the new IBM Redbook Optimization and Decision
Support Design Guide: Using IBM ILOG Optimization Decision Manager. Down load the pdf at no charge from http://www.redbooks.ibm.com/redpieces/abstracts/sg248017.html?Open.
If you’ve ever tried to build an application that business decision makers can use, you know that having a good model of the system you want to manage isn’t enough. And while you need the best optimization solving technology, line-of-business managers and executives demand more. They want to see the data supporting the decisions, they want to try what-if scenarios to validate the proposed options, and they want planners and schedulers to collaborate across the corporate organizational lines. And if you want to deploy your solution, you need to satisfy a bunch of requirements and standards from your IT department.
The Design Guide addresses these issues with concrete guidance and practical examples derived from IBM’s long experience developing and deploying analytical decision support solutions in many organizations. Going beyond how to formulate good models, the Guide shows you how to design data integration, business user interfaces, client/server architectures, taking advantage of IBM’s ODM Enterprise to streamline development. The Guide illustrates the steps using a concrete example derived from a real-world logistics application. Plus the Guide explores two detailed case studies, one in manufacturing and the other from insurance.
Need to convince your management that optimization can work for your organization? The Design Guide can give you the credibility you need.
Down load the pdf at no charge from http://www.redbooks.ibm.com/redpieces/abstracts/sg248017.html?Open.
We are jointly presenting with GE Healthcare on May 10th at 2PM ET in a webinar hosted by IndustryWeek. Click here for details and registration.
Here is a description of the session from the registration site:
Managing a global supply chain is a constant balancing act. Making sure you’re getting the best results means calculating thousands of trade-offs. You need to consider every cost and constraint associated with transportation, production, storage, and global trade, while keeping service levels as high as possible. And when you consider how unpredictable high-growth markets can be, the levels of complexity increase exponentially.
Attend this IndustryWeek webinar featuring experts from IBM and GE Healthcare to learn best practices for simplifying the complex. Find out how your company can calculate the best possible supply chain network design to meet rapidly expanding business needs.
You will learn:
MichaelWatson 270002K5FS Tags:  ilog supply_chain optimization transportation analytics container 2,664 Visits
A recent article in The
The importance of moving empty containers is simple:
"It's a huge expense, a huge headache for the industry," says Neil Davidson of London-based Drewry Shipping Consultants. The net cost of moving empties is around $7 billion a year, say analysts.
The foldable container would reduce the cost of shipping the empties. However, these foldable containers cost around $4,000, or twice the cost of the standard containers. And, the
Right now, the industry is not standing still. IBM's ILOG Optimization solutions are being used to optimize the return of the empty containers. The goal of the optimization is to get empty containers to where they are needed at the lowest cost. Of course, the containers do not have to return from where they started and there are options for leasing or buying new containers.
The problem can be difficult when you start to consider such things as the different container types, the capacities of ships, the costs of different modes of transportation, and the long ocean shipping times.
Besides reducing costs, the shipping companies using this
Finally, IBM's commitment to Analytics and Smarter Planet, provides additional benefits to this problem: First, since there is variability in demand and supply, it is important to correctly set the safety stock levels for empty containers at key locations. Second, it is important to track and trace the containers so you have better visibility but also to know when a container needs to be replaced or repaired.
Retailers are Restocking Shelves-- Analytics and Optimization Can Ensure You Stock with the Right Products
MichaelWatson 270002K5FS Tags:  supply_chain store_operations retail shelf_space analytics ilog optimization 2,656 Visits
According to an article in Businessweek, "Companies from Tiffany & Co. to Home Depot Inc. are restocking shelves in a move that will boost economic growth and may keep the recovery on track through 2010."
The questions many retailers are asking is "what should I restock with?"
Today, we recorded an educational webinar with SC Digest on shelf space optimization-- a great way to answer the question about how to stock your stores. The objective is to keep customers happy at every single store with the right products and, in turn, drive up revenues and profits.
SC Digest will keep the Webinar available for 12 months for viewing. You just need to register to watch it. Click here for the link.
Today, we announced the release of a new version of our multi-echelon inventory optimization product, Inventory and Product Flow Analyst (IPFA) v7.6
We have put a lot of investment in IPFA so that it fits within the workflow of an organization. That is, it is important to be able to answer strategic inventory optimization questions, but it is even more important to maintain the right inventory targets. You maintain these targets with strong work flow capabilities.
By maintaining the right inventory targets at all levels in the supply chain, you can avoid lost sales, minimize late shipments, minimize expediting, and keep inventory to a minimum. And, since IPFA directly accounts for demand forecast error and supply variability, you get value even when your forecasting is not very robust. For more details on the strategic importance of inventory optimization, click here.
Many S&OP processes stop with the sales planning. When you extend your S&OP process to include optimization through a tool like LogicNet Plus XE, you can reap many benefits.
The picture to the left is shows some highlights from an S&OP case from a beer company. On a monthly basis, as part of the S&OP process, the operations of this beer company are modeled and optimized in LogicNet Plus XE. The details below the map provide information on how much beer, by product by month, is shipped to each of warehouses and how much product is produced in each month. The graph shows the inventory build up in the supply chain by warehouses.
Besides providing insight into the operational cost and capacity implications of a given sales plan, the results also show the impact on total revenue, operational gross profit, and total pre-build inventory.
These results can also provide insight into the sales plan. For example, it can determine the cost and feasibility of promotions, it can suggest additional demand shaping activities by looking at under-utilized capacity.
In this case, the firm analyzed different demand plans around the implications of a marketing program to grow demand in a region, the implications of a promotion for a specialty product, and the implications of a price increase.
David F. Carr of Forbes Magazine recently wrote an article based on an interview with Steve Sashihara, the author of the new book called "The Optimization Edge: Reinventing Decision Making to Optimize all of Your Company's Assets".
The article does a great job of explaining how firms need to embed mathematical optimization deep into their organizations to really take advantage of their investment in IT and data.
The article mentions that IBM and IBM's ILOG CPLEX have the ability to address the need for more automated optimization. This article confirms the value we've seen in Optimization:
And the list could go on. We are finding that firms who push optimization deep into their organizations see significant returns on their investment.
As a complement to the Forbes article, we have just released a short educational video to explain the value of mathematical optimization to business leaders. Click here for a link to that video.