IBM Decision Optimization
RILA Logistics 2010 - Meet David Simchi-Levi, IBM ILOG Chief Scientist, LogicTools Co-founder and MIT Professor
aeortiz 2700024WMF Tags:  logistics ibm_ilog_supply_chain_sol... ilog retail optimization 2,334 Visits
Attention Retailers: IBM is attending the Retail Industry Leaders Association (RILA) Logistics 2010 Conference in Orlando, FL on Feb 21-24 at booth #322.
We invite you to join us on Monday, February 22 from 7:30 to 9:00 p.m. to chat with IBM ILOG Chief Scientist, LogicTools founder and MIT professor, Dr. David Simchi-Levi, as well as several IBM supply chain experts. In a retail world where demand-driven inventory and optimized global supply chains are more essential than ever, this informal event will give you the contacts and ideas you need to start making a difference. REGISTER BY February 17th.
IBM is a leader in Operations Research and we offer the world's most advanced optimization solutions for solving tough business and supply chain problems.
aeortiz 2700024WMF Tags:  optimization ibm scm ilog working smart chain event supply capital smarter 2,384 Visits
The IBM Smarter Supply Chain Management briefing is coming to Toronto on March 4th, 2010! Save the date!
Join us on March 4 at the Intercontinental Toronto Centre's Caledon Room, to learn how your business can take advantage of these proven supply chain strategies and tactics to help improve bottom line profits:
1) Optimizing S&OP Processes
- Generate real value to the business
- Create significant improvement in KPIs
2) Leveraging Network Design to Create Lean Supply Chains
- Help reduce costs and better manage risks
- Develop efficient production and scheduling systems as more products are moved to the same plant
3) Improving Operational Efficiency
- Optimize the production process to improve manufacturing efficiency and reduce inventory
- Use a dynamic safety stock approach to improve supply chain flexibility
This one-day event for business executives and supply chain practitioners will focus on both the strategic and tactical decisions that are impacted by the current business environment. Thought leaders from industry and academia will discuss the challenges and circumstances that are driving the need for business solutions that optimize overall supply chain costs, free up working capital, and improve service levels.
Date & Location:
Thursday, March 4th
Intercontinental Toronto Centre
255 Front Street West
Toronto, Ontario M5V 2X3 Canada
MichaelWatson 270002K5FS Tags:  scm ilog strategy optimization retail optimization_supply_chain... 1 Comment 2,940 Visits
This week’s Economist magazine has a special report on the “the data deluge.” The report points out:
“According to one estimate, mankind created 150 exabytes (billion gigabytes) of data in 2005. This year, it will create 1,2000 exabytes. Merely keeping up with this flood, and storing the bits that might be useful, is difficult enough. Analysing it, to spot patterns and extract useful information, is harder still. Even so, the data deluge is already starting to transform business…”
The article notes that the retailers are one of the leaders in amassing this data. For example:
“Wal-Mart, a retail giant, handles more than 1m customer transactions every hour, feeding databases estimated at more than 2.5 petabytes.” (A petabyte is 1m gigabytes)
Of course, this article fits nicely within IBM’s Smarter Planter. Smarter Planet’s big ideas are that the world’s systems will be instrumented, interconnected, and intelligent.
In IBM, the group behind this blog works on solutions to help firms make more intelligent decisions with this data. Often, due to the number of possible choices, optimization-based technology is the only way to get value from the information you’ve collected.
For example, for retailers we’ve worked with, they have taken advantage of the data in a variety of ways:
1. Determining what items should be stocked at a store, how the store should be laid out, and where the SKU’s should be on the shelf—this helps retailers increase store revenue and profitability.
2. Determining how the warehouses and stores should best be replenished, how the workforce should be scheduled, how products should flow through the supply chain, locating the warehouses, and routing trucks--- this helps retailers take costs of their supply chain.
In each of these cases, simply analyzing the data was not going to be good enough to extract value from it to give the retailer a strategic advantage.
MichaelWatson 270002K5FS Tags:  analytics scm retail supply_chain ilog optimization 2,367 Visits
Yesterday, IBM published its 2009 annual report. In the Letter From the Chairman, IBM lays out its growth opportunities for 2010. It lists fours strategic areas for investment. Analytics and Smarter Planet are two of those four areas.
For Analytics, there is great amount of data available and organizations who take advantage of this information will unlock tremendous value. The letter notes:
IBM is moving quickly to capitalize on this promise. We have built the industry’s premier analytics practice, with 4,000 consultants, mathematicians and researchers, as well as leading-edge software capabilities
Of course, this fits with the opportunity IBM sees with its Smarter Planet initiative. In fact, the letter points out some benefits retailers have seen.
Four leading retailers have reduced supply chain costs by up to 30 percent, reduced inventory levels by up to 25 percent, and increased sales up to 10 percent. They’ve done so by analyzing customer buying behaviors, aligning merchandising assortments with demand and building end-to-end visibility across their entire supply chain.
A good example of how this IBM strategy comes together is through our shelf space optimization solution. In this solution, we help retailers place their products in the right place in the store-- from how the store should be laid out, how much space should be given to each products, and where the products should be on the shelf (for example, determining which products are at eye-level). This solution leverages our advanced optimization capability (to determine the placement), our advanced statistical capability (to predict and analyze detailed sales data), and our rules technology (to maintain the system since different regions and stores may be unique in their requirements).
Webcast: Building A Smarter Supply Chain - Positioning Your Business for Economic Recovery and Growth
Register today: http://www.sctvchannel.com/Videocast_Building_Smarter_Supply_Chain.php
Join IBM Optimization and Supply Chain experts on March 30, 2010 for the webcast: Building a Smarter Supply Chain: Learn how to position your business for recovery and growth with better supply chain decision-making using next generation supply chain optimization.
Is your business positioned for recovery? Are your supply chain strategies flexible enough to manage a rapidly changing and volatile economic landscape? Join IBM ILOG Optimization & Supply Chain experts to learn how optimization technology supports flexible business strategies that enable companies to reduce costs today and prepare for growth tomorrow.
MichaelWatson 270002K5FS Tags:  ilog optimization supply_chain transportation analytics container 2,669 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 2,658 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.
MichaelWatson 270002K5FS Tags:  supply_chain logicnetplus optimization_supply_chain... analytics ilog optimization 2,960 Visits
An article in DCVelocity provides some great insight into how Whirlpool and Maytag combined their supply chains. Whirlpool purchased Maytag in 2006 and promised the investment community $400M in savings over the first 3 years.
According to the article, $40M of savings per year was going to come from logistics-- freight and warehousing costs. This reminds us how important it is to get these decisions right. And, in Whirlpool's case, the article reported that they were able to overachieve and hit a savings of $66M in the current year.
How they got off to a fast start:
One of the first steps was to determine what inventory was on hand in both operations so that Whirlpool could determine what to do with it. The company acquired ILOG's LogicNet Plus suite of network design and planning software so it would have a
The network optimization with LogicNet Plus allowed Whirlpool to determine which distribution centers to close, which new sites should be built, and what the local cross dock network should look like.
We have seen this type of result many times over the years. When a firm grows through an acquisition, having a high-quality network optimization tool allows it develop solid plans for the new network. This creates a foundation for additional improvements and helps a company meet the goals of the acquisition.
In an article in today's Wall Street Journal with the same title as this post, the authors argue that the economic conditions in this recovery are going to be different than the years prior to the recession. Specifically, they mention that capital is going to be much more expense to come by; globalization will continue to put pressure on margins, and rising world demand will drive up commodity costs.
A key part of the article argues that companies will have to learn to finance their growth and investments with their own cash flow.
We are seeing how companies are now adjusting to this reality:
More companies are implementing advanced inventory optimization to reduce inventory to free up working capital for other parts of the business. And, this is not a one-time exercise. These firms are making inventory reduction an on-going part of the business. Our inventory optimization solutions are allowing firms to uncover new strategies to reduce inventory and allow them to maintain optimal inventory levels by integrating this technology with their ERP systems.
This map shows a classic network design case. This client was producing most of its product in northwest Mexico with some product coming from the Virginia plant.
Like many firms, they were just distributing product from the plant where the product was made. The baseline map shows the current situation.
They wanted to do an analysis to determine a better distribution strategy. The result on the right shows the optimal distribution strategy. Thy shipped full trucks loads from the plant in Mexico to the warehouse in Virginia and then on to the customer.
This solution has much more expense in transportation from the plant to the warehouse. However, this is more than offset by the savings on shipments to customers. The optimal solution resulted in $5MM in savings (about a 25% reduction in transportation costs).
Although this case looks rather simple, it wasn't clear at the start whether the best solution would have one warehouse in the center of the country, two warehouses not located at the plants, or a third warehouse. And, it wasn't clear how the country should be split. And, finally, with a lot at stake in terms of savings, and moving capabilities, it is important to do a robust study to make sure you have covered all the angles.
IBM has reorganized its website to highlight it growing power in Analytics. At the beginning of this year, the letter to shareholders spelled out Analytics as one of IBM's four strategic initiatives.
Within IBM's software group, Cognos, SPSS, and ILOG Optimization make up the current pillars of the Analytics offering.
Within ILOG Optimization, you will find information on IBM ILOG CPLEX Optimization Studio, IBM ODME Enterprise, and our supply chain optimization applications.
ThomasDong 270002GM71 Tags:  smarter_planet analytical_decision_suppo... optimization advanced_analytics cplex opl odm_enterprise 3,060 Visits
Last week, IBM hosted another Connect to Win event for business partners at it's northern California IBM Innovation Center. The event focused on business analytics and featured IBM Distinguished Engineer Jeff Jonas, a dynamic and highly sought after speaker. Among his many accomplishments, he is known for developing the technology used by the Las Vegas gaming industry featured in the book "Bringing Down the House", the recent movie "21", and numerous documentaries on the Discovery Channel, Learning Channel and the Travel Channel.
Following the keynote by Jeff Jonas, IBM hosted a panel discussion. Some 30+ partners came to learn how to leverage analytics in their offerings, and naturally a wide spectrum of analytics sophistication was represented, generating a vibrant discussion on everything from Smarter Planet to Artificial Intelligence to Decision Management.
The panel was made up of:
During the panel discussion I had the opportunity to first share IBM's vision for business analytics, using an adaptation from Tom Davenport's book "Competing on Analytics", to explain why, how and where IBM has invested $14B since 2005 in business analytics. Several partners thanked me afterwards for presenting this visual, as it provided them with a blueprint for how they might evolve their own analytics capabilities.
In fact, this gave me an opportunity to define a new software category for many - Advanced Analytics, which applies statistical and mathematical techniques to provide forward-looking capabilities, beyond the insight commonly extracted from historical data and information. It can be viewed as a subset of Business Analytics, and provides an interesting convergence opportunity, between the IT-based "analytics" world, and this emerging world previously reserved for specialists in statistics and Operations Research-related disciplines (Management Science, Industrial Engineering, Financial Engineering, Systems Engineering, Applied Mathematics, etc.). As the business world evolves its analytics agenda beyond business intelligence and performance management capabilities, the desire to not only look back in time, but forward in time as well, is driving awareness for Advanced Analytics - and creating many opportunities for SPSS and ILOG Optimization at the point of business impact.
To learn more about Advanced Analytics for a Smarter Planet, start here:
MichaelWatson 270002K5FS Tags:  tms inventory wms sterling network_design yms visibility optimization ilog 2,573 Visits
A SupplyChainDigest article from earlier this year noted that "IBM is building a formidable portfolio of supply chain software solutions that has the potential to shake up the existing market."
Now that IBM has completed the Sterling Commerce acquisition, IBM has much more to offer to the ILOG Supply Chain customers.
The IBM ILOG supply chain group provides supply chain planning capability (LogicNet Plus XE), inventory planning (Inventory and Product Flow Analyst), strategic transportation planning (Transportation Analyst), and production planning and scheduling (Plant PowerOps).
Sterling provides a strong set of supply chain execution and visibility products. These products include:
The supply chain products from Sterling and ILOG complement each other and allow our customers to make better plans and efficiently execute against those plans.
MichaelWatson 270002K5FS Tags:  cognos ilog s&op optimization analytics logicnet_plus_xe 2,873 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.
We are presenting a SC Digest Videocast on Tuesday, December 14 at 11:30 EST. Here is a description of the Videocast:
Increased complexity requires a complete supply chain network based approach to sourcing that incorporates end to end cost from supplier to customer and all of the associated manufacturing, logistics and inventory costs in between.
Click here to register.