To register for the event and learn more, click here.
IBM Decision Optimization
On Wed Nov 16 at 11:30 ET, we will be presenting a videocast with Supply Chain Digest on multi-objective optimization. This is a nice breakthrough technology that will allow you to gain deeper insights into your supply chain and dramatically increase your productivity. In the videocast we will talk about bigger trends in supply chain and optimization that make this possible, what multi-objective optimization is all about, and a case study to show how it works in practice.
To register for the event and learn more, click here.
MichaelWatson 270002K5FS 2,179 Views
Northwestern is starting a new Master of Science in Analytics. This promises to be a top notch program turning out students ready to lead in applying analytics.
IBM supports this deep commitment to analytics. Sam Palmisano, IBM's current CEO, is quoted on the Northwestern website:
"[Analytics] is huge...for the first time, information technology is going to do real things to make our lives better. The data is out there. Now it is just a matter of maximizing the utilization of that data, organizing and analyzing it so businesses can make better decisions."
IBM is committed to becoming a leader in Analytics. Click here for an article.
It is very likely, that IBM's incoming CEO, Ginni Rometty, (a Northwestern graduate) will be equally committed to analytics.
aeortiz 2700024WMF Tags:  smarter ibm business commerce ilog optimization analytics 4,461 Views
Customer expectations have grown for not only what they are buying and how they are buying it, but how it is fulfilled and when they will receive it. They want to buy online and pick up in the store, or have it shipped direct to their home or office -- and they don't want to wait.
This shift has supply chain professionals moving beyond transactional enterprise systems and operational rules of thumb to a more advanced value chain. The value chain takes advantage of all this new granular customer data to enable organizations to respond to demand variability at the point of consumption -- connecting the supply chain directly to customer demand, orchestrating seamlessly between trading partners and suppliers. This is an inherently multi-enterprise, cross-functional collaborative process that requires bringing together a vast amount of data from disparate sources to make the right strategic, tactical and operational choices.
In this webinar, we will discuss the strategic requirement to creating a successful value chain:
Adrienne Selko manages the editorial content of IndustryWeek's award-winning Web site. Before joining the staff in 2004, Selko was managing editor of corporate publications at a large regional financial institution. She was also an editor for the U.S. based publication of a medical manufacturing company. Prior to that she ran a public relations and marketing company that published a best-selling healthcare book. Selko received a bachelor's of business administration from the University of Michigan.
Richard Douglass is the Worldwide Industry Director, Manufacturing, Smarter Commerce within the software group of IBM, where he is responsible for industry marketing and key industry account support. He has over twenty-five years of experience in supply chain management consulting and solutions development in a variety of manufacturing sectors ranging from chemicals to high tech. Prior to joining, Douglass had similar responsibilities at Sterling Commerce and webMethods, integration and application software providers, and prior to that he was an associate partner at Accenture, a global consulting firm.
He received a bachelor's in computer science from Michigan State University and an MBA from the Kellogg Graduate School of Management at Northwestern University. He is certified as a Six Sigma Black Belt. He is a senior fellow at the University of Maryland.
We will be presenting at Florida International University's Green Supply Chain Forum on Oct 27 at FIU's College of Business complex in Miami. Click here for information on the agenda. Our session runs from 3:30 - 4:30 ET on the 27th. Here are the session details:
Introduction to IBM Green Sigma™
How to reduce your environmental impact through Green Sigma™
If you are in area, we hope you can make the session.
In yesterday's broadcast of the weekly Supply Chain Video News sponsored by the Supply Chain Television Channel and CSCMP, we were interviewed about the new multi-objective optimization capability. If you click here, it will take you to the video. The interview starts at about the 7:00 minute mark.
This type of technology fits in with IBM's broader strategy of Smarter Commerce. IBM is seeing the trend towards much more complicated supply chains with a much more connected customers at the center. These customers have great access to information through their smart phones and social networks and are buying through many different channels. IBM's Smarter Commerce strategy helps companies thrive in this new environment.
Making sure the supply chain is properly designed is an important component of Smarter Commerce. The multi-objective optimization is the technology that gives full visibility to potentially conflicting objectives of various components of a value chain and analyzes the trade-offs between them. This technology is an attempt to replace the traditional optimization questions such as "what is the least-cost supply chain?" with questions such as "what is the ideal value chain for my customers, partners and my own organization".
Do you need to reevaluate your supply chain?
The Q3 2011 edition of CSCMP's Supply Chain Quarterly has an article on the seven signs that you need to redesign your supply chain. (click here for a link to the article-- you need to be a CSCMP member or subscribe to the journal.) The article was written by Simon Bragg, Richard Stone, and Julian Van Geersdaele of the consulting firm SCI3. [UPDATE: Click here for a link to the article on SCI3's website]
The article provides a great overview on why network modeling is important to a firm.
They make the point that network modeling tools can help you evaluate many different strategies to understand the impact of each. IBM's new capability to optimize over multiple user-defined objectives greatly enhances this process. That is, you can gain deeper insight into your supply chain by evaluating the complete trade-off curve between multiple objectives.
Also, the article points to many reasons for re-evaluating your supply chain that reinforce the need for bringing these types of tools in-house. For example, it is important that you have the on-going capability to analyze service failures, major disruptions, product and customers changes, and changing 3PL relationships. You do not want to wait every two to four years to look at these issues, you want to be on top of them on an on-going basis.
The next Virtual Users Group will be held on Thursday Oct 13 at 11 AM ET / 5 PM Paris. The next user group sessions will cover the new features in the upcoming version of LogicNet Plus XE. The new version was announced this week and will ship in December. It has a lot of new capabilities that will increase the value you get from the tool.
If you did not get an invitation to the users group meeting, please let us know.
Or, if you are not a current client, but want to know more about how this version could help you, please let us know and we'll set up a meeting with you.
IBM announced the new version of LogicNet Plus XE this week.
This releases enhances LogicNet Plus XE's leadership position in the supply chain network design market. It includes many cutting edge and innovate features that will allow you run new types of optimization , and gain deeper analytical insight. Highlights of the new release include:
This is the third major release of LogicNet Plus XE since 2009 and shows IBM's continued investment in the product.
The annual CSCMP (Council of Supply Chain Management Professionals) conference runs from Oct 2-5 in Philadelphia. It should be another great conference.
Since last year, there is a lot that is new with IBM's supply chain software solutions. If you are at the conference, make sure you meet up with us. We have several talks, a large booth, and are happy to set up a session with you.
Come see our talks:
And, be sure to stop by our booth to get more details on our software solutions for the supply chain:
If you will be at the conference, please let us know.
Speakers at Smarter Commerce Global Summit include Amway, True Value, Elkay, 1-800-FLOWERS.COM, and Best Buy
IBM's Smarter Commerce Global Summit has a host of speakers that managers in the supply chain will find interesting. Here is a sampling of the flavor of talks at the conference:
IBM is hosting the Smarter Commerce Global Summit in San Diego from Sept 19 to 21st. Click here for more details on the event.
This event will be very educational with deep dives into:
There is a strong track for those interested in the supply chain. But, IBM is strong in other new areas that eventually (if not already) will impact the supply chain. For example, companies need to react to the proliferation of data on customers, the consumers greater user of smart phones, and the rising importance of social media. These topics will all eventually impact managers in the supply chain. This event will help you understand and get out in front of these trends.
If you are planning on attending, let us know. We have a team of folks from the ILOG supply chain group who will be there. We would like to hear from you.
A public training class for LogicNet Plus XE will run from August 16-18 in Chicago. We have limited seating, so please sign up early.
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.
We were recently interviewed by Tom Andel, Editor-in-Chief for Material Handling & Logistics magazine for their edition on how the concepts of 'Lean' apply to the warehouse. We were quoted in the Editor's Note on page 4.
Lean techniques started with Toyota's manufacturing system and have moved into many other types of operations over the last two decades.
Often, though, it is difficult to take the concepts of 'Lean' and apply them to operations that do not look much like Toyota. Often, these efforts will just focus on waste reduction. However, a careful study of the fundamentals of lean reveals the importance of creating optimal (and minimal) buffers to protect against variability. This is where optimization can come in. Optimization can often reveal new strategies for minimizing the buffers you have in your supply chain. For example, the article quotes:
"Of course, another great way to reduce inventory at the warehouse is if the product just skips the warehouse entirely. That requires determining which products should touch every warehouse, which should bypass the warehouses, and which should be cross-docked."
IBM just released a nice video introducing the concepts of mathematical optimization to business. This is a great video to help you convince others in your organization of the value of optimization. Click here to view the video.
One example of this type of optimization is strategic network design. To get more information on this, click here for a video on this technology.
In addition, within IBM this all fits under our umbrella of Smarter Commerce. Smarter Commerce, in part, is about taking advantage of new data about customers and the market and creating new processes throughout your business to better meet customer demand. Click here for a video introduction or go to this website for an overview of Smarter Commerce.
The new "hours of service" rules were discussed In a recent Wall Street Journal article. The article mentioned that the hours a truck can drive in a day is proposed to be dropped from 11 to 10. The final decision is expected to be made in October.
This represents a potential 9% decrease in the number of miles that can be covered in a day by a truck. This obviously has a large impact for the supply chain. Some orders that could be met within a day will now be two days. You may have to shorten routes or change modes. And, this will drive up your transportation costs.
To mitigate the increase in transportation cost, you should re-evaluate the structure of your supply chain to make sure you have the right number and location of your warehouses, to make sure you are making products in the right locations, and to make sure your routes and modes are correct. By re-optimizing your supply chain, you may be able to offset much of the cost of the new rules.
Although the new rules are not yet in place, it is a good idea to get ahead of the situation so you are ready if they are enacted. Even if the rules are not enacted, the supply chain optimization scenario may yield other savings.
The new supply chain news aggregation site OpRules, reported on on an article about Australia's new carbon tax. According to the article,
"Prime Minister Julia Gillard yesterday announced a $23 dollar per tonne price on carbon emissions to be paid by about 500 of the country’s biggest polluters from July 1, 2012."
Supply chain optimization can help firms help minimize the impact of this tax and reduce carbon. For example, with this tax, it may make sense to change the number of warehouse locations, manufacture or procure products from different locations, develop different routes for the trucks, switch transportation modes, and evaluate different inventory policies.
By re-analyzing the supply chain to include this new tax, firms should be able to find strategies that dramatically decrease the total cost of the carbon tax by developing new strategies in other areas of the supply chain.
We are hosting a 2-day Proof of Technology workshop in Cologne, Germany on September 19th and 20th. The meeting will be held in our local IBM office.
This proof of technology workshop enables participants to understand the potential of supply chain optimization tools.
The workshop emphasizes hands-on experience with the product and will highlight various ways these products can help you run a smarter supply chain.
If you are interested in the session, please contact us or your local IBM representative.
The Supply Chain Digest's editorial staff recently wrote an editorial on the "Out of Stock" problem faced by Consumer Goods companies. They noted:
"In fact, inventory levels in consumer goods manufacturers stayed flat throughout most of the 2000s, and out-of-stock levels at the shelf have also been resistant to improvement. A well-publicized 2007 study by Dr. Thomas Gruen of the University of Colorado and Dr. Daniel Corsten of the IE Business School Madrid, based on funding from Procter & Gamble, estimated that manufacturers lose something close to $100 billion in sales annually due to out-of-stocks at the shelf.
The editorial discusses areas where IBM is helping firms solve this problem by better optimizing inventory.
"In fact, according to Remzi Ural, a supply chain lead in IBM's global consumer packaged goods practice, one beverage company IBM recently worked with was able to increase its sales by 12.3 million cases by significantly reducing its out of stocks, in this case throughout its distribution network that served local stores "
This was based on a videocast we did with SCDigest.
Ahold USA and IBM to Talk About Network Analysis with Strategic Souring, Inventory Optimizaiton, and Route Optimization
MichaelWatson 270002K5FS Tags:  network_modeling transportation_optimizati... ilog inventory_optimization 3,307 Views
Joseph Shaw from Ahold USA and Alex Scott from IBM will speak at the 2011 Material Handling and Logistics Conference. The conference is Sept 18-21 in Park City Utah.
Ahold is an international retailing group based in the Netherlands. Ahold had revenues of 29.5B Euros in 2010. Ahold USA is a wholly owned subsidiary of Ahold. Ahold USA operates Stop & Shop, Giant, and Giant Martin's stores as well as the on-line grocer Peapods.
The title of the talk is "Beyond the Traditional Network Analysis."
"So you are challenged with managing a large portfolio of products and a complex set of vendors, customers and distribution locations. How do you make sense of this all and streamline your supply chain? This session takes you beyond the pin-on-a-map network analysis and examines factors such as sourcing strategies, inventory optimization, route planning and more. We will also review a grocery case study that involved the analysis of sourcing effectiveness, evaluation of DC investment opportunities, and relocation of legacy facilities to get the most out of their supply chain network. "Click here for the link to the conference tracks and a full bio of each speaker. This talk is in Track 3, Session 2 at 10:15 AM on Monday.
MichaelWatson 270002K5FS Tags:  optimization transportation_analyst transportation ilog 3,273 Views
We have a new release of IBM ILOG Transportation Analyst.
This is a major release for this product. It has a new interface, improved run time performance, additional constraints and settings, and enhanced optimization capabilities. The product embeds IBM ILOG CPLEX Optimizer. Specifically, the optimization engine takes advantage of our powerful constraint programming engine which is well suited to these types of problems. All of this allows you to more easily solve larger problems and address other routing problems.
IBM ILOG Transportation Analyst is a strategic tool that allows you to determine the best routes, size your fleet, determine best backhauls, determine how to best use hubs, and make mode selection choices between private fleet, commercial carriers, multit-stop routes, and LTL.
This product is a nice complement to IBM ILOG LogicNet Plus XE. When designing a network, it is often important to understand the implications to routes, fleet sizes, hubs, and modes. The product also complements Sterling TMS by providing a strategic complement for doing what-if analysis.
At the May 2011 Manufacturing Leadership Summit, The Dow Chemical Co. won a Supply Network Mastery award for their global supply chain optimization initiatives.
The award sited a few examples of the type of work they did:
"One Pacific-area team used a Network Optimization Work Process to evaluate tank usage. Optimizing tank usage for multiple products cut costs, improved service levels, and reduced GHG emissions; the latter has become a key performance metric in the Network Optimization Work Process. Each network project looks not only at cost and customer service, but also provides key carbon footprint data to reveal opportunities for GHG reduction.
After the April 2009 acquisition of Rohm and Haas, D&MSC Work Processes helped teams capitalize on synergy opportunities and optimize the company’s Europe warehouse network. The evaluation identified savings through consolidation of shipments to warehouses and reductions in freight and warehousing costs. "
The award mentioned that these projects and others saved the firm $5 million during 2009-2010.
The article mentions that LogicNet Plus was part of the toolkit. For the a link to the full article, click here.
Consumer Products companies (and others) face pressure to reduce costs, have customers demanding better availability, and have an ever-expanding global supply chain. In this environment, managing inventory is difficult. However, by optimizing inventory by determining the best buffers, the location of the push/pull boundaries, and the correct amount of inventory and safety stock at each location for each SKU.
To address these needs, IBM has pulled together a solution to help firms optimize inventory on an on-going basis. This solution pulls together IBM's optimization technology (IBM ILOG Inventory and Product Flow Analyst), our expertise in inventory optimization, our expertise in integration to ERP systems, and other capabilities such as SPSS's predictive analytics. Click here for a paper on this solution.
The benefits of inventory optimization can be significant:
A public training class for LogicNet Plus XE will run from May 24-26 in Chicago. We have limited seating, so please sign up early.
Click here to enroll.
If you have any questions, please let us know.
MichaelWatson 270002K5FS Tags:  supply_chain network_design ilog production_sourcing 3,604 Views
Deciding where to locate your manufacturing plants or where to make a product can have significant impact on your overall cost and your ability to serve your customers. However, this is not a trivial decision and depends on many factors.
Over the last several years, the press has reported on the move of manufacturing from the US to China. However, two recent in articles in The Wall Street Journal and Bloomberg Businessweek, show that the issue is much more complex.
Both articles point out that rising wages in China erode the labor cost advantage. And, the rising cost of commodities and especially oil, tip the scales even further. Both articles indicate that there will be a speed up in new manufacturing capacity being built in the U.S.
Certainly, moving production to China was not the answer for many firms. The Wall Street Journal article points out that rising productivity has allowed US manufacturing output to actually double from four decades ago. And, many firms chose to keep manufacturing in the U.S. to protect intellectual property, to be closer to the market, or to minimize inventory investments.
At the same time, over just the last five to ten years, we have seen firms build manufacturing capacity in China for the China market. So, as consumer demand increases in China, more manufacturing capacity is needed to service these markets. This new demand must be accounted for in decisions on where to locate manufacturing capacity.
Deciding where to locate manufacturing capacity becomes even tougher when you factor in the impact of taxes, inventory, and risk.
So, how should you determine where to locate your manufacturing capacity? The answer is not simple, but should consider the following:
This type of analysis is not a one-time event. You have a chance to mold your strategy everytime you make a capital investment in your supply chain. And, the more facilities you have, the more opportunities you have to adjust your supply chain when market conditions change.
MichaelWatson 270002K5FS Tags:  tms network_design optimization inventory ilog routing sterling 3,442 Views
IBM's ILOG and Sterling supply chain teams have been named to the Top 100 Logistics IT Providers for 2011 by Inbound Logistics.
This echos the comment from last year from SupplyChainDigest that" Somewhat quietly, IBM is building a formidable portfolio of supply chain software solutions that has the potential to shake up the existing market."
aeortiz 2700024WMF Tags:  in virtal commerce supply chain scm linked optimization linkedin user group ilog ibm management 4,468 Views
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
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October 7th - Friday
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December 2nd - Friday
aeortiz 2700024WMF Tags:  products commerce consumer ilog scm inventory chain analytics supply business smarter optimization cp stockouts cpg ibm 4,269 Views
How Smarter Inventory Analytics Solve the "Out-of-Stock" Scenario for CPG Supply Chains
Date: Tuesday, May 17, 2011
Time: 11:30 ET, 10:30 CT, 9:30 MT and 8:30 PT
Place: Your PC
Fulfilling the Three A's: Adaptability, Agility and Alignment
In the recent years, we have seen a transformation in consumer behavior. The use of social media allows consumers to exchange thoughts; the migration from controlled media and monitored media. Easy information access combined with more educated consumers is making promotion planning more important. Finally, the chase for "value" is not only changing the timing of purchases but also location and brand. All these changes on the demand side are forcing consumer products companies to think about supply side in terms of: Demand Driven Supply Networks.
The supply chains are being transformed into complex supply networks with the introduction of co-packers, co-manufacturers and service providers. Commodity price increases and fluctuations are adding to volatility and margin pressures. Overall, changing consumer behavior, and increases in complexity, globalization and cost reduction pressures all force consumer products supply chains to fulfill the three A's: Adaptability, Agility and Alignment.
The crux of these strategies relies upon the application of Business Analytics to help close the gap between planning and execution. In this case, Closed-Loop Dynamic Inventory Optimization is leveraged to set appropriate inventory targets throughout the global supply chain and ensure that the right products are positioned in front of the right customers at the right time.
Closed-Loop Dynamic Inventory Optimization is a core process that regularly tunes policies across the supply chain to keep inventory closely aligned with changing conditions. But, the organizational value of such an approach goes beyond the more obvious metrics of improving service levels, order lead times, and inventory positioning. For example:
The application of Business Analytics on top of traditional supply chain planning and execution solutions gives CP Manufacturers the unprecedented ability to continuously improve operational efficiency, reduce costs, and enhance the customer experience.
Michael S. Watson, Ph.D., WW Optimization & Supply Chain Lead at IBM,
Remzi Ural, Global Supply Chain Management Solutions Lead, Consumer Products Industry at IBM
SCDigest Editor Dan Gilmore.
DC Velocity Videocast: IBM Cloud Computing Optimization and Analytics in the Transportation Industry
aeortiz 2700024WMF Tags:  chain ilog smarter logistics optimization ibm transportation distribution commerce supply scm 3,560 Views
Question: What is IBM Cloud Computing Optimization and Analytics?
IBM Watson Answer: Learn how companies are dealing with transformative events in their logistics network and managing uncertainty in a turbulent market.
Despite the turmoil of the transportation market there are advanced technologies to help steward firms through rate hikes, oil prices, driver shortage, congestion, and capacity constraints while managing today's network complexities.
The imperative for companies who want to outpace competitors is to reconsider how they apply optimization to take advantage of limited resources. Executives are looking to technology solutions to provide the tools they need for daily execution and long term strategic transportation decisions.
Executives Walter Heil and Dan Vanden Brink will discuss how the application of business analytics in conjunction with "as a Service" (SaaS) Transportation Management Systems helps optimize distribution and logistics decisions capabilities to:
This webcast was recorded on the show floor at ProMat 2011.
Registration is not required for this free event.
aeortiz 2700024WMF Tags:  sterline scm management ibm optimization transportation execution ilog planning group commerce aberdeen 3,839 Views
On April 26th, Sterling Commerce, an IBM Company is sponsoring an Aberdeen Group webinar on Inbound Transportation Management: The Convergence of Planning, Optimization, and Dynamic Execution. Register today!
Inbound Transportation Focus –
· WalMart’s Inbound supply chain collaboration initiative is one additional factor driving change- (Kelly Abney, WalMart VP Corporate Transportation presented a keynotes on this initiative during Aberdeen’s 2010 and 2011 Supply Chain Summit).
· Gaining visibility and control of inbound transportation management is prerequisite and central to…
· Organizations lacking inbound control are blind to shipment details within the transportation pipeline.
Learn how leading companies (those with highest percentages of Inbound Freight under control) are focusing on new Inbound Technologies to address challenges and take action. They are:
· 2.8 to 5.8 –times as likely to leverage enhanced planning optimization –leading companies are converging planning processes with robust automation to support on-the-fly decision-making
· 1.2 to 2.5 –times as likely to automate dynamic optimization and near real-time visibility with optimization of execution within their processes.
and as we look for insights around best practices and review specific examples
of strategic technology advancement around inbound collaboration.
An important part of merger and acquisitions is the value created when the two supply chains come together. For example, MillerCoors reported on the progress toward their $750M savings goal on May 4, 2010:
"Supply chain integration continues to proceed on schedule. The brewery optimization project is nearing completion, as product moves are more than 90 percent complete."
Without a analytics modeling tool, like IBM's LogicNet Plus XE (click here for a video introduction), it can be difficult to properly merge the two supply chain. Each firm has unique products, unique manufacturing locations or vendors, unique warehouses, unique customers, and different business strategies. By modeling and optimizing the supply chain, you can evaluate the various trade-offs, understand where there is true overlap, and understand where separate supply chains are still needed. This modeling process allows you to accommodate the two businesses, deliver savings, and avoid creating a situation where the costs go up for both firms.
MarWrigley spoke at CSCMP about their modeling experience and noted the value in just getting a baseline model built. That is, as part of the merger process, there is value to seeing the combined supply chain in one place.
Whirlpool mentioned the importance of getting off to a fast start. Often a merger is known about long before the two firms can legally talk to each other. Therefore, it is important that you start as soon as it is legally possible. The investment community usually expects to see some quick savings.
In some firms, the supply chain modeling team is often an input to the acquisition process. Some firms model potential acquisition targets to approximate supply chain savings. And, this type of analysis can help determine if part of the business should be spun off.
aeortiz 2700024WMF Tags:  chain optimization ilog business scm ibm advanced supply analytics 3,513 Views
Date: Tuesday, March 29, 2011
Time: 11:30 EST, 10:30 CST, 9:30 MST, and 8:30 PST
Optimization in and of itself is nothing new but it is
often overlooked by Line of Business and Information Technology
professionals since many instances of it are embedded inside "classic
supply chain management applications". Optimization allows companies to
make sense of the massive amounts of data across the extended
enterprise. By applying this data in unique and innovative ways, firms
can optimize business outcomes by anticipating, controlling and adapting
to a dynamically changing and chaotic environment, using the insights
from visibility, analytics and trading partner collaboration to direct
and control operations more intelligently.
With the advent of "Optimization 3.0", firms now have the ability to layer or integrate key advanced analytics technology on top of existing supply chain planning and execution systems to support both long-term (strategic) and short-term (tactical) planning goals as well as detailed scheduling while continuously improving operational efficiency, reducing costs and ultimately enhancing the overall customer fulfillment experience. This new combination of State-of-the-Art advanced analytics and B2B integration gives businesses the unprecedented ability to quickly model and solve across the most complex systems and implement solutions in near real-time, creating truly adaptive supply chains.
aeortiz 2700024WMF Tags:  spss ibm optimization ilog cplex business chicago advanced analytics 4,377 Views
IBM Advanced Analytics Summit
Wednesday, April 13, 2011
9:00 a.m. - 5:15 p.m.
Chicago Marriott Downtown Magnificent Mile
Chicago, Illinois 60611
This live complimentary event will show you how IBM, through its ILOG® Optimization and SPSS portfolio and Business Analytics & Optimization service line, enables organizations to quickly and confidently answer fundamental business questions, from: Who will be our most profitable customers tomorrow? to What price will maximize profit from sales?
Learn and share best practices in implementing advanced analytics to your most critical business decisions.
Breakfast and lunch included.
If you are going to be at SCOPE East in Orlando in April (17-19), 3M and IBM will be doing a talk. And, the IBM supply chain group will have a booth at the event--- we will be under the Sterling booth.
Here is a description of the talk:
"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 (like the run up in oil prices) to highlight the value from analytics such as network and inventory optimization. 3M will discuss how they are organized to deploy this capability.
Hu (Tiger) Liu, PhD, CSCP, Supply Chain Specialist for Manufacturing & Supply Chain Services, 3M and Michael Watson, PhD, ILOG Supply Chain Solutions Leader, IBM
In the recent letter from the chairman in IBM's 2010 Annual Report, Sam Palmisano discussed business analytics and optimization as a key part of IBM's future growth strategy:
IBM spotted this emerging need early, building the world’s leading analytics practice, with 7,800 expert consultants, the world’s premier nonacademic mathematics function, leading‑edge software and offerings integrated by industry.
As a reminder of a detailed explanation and definition of analytics from an IBM team, click here.
Lean principles have many virtues. However, as a system primarily created by Toyota and then widely adapted to other businesses and industries, some firms are having second thoughts about some key Lean principles.
Specifically, if lean principles are applied just to the manufacturing sites, it may decrease the flexibility in the system and push inventory to other parts of the supply chain. For example, in the diagram below, if the manufacturing plant decreases their production variability by locking in firm schedules and minimizing their inventory, it may push inventory to the warehouses.
Executives realize that their supply chains need flexibility and that it is best to minimize system-wide inventory, not just inventory at the plants. Inventory optimization analyzes the entire supply chain to determine where inventory should be buffered. In some cases, it may provide more flexibility and less system-wide inventory by creating an inventory buffer at the plant. Inventory optimization provides a way to analyze these trade-offs and better adapt the lean principles to your unique organization.
This blog has often commented on the price of oil. Oil prices have a big impact on the supply chain. As oil prices change, it impacts the cost of raw materials, productions, and transportation. The change in these costs impacts the trade-offs that a firm needs to make.
For example, as the increase in oil prices drives up transportation costs, it can change where product should be made, the mode of transportation used, and the inventory strategy.
Several years ago during the big run up in oil prices, we wrote an article for The Wall Street Journal that discussed how the supply chain strategies needed to adjust to the new prices. As oil prices fell, we wrote an reminder that it was still important to analyze the impact on the supply chain. In both cases, it is important to understand the trade-offs between transportation costs, sourcing decisions, and inventory and adjust the supply chain accordingly.
As oil hit $100 a barrel this week, it is worth recalling these lessons. More firms have invested in more flexible operations, but the basic lessons remain. It is important to adjust your supply chain to fit the realities of the market.
MichaelWatson 270002K5FS Tags:  analytics ilog inventory_and_product_flo... inventory_optimization invenory ipfa 3,562 Views
Smarter inventory analytics is about using your investment in inventory wisely. This means optimizing your inventory-- setting the right inventory levels for each SKU at each location, optimally positioning and buffering inventory in the supply chain, setting the correct service levels, and determining the correct flow paths.
With optimized inventory you can:
To reap the benefits of inventory optimization, it is not just about the optimization technology. You need to integrate into your ERP system for on-going updates and build the capability into your processes.
If you are interested in more details, contact us for a white paper on how to achieve better performance with your inventory.
aeortiz 2700024WMF Tags:  supply events impact informs ibm optimization scm ilog chain 3,266 Views
Don't miss ILOG Optimization and Supply Chain at these must attend IBM and INFORMS events: http://www.kingfishmedia.net/emails/IBM/2.24b.html
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.
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.
MichaelWatson 270002K5FS Tags:  sterling_tms ilog optimization transportation_analyst 3,914 Views
Finding good routes can reduce transportation costs by 5-15%.
Finding great routes can reduce costs by a further 5-10%.
These savings can add up fast.
However, finding these great routes can be difficult.
On one level, routing seems trivial. If you have 75 shipments to make, you can easily look at a map and come up with routes. If analyze the routes, you can probably make changes to reduce costs. But, how do you know if you've found good solution? How do you know if you've found a great solution?
What is not obvious at first glance is how many total possible routes exist in a routing problem. In a problem with just 75 shipments, if you allow up to 10 stops per truck, the total possible routes exceed 10 to the 100th power (10 followed by 100 zeros)! Even with today's computing power, there is no way to evaluate each of these options.
And, the problem becomes harder when you consider delivery windows, different types of trucks, the ability to do backhauls, making making multiple trips with the same vehicle, and so on.
This is where IBM's optimization expertise comes in. Both the IBM ILOG Transportation Analyst and Sterling TMS use the ILOG CPLEX Optimizer to find great routes. The ILOG CPLEX Optimizer product contains a module for Constraint Programming (CP). CP is well suited for tough scheduling and routing problems, especially routing problems with time windows. It is this optimization technology that allows to you to find great solutions.
Here are conferences and events we will attend this year. If you are going to be at any of these events, please let us know.
IBM Impact2011, April 10 - 15, Las Vegas, NV
INFORMS Conference on Business Analytics and Operations Research. April 10 - 12, Chicago, IL
SCOPE East, April 17-19, Orlando, FL
SCOPE West, Aug 29 - 31, Las Vegas, NV
CSCMP Annual Global Conference, Oct 2 - 5, Philadelphia, PA
IBM Information on Demand, Oct 23 - 27, Las Vegas, NV
We received a lot of good feedback from the virtual users group meetings in 2010. These 1-hours 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.
Like last year, we are open for ideas for sessions. Please send us your ideas. If you are not on the invite list for the events, please let us know and we'll make sure we add you.
Here is the schedule for 2011. The times will be announced closer to the meeting in the invite.
February 1st - Tuesday. Topic: Transportation Optimization Capabilities in relation to Network Design
March 1st - Wednesday. Topic: Advanced Tableau Capabilities
April 1st - Friday
May 4th - Wednesday
June 1st - Wednesday
August 2nd - Tuesday
September 1st - Thursday
October 7th - Friday
November 2nd - Wednesday
December 2nd - Friday
These dates may be subject to change. We look forward to seeing you at the meetings.
Today's Wall Street Journal (WSJ) reported on IBM's big push into Analytics: "IBM Chief Executive Sam Palmisano is making a big bet on a field called business analytics, which involves using software to mine huge volumes of data to help executives make decisions."
For more information on what business anlaytics is, how it helps makes better decisions, and how our supply chain and optimization solutions fit in, click here.
Earlier, we recorded a session with SupplyChainDigest on strategic sourcing. This session covers how firms can better use their manufacturing network. For example, where should a product be made and at how many of the plants. These decisions can impact manufacturing costs, transportation costs, and the ability of your supply chain to meet its objectives.
This use of LogicNet Plus XE (LNP XE) is part of a larger trend. More firms are using LNP XE on an on-going basis to gain a competitive advantage in the market. This can range from strategic sourcing to budgeting to contingency planning. This is a way to leverage your supply chain data and bring advanced analytics to your supply chain.
Click on this link for a video on strategic sourcing. You will need to submit your email to register and you will be all set.
MichaelWatson 270002K5FS Tags:  ilog inventory inventory_optimization optimization analytics 4,511 Views
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.
MichaelWatson 270002K5FS Tags:  routing optimization network_design ilog green carbon_modeling inventory_optimization 1 Comment 4,368 Views
The Dec 2010 issue of Inbound Logistics reported that McKesson Corporation is using "IBM's Supply Chain Sustainability Management Solution to aggregate supply chain, sales, and geographic data to create "what-if" scenarios that enable distribution network modeling, supply planning, inventory positioning, vehicle routing, and sustainability management."
When optimization and analytics are applied to a firm's supply chain, you can often see significant returns on your investment. When you make this capability part of an overall framework, like McKesson did, you create a repeatable process to continually drive improvements in your supply chain.
If you are going the NRF show in New York City next week, stop by our booth and visit us or drop me a note that you will be there.
Our supply chain team will be there and we can talk about what's new with ILOG Supply Chain in 2011. We also have a deep dive session and are giving a few talks.
We look forward to seeing you there.
As previously noted, inventory optimization is a core capability for a firm that wants to perform at the highest possible level. Inventory is a lifeline of a firm. Having inventory in the right place allows you to meet demand and allows your business to operate smoothly. Done right, an inventory optimization processes can reduce inventory by 10-30% while improving service levels. For a large firm, this can translate in over $100M in inventory reduction. This is a one-time increase in cash flow as well as the on-going opportunity cost of this capital.
The technology to do this, provided by a tool like IBM ILOG Inventory and Product Flow Analyst, allows you determine the correct inventory strategies and levels. It does this based on data you are likely already collecting-- demand, demand forecast error, supplier lead times, supplier variability, order frequency, minimum order sizes, flows through the supply chain, and other factors. You have to get this piece right to get the buy-in of the people in the organization. When people see that the technology suggests strategies and inventory levels that allow customer demand to be met while maintaining service, they are more comfortable accepting the outputs.
But, to make the technology (and savings) stick within the organization, you need a strong process as well. We have found that it is important that the technology fit within the organization. This means that the inventory planners see information that is appropriate to them while the business analysts and managers may see a different view. When we implement an inventory optimization solution across the enterprise, we make sure the workflows are correct for each user, we make sure the solution fits within an overall larger closed loop planning cycle (which may span the year), we make sure the process is dynamic to allow you to adjust as the market changes, and we have even developed inventory optimization "playbooks" that help customers through the entire planning cycle.