IBM Decision Optimization
MichaelWatson 270002K5FS Tags:  ilog cognos wall_street_journal spss business_analtyics 4,169 Views
A recent Wall Street Journal, "Products, Products Everywhere," argued that companies do not need so many varieties of similar goods.
Manufacturers are offering more and more products by changing the "sizes, brands, colors, fabrics and flavors."
But, "instead of improving profitability, these tactics often lead to bloated product portfolios that raise a company's costs, reduce supply-chain efficiency, confuse consumers and lead to shortages of popular products."
The article offers tips for reducing the number of SKUs. But, this problem is difficult to tackle-- it involves many different groups and decisions can impact the top line and ability to compete for shelf space. At IBM, our advanced analytics solutions can add to the analysis.
Cognos helps with the Business Intelligence, allowing you to understand the demand and sales price of each SKU in each market. SPSS allows to determine which SKU's actually sell together and estimate what would happen to overall demand if SKU's were reduced. That is, if you eliminate an SKU, what will be the likely uptick in the demand of the remaining products. ILOG can help determine the true landed cost, supply chain efficiencies, and safety stock impact of a reduced SKU count.
Combined, these technologies could help you make the correct decisions on how many SKU's to eliminate and which new varieties to the market.
MichaelWatson 270002K5FS Tags:  supply_chain_strategy supply_chain ilog flexibility 4,134 Views
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
MichaelWatson 270002K5FS Tags:  ilog inventory inventory_optimization optimization analytics 4,123 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.
aeortiz 2700024WMF Tags:  smarter ibm business commerce ilog optimization analytics 4,097 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.
Andrew Reese 270002Q78Q Tags:  design chain and network inventory regional smarter conference management planning – chains supply atlanta 4,065 Views
At Smarter Supply Chains – Atlanta Regional Conference, David Simchi-Levi talked about Combating Volatility through Flexibility. I talked about this in greater detail here.
One point that David raised at the outset was the increased level of volatility surrounding the supply chain. His point was that companies need to be careful in thinking about the "best practices" that they apply to managing their supply chains. In such a dynamic environment, the best practices that applied before the recession - or before oil prices spiked, or before they crashed again - are not necessarily applicable today. It's a call to action for all supply chain executives to step back and reassess their processes to see if they are still "best in class," or whether there might be benefit to adjusting to the "New Normal."
MichaelWatson 270002K5FS Tags:  scm ilog optimization strategy retail optimization_supply_chain... 1 Comment 4,063 Views
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.
aeortiz 2700024WMF Tags:  smarter commerce decision optimization_supply_chain... nrf2014 1 Comment 4,058 Views
There's a big difference between impulse buying and purposeful buying. Most of the Retail customers we met with at NRF 2014 were focused around products designed for purposeful buying behaviors and how to create a seamless customer experience in a very fragmented omni channel world.
"Impulse" product lines are very different - they appeal to the emotional side of consumers. So, how will specialty retail brands compete effectively in an increasingly digital, e-commerce world? As automated checkout and online purchasing increase, how can these Retailers continue to exploit the emotional "buy" when products like candy, for example, are no longer in front of us as we shop? From a retailer's point of view, impulse items bring in high margins—50 percent or better on some SKUs—and have a quick turn over rate (homechannelnews.com/article/impulse-item-guide). How can they make up for this loss of revenue? Thoughts on this?
A new case study is available highlighting how Johnson Controls uses LogicNet Plus to model and improve their closed-loop battery supply chain.
The following is a quote from Johnson Control's Supply Chain Network Strategy Manager, Chad Montgomery:
"I’m using LNP XE every week to perform modeling on a variety of projects from small capacity analysis/capital investment decisions to quarterly financial forecasting and annual budgeting for capacity utilization, plant manufacturing, and shipping territories. LNP XE has allowed us to create clear pictures of our network, starting with a best-case utopia state and then quantifying the impact of each constraint. This clarity can reveal hidden savings opportunities as well as gives complete insight into the main drivers of our supply chain”
Read the full case: Johnson Controls reduces supply chain spend with IBM ILOG LogicNet Plus.
MichaelWatson 270002K5FS Tags:  ilog supply_chain optimization transportation analytics container 4,024 Views
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.
aeortiz 2700024WMF Tags:  spss ibm optimization ilog cplex business chicago advanced analytics 4,011 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.
aeortiz 2700024WMF Tags:  in commerce virtal supply chain linked scm optimization linkedin ilog group user ibm management 4,005 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
November 2nd - Wednesday
December 2nd - Friday
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.
MichaelWatson 270002K5FS Tags:  cognos ilog s&op analytics optimization logicnet_plus_xe 3,938 Views
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.
A recent Wall Street Journal article highlighted how Starbucks was applying lean techniques to improve operations.
The article shows how the techniques are being applied in a non-discrete manufacturing environment.
We are seeing a similar trend.
However, many firms struggle with translating the lean system developed by Toyota for their environments. This can be especially difficult in long supply chains or in a environment where there is inherent batch or tank processes.
The excellent book by Hopp and Spearmen, Factory Physics, helps translate Toyota's system to other environments by defining lean as:
They define three types of buffers a firm can have: inventory, time, or capacity. In short, if you can make your product with a minimum of inventory, short cycle times, and excess capacity, you are getting closer to lean.
We are finding that optimization can be a great way to minimize these buffers and evaluate the trade-offs between them.
With inventory optimization, firms realize that the may not be able to eliminate inventory completely or that they have removed it from the wrong location. In these cases, optimizing inventory is important to achieving a lean operation.
In process manufacturing plants, these firms are relying on high-end optimization to better schedule the plants. They realize that they cannot get around batch and tank production, set-ups, cleaning operations, and other realities in the process industry. Optimization-based scheduling allows them to reduce manufacturing costs, improve inventory, and achieve lean operations.
Click here for a YouTube video showing how ILOG's optimization technology can enhance Maximo's maintenance scheduling. Optimization is a great way to determine how to best allocate limited resources to get the most value. This video is a great example of how optimization can enhance an enterprise-wide business solution.