This time I feel like writing about something that I’ve encountered in my work since I joined AIMMS over a year ago. It probably will be a shorter blog post than you’re used to, but hopefully equally inspiring.
In speaking with our business relations, I often find myself wondering how to best explain what optimization is all about. For math people, it’s easy. They will refer to a set of variables (i.e. the subjects you need to decide on) that you assign values to in such a way that the objective function (your goal) is maximized (or minimized) within the boundaries of a set of constraints (restrictions). This is formally true and it’s important to grasp the concept so you can easily go back to the basics.
It’s the time of year to look ahead. I’ve read several interesting articles and blog posts that are trying to pinpoint the developments and trends shaping the supply chain industry this year. They all seem to come from a different angle and while they each make a fair attempt, I haven’t found one that provides a clear view of what 2014 will bring for us. So, I decided to do what I love most: talk with some of our clients and contacts and find out for myself.
As we discussed in our previous blogpost, Integrated Supply Chain Optimization offers undeniable benefits for your organization. The industry is abuzz with talk about this trend as well. ORTEC’S John Poppelaars referred to this approach as the optimization of the value chain in a recent post, and leading supply chain blogger Lora Cecere shared an urgent pitch for horizontal collaboration and planning over the entire value chain on Forbes earlier this month.
Should I make or buy? Should I make to order or make to stock? Where should I keep my inventory, close to my client or in my factory? How much should my safety stock be and when should I reorder? How can I minimize my supply chain costs? Is inventory an asset or a waste?
Companies have always been tormented by these questions. The answer is not hidden in their supply chain network; it is the supply chain network itself. Companies that acknowledge their supply chain as a strategic asset achieve 70% higher performance.* In order to move towards the efficient frontier and achieve higher performance with minimum supply chain costs, a company should understand its uniqueness. Each organization has a unique makeup or configuration. Accompanied by a differentiated brand promise, this configuration can lead to the ongoing evolution of supply chain intelligence. But how can supply chains get smarter nowadays?
What do you do when you seem to have exhausted all options for further inventory reduction, footprint reduction, transport bill reduction, or working capital reduction, and your board demands these things of you once more along with further performance improvements? You’ve gone through all the major Lean programs, adopted 6 Sigma along the way, implemented TQM, deployed the finest forecasting software and tested out multiple vendors only to find yourself at a loss for new options. When you find yourself in this kind of situation, it’s time to move towards an integrated supply chain.
Changing market conditions are driving companies to reimagine their supply chain and push the boundaries of conventional thinking. Gartner’s upcoming Supply Chain Executive Conference will delve into key tactics, tools and strategies supply chain leaders can employ to foster growth and efficiency amid rising competition and economic change.
It’s a theme typical to Gartner and their conferences: very strongly focused on global trends, combined with a top-down view on supply chain concepts, approaches, methods and maturity levels. With 750 analysts worldwide, they are capable of putting structure into almost any aspect of supply chain development. But let’s face it, this wealth of information can also be difficult to process: which insights are applicable to your company, how can you apply them to your own supply chain, what should you prioritize? Obviously, you can’t keep up with all their combined output, but they can help you with that as well…
Visiting the LogiChem conference last week in Antwerp, I was pleasantly surprised to hear many presentations focusing on supply chain opportunities instead of doom scenarios.
According to analyst J. Witteveen from ING, the European chemical market is characterized by under-capacity, low margins, consolidation and lower demand. A pessimist would be discouraged by this. An optimist sees opportunities to grab market share. I met a lot of optimists in Antwerp.
Management genius Eliyahu Goldratt published his bestselling book Necessary but not Sufficient in 1998. It is still a compelling story about how enterprise resource planning systems lack the ability to create significant value for organizations.
Now fifteen years later, Sales & Operations Planning systems seem to be demonstrating a bit of ‘necessary but not sufficient’ themselves. In both cases, organizations assumed that one global planning system would give them the ultimate visibility, agility and significant cost savings.