Miscellaneous

1. Miscellaneous John Vande Vate Spring, 2007 1

2. Agenda • Bull Whip • IT • Summary • Project Presentations 2

3. The Bullwhip Effect… … describes the phenomenon in which order variability is amplified as it moves up the supply chain from end-consumers through distribution and manufacturing to raw material suppliers. 3

4. Example Procter & Gamble: Pampers • Smooth consumer demand • Fluctuating sales at retail stores • Highly variable demand on distributors • Wild swings in demand on manufacturing • Greatest swings in demand on suppliers 4

5. Illustration Consumer Sales at Retailer 1000 900 800 700 600 Consumer demand 500 400 300 200 100 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Retailer's Orders to Distributor 1000 900 800 700 600 Retailer Order 500 400 300 200 100 0 5 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

6. Illustration Retailer's Orders to Distributor 1000 900 800 700 600 Retailer Order 500 400 300 200 100 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Distributor's Orders to P&G 1000 900 800 700 600 Distributor Order 500 400 300 200 100 0 6 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

7. Illustration Distributor’s Orders to P&G 1000 900 800 700 600 Distributor Order 500 400 300 200 100 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 P&G's Orders with 3M 1000 900 800 700 600 500 P&G Order 400 300 200 100 7 0 1 4 7 10 19 40 13 16 22 25 28 31 34 37

8. Illustration Consumer Sales at Retailer 1000 900 800 700 600 Consumer demand 500 400 300 200 100 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 P&G's Orders with 3M 1000 900 800 700 600 500 P&G Order 400 300 200 100 8 0 1 4 7 10 19 40 13 16 22 25 28 31 34 37

9. Efforts to Resolve • CPFR: Collaborative Planning, Forecasting & Replenishment • Share forecasts, plans for promotions, etc. • VMI: Vendor Managed Inventory • Let the supplier manage the inventory (consigned to the customer) • Visibility: • ASN (Advanced Shipment Notices) • Track & Trace • Event-driven notifications 9

10. Events Opposing • SKU Proliferation • Shorter product life cycles • Consignment Inventory practices • Globalization • Tight global transport capacity • Supply Chain Disruptions 10

11. IT • Y2K Threat helped justify revamp of corporate software • By 2000 companies were spending nearly 50% of capital investment $ on technology, up from 30% in the early 90’s. • Consequences • Internet bubble and ill-considered investments in IT applications much of it in the SC arena • Huge investments in ERP systems • Emergence of the CIO role • Prominence of Supply Chain Mgt 11

12. Post Mortem • Consolidation in ERP providers • SAP and Oracle • Standardization and Integration • Diminishing role for CIO • Evolving cloud of bolt-on technologies • APS: Advanced Planning & Scheduling Systems • I2, Ilog, Manugistics, Aspen Technologies, SAP, Oracle • S&OP: Sales & Operations Planning • Balance supply and demand • Interlace, Steelwedge, Logility, … • TMS: Transportation Management Systems • Consolidation, Carrier Selection, Routing, Tracking, Invoice Audit, Labeling, Export compliance, … • I2, Manugistics, Red Prairie, Tranzact, … 12

13. More Bolt-ons • WMS: Warehouse mgmt systems • CRM: Customer relationship management • Procurement solutions • … 13

14. Evolving Architecture • Layered approach • Decomposes complexity • Reuse functionality • Separate evolutin • Less reliance on single provider Client Presentation Layer Business Logic Layer Data Layer 14

15. Projects • Deliverables: • Presentation to the Class • Presentation to the Client • Documented CD to the client and to me • Presentation to the Class < 30 minutes • What is the Issue and business context • What value does your approach provide • How does it fit/fail to fit the context • Some technical details (and backup slides) • A proposed exam question 15

16. Projects • Presentation to the Client • Can be combined with class presentation or separate • Can be via teleconference • What the client wants • Focus on value, fit, requirements and limitations • Be prepared to discuss techniques • CLARITY 16

17. Projects • Documented CD • Index and explanation • Data • Models • Tools • Presentations • … • Imagine a similar team will be asked to extend the project. What will they need? 17

18. Some Basics • Remember to do the simple thing first • Process is as important as result • Fit with context is more important than “optimality” and “technology” • Is your process worth the effort, as simple as possible, sustainable, supportable, … • Why, Value, What, 18

19. Course Review • Introduction to modes and transportation rates • There are economies of scale in transportation costs • Consolidation helps us capitalize on these economies of scale • Introduction to Finance & SCM • Focus on Working Capital • Transportation & “Deterministic” Inventory • The “magic” of consolidation • The EOQ: Balancing Transport & Inventory costs • Consolidation • Multi-Stop • Load-Driven 19

20. Review • Location: • Retail Pricing: Pricing what you have • Sport Obermeyer: Sourcing what you need • Inventory Management: • Techniques • Pooling • Postponement • SCM: BMW Case Study • IT: Lightening overview • Projects 20

21. Projects • April 12: NS • Mikac • Lai • Dayagi • April 17: Coca Cola • Solveling • Lee • Kwan • April 19: XYZ & GE Appliances • Meidl • Green • Tandon 21

22. Projects • April 24: GE Energy • Walker • Sanchez • Gupte • April 26: BMW & Children’s Hospital • VPS • Ship-to-Average • Children’s Hospital 22