• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » ILOG Plus Logic Tools Brings Innovation to Supply Chain Planning

ILOG Plus Logic Tools Brings Innovation to Supply Chain Planning

December 1, 2007
ARCWEB/Simon Bragg

ILOG's acquisition of LogicTools is looking like a master stroke that will enable ILOG to bring real innovation to Supply Chain Management, especially in the area of Sales and Operations Planning.

LogicTools was founded in 1995 by David and Edith Simchi-Levi, who are well respected gurus at MIT. Logic Tools offered tools for supply chain network design and multi-tier inventory optimization. Supply chain design determines where and how many manufacturing plants and warehouses there should be, given expected demand and transport costs. Inventory optimization calculates the investment in safety stocks, given the demand variability. ILOG, which acquired LogicTools earlier this year, was best known for optimization tools, but had developed production and transport planning applications. The combined entity is now offering innovative supply chain solutions.

Optimizing Product Flow
Recently, LogicTools combined its network design and inventory optimization tools into a new application called "Product Flow". This determines the best path for a SKU through the supply chain - i.e. which plant and which DC supplies each customer. For instance, determining which SKUs could be delivered from a central DC, and which should be stored in a regional DC. Essentially this tool clarifies the trade-offs between the inventory reduction benefits from risk-pooling in a central DC, versus the costs of increased transportation.

The Green Supply Chain
The "Green" supply chain, i.e. the carbon footprint of the supply chain is becoming an important issue for many companies, especially retailers stung by questions about the value of transporting fruit and vegetables thousands of miles by air, when the product could be grown locally. ARC led a track on this issue at the recent CSCMP conference. Network design tools, in principle, have the ability to incorporate the carbon content in packaging, and carbon emissions in transportation as a constraint. Thus, ILOG has partnered with Accenture, who provides the background data on emissions and carbon use, to offer a solution that helps minimize the carbon footprint of a supply chain.

Product Design
Network design, because it optimizes manufacturing and distribution costs, has value in the product design process; e.g. in understanding whether or not is better to manufacture lower cost regional variations of a product, or a generic product that meets all regional requirements. Other applications include optimizing the trade off between inventory savings and higher manufacturing costs enabled by a late customization manufacturing strategy, versus the lower manufacturing costs but higher inventory costs if a wide range of finished products were to be manufactured.

What-if Simulation Strengths
Both Ilog and LogicTools offer strong what-if simulation capabilities, valuable capabilities often lacking in SCM solutions. For instance, a large CPG manufacturer had a network of 40 plants across the world. The optimum solution suggested that about 23 plants would give the lowest total manufacturing cost, and a saving of about $66 million. The problem was that the optimum solution would mean no plants in Western Europe or North America, so the optimum solution was highly sensitive to supply chain disruptions. However, through analyzing the costs for a network of 23 to 40 plants, it was found that the costs of running with 30 plants would only cost $2.5 million more than the optimum, yet the supply chain would be far more robust with some plants in North America and Europe.

New Production Planning Capabilities for the Hybrid Industries
ILOG's PPO production planning tool is aimed at the hybrid industries, and offers neat features like tank scheduling, the ability to optimally schedule production of intermediates that are used by multiple other recipes, cleaning/sterilization steps, and maturation/shelf life. It will also gain LogicTools' inventory analyst tool.
It has been designed for ease of use, to support what-if simulation, and to support the way planners think about their production process. For instance, some hybrid manufacturers first plan production of finished products, and then plan production of intermediates. Other hybrid manufacturers do the opposite, and the tool supports both approaches. The tool also offers good support for late changes - for instance, if production orders for a batch of intermediates have already been launched and demand or equipment availability changes, the planner can still change the schedule for the mix of final products, using the existing orders for intermediate products as a constraint.

From S&OP to SIOPT - Sales, Inventory, Operations Planning, + Transportation process
Traditionally Sales and Operation Planning determines whether expected demand can be met by existing production capacity and many suppliers merely offer a tool to aid collaboration between sales and production. However, what if manufacturers have a network of plants, each capable of manufacturing a range of products. The question is to what extent plants should specialize in manufacturing a limited range of products, benefiting from reduced set-ups and larger batches, at the expense of increased transport costs. ILOG's existing plant power ops and transport planning can be used to accurately estimate these costs, although it is an iterative process. In addition, if a manufacturer faces seasonality or promotions driven sales, there is a trade off between manufacturing for stock in advance of peak sales, versus overtime working during the peak sales period, as well as calculating the optimum manufacturing batch size given the inventory holding cost.

One customer had seven business units, of which five agreed to use this tool, and 2 did not. Total costs for the five that used the system fell by 2.6 percent, - mainly due to a 9 percent reduction in transport costs, and a 0.6 percent reduction in manufacturing cost. The two non-using business plants suffered considerable expediting issues. Thus ILOG's suite of tools now bring considerable sophistication to a quarterly sales and operations planning process, which perhaps ought to be renamed the S&IOPT - sales, inventory, operations planning, + transportation process.

Conclusions
Few suppliers are offering innovation in supply chain planning and management these days. Most are reworking ideas that have been around for many years. However, the combination of ILOG and LogicTools is creating new, valuable developments in this area.
http://www.arcweb.com/txtlstvw.aspx?LstID=69233294-a42f-4658-8d5d-accf0213ca22

RELATED CONTENT

RELATED VIDEOS

Inventory Planning/ Optimization
KEYWORDS Inventory Planning/ Optimization
  • Related Articles

    Global Chemical Company brings SmartOps' Multi-Stage Inventory Optimization to Supply Chain Planning and Supply Chain Analysis

    ILOG Issues Latest Release of LogicNet Plus for Network Design, Planning

    Q&A | Supply Chain Planning Innovation: Dream or Nightmare?

ARCWEB/Simon Bragg

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • A WORKER IN A WAREHOUSE, SUPERIMPOSED WITH GRAPHICS SHOWING SUPPLY NETWORK

    Enabling Intelligent Visibility With Supply Chain Analytics

    Data Management (Big Data/IoT/Blockchain)
  • GSCMS-Promo.png

    Watch: Introducing the Global Supply Chain Marketing Summit

    Education & Professional Development
  • A HAND TURNS A LARGE, LIGHTED DIAL WITH THE WORD RISK ON IT iStock-NicoElNino-1364371014.jpg

    Measuring KPIs and KRIs for Comprehensive Supplier Performance Management

    Technology
  • DEEPLY CRACKED EARTH UNDER A BLUE CLOUDY SKY

    Why Maritime Supply Chains Must Adapt to Sustainability Regulations

    Ocean Transportation

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing