Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 1 Logistical applications and optimizations

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 2 overview Introduction October 28 - definition of business processes November 11 - overview of logistical business processes December 02 - functionality of production processes January 20 - special problems within the supply chain handling December 16 - functionality of sales and distribution processes November 18 - functionality of purchase and supply processes

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 3 Review on the last session You have learned about business processes and composed business process You have learned 1.that translating business processes into IT application processes is a very challenging task which needs some experience 2.That process integration is an important factor for an optimal IT application system 3.Why to avoid individual developed interfaces if ever possible You have seen the different types of business processes 1.supply chain business processes 2.logistical crossover business processes 3.business support processes You have learned about procedures and tools to 1.analyse business processes 2.visualise business processes 3.document business processes You have seen the needed components to implement an IT application system 1.customizing 2.master data management 3.user exits and modifications

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 4 About this lecture All sessions are split into 2 blocks: from 08:30 to 10:00 and from 10:15 to 11:45 Each session starts with a short review of the last lectures subjects Next I will give you a short theoretical overview of the days subject Each group will then present the results of their discussions I will present theoretical explanations for the discussed subjects Then I will show a example solution for a potential written test question Finally I will give a summary of the key messages for this session Next you probably will develop 3 different subjects in a brainstorming session in 3 groups

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 5 overview Introduction October 28 - definition of business processes November 11 - overview of logistical business processes December 02 - functionality of production processes January 20 - special problems within the supply chain handling December 16 - functionality of sales and distribution processes November 18 - functionality of purchase and supply processes

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 6 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 7 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 8 Usage of SCM Tools in chemical industry (November 2008) none In use planned considered Overview of logistical processes, Part 1 Problems and potentials

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 9 Overview of logistical processes, Part 1 As a consequence many companies do not use the potentials of an appropriate SCM Very often suboptimal SCM processes are implemented by the IT application system Problems and potentials

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 10 Overview of logistical processes, Part 1 Understand the need for both external and internal collaboration processes Understand the important inputs and outputs of each component Understand the main component structure of a supply chain application system Learning targets Understand the involved acting logical business units Understand the business support components, that are needed in assistance to run a supply chain application system

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 11 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 12 Plant CustomerStoreTransport Supplier Supply chain processes Supply chain processes represent all main logistical activities for creation of value according to the business definition

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 13 A3 A2 B C A1 Raw Material Transport- unit Production 1. level Entry Stores Production n. level Plant CustomerStoreTransport Supplier Supply chain processes

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 14 Supply chain processes Plant B Plant A Transfer Prices A Customer A Prod. A Customer B Prod. B Customer C Prod. C Transfer Prices B

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 15 Sales Production planning and scheduling Shipment and distribution Purchasing Logistical crossover processes Business support processes Supply chain processes

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 16 Core Business Processes and X-over Processes PTP – purchase to pay FFG – forecast to finished goods OTC – order to cash AE - asset effectiveness FAC – finance & accounting MITO CSAPS BW core process cross process material input to output chemistry services advanced Planning systems business information warehouse

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 17 Purchase requirements Materials requirements planning (MRP) Materials requirements planning (MRP) Sales and operations planning (SOP) Sales and operations planning (SOP) Conversion of planned orders Conversion of planned orders release of production as process orders release of production as process orders Actual production Actual production Confirmation Production controlling Production controlling MRP lists Goods Receipt Production Papers Planned order Goods Issue Sales order Forecast Time and Material MES Supply chain processes Distribution

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 18 Production Distribution Sale Purchase Network Design (ND) Supply Network Planning (SNP) Procurement Planning Procurement Planning Demand Planning (DP) Global ATP Transport. Planning & Vehicle Scheduling ( TP/VS) Transport. Planning & Vehicle Scheduling ( TP/VS) Production Planning & Detailed Scheduling (PP/DS) Production Planning & Detailed Scheduling (PP/DS) Supply Chain Cockpit Monitor Long Term Mid Term Short Term Distribution Planning & Deployment Distribution Planning & Deployment Supply chain planning

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 19 Demand Planning (DP) Supply Network Planning (SNP) Transport Planning (TP/ VS) Detailed Scheduling (DS) Production Planning (PP) Deployment Planning Horizon Supply chain planning

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 20 Plant A Plant BPlant C Plant E Plant D External customer Supplie r Customer Supply chain planning model External customer Internal customer Plant

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 21 2nd Supplier ManufacturerRetailer From sequential supply chains...  One-to-one Communication  Excessive Inventory (Bullwhip-Effect)  Manual Communication  Asynchronous Planning Cycles  Assumption bases Planning 1st Supplier

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 22  Collaboration  One-to-many Communication  Synchronous/asynchronous Communication  Synchronized Planning Cycles  Automated Decisions  Tracking and Tracing  Technological Openness ….. to networked Supply Chains. Retailer 2 nd Supplier Carrier Trade Exchange Transportation Exchange Customer 1st Supplier

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 23 Advantages of Collaboration CustomerSupplier No safety stockMore precise demand planning No purchase orders Automated consignment fill-up and consignment issue orders No quality inspectionNo printing of CofA‘s „Pay only what you have used“No printing of invoices No incoming invoiceNo invoice verification

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 24 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 25 Business support processes Business Support Processes represent all non logistical activities to support the main logistical activities Controlling Budgeting Invoicing

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide Info Cube Info Cube CC- Cube Cluster A CC- Cube Info Cube Info Cube Info Cube Cluster Business Warehouse Business support processes, strategic planning and reporting Cluster BCluster CCluster D ERP Systems

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 27 Practical part: developing the subjects Group A:Please design the SC Model for 1.4 Plants A,B,C,D 2.A, B, D have own Customers 3.C, B have own Suppliers 4.A supplies C and B, B supplies C and D 5.Please design as an sequential model 6.Please design as a network model 1.you have 20 minutes for group discussion and writing down your ideas 2.afterwards each group has 5 minutes for the presentation of your ideas 3.your are free to use any presentation medium Group B:Please design the SC Model for 1.4 Plants A,B,C,D 2.A, C have own Customers 3.C, B, D have own Suppliers 4.A supplies C and B and D, C supplies B and D 5.Please design as an sequential model 6.Please design as a network model

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 28 Example solution for a potential test task, Part 1 design the SC model for 1.4 Plants A,B,C,D 2.A, B, D have own Customers 3.A, C, B have own Suppliers 4.A supplies C and B, C and B supply D Plant A Plant CPlant D Plant B

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 29 Summary and key messages, Part 1 The SC components are sales, purchase, production and distribution Literature 1.Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 There are models and tools to describe SC processes SC planning processes effect all SC components SC networks are the basis for collaboration Business support processes are mainly calculation, budgeting and reporting

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 30 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 31 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 32 Overview of logistical processes, Part 2 There are many logistical processes, which do not belong to the main SC processes, but effect all those components Problems and potentials The integration of these components assure the most effective use of the supply chain Distribution of information in case of disturbances is a challenge a high potential

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 33 Overview of logistical processes, Part 2 Understand the important inputs and outputs of each component Understand the structure of logistical crossover processes Learning targets Understand the involved acting logical business units Understand the applications tasks to assure process integration

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 34 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 35 Logistical crossover processes Logistical crossover business processes represent all logistical activities to support the main logistical activities

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 36 Life-Cycle Data Management Document Management Product Structure Management Recipe ManagementIntegration Change and Configuration Management Asset Life-Cycle Management Technical Assets Management Preventive and Predictive Maintenance Maintenance ExecutionWork Clearance Management Program and Project Management Program ManagementProject PlanningProject ExecutionInterfaces Life-Cycle Collaboration and Analytics Design Collaboration Collaborative Project Management Quality Collaboration Enterprise Portal Content Analytics Quality Management Quality Improvement Environment, Health and Safety Basic Data and Tools Product Safety Hazardous Substance Management Dangerous Goods Management Waste Management Industrial Hygiene and Safety Occupational Health Audit ManagementQuality Control Quality management in the SC

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 37 Quality management in the SC  Q Info  Technical delivery terms and conditions  Inspection lots  Fault reports  In-process inspection  Batch classification  Quality control charts  Quality reports  Inspection lots/Delivery  Certificates  Customer reports  Service reports ProcurementProduction Sales Service

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 38 Quality reports can be evaluated according to different criteria. For instance, an overview of problems occurring with one material can be provided. Questions such as what happened during production or have complaints been received from customers can be answered easily. Quality management reporting in the SC

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 39 Quality management reporting in the SC

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 40 Sample management in the SC

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 41 Goods receipt Outward stock movement Periodically Deadline monitoring batch In-process Create inspection lot /labels Print inspection instruction/labels Record results subsequent ac Usage decision subsequent action Manually Inspection orders in the SC

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 42 New products and processes are the driving force of the continued international competitiveness A company can aim to win on lower overall cost or with differentiated products and services that can command a price premium It is expected that by 2004 over 20% of sales are from new products, compared to only 13% in 1994 Innovation is  long-term driver of future financial performance and value creation  provides business opportunities as well as the sustainable foundation for continued growth  can lead to shifts in relative cost relationships as well as provide sustained competitive advantages R & D in the supply chain

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 43 A manufacturer of chemicals has to comply with the respective laws > be able to provide seamless information about the properties of the products that leaves no room for doubt > provide foresighted information about handling > take preventive action against emergencies > have clearly structured development routines, production procedures and supply chains > R & D in the supply chain

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 44 Regarding R&D, the product life cycle management consists of Strategic R&D planning Compliance of R&D requirements in the running system Operational R&D handling Phases Core Phase R & D in the supply chain

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 45 Implementation of subsequent settings in the ERP environment IT support of the total actual R&D process > > Requirements for an Operational R&D handling Document the results of the R&D activities > R&D handling is more than writing down structures and recipies > R & D in the supply chain

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 46 Overview of logistical processes Supply chain processes Business support processes Short break Part 1 Logistical crossover processes Applications tasks to assure process integration Part 2

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 47 Applications tasks to assure process integration Lacking exchange of information is one of the main problems, why business processes do not run optimal. Very often you will find human factors as a reason JIT manufacturing and outsourcing are creating many more shipments to a wider variety of destinations. The likelihood of breakdowns increases.

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 48 Which logistical consequences emerge through a missing Process integration?  Work Arounds  Badly designed Process flows  Additional Manual effort for coordination Which costs arise through a missing Process integration?  Costs for individual Interfaces  Costs for necessary modifications What should already be considered during a project planning ?  Cost analysis for the Process Integration  Detailed functional Process analysis  Preliminary Study Applications tasks to assure process integration

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 49  Process Integration is surely not given by creating interfaces between individual solutions afterwards, Process Integration is part of the System planning process  Process Integration is more than a try to connect two different Plugs, but rather a complex Challenge where the interactive details of a lot of components have to be identified and where the following implementation has to be kept in mind Applications tasks to assure process integration

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 50 What is Supply Chain Event Management (SCEM)? SCEM is a solution to MONITOR and CONTROL Supply Chain Processes. It enables to react to events immediately, over heterogenious systems, over company boundaries.

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 51 SC Event Management consists of four steps: Define: Event Profiles for business processes Monitor: Event Messages Notify:Actual and coming Problems by As-Is Comparison Control: by manual Interference, automatically,  SAP AG 2001, SCEM, Andreas Otto 51 What is Supply Chain Event Management (SCEM)?

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 52 Summary and key messages, Part 2 Literature 1.Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, Dangelmaier, Busch (Hrsg.) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 QM and material management are the most important crossover processes Distribution of information in case of disturbances is an important success factor A supply chain event manager (SCEM) is urgently recommended for an optimal SC organisation

Matthias Mekschrat h_DA WS 2011Logistical applications and optimizationsslide 53 Thank you very much for your participation …… and see you on Friday, 18th of November