Bruce Palmer SCOR Modeling and Simulation Case Studies Copyright 2000 by Gensym Corp.

Introduction Supply Chains and e-SCOR e-SCOR Quick Tour How e-SCOR has been used

Supply Chain Trends Worldwide dispersion of manufacturing and distribution facilities Multiple, volatile channels Responsiveness versus internal efficiency Lower margins and higher market share New products, services, and delivery options Friction-free and Internet-time information flow Companies are differentiating on the basis of their supply chain models

What’s Driving Supply Chains Today? C ustomers C apacity / C onstraints C osts C ollaboration / C ommunication Change

How do you make supply-chain decisions? Analyze alternative configurations that meet organizational goals –customer service levels –costs –capacity Build confidence in new configurations (make sure you don’t “break the business”) –responsiveness –limitations –financials Facilitate communication and coordination among all members of supply chain

e-SCOR for supply-chain modeling and simulation Quickly models all the 5 Cs of the supply chain Simulates alternative configurations to: –identify best configuration for achieving critical business goals –“what-if” analyze supply-chain robustness –communicate required service levels across chain –handle constant changes of players and game rules (such as auctions to bid consolidators to future formulas)

What is e-SCOR? e-SCOR is a software product developed by Gensym for dynamic modeling and simulation of supply chains. Implements SCOR including the implementation specific details Provides a time based transaction-level simulation of a supply chain Is driven by parameters of the plan, source, make, and deliver functions Represents the players, functions, products and resources of a supply chain

e-SCOR -- Supply Chain Design & Configuration Where Does e-SCOR Fit In? Time Horizon Planning Level Strategic Tactical Operational Seconds/ Minutes Hours/ Days Weeks/ Months Quarters Years execution planning Order/Warehouse Management Transportation/Inventory Management Production Scheduling Manufacturing & Distribution Planning Supply Planning Demand Planning & Forecasting

e-SCOR Offers Analysis for Everyone CFO: How can I dramatically reduce working capital within our supply chain?… are there any policy or practice changes that will help? CEO: What are the best strategies for adapting our supply-chain to e-business? What’s the overall impact of any major supply-chain configuration changes? CIO: What kind of e-communication will improve my multi- vendor supply chain? Supply Chain Manager: How can I configure my supply-chain to ensure the high-levels of performance needed to succeed within a world of virtual suppliers and customers? VP Operations: How will unexpected delivery delays impact my overall supply-chain service quality? Where are the bottlenecks -- and how can I reduce their impact?

What are e-SCOR’s Capabilities? Development of SCOR models in a graphical user interface Animated discrete event simulation of the supply-chain Computation and tracking of SCOR standard performance metrics to support comparative analysis and benchmarking Support for multiple models, allowing side-by-side comparison of alternative supply-chain configurations, policies, and practices Extensibility, enabling development of custom functions and interfaces to real data sources

e-SCOR Models SCOR Levels 1 to 4... …and can customize beyond Level 4 Level 1 Level 2Level 3 Level 4

e-SCOR Automatically Quantifies Performance Inventories –fulfillment –fill rates –days of supply Times –cycle times –lead times –utilization rates Financials –cash flows –asset turns … and much more

e-SCOR “Level 1” Roles e-SCOR aggregates Make, Source, Deliver process categories into four distinct roles to create Level 1 models –Base Manufacturer: Front end generator of parts for products Make & Deliver categories –Distributor: Intermediate passer of parts and products Source & Deliver categories –Manufacturer: Turns parts into products Source, Make, & Deliver categories –Consumer: Back end consumer of products Source category S M D S D M D S

ACME Consumer Supplier/ Distributor Base Manufacturer RFQs, POs and $ flow this way Quotes, Goods and Invoices flow this way Top-down Graphical Modeling ACME Taiwan Semiconductor Manufacturer Semiconductor Distributor ACME Laptop Retailer

e-SCOR Components Simulation Controls Model Browsers Resources Process Role Blocks Process Parameters

With e-SCOR, You Model Your Level-1 Supply Chain ACME Consumer Distributors Base Manufacturer RFQs, POs and $ flow this way Quotes, Goods and Invoices flow this way

e-SCOR Creates the Level 2 categories...

e-SCOR Creates Levels 3 and 4 as well! Make Infrastructure Make to Stock Make to Order Engineer to Order

Define the Products and BOM

e-SCOR Financials

e-SCOR Projects Electronics Inventory Management e-Commerce addition Order Fulfillment Electronics Distribution

Hitachi Hitachi’s TFT production uses e-SCOR to assess alternative supply-chain configurations with the goals of: –maintaining on-time sourcing deliveries across varying demands –lowering inventory costs

Electronics Inventory Management Large Asian electronics manufacturer wants to reduce inventory costs by $50M/year Currently use “Push” strategy, running all facilities at full capacity Using e-SCOR to explore and compare two approaches –Make adjustments to current strategy –Undertake major effort to switch to “Pull” strategy

Electronics Inventory Management e-SCOR is enabling manufacturer to quantify value of Push adjustments like: –More frequent planning cycles –Requiring suppliers to cut lead times –Modifying replenishment strategies Replenishment thresholds Re-order quantities

What if we add the Web to our distribution channel? We should expect some erosion in our usual retail sales. Will we eventually be profitable?...when? e-Commerce Addition

e-SCOR visualized the future... start web service retail erosion web expansion profitable web sales outpace retail web retail

European communications equipment manufacturer using e-SCOR Evaluate suitability of centralizing fulfillment activities e-SCOR is quantifying –Cost of facility –Cost of operations –Cost of inventory e-SCOR is identifying impacts upon manufacturing operations Order Fulfillment

Gensym is helping a North American manufacturer to create an e-SCOR model of its global distribution function Decisions such as: Where should inventory be kept to meet desired delivery times and minimize costs? –De-centralize inventory –Manage multi-point transportation –Estimate costs Electronics Distribution