1. 1 1 ISyE 6203 Consolidation Intro to GIS John H. Vande Vate Fall 2011

2. 2 2 Our Company Direct TL shipments –Low transport cost gives high Gross Margin –High Cycle Stock at Stores gives low ROIC Balance Transport and Inventory –EOQ/EPQ improved ROIC dramatically with only small impact on Gross Margin –Adjusting mode to suit smaller shipments reduced impact on transport costs and Gross Margin What next?

3. 3 3 Summary Direct Full Truckloads –$158 million in inventory –$435 thousand in transportation –Gross Margin % = 33% –SPEED = 1.08 –ROIC = 23% Single EOQ to All Stores –$15.8 million in inventory –$2.54 million in transportation –Gross Margin % = 32.5% –SPEED = 1.65 –ROIC = 34% Different EOQ shipments –$? million in inventory –$? million in transportation –Gross Margin % = ? –SPEED = ? –ROIC = ? Balance Inv. & Transport Balance Inv. & Transport w/ more detail & complexity

4. 4 4 Our Company Pretty much come to the end of the possibilities for improving performance under the current rules. So, … CHANGE THE RULES Use LTL instead of FTL (Challenge 4) Change the network Consolidate flows –Recognize & exploit economies of scale in transport rates –Aggregate flows to exploit economies of scale while managing the inventory impacts. –Try to get low inventories at the stores AND larger shipments

5. 5 5 Consolidation: An Example Truck load shipments from Green Bay and Denver to Indianapolis Assemble Products in Indianapolis and distribute by full truckload from there to stores What will happen to costs compared to direct full truck load shipments? –Transportation –Pipeline –At plants –At Indianapolis Warehouse/Cross Dock –At Stores

6. 6 6 Indianapolis Assume 2 separate operations –Manufacturing –Assembly & Distribution Manufacturing moves finished units to Assembly as they are completed at no cost. What happens in Assembly & Distribution?

7. 7 7 Assembly & Distribution Receiving Dock –Receives shipments from Green Bay and Denver Assembly Operations –Draws goods out of Receiving and Indianapolis Manufacturing, Assembles and sends to Shipping at rates matched to demand Shipping Operations –Accumulates finished goods –Ships when a full truck load accumulates.

8. 8 8 Indianapolis Green Bay Denver Indianapolis Plant Indianapolis Receiving Assembly Indianapolis Shipping

9. 9 9 Indianapolis Indianapolis Assembly draws goods out of Receiving and moves them into Shipping at a constant rate matched with demand Two Related Questions –What is in a Truck Load shipment to a Store? –What is the Cycle Stock in Indianapolis Shipping?

10. 10 Challenge 5 Determine how many –TVs –Computers are in a full truck load shipment from Indianapolis to a store Give a brief explanation of how you calculated this Due in 10 minutes

11. 11 Challenge 6 Assume we operate with full truck load shipments using Indianapolis in this way Adjust the financial statements to reflect changes in transportation and inventory Discuss the impacts, relate them to our initial assessment. Explain the differences. What would you do next? Due ???

12. 12 Review of EOQ Ignoring the Supplier’s Cycle Stock Considering the Supplier’s Cycle Stock If we’re the only customer The 2 disappears

13. 13 What if? What if, say, Denver, is an arm’s length supplier – not part of our company? Should we consider his Cycle Stock or not? There’s a 40% difference. It matters.

14. 14 Questions?

15. 15 Intro To GIS Useful Tool: GIS Geographic Information System –Links databases and maps –Useful for addressing questions like: Where should we …? How far away are…? How are …. distributed?

16. 16 GIS Spatial data –Location –Stored in a shape file, geodatabase, … Attribute data –Associated characteristics –Stored in DB GIS systems typically maintain these separately and “join” them for display or analysis

17. 17 Geographic Data Raster model –Area covered by a grid of square cells –Image data is a Raster model, cells = pixels Vector model –Features represented as Points or nodes Lines or arcs Areas or polygons

18. 18 Geographic Data Key Properties of Geo Data –Projection: The method of translating locations on the 3-D earth to (X,Y) coordinates on a map or screen –Scale: The ratio between distance on a map to the equivalent distance on earth –Accuracy Positional: Is it in the right place? Consistency: Is it correctly categorized? Completeness: Is it all there? –Resolution: e.g., pixel size

19. 19 Layers Different geo data maintained in different data layers with common location information, Raster Layer: Digital Ortho photo: combines the visual properties of a photograph with the positional accuracy of a map, in computer readable form. Vector Layer: Lines defining the street network Vector Layer: Polygons describing land parcels Smart Map Different layers linked by common locations

20. 20 Software Tools ESRI – ArcView, ArcGIS and others MapInfo – MapInfo and others MS – MapPoint (Tutorial, etc)Tutorial, etc Many others

21. 21 Geocoding Geocoding: –Placing data with location information on the map LatLong Street Address Examples: –Geocode Stores by ZIP (OurCompany.xls) –Geocode Census Data by ZIP (US Census and private vendors sell demographic data)US Census (3XXXXDemographicData.xls)3XXXXDemographicData.xls

22. 22 Thematic Maps Thematic Maps: –Display the attributes of geographic data Examples: –Population Sized Circles Shaded Regions –Median Household Income Shaded Regions

23. 23 Geographic Queries SQL-type query based on geographic information: –Eg. Average household income within 20 miles of Store # 1 MapPoint is quite poor at this Example: –Household income within 20 miles of Store #1

24. 24 Distance Calculations As the crow flies –Using the Measure Distance Tool Over the road –Using the Route Tool Add Store #2 as Start Add Store #1 as End Get Directions Over the road distance Can adjust route options for speeds, hours of driving, rest stops, …

25. 25 Territories Given fixed centers develop territories based on proximity to those centers MapPoint is very poor at this –Either you import them or you build them by hand… –Other (more expensive) packages do this automatically

26. 26 Programming Tools MapPoint includes software links (COM or Component Object Model) that allow you to integrate MapPoint into your applications (e.g. with VB, into Excel, Access, …) We won’t go that far. Interested: See About Programming with MapPointAbout Programming with MapPoint