Setanta Systems - Supply Chain Report and Analyses Module

Business
Simulation Software
Supply Chain Analytics

1

Contents

Description Page

Introduction……………………………………………………………..1
Solution Scope………………………………………………………....2
Supply chain management problems solved……………………..3
Some practical questions answered………………………………..4
Steps to build - Scenario……………………………………….…......5 – 6
Steps to build - Analytics report……………………………….…….7
Scenario Analytics Drilldown - Cost …..………………………...…8 - 30
Scenario Analytics Drilldown - Cost change ……………….…….31 - 55
Scenario Analytics Drilldown - Inventory………………………….56 - 60
Scenario Analytics Drilldown - Inventory change……….…….…61 - 66
Contact details………………………………………………………….67

2

1

Introduction
The purpose of this paper is to demonstrate how the analysis and
reporting of supply chain dynamic complexity does not need to be a
complex process, if fact, it can be made so simple as to be automated.
This is made possible using our simulation software that enables decision
makers model and simulate supply chain scenarios using the “Modeling
and Simulation Module” then import each scenario into the “Supply Chain
Reporting and Analytics Module” as required. Once imported, practically
everything else is automated. There is no further delay in getting down to
understanding the dynamics of one or more scenarios or the dynamics
responsible for differences between multiple scenarios, all at the click of
a mouse.
We demonstrate this capability by taking you behind the supply chain
profit and loss statement to reveal these dynamic complexities.
The objective is very simple, to access actionable information that enables
decision makers to measure, influence and manage future outcomes
through greater awareness and understanding.

3

2
Solution Scope

Modelling

Simulation

Analytics

Optimization

4

3
Supply Chain Management Problems Solved

Diagnostic
Model current and proposed change to the supply chain strategy in order to
identify opportunities for driving change for competitive advantage.

Simulation
Holistic model that simulates cause effect for risk assessment and decision
making.

Planning & Control
Supports the integration of Lean, Six Sigma and Constraints
Theory so that the outcome of the Diagnostic and Simulation is
reflected in the business planning process, such as, rolling forecasting.

Analytics
Connect cause and effect so that threats and opportunities are understood and
appropriate action is targeted for sustainable results.

5

4
Some practical questions answered

Diagnostic
Where and what drives cost and risk along the supply chain?
What is the cost to serve?
How can we evaluate the effectiveness of current and proposed change?

Simulation
How can we test the sensitivity to change when change is applied to multiple
drivers across the supply chain simultaneously.?
How can we rely less on intuition when dealing with complexity?
How do we select the right KPIs for our business needs?

Planning & Control
How can we more effectively integrate continuous process improvement and
supply chain management into mainstream business planning and control?

Analytics
How can we more effectively acquire the business intelligence and insight in a
timely manner to reduce risk and leverage the gain from opportunities?

6

5
Steps to build - Scenario
Supply Chain Modelling & Simulation Module

The following two pages outline the assumptions and steps required to
build the scenario database used as the basis for this paper,

Supply Chain
1. Raw material sourced from China, Malaysia, USA, Ireland
2. Raw Material (excl Irish sourced) routed to Holland for onward
distribution.
3. Manufacturing occurs in Ireland
Trade Terms
1. Supplies - Ex Works
2. Sales - Delivered
Task
1. Reduce lot size in order to improve quality and reduce inventory
2. Analyse impact by highlighting resulting change in
a) Product lot size change
b) Product Lot Size yield improvement
c) Supplies lot size reduction

7

6
Steps to build - Scenario

Prepare Value Stream Map to represent Supply chain.

Configure system model based on value stream map.

Assign demand to drive resource requirements.

Execute code to auto build resource demand, utilization, multi-
dimensional cost structure and extended period cost and revenue.

Output = Scenario Database

Build additional Scenarios as required by modifying driver assumptions.

8

7
Steps to build – Analytics Report

Only input required:-
Assign sequence number and name for each scenario to be imported. Sequence
one is assigned to the base scenario which represents the current state or scenario
from which change is measured.

Automated Process:-
Execute code to auto import data from Modelling and Simulation Module and build
Supply Chain Analytics Reports.

9

8
Scenario Analytics Drilldown - Cost
Supply Chain Report & Analytics Module
The screen shot in the next page represents the incremental change in the
supply chain P&L Statement from the current to the future state. The
“Base Scenario” in this case focuses on the execution of the current
supply chain strategy whereby the operational strategy is to maximise
product lot size.
In this example the decision maker needs to understand what the outcome
of a decision to reduce the lot size would be from a holistic perspective
and how each component of change contributed to the total. In order to
understand this the change is subdivided into the follows increments,
1. Large to small product lot size
2. First pass yield improvement resulting from smaller lot size
3. Raw material lot size reduction.
The objective of the Scenario Drill Down is to provide decision makers
with a total understanding of the base scenario before moving onto
reviewing the impact of each of the incremental changes above.

10

10

From the Variance report in the previous page the decision maker selects
the Base Scenario to extract the Supply Chain P&L Summary for the
“Large Product Lot Size”. This format provides insight, at a summary
level, into the profit and loss based on the three segments of the demand
driven supply chain as follows,
Supply Process
Demand Process
Product Process

The objective of this report is to provide decision makers with insight to
the dynamics of the supply chain performance from the perspective of
each segment. Also, to serve as a launch pad from which decision makers
can drill down to understand the dynamic complexities of each segment
and the part that each plays in order overall supply chain financial
performance

12

12

From the Base Scenario P&L Summary in the previous page there is one
significant line item that stands out,

Resource Imbalance - - As it suggests is the difference between

Resources made available to support the supply chain strategy
And
Current demand for these resources

But this is just the starting point and just one of many consequences of
current state that we need to understand. There is no actionable
information at this level. We need to drill down to understand what drives
this outcome and how we can better influence, measure and manage the
current state before driving change towards the future state.

14

13
Support Process
The objective of the next two pages is to drill down behind the Support
Process in order to understand,

1. The scope and cost in providing these support processes

2. The scope and cost of each support process and identify
opportunities for driving change.

3. Identify, in order of magnitude, which raw material items drive
the greatest activity and cost for each process task.

4. Identify the key attributes and resource source that is responsible
for driving cost for each process task.

Actionable Outcome – We know where to affect change and can
measure and manage the outcome.

15

14

Supply Support Process
Summary

Configuration

16

15
Supply Support Process

Driver - Cyclecounting

Activity Driver Attributes

17

16
Material Cost
The objective of the next page is to drill down behind the Material Cost in
order to understand,

1. Material Cost by Part

2. Identify the key driver attributes, such as, purchase price, qty per,
current process yield, first pass yield. Also, the routing step and
product where demand for materials is driven.


18

17
Material Cost
Summary

Driver Attributes

19

18
Logistics Cost
The objective of the next two pages is to drill down behind the Logistics
Cost in order to understand,

1. Scope and Cost of Logistics

2. Logistics Cost by raw material item

3. Identify the key driver attributes that drive logistics cost.


20

19
Logistics Cost

Expense Summary

Freight - By Raw Material Item

21

20
Logistics Cost

Logistics Cost Driver Attributes

22

21
Transformation Cost

The objective of the next two pages is to drill down behind the Supply
Process Transformation Costs in order to understand,

1. Total transformation cost by routing step & value type
2. Transformation Cost & Value Type by activity.
3. Driver Activity cost by raw material item.
4. Driver Attributes, such as, cycle time, batch size, sample size,
demand activity, pack configuration, resource utilization.


23

Scenario Analytics Drilldown - Cost 22

Transformation Cost
Summary By Routing Step

Activity Cost By Routing
Step

24

Transformation Cost
Driver Activity Cost By Raw Material Item

Activity Driver Attributes

25

24
Resource Imbalance Cost
The objective of the next two pages is to drill down behind the Resource
Imbalance Cost in order to understand,

1. Resource Imbalance by Process Type
2. Resource Imbalance by Resource Cell
3. Resource Assignment summary
4. Resource Cell Spend Summary

Actionable Outcome – We know the source, period cost, where
resources are consumed and the resulting imbalance so that we
can determine how best to optimise the utilization of resources
from a holistic perspective rather that optimization on a silo by
silo basis. Involves a review of strategy and tactical plans.

26

Process Type Summary

Process Resource Type Summary

27

Resource Cell Assignment Summary

Resource Cell Spend Summary

28

27
Cost Of Capital
The objective of the next two pages is to drill down behind the Cost Of
Capital in order to understand,

1.Cost of capital by process and driver source, such as, process
cycle time, idle resources, vendor credit, customer credit.
2. Cost of capital summary by driver source, e.g.., raw material
process cycle time cost of capital.
3. Cost of capital by driver source detail, such as, process cycle time,
cumulative flow time, resource cost, CoC rate

Actionable Outcome – We know the source, period cost, where
resources are consumed, process cycle time, total time in process,
cost of capital interest rate applied and the resulting cost of
capital. All necessary information to decide best tactical plan to
affect cost of capital reduction.

29

Cost Of Capital
Process & Cost Of Capital Type Summary

Process Cycle Time Cost Of Capital Driver

30


Cost Of Capital
Driver – Process Cycle Time Detail

31

Conclusion

The scenario drilldown process presented for the “Supply” segment of the
supply chain is repeated for both the “Demand and Product” segments
when completed,

Actionable Outcome – Thorough understanding and insight into resource
and cost for each segment of the current supply chain scenario, key
drivers and attributes. Understanding of where improvement can be driven
across the supply chain and where a review of strategic and tactical plans
warrant further analysis and possible change.

Next Learning Process – The remainder of the paper focuses on
understanding how the change from a large to a small lot size drives
performance improvement across the supply chain.

32

31
Scenario Analytics Drilldown - Cost Change
The objective of this phase of the supply chain change review is
understand how and where the cost and overall performance of the supply
chain has been affected by a reduction in Lot Size.

Each change resulting from a reduction in the Lot Size can be represented
and analysed in the same way as the preceding pages. The purpose of the
following section of the paper is to demonstrate that the affect of a
reduction in Lot Size could be viewed from the perspective of

1. Batch Affect – Unit cost increase for batch based processes

2. Quality Affect – Research has demonstrated that improvement in
product quality can result from lower lot sizing.

3. Frequency Affect – Increase in frequency for support and
transformational processes that affect both
batch and non batched based activities.

33

32

Based on the selection of scenarios for comparison the interactive report
and drill down capability automatically analyses the change from one
scenario to another.

The objective of this drill down is to provide decision makers with a
thorough understanding and insight into how a change as simple as a lot
size reduction can have such an impact on both supply chain cost and
inventory holding.

Replaces intuition with fact based understanding and therefore a sounder
foundation on which to influence and manage change.

34

33

35

34
Support Process

The objective of the next two pages is to drill down to understand the
affect of change from large to small lot size on supply chain support
processes, as follows,

1. Change at Segment Level. (Supply, Demand, Product)
2. Change at process level (business support process by segment)
3. Change at task level (by business support process)
4. Change at task driver level (by Part)
5. Change at task driver attribute level. (Process cycle time, Batch
Size, Sample Size, Activity)

Actionable Outcome – We know where and how a change in
support process cost has arisen and how we can influence,

36

Scenario Analytics Drilldown - Cost Change 35
Support Process
Supply Chain Segment Change Summary

Supply Process Change

Supply Process Task Change

37

Support Process
Driver Change

Driver Attribute Change

38

Material Cost
The objective of the next three pages is to drill down to understand the
affect of change from large to small lot size on supply chain material cost,

1. Change at part level.
2. Change at part level where used
3. Change in Material cost drivers where used. (change in Currency,
price change, Qty Per, Current process yield, First pass yield,
volume.)

material cost has arisen and how we can influence, measure and
manage the outcome.

39

Material
Summary

40

Material
Where Used

41


Material
Driver Attributes

42

Logistics Cost
affect of change from large to small lot size on supply chain logistics, as
follows,

1. Change at segment level. (Supply, Demand, Product)
2. Change at Expense line item level. (by segment)
3. Change at Expense line item level. (by Part)
4. Change at driver attribute level,. (Exp rate, Currency, price change,
component Packaging weight, Volume.)

logistics cost has arisen and how we can influence, measure and
manage the outcome.

43

Logistics

Spend Change

44


Logistics
Freight by Driver Change

45

Logistics
Freight Cost Driver Attribute Change

46

Transformation Cost
The objective of the next two pages is to drill down to understand the
affect of change from large to small lot size on supply chain
transformation costs, as follows,

1. Change at Segment Level. (Supply, Demand, Product)
2. Change at Routing level (by process)
3. Change at task level (by routing step)
4. Change at Task Driver Attribute level (Process cycle time, Current
process yield, First pass yield, Lot Size, Volume.

transformation cost has arisen and how we can influence, measure
and manage the outcome.

47

Transformation Cost

Product Process Step Transformation Cost Change

48

Transformation Cost
Task Cost Change

Volume Based Task Change

Lot Size Based Task Change

49

Resource Imbalance
affect of change from large to small lot size on supply chain resource
Imbalance Cost, as follows,

1. Change at segment level (Supply, Demand, Product).
2. Change at process type level. (Transformation and Business Process)
3. Change at Resource cell Level (where resource are located)
4. Change at Driver Attribute level ( Resource spend, Resource
assignment)

resource imbalance cost has arisen and how we can influence,

50


Product Process Resource Imbalance Cost Change

51

Resource Imbalance Change

52

Change

Spend Change

53

Cost Of Capital
affect of change from large to small lot size on supply chain cost of
capital, as follows,

1. Change at segment level (Supply, Demand, Product).
2. Change at process type level. (Transformation and Business
Process)
3. Change at Driver Level (Cycle time, Idle time, Vendor and customer
credit)
4. Change at Driver Attribute level ( Forecast cost, Cost of Capital
rate, credit terms, cycle time, idle time).

Actionable Outcome – We know where and how a change in cost of
capital has arisen and how we can influence, measure and manage
the outcome.

54

Cost Of Capital

Supply Process Cost Of Capital Change

55

Cost Of Capital

Vendor Credit Cost Of Capital Change Summary

56

Cost Of Capital

Vendor Credit Cost Of Capital Change by Part

57

Scenario Analytics Drilldown - Inventory 56
Inventory

The objective of the following four pages is to drill down from a summary
to a part or product inventory level in order to understand where and how
inventory cost accumulates across the supply chain. Also, to expose
where effort should be focused in driving process improvement that will
result in inventory reduction.

Actionable Outcome Understanding what drives inventory across the
supply chain, we are enabled to drive inventory reduction. This is
achieved by focusing effort on driver attribute improvement, such as
cycle time, total flow time, quality, forecasting etc.

58

Raw Material Inventory
Summary

59

Raw Material Inventory

60

W.I.P & Finished Goods Inventory
Summary

61

W.I.P & Finished Goods Inventory Flow & Cost Accumulation

62

Scenario Analytics Drilldown – Inventory Change 61
Inventory Change

The purpose of the following six pages is to drill down to understand
how change applied to driver attributes such as lot size, quality affect and
process improvement etc. affect the flow and accumulation of inventory
across the supply chain. Earlier in this paper we demonstrated how a
change in lot size drives change across the supply chain and how
analytics enable us to understand the dynamic complexity of what occurs
as a consequence of change. What we learned from this helps to explain
how change at driver attribute level affects inventory flow and cost
accumulation across the supply chain.

Actionable Outcome By understanding how change applied to driver
attributes affect inventory flow and accumulation across the supply chain
we are enabled to influence and target change that will result in greater
agility, flexibility, reduce risk, increase competiveness and support
sustainable competitive advantage.

63

Inventory Change Summary

64

Raw Material Inventory Change

65

Raw Material Inventory Flow & Cost Accumulation Change

66

W.I.P & Finished Goods Inventory Change

67

W.I.P & Fin Goods Inventory Flow & Cost Accumulation Change

68

67

Contact Us

Cyril Bourke ceo
Setanta Business Systems Ltd

Address:
Redmondstown House,
Redmondstown,
Clonmel
Co. Tipperary
Ireland

Phone: 353-52-6125476
Email: cyrilbourke@setantasystems.com

69

Setanta Systems - Supply Chain Report and Analyses Module

Recommended

Recommended

More Related Content

Similar to Setanta Systems - Supply Chain Report and Analyses Module

Similar to Setanta Systems - Supply Chain Report and Analyses Module (20)

Recently uploaded

Recently uploaded (20)

Setanta Systems - Supply Chain Report and Analyses Module