Implementing Supply Chain Planning and Optimization Projects

Companies attempt to spend their resources at an optimal level, not more and not less.  Optimization cannot be separated from life as per the following examples; the natural duration of pregnancy is 40 weeks not more and not less;   balanced nutrition, playing games and sleeping is important for growth during childhood;   students search for the best restaurant near the university in order to find delicious and cheap food; most employers offer jobs with an average market salary.  

All companies have processes in place related to optimization. Companies need supply chain optimization software, if they require supply chain plan decisions with less labor dependency. The following steps are important for all implementations: 

A) Analyze business requirements

B) Select proper software 

C) Design model and prepare data for optimization

D) Analyze and report optimization result


A) Analyze business requirements

All the departments in a company have their own goals and different KPIs. Supply chain optimization implementations affects more than one department. The important point is the alignment of the department’s goals to global company goals. The main idea of optimization implementation is to optimize all models. Local optimized results are not useful for supply chain optimization, as problems will occur at integration between departments. The analysis of business requirements should be performed by experts who are able to work with different departments and make a decision, or escalate the decision to the responsible manager.  

B) Select proper software

Of crucial importance is to select the appropriate mathematical solution based on requirements. The Simplex method can be used to solve Linear Programming or Integer Linear Programming problems. Genetic algorithms are mostly used for scheduling solutions, but Multi-Level planning or heuristic methods can be applied too. 

Integration is another important issue for software selection. For example, optimization software should able to get data for Sales & Operation planning and publish results to procurement. The integration between all modules is important for data consistency. 

Another criteria for software selection is, open source code, user friendly screens, customizing capability and continued support.  

C) Design model and data preparation for optimization

A proper supply chain model should be designed according to planning requirements. The first step is to clearly define the planning goal. The following planning strategies can be used:

-cost minimization

-order prioritization with constraints

-non-constrained plan 

Dummy resources, dummy locations or dummy materials can be used based on planning requirements. Using an experienced consultancy is an important first step. Incorrect results or poor performance will result due to an inefficient supply chain model design.

Data preparation is a challenging task for implementations. The Classic MRP systems provide results with existing data. Incorrect data do not affect all planning results. It is different with Optimization tools where small data mistakes can change the whole planning result. During the design of a supply chain model project the scope should be defined with consideration of the master data which should be adaptable. 

D) Analyze and report optimization result 

Gathering results from software is not meaningful if the result is not understood by planners. Planners should able to compare different planning results and style what-if scenarios (simulation planning run). Planning logs, errors and master data problems can be navigated by the planning system. 

Reporting is important to highlight key planning indicators in the company. High performance printed reports can be obtained from the system any time. The Planning software has the ability to be integrated with reporting systems such as BW, BI. 

Project management is also an important factor for success. The successful implementation requires dedicated and result oriented team members. Success happens when the two teams from the client and consulting company respectively collaborate.  Coordination inside the company, keeping managers informed about the status of project, knowledge transfer to the key users and document preparation are key competencies for the team at the client. The consulting team should work closely with the client team and present solutions based on business requirements. Documentation skills and format is important at this stage. The communication language is quite different due to different terminology used between two team members but this problem is solved with combined effort. Technical experience and communication is a key competency for the consulting team’s members. Success will be guaranteed with the correct software and team members.