An effective approach to working with case studies is to first do whatever you feel is needed to get your supply chain to run without breaking for 30 days. That generates an initial set of simulation data that can be analyzed and optimized. The two screenshots below show one solution to get the Cincinnati Seasonings supply chain to run for 30 days.
The beta test template shown here improves on the standard version of the P&L reporting template described in Analyzing Simulation Data. As shown below, the new template includes the original Profit & Loss report and KPIs and it adds a new feature that uses the EOQ formula to calculate optimal delivery amounts and frequencies for the stores.
NOTE: Orange bordered boxes on screenshots above and below show where direct input from users is needed, the rest comes from downloaded simulation data.
In addition to the P&L report and KPIs, there are two new tabs on the reporting template. The first tab has a dashboard which provides a high level view of overall supply chain performance. You can assign weights to each of the performance categories (Inventory, Transportation, and Storage). These weights reflect your strategy for improving operations – they focus attention on the performance categories you most want to improve.
Based on comparing simulation results to predefined performance targets, the dashboard calculates percent effectiveness for each facility. And based on weighting assigned to each target, a net score is calculated for the whole supply chain. This is shown below circled in red.
The second new tab in the reporting template has facility detail as shown above. This provides more insight into operations at particular facilities and pinpoints the biggest opportunities for improvement. The dashboard and the facility detail above show the biggest opportunities lie in improving inventory management and storage utilization at the facilities. It also indicates transportation costs and operations are working well enough.
Based on this information, improvements can be made to the supply chain model (AKA the supply chain operating plan). The dashboard focuses attention on improvement opportunities such as:
- Synchronize production at the factory with demand at the stores
- Reduce on-hand inventory at stores to reduce inventory days of supply
- Reduce storage space at stores to lower rent cost and improve storage utilization
- Redesign delivery routes and frequencies to further reduce costs
After making improvements in those areas simulation data from that improved supply chain model is loaded into the reporting template. It shows significant improvements. In the screenshot below, the monthly loss on gross profit is reduced from $1,552,646 in the first report to $351,641 in this second report (that is a 77% improvement).
NOTE: Facility rent costs are set high so profitability can only be reached by increasing product demand at existing stores and/or opening new stores.
And the dashboard below shows a big improvement in overall supply chain performance. In the first dashboard the overall performance Net Score was 55.7. It has improved in the second version to 86.1.
The facility detail tab shows improvements in the percent utilization for storage space at all of the facilities. The dashboard and facility detail tabs continue to identify the biggest areas for more improvement. By continuing to make changes in those areas you can continue to optimize the operations of this supply chain.
In this process of continuous improvement, your supply chain design and the designs of others who are working on the same case will all converge on one or two optimal solutions regardless of individual starting points for those designs. People’s designs will not be identical, but they will become more and more similar as they keep making improvements to optimize their designs. See more about this in The Butterfly Effect.
Click here to download a copy of the beta test reporting template and dashboard
[ New template tabs for Dashboard and Facility Detail were contributed by Robert Scanlon, operations and supply chain executive and adjunct professor at Catholic University of America, scanlonro
In addition to the reporting templates provided by SCM Globe, there are other open source templates available to help you optimize supply chain operations. These templates let you use data from your supply chain model and your simulations to analyze and improve your supply chain:
- Explanation of capacitated plant location (CAPLOC) model — clear set of lecture slides from University of Colorado at Boulder, Leeds School of Business
- Capacitated plant location template — video showing how to use Excel spreadsheet and Solver to set up a model and determine optimal plant locations
- Spreadsheet Solver for Vehicle Routing Problems — open source template to analyze and improve vehicle routing and scheduling