Supply Chain Management

The analysis of business processes and the use of traditional techniques together with the support of Supply Chain Management software can become true critical factors of success.

SO99+ is a tool that optimises the investment in stock necessary to ensure the level of service desired by the company in the various segments of the product and market.

In companies where it has been applied, it has created more efficient daily operation and a reduction in the stock and relevant management costs of between 25% and 50%, increasing the level of service provided for the components and/or finished products. SO99+ has been applied in many different realities with multi-stage distribution networks and multiple production sites.

SO99+ is a tool which connects to the ERP, and for each code can:

• Analyse demand data with the frequency desired (monthly, weekly or daily) in relation to their characteristics (seasonality, trend, statistical distribution).
• It also assists in defining sales forecasts, offering functions to manage promotions, launch of new products and recodifications
• Optimise the necessary stock for each article in each warehouse of the distribution network to ensure the level of service desired, depending on the characteristics of demand (frequency of order lines and variability) and the characteristics of the process of supply and/or production for replenishing stock
• Calculate the supply and/or production needs, keeping account of the forecasts, of inventory situations in the various warehouses and of outstanding orders

SO99+ can be made operational in its basic configuration within a few weeks: the simplicity of implementation and use makes it possible, even in complex realities, to reach the expected benefits in a period of a few months.

LOGISTICS ASSESSMENT
Assessment consists in realizing a detailed analysis of the current method of managing the logistics chain, using a detailed model of the physical distribution network, including transport restrictions, product flows (especially on demand side) and correlating those figures with the levels of service provided to the customer. This study quantifies the reduction of the stock and/or the improvement of the level of service that can be achieved adopting advanced stock management tools. Furthermore, the period of time required to reach operating regime, parameter often neglected, can also be estimated. It becomes a powerful decision making support tool to redesign the distribution network: the user – by means if a simple "what-if" approach – can test different parameters and policies (frequency of procurement, lot dimensions, lead time, delays…) creating, for each hypothesis, a detailed map of all logistics costs.

OPTIMISATION OF THE LEVEL OF SERVICE vs COSTS
The generation of accurate sales forecasts is always difficult, even in better managed businesses. Collaborative demand planning systems suffer from persistent forecast errors, established by sales remunerization mechanisms which encourage an optimistic view. The forecasts are often aggregated in a way that does not reflect the daily demand at SKU/L level. The logic of Forecast Consumption is rudimental, and often allocates demand incorrectly. As a result, the forecasts are inaccurate and do not reflect the true detailed daily demand (product-day).
SO99+ supports customers in improving the accuracy of daily forecasts, doing away with persistent deviations. It responds to the gap between Demand Planning and daily procurement with a solution that includes:

• Monitoring deviations: continuous monitoring and statistical comparison for the areas subject to persistent deviations in forecasts
• Demand profiles: disaggregation of demand plans in daily forecasts at SKU and market level, also including the "frequency analysis", i.e. the pattern according to which demand occurs, which typical of any single SKU and which may deeply affect stock policies
• Detailed monitoring of the behaviour of demand: it allows an evolved logic of Forecast Consumption and reactive adjustments of forecasts.

In this way, it is possible to obtain accurate detailed forecasts. An accurate forecast with the optimization of the mix of stock is able to generate a correct safety stock able to guarantee an adequate level of service.

OPTIMISATION OF STOCK
The SO99+, adopts a powerful optimization engine to determine a global mix of stock, which is able to guarantee exceptional levels of customer service while concurrently reducing stock. Reliable analytical models define a precise relationship between stock behaviour and the objective level of service for each SKU/L (Stock Keeping Unit / Location). The system models millions of SKUnits keeping in mind variables like volume, lead-time, lot size, to calculate the appropriate level of stock and the appropriate frequency of reprocurement for each product in each location. The model manages many variables like promotions, in and out phases of products, shelf-life, seasonal products and sophisticated launch profiles.

The ToolsGroup solution calculates optimal stock objectives dynamically and feeds these values to the ERP management system of the supply chain. Now the Logistics, Finance and Marketing Management functions have adequate SIOP (Sales Inventory & Optimization Planning) tools to establish the level of overall service, and a powerful optimization algorithm to reach their objectives at the minimum cost.