Optilon's consultants and sales people have been working to improve manufacturing companies' planning for decades. Through the years, much has happened, not least, better, faster and more flexible tools have been developed. However, many companies have nevertheless similar challenges now as then. It is still common to find it difficult to get a good overview of the bottlenecks, to predict the impact of material weaknesses, being able to prioritize effectively between different orders and customers, and last but not least to be able to visualize the planning situation for management, production department, purchasers and others.
Hard to make strategic decisions
Optilon helps manufacturing companies improve their planning at both strategic, tactical and operational planning. At a strategic level, many companies find it difficult making decisions regarding changes in the supply chain structure. Many companies feel that they have insufficient opportunities to quantitatively analyze what is the right decision based on expected costs, service levels and lead times.
Historically, analysis of this type was carried out at a very low frequency using complex spreadsheets. With increased competition, increased demands for efficiency and more complex and dynamic supply chains more and more companies find these tools are not sophisticated enough. Another area that many companies need help with at the strategic level is to define operational policies that govern the manufacturing operations in accordance with the company's business and production strategies.
In search for the minimum forecast error
On the tactical level, the challenge is often to balance demand and supply. In many manufacturing companies forecasts control purchasing, production, inventory and capacity. This means that the prediction accuracy has a significant impact on both profitability and the level of service to customers. Consequently, many manufacturers have made efforts to improve its forecast accuracy, and many people today feel that the forecasting and demand planning processes are taking too much time.
Alongside these demand challenges, many manufacturers find it difficult to know the upcoming production capacity so that they can add a realistic financing plan at a tactical level. Without that knowledge it is difficult to agree on delivery schedules with suppliers and to plan production staffing, inventory build-ups and distribution plans. For manufacturing companies with alternative supply methods (multiple production facilities, distribution centers, contract, etc.) choosing the right one is also an issue that can be difficult to manage without specific support and simulation capabilities. Another activity in tactical planning that many companies find it difficult to perform optimally is obviously calculating inventory and safety stock levels.
Complex flows and migratory bottlenecks
Operational planning is particularly within the machining industry an area that many companies struggle with. Factories with functional layouts, thousands of manufacturing orders, lots of materials and moving bottlenecks, often makes it difficult to plan the upcoming weeks of production without unexpected delays occurring. Many companies therefore experience too many disaster rescues due to priorities, late material deliveries, overcrowded and unexpected bottlenecks. In for example painting and machining changeover times also impose challenges. In these cases, sequencing might be necessary.
Optilon's solutions create business value to low-risk
Optilon is always striving to find the sweetspot between supply cost, service and capital to create business value for our customers. High quality and low risk for the customer characterize everything we do.
Supply Chain Design
To help manufacturing companies to make informed decisions based on quantitative analysis Optilon performs projects within Supply Chain Design. In these projects models of the business are created to act as the basis for analysis where the supply chain is considered from a strategic/ tactical perspective.
An example where Supply Chain Design is useful is the location of new distribution centers, i.e. decisions that alter the physical supply chain. Parts of this work can be center of gravity calculations, but the analysis is often far more comprehensive to ensure that a sufficient number of factors are taken into account. There are also tactical decisions such as how new products or new markets should be handled in an existing supply chain or how existing products are to be sourced as optimally as possible.
To solve our customers' problems at a tactical level, we work with forecasting and demand planning and inventory optimization in a more satisfactory way to balance demand and available supplies. Our concept Service Optimization is based on an overall aggregated service level and therefore superior to traditional inventory management. An individual service level is calculated for each SKU-location in such a way that the overall goal is achieved while the right items get good service and those that are expensive to keep in stock (in terms of how many customers are served) gets a slightly lower service .
Inventory optimization is especially useful to control spare parts (Aftermarket Services) but also in the manufacturing operations to set levels for components and end items in all warehouses in the supply chain. Using inventory optimization you can not only calculate the correct inventory level on each SKU-location based on its specific demand pattern, but also an create an optimally computed forecast and a replenishment interval. Since there is a built-in variation in lead time and demand there is in fact a range within which the replenishment proposals can vary and still meet the overall service level target.
Overall, our solutions in the forecasting, demand planning and inventory optimization offer opportunities to make the most of the order history, market intelligence, and general personal skills available.
Supply Chain Planning
Planning of production and material supply is an area where development has progressed a lot in recent years. Today, there are new opportunities in the context of a single product, user interface and database to manage both sales and operations planning, supply chain planning/ master planning and production as well as material planning. These different planning models can be based on different interpretations of the reality (such as different versions forecasting, etc.) while the basic data in all cases is the same and only needs to be updated at one place.
Another great advantage of this single database is that it provides excellent opportunities to easily set up customized reports showing both historical performance and expected ratios and plans for both the short and long term. Parallel to this development, the optimization algorithms have become much better. Today they can automatically and without manual intervention take into account capacity, material, promotions, physical limitations, sequencing, yield and much more. The optimization is done per order so that any sub-optimization is avoided.
Being able to handle large amounts of orders and to automatically reschedule them in an optimal way is often a prerequisite for an efficient production process. However it is often not sufficient. Therefore, Optilon is also working to improve adjacent processes such as reporting and with the development of priority rules and planning strategies.
Read more about our references in the manufacturing industry here.