A new way to optimise your supply chain operations

Posted on 16 Dec 2020 by The Manufacturer

“We need to have more SKUs to realise more volume, all whilst achieving higher margin and lower costs. Oh and less inventory invested in working capital too.”

You are not alone if you’re experiencing any of these demands, all while managing customer expectations and dealing with increased competition. The way production and plant managers approach these challenges can make a big difference to the bottom line.

SupplyCycle is a new way of optimising your supply chain. It creates a digital copy of your factory operations to test millions of possible scenarios without disrupting your current production operations. It gives you robust, statistically sound insights that perfectly balance consumer demand, production and inventory – before implementation. The result? Reduced operating costs, reduced inventories and smoother operations, all whilst maintaining exceptional customer service levels.

SupplyCycle in action

A global drinks manufacturer wasn’t meeting service requirements on their most important products. In the warehouses, they were trying to stock over 230 SKUs and had too much of the items they didn’t need. The amount of change they were dealing with led to a 52 per cent plan production adherence across their five production lines.

They moved from a traditional reorder point planning, to fixed cycle scheduling where they could plan to make an item once a week, once every two weeks, once a month, etc. Traditionally, people would have tried to tackle this challenge with Excel spreadsheets and found themselves up against the limits of the tool. To successfully solve, you need to chunk this problem up into both linear and nonlinear optimisations. Today, the maths is there, the data science is there, you just need to take advantage of it.

supply chain

They’re now able to achieve galactic scale optimisation of 10 to the power of 52, which Deloitte’s data scientists love to say, is more stars than the galaxy. What they do is take the optimisation and test it by running over eight million simulations. Once you know what the parameters are that you’re working towards, you can test their validity and how reliable they are so you get confidence in the answers.

On average, across a factory they’re finding they’re able to realise a million euros in profit and loss benefits through smarter working and changeovers, less storage costs, as well as releasing additional capacity that could be used to sell more product. In addition, they’re achieving a €1.6 million working capital reduction, and reduced their inventories by 12 per cent, reduced changeover times by 21 per cent, all while working to higher levels of service.

Deloitte helps manufacturers to use very large scale analytics to look at customer demand, inventory, and production and get all of those things working in harmony to drive efficient supply chain operations.

In case you missed Deloitte’s Capacity Planning and Productivity session at Smart Factory Expo you can listen to the recording here.

While COVID-19 has caused major disruption, many businesses achieved a step-change in their use of new digital technologies born out of necessity. Digitisation has had an impact far wider than just production: many companies are now getting better at managing supply volatility and predicting customer demand. Contact Nick Davis, Deloitte UK’s Industry 4.0 Leader to discuss lessons learnt from manufacturers who have implemented a Smart Factory network.

If you’re looking for a new podcast that brings you insights from opinion leaders, business leaders, academics and researchers on key developments and their experiences across the manufacturing sector, subscribe to the Industry 4.0 Ready podcast series. This podcast explores the importance of digital transformation across the manufacturing sector – and its impact on how businesses design, make and service their products.

Image Courtesy Deposit Images