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MIT Center for Transportation & Logistics ctl.mit.edu
SupplyChainSystemsII:SupplyChainModules
MIT Center for Transportation & Logistics
EvolutionofSupplyChainTools
§ 1960-1970’s§ IBMdevelopedaBillofMaterialsProcessor(BOMP)§ Mainframebaseddatabasesystemsmainlytotrackmaterialsforlarge
manufacturers§ Closed-loop(shopfloormanagement)functionalityadded§ MRP(materialrequirementsplanning)isessentiallyatime-phasedorder
releasesystem
§ 1980’s§ MRP-II(manufacturingresourceplanning)introducedtointegrate
productionwithfinanceandmarketing§ FitinwithJust-In-Time(JIT)manufacturingmethodology§ Expandedtiestootherfunctions:S&OP,masterproductionplanning,
capacityplanning,etc.§ PrecursorofthelargerandmorecomprehensiveERPsystems
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MIT Center for Transportation & Logistics
EvolutionofSupplyChainTools§ 1990’s
§ MostMRP-IIfunctionsabsorbedintolargeERPsuites§ IntroductionofAdvancedPlanningSystems(APS)§ Introductionoffunctionspecificoptimizationbaseddecisionsupport
software(WMS,TMS,MES,InventoryOptimization,Procurement,etc.)§ WiderspreadadoptionofERPsystemstosmallandmid-sizedfirms
mainlyduetopotentialY2Kissues
§ 2000’s§ Introductionofweb-basedinterfaces§ Improvementsincommunication(XML,GPSpositioning)§ Wideradoptionofsharedorcloudbasedsolutions(SaaS)§ Consolidationofsupplychainsoftwarevendors§ Emergenceofsupplychainecosystemsorplatforms§ ExpansionofERPsystemstoincludeessentiallyallSCMfunctions
3
MIT Center for Transportation & Logistics
ExtendingtheEnterprise
§ Integratedsupplychainsspanmultiplecompanies§ SystemscanbepartoftheERPitself,astandaloneapplication,or
partoflargersupplychaineco-system.§ Wewillfocusonthefunctionalityinthislesson.
§ PlanningApplications§ ProductionPlanning(PP)andAdvancedPlanningSystems(APS)
§ ExecutionApplications§ WarehouseManagementSystems(WMS)§ TransportationManagementSystems(TMS)§ ManufacturingExecutionSystems(MES)
4
ERP
PLM
CRMSRM
SCM
ERP
PLM
CRMSRM
SCM
ERP
PLM
CRMSRM
SCM
MIT Center for Transportation & Logistics
Planningvs.Execution
5
MIT Center for Transportation & Logistics
Planning vs. Execution
ROAImpact
Fleet Routing/Scheduling
ShipmentConsolidation& Carrier Selection
TacticalTransportationModeling
SupplyChainStrategy/NetworkDesign
TransportationProcurement
Planning Tasks
Execution Tasks
Consists of a continuum of tasks, but . . .
. . . there is a gap!
MIT Center for Transportation & Logistics
Questions Differ Based on Timeframe
Strategic
Tactical
Operational
• WhatcarriersshouldIpartnerwithandhow?• HowshouldIflowmyproducts?• ShouldIusepoolpoints,cross-docks,ormulti-stoproutes?• WhereshouldIusededicatedorprivatefleets,ifanywhereatall?• Whichcarriersprovidedqualityserviceinthepast?
• HowcanIquicklysecureratesforanewDC/plant/lane?• Whatlanesarehavingperformanceproblems?• Whichcarriersarecomplyingtoorexceedingtheircontracts?• Aresitemanagerscomplyingtothestrategicplan?• WhereshouldIestablishaseasonalcontract?
• WhichcarriershouldItenderthisloadto?• HowcanIcollaborativelysourcethisweeks’loads?• HowdoIpreventMaverick/Roguebehavior?• ShouldIuseacontractcarrierorlookatthespotmarket?• HowcanIbestcommunicatewithmycarriers?
MIT Center for Transportation & Logistics
ApproachesDifferBasedonTimeframe
Analysis(Risk)
Management
SearchTime
Days
Weeks
Minutes
0% 100%
• Establishingplan&strategy• Eventbasedengagement• Non-routineanalysis- ValueFocus
Strategic
Tactical
Operational
• Executingthestrategicplan• Transactionbasedrules&processes• Automatedactions- ProcessFocus
MIT Center for Transportation & Logistics
Strategic
Tactical
Operational
TechnologiesDifferBasedonTimeframe
Analysis Engine•Optimization •Simulation•Data Analysis
Communication•Web-based •File Exchange•Remote Access
Workflow Software •Compliance Tracking •Rules Engine•Transaction Processing
X X
X XXX
MIT Center for Transportation & Logistics
AdvancedPlanningSystems
10
MIT Center for Transportation & Logistics
AdvancedPlanningSystems§ Calleddifferentnamesbydifferentvendors§ Mostcommonfunctionality:
§ Networkdesign,§ Demandplanning,§ Productionplanning,§ Productionscheduling,§ Distributionplanning,and,§ Transportationplanning.
§ Usedprimarilyasdecisionsupportsystem§ Typicallyutilizeslargescalemixedintegerlinearprograms(MILPs)andsometimessimulation
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MIT Center for Transportation & Logistics
AdvancedPlanningScale&Scope
§ PlanningHorizons(roughguidelines– eachfirmdiffers)
§ <3monthsout– MasterProductionSchedule(MRP,DRP)§ <4weeksout- FrozenMPS§ 5to8weeksout– SlushMPS– somechangesallowed(+- 10%)§ >8weeksout– WaterMPS– morechangesareallowed(+- 30%)
§ 3-18monthsout– AggregatedPlanning§ >18monthsout– LongRangePlanning– NetworkDesign,etc.
§ Longerrangemodelsusedin“whatif”analysis§ Oftencustomizedtospecificindustry
12
Now 3 Mon 18 Mon
FrozenSlush
WaterMPS Aggregate Planning Long
Range Planning
MIT Center for Transportation & Logistics
AdvancedPlanningSystem§ Inputs(fromERPorothersystems):
§ Currentcosts,manufacturingandstoragecapacities,consensusforecast,salesorders,productionstatus,purchaseorders,andinventorypolicyrecommendations,etc.
§ DecisionProcess:§ Largescaleoptimization(MILP)acrossmultiplefacilitiesandtime
horizonsinasingleplanningrun§ Generatesunconstrained,constrained,andoptimalplans
§ Outputs:§ Demandforecastandplanformeetingdemand§ Afeasibleproductionplanforfutureperiodstoincludeallocationof
productiontoplants§ Allocationoforderstosuppliers§ Identificationofbottlenecks§ RootCauseAnalysis
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MIT Center for Transportation & Logistics
TransportationManagementSystems(TMS)
14
MIT Center for Transportation & Logistics
TransportationManagementSystems(TMS)§ Definition:
§ TMSissoftwarethatfacilitates(1)procurementoftransportationservices,(2)short-termplanningandoptimizationoftransportationactivities,assets,andresources,and(3)executionoftransportationplans.(Gonzalez,A.2009)
§ Oftensegmentedorspecializedbygeography(domestic,international)and/ormode(ocean,air,rail,fulltruckload,less-thantruckload,parcel,privatefleetetc.)
§ CoreFunctionality(notallsystemshaveall)
15
§ Transportationprocurement§ Modeandcarrierselection§ Carriercommunication
(EDI/XML/Web)§ Routingguidegenerationand
maintenance
§ Fleetmanagement§ Audit,payment,andclaims§ Appointmentscheduling§ Yardmanagement§ Routeplanning(multi-stop,
continuousmove)
MIT Center for Transportation & Logistics
TMS– ConnectingProcurement&Execution
16
Routing Guide
Strategic Bid
SpotMarket
?
Reverse Auctions
Optimization based bidding added to every TMS solution by early 2000’s
There were over 50 Internet Truckload Exchanges in 2000
CAR R I ERS
Electronic Catalog
Public/Private Exchange
MIT Center for Transportation & Logistics
Transportation Execution§ ConnectstoOrderManagementSystems(OMS),Payment
Systems,andtheERP§ Servesastheinterfacetothecarriers§ Objective:
§ Moveproductsfrominitialorigintofinaldestinationinmostcosteffectivemannerwhilemeetinglevelofservicestandards
§ Executestheplanusingtheprocuredcarriersbasedonreal-timeinformation
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PLAN:CreateShipmentsfromOrdersEXECUTE:SelectandtendertoCarriersMONITOR:VisibilityofthestatusofShipmentsRECONCILE:AuditinvoicesandpayforTransportation
PLAN RECONCILEMONITOREXECUTE CompletedShipments
AcceptedShipmentsShipmentsOrders
MIT Center for Transportation & Logistics
Execution Considerations § Considerations
§ Howdoordersdrop?Batchedvs Continuous?§ Howmuchtimeisallowedbetweendropandmust-ship?Weeks?Days?Hours?Minutes?
§ Whatpercentageoforderschangeafterrelease?§ Howdotheychange?Quantity?Mix?Destinations?Timing?§ Whatisthelengthofhaul?§ Howmanyordersare“inplay” atanytime?
§ KeyDecisions§ LoadBuilding(Consolidation&Routing)§ CarrierSelection
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MIT Center for Transportation & Logistics
Kansas
P
St.. Paul
15,000 lbs
D
D
D
D
D
Atlanta18,000 lbs
D
2,000 lbs
2,000 lbs
2,000 lbs
2,000 lbs
Pool8,000 lbs
Load Building
19
1. DirectLTLfromKCto6destinations2. Multi-stopTLfromKCtoalllocations3. MSTLfromKCtoSt.PaultoPoolPoint(dropoff4localLTLshipments)continue
toAtlanta
MIT Center for Transportation & Logistics
TMSCarrierCommunication&Selection
20
MIT Center for Transportation & Logistics
PrimaryEDITransactionSets
21
204– MotorCarrierLoadTendern Usedbyshipperstotenderanofferforashipmenttoafulltruckloadmotorcarrier.Itmaybeusedfor
creating,updatingorreplacing,orcancelingashipment.n Maycontaininfoon:Carrieridentification,Scheduling,Equipmentrequirements,Ship-tolocation,Contact
atdestination,Descriptionofgoods,andShippinginstructions990- ResponsetoaLoadTender
n Usedbymotorcarrierstoindicatewhetheritwillpickupashipmentofferedbytheshippern Five potentialresponses(Accepted,Declined,Acceptedwithconditions,Spotbidrequestaccepted(w/bid
amount),Spotbidrequestdeclined214- TransportationCarrierShipmentStatusMessage
n Usedbycarrierstoprovideshippersandconsigneeswiththestatusoftheirshipments.n Maycontaininfoon:Origin,Currentlocation,Datesandtimesforpickupand/orestimateddelivery,Proof
ofdelivery,Shipmentstatusdetailstoincludereasonsforexceptions,andShipmentdescription.
Shipper CarrierEDI204
Tender
Accept?EDI990- Decline
Response No
YesEDI990- Accept
Response
EDI214- StatusEDI214- Status
EDI214- StatusEDI214- Status
Status Enroute
MIT Center for Transportation & Logistics
Types of Capacity
Primary - Contracted CarrierDedicated FleetContinuous MoveSpot Carrier
PrimaryCarrier A
Carrier BCarrier B
Carrier BCarrier B
Dedicated
Carrier CContinuous Move
Carrier D
Spot
Carrier E
Spot
Carrier A
Spot
Carrier Selection
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MIT Center for Transportation & Logistics
Load 1
Primary
Dedicated
Spot
Continuous Move
CapacityRequirement
Load 2
Load 3
Load n
.
.
.
($,#,Timing,Service)
Carrier Selection
23
MIT Center for Transportation & Logistics
CarrierSelectionwithAutomatedEscalation
24AdaptedfromMaziarz,M,(2002)logistics.com.
Carrier
Accept?
OrderManagement
System
Load
NotLT>tMIN ?
SelectAppropriate:(1)CarrierGroup&
(2)ClearingMechanism
No
Yes
CarrierCarrierCarrier
Offer
Response(s)OK?
Yes
Done
SelectCarrierfromRoutingGuide
Tender
Tender
Yes
No
TransportationManagementSystem
MIT Center for Transportation & Logistics
Num
ber o
f Car
riers
Range of Pricing
Primary
Step 1
LaneBackup
Step 2 Step 4
AllRelevantCompanyCarriers
(DynamicPrices)
AllRelevantCompanyCarriers(QuotedRates)
Step 3 StepsStep 5
PublicMarket
AutomatedEscalationProcess
25
MIT Center for Transportation & Logistics
Approaches Must Be Linked
26
Contract Dynamic
Static
Dynamic
How
do
I sel
ect
each
car
rier?
How do I price each load?
IIII
IIIV
Strategic Lane Assmt
Strategic Lane Assmt
w/ Tier Pricing
Dynamic Pricing in Private Exchange
Flexible Assmt Dynamic Carrier
Selection
Tier IUses strategic routing guide
Tier IIISpot execution –highly variableTier II
Increased flexibility in execution
MIT Center for Transportation & Logistics
WarehouseManagementSystems&Automation
27
MIT Center for Transportation & Logistics
WarehouseManagementSystems(WMS)§ Definition:
§ WMSisasoftwaresystemthatfacilitatesallaspectsofoperationswithinawarehouseordistributioncenterandintegrateswithothersystems.
§ Notthesameasinventorymanagementsystemsthatdeterminestockinglevelsandreplenishmentpolicies– theycomplement.
§ BenefitsofaWMS:
28
§ real-timestockvisibilityandtraceability,
§ improvedlaborproductivity,§ reductioninmis-picks,§ reductioninreturns,
• Closelyconnectedtoautomationintermsofmaterialhandlingandpaperlessdeviceinterfaces(identificationandcommunication)
§ moreaccuratereporting,§ improvedresponsiveness,§ greaterdatavisibility,§ improvedcustomerservice,and§ minimizedpaperwork.
MIT Center for Transportation & Logistics
WarehouseAutomation§ Automaticidentificationtechnologies
§ Barcodesandbarcodescanners§ Radiofrequencytags(RFID)andantennae§ Smartcardsandmagneticstripes§ Visionsystems
§ Automaticcommunicationtechnologies§ Radiofrequencydatacommunications§ Synthesizedvoice§ Virtualdisplays§ Picktolight/voicesystems
§ Automatedmaterialhandlingtechnologies§ Carousels§ Conveyors/robotics§ Flowracks§ AS/RS– Automatedstorage&retrievalsystems
29allimagesinpublicdomain– sourcedWikipedia
MIT Center for Transportation & Logistics
WarehousingOptions
SystemThroughput
Costto
Com
pany
PublicWarehousing
LeasedWarehousing
PrivateWarehousingManualHandlingSystems
PrivateWarehousingAutomatedHandlingSystems
MIT Center for Transportation & Logistics
WMSSoftwareComponents§ OrderProcessing
§ Orderchecking&batching§ Allocation§ Auto-replenishment
§ Receiving§ ASNplanning§ Inboundtracking§ Deliveryappointmentscheduling§ POverification§ Returnsprocessing
§ Put-Away§ Palletizing§ Zoningandslotting§ Random/directedputaway§ Routingforputaway &
replenishment31
§ Picking§ Batch/Wave/Zone/Directedpicking§ Carton/palletselect§ Assembly/kitting§ Pick-to-light/voice
§ Shipping§ Palletsequencing&Loadplanning§ Palletlayering§ Trailermanagement
§ LaborManagement§ Individual/teamperformancemgmt§ Laborscheduling§ Timestandards
§ EquipmentSupport§ Interfacetoautomatedequipment§ Equipmentmaintenance
MIT Center for Transportation & Logistics
ManufacturingExecutionSystems
32
MIT Center for Transportation & Logistics
ManufacturingExecutionSystem(MES)§ Definition:
§ MESisasoftwaresystemthatmanagesandmonitorsallwork-in-process(WIP)intheproductionprocess.
§ ThisincludesintegratingwithanERPtomanagetheexecutionofreleaseofproductionorderstofinishedgoodsdelivery,triggersupplychainreplenishments,andenhanceproducttraceabilitythroughmanufacturing.
§ FunctionalitywithinanMES:
33
§ Machinescheduling,§ Processmanagement,§ Documentcontrol,§ Labormanagement,§ Inventorymanagement,
• Moreofaninternalfacingsystem– notusuallyconnectedtothelargersupplychainnetwork.
§ Product(WIP)tracking,§ Performanceanalysis,§ Labormanagement,§ Qualitymanagement,§ Productionreporting.
MIT Center for Transportation & Logistics
KeyPoints
34
MIT Center for Transportation & Logistics
SCMApplicationsExtendtheEnterprise
§ AdvancedPlanningSystems(APS)§ Longrange,optimization-baseddecisionsupporttools
§ ExecutionSystems§ TransportationManagementSystems(TMS)§ WarehouseManagementSystems(WMS)§ ManufacturingExecutionSystems(MES)
35
ERP
PLM
CRMSRM
SCM
ERP
PLM
CRMSRM
SCM
ERP
PLM
CRMSRM
SCM
MIT Center for Transportation & Logistics
Planningvs.Execution:Approaches
Analysis(Risk)
Management
SearchTime
Days
Weeks
Minutes
0% 100%
• Establishingplan&strategy• Eventbasedengagement• Non-routineanalysis- ValueFocus
Strategic
Tactical
Operational
• Executingthestrategicplan• Transactionbasedrules&processes• Automatedactions- ProcessFocus
MIT Center for Transportation & Logistics
Strategic
Tactical
Operational
Planningvs.Execution:Technology
Analysis Engine•Optimization •Simulation•Data Analysis
Communication•Web-based •File Exchange•Remote Access
Workflow Software •Compliance Tracking •Rules Engine•Transaction Processing
X X
X XXX
MIT Center for Transportation & Logistics 38
TopSupplyChainPlanningVendors
Source:Trebilcock,B.(2016)LogisticsManagement,http://www.logisticsmgmt.com/article/top_20_software_suppliers
MIT Center for Transportation & Logistics
ctl.mit.eduMIT Center for Transportation & Logistics
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“Jasper– justexcitedtobeinthecar”photocourtesyJenniferSexton