SUPPLY CHAIN MANAGEMENT: 101

OptimisationDamian Milicich GM Ocean Freight

16/04/2013

Introduction

• Definition• Data and Product• What is important?• batch vs sequence vs prioritisation exercise• Housekeeping – casual, interactive, questions,

acronyms

Definition: Optimisation

A series of conscious comprises resulting in the overall best solution for the total demand.

The Kotahi Problem!

• Forecast accuracy• Supply and demand imbalance• Demand visibility = Surprises• When and where to start• Cost dissatisfaction• Quality dissatisfaction• Frustration• Inconsistent results

The Kotahi Solution

“If you define the problem correctly, you almost have the solution”

Steve Jobs

Boring stuff

• Data – Data – Data

• What• When• Where• How Much• Product – allocation

etc.

What matters to the customer?

What matters to Kotahi?

What is hard to solve?

What is easy to solve?

What is mandatory?

Visibility

Exercise: Line up in a row

Exercise: Line up in a row by tallest to shortest

Exercise: Line up in a row by tallest to shortest – one by one

Exercise: Line up in a row, tallest to shortest, facing alternative ways – one by one

Exercise: Line up in a row, tallest to shortest, facing alternative ways

Exercise: Line up in a row, tallest to shortest, facing alternative ways – one by one

BATCH

SEQUENCE

PRIORITISATION

Start Point!

Data and Product

Importance

Visibility

Weighted Scorecard

GEEK TREAT:

TOTALTEU]*(IF([BESTCOST]>10,SQRT([BESTCOST]),10000)+([AVGDIFFCOST]*[AVGDIFFCOST]/IF([STDDEVCOST]<1,1,[STDDEVCOST])))/IF([POSSIBLEOCEANSCHEDULES]<1,0.1,IF([POSSIBLEOCEANSCHEDULES]>12,12,[POSSIBLEOCEANSCHEDULES]))

Where do we start and how do we then satisfy demand with supply?

SIZE OF BOOKING

COST

NUMBER OF SCHEDULES

Highest Score

Lowest Score

ASSIGNMENT

Product and Cost:MAEU / NZTRG-SGSIN / eta 08/05/2013 – USD2000 per 40 DRYMOLU / NZTRG-SGSIN / eta 03/05/2013 – USD1800 per 40 DRYMSCU / NZTRG-SGSIN / eta 10/05/2013 – USD1500 per 40 DRY

CRAWFORD STREET to NZTRG / RAIL / USD300 per 40 DRY

What: 2 x 40 DRY of Whole Milk PowderWhen: eta 01/05/2013 to 11/05/2013Where: Crawford Street to Singapore

Conclusion

Optimisation is a word often used that is not scary – actually it is pretty simple and logical!• We have agreed on a definition• We have taken care of our data and product• We know what is important• We have the necessary visibility – batch vs

sequence vs prioritisation• We have a start point

Conclusion

Kotahi success = order satisfaction, happy customer, repeat business and word of mouth= profits, satisfaction, growth and opportunity

THANK YOU