Maintain Your Competitive Advantage!
In an already crowded and dynamic global market, it is harder for business to maintain its competitive edge and to continue to meet the demanding and sophisticated needs of its customers.
Many companies, big and small, have turned to Operations Research/Management Science (OR/MS) solutions and tools to raise their profit margin and competitiveness. These decision support solutions have enabled them to make quicker, better and coherent decisions at both strategic and operational levels. Companies that had wisely invested on such solutions achieved significant reduction in operating costs, improved service quality and higher customer retention. All these translate to higher productivity and bigger returns on the company’s assets.
Integrated Logistics Management
The core enabling technology (besides IT) to bring about integrated logistics is operations research (OR). OR is the application of mathematical methods such as linear programming, game theory, statistical analysis and simulation to solve real world (complex) management problems. It always take a total systems and total cost perspective of the management problem so that the solution does not inadvertently create problems in other areas or that savings in one area does not worsen the overall company’s performance.
Decision Support Systems (DSSs) are applications embodied with OR technologies to solve specialised problems. These systems have, time and again, proven to produced significantly better solutions to structured problems and in a much shorter time than those produced by the most experienced planner. Coupled with IT applications, it provide a powerful system to tackle and integrate the many aspects of logistics planning.
Supply Chain Management
Supply chain management is about suppliers, manufacturers, third party logistics providers, wholesalers and retailers sharing information so that goods move faster through the system. However, what is usually lacking is an overall global or regional strategic plan that integrates the activities of the many players. A strategic plan that ensure that the overall cost of delivering goods to customers is the lowest possible while maintaining the desired service level.
Different OR techniques (such as optimisation and simulation technologies) lend themselves readily for addressing issues like: the appropriate product specialisation and production capacity of the plants; location and size of distribution centres; assignment of customers to be serviced by distribution centres; mode of transportation for every link in the supply chain; optimal inventory level to meet desired service level. The end result is a globally optimised supply chains that perform robustly under foreseeable future scenarios, thus avoiding costly infrastructure changes.
While supply chain design deals with the flow and stocking of goods, transportation optimisation examines the shipment (flow) process itself. The typical transportation optimiser will search for opportunities to aggregate compatible orders or splitting orders to fit the transportation media (e.g. containers), identify pooling points to consolidate orders for long haul using larger & hence cheaper media and routing of pick-up and drop-off orders to increase backhaul. The judicious use of OR to optimise shipment plan has been generating large savings in transportation. 10-35% reduction in freight expenses had been achieved through optimal aggregation/ consolidation, multi-modal multi-leg carrier selection, rating and routing of freight orders.
Tactical Storage and Warehouse
Warehouses are long term investment and must be designed to grow with the business. Dedicated simulation software is able to model the impact of equipment selection, layout and work processes to derive the optimal design for the warehouse facilities. Other OR tools can also generate the optimal storage arrangement for efficient retrieval and turnover of stocks. By studying the range of business and cost scenarios over the planning horizon, the logistics planner would be able to ensure that the warehouse is optimally designed for its anticipated range of business scenarios.
Packing & Stuffing
Typical system that generates pick list for each vehicle do not necessary know if all items could fit into the vehicle. The discreteness of items will inevitably result in some space that cannot be used. Hence, knowing how items should be packed or stuffed so that capacity is well used is another important cost saver. The load planning software can be integrated with the routing software to generate an optimal stuffing plan that considers compatibility, stackability and unloading sequence. Planners are thus assured that the routes and loading plans would both work.
Operational Fleet Routing & Loading
The routes derived in transportation optimisation are mainly long-haul. For short haul deliveries, there are ready solutions, that are tightly integrated to warehouse management systems, to efficiently route fleets of vehicles and vessels and plan picking and loading. Stipulated time windows for pick-ups and deliveries and vehicular weight and spatial capacities would be respected, as will constraints such as delivery within x minutes upon pickup (useful for perishable goods). Time required at various stops - in terms of fixed time to park and variable time dependent on amount to be loaded or off-loaded - can be specified. Travel speeds along various types/zones of roads can be stipulated for both peak and non-peak hours or piped in either from GPS systems mounted on the vehicles or real-time traffic information services. The scheduled arrival and departure times for each stop can thus be worked out quite accurately. Routes can be generated dynamically and ad hoc backhaul or other opportunities can also be assigned to the most suitable vehicle. Managers can view over the web the progress of deliveries. The benefits of operational fleet routing include 5-25% reduction in fleet operating cost and improved customer service with better estimated arrival time.
Vendor Managed Inventory
Vendor managed inventory, coordinated by an integrated logistics system, allows inventory to be optimised together with transportation. By knowing the product value as well as storage capacity at each site, and routinely collecting information on consumption rate, current inventory levels, forecasted demand and status of shipments, the system can optimise the right quantities of replenishments to be sent at the right time to ensure that service levels are maintained while minimising cost of inventory and transportation.