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Operations Research in Govt & Commercial Sectors
SCSR Presentation
25 July 2013
Agenda
Brief Intro to IDSC Public & Private Sector Track Record Potential Areas of Collaboration Discussion
IDSC Pte Ltd
An Introduction
Operations Research Core Competency
Definition Discipline of applying advanced analytical methods to
rich data to help make better decisions Distinctive Nature
Goes beyond informing to advising • Can find the best among many choices, in reasonable time • Can consider & balance multiple objectives • Can help measure, control & reduce risk
Scientific & verifiable
IDSC Partial Client List
Areas of Consultancy Logistics
Supply chain design, maint optimisation Fleet routing, warehouse optimisation
Manpower Modeling & designing MP policies &
organisational structures Optimising ROAs & posting plans Rostering & ranking software
Others Telecommunications policy (TAS) SPF BPR - Logs, Traffic & Licensing Corporate modeling & technical audit
Public Sector Operations Research
Singapore Ammunition Logistics
Singapore is a tiny country of 710 sq km
Where ammunition is stored, people cannot live or work nearby
Quite a large military for its size – how to store the ammunition?
Procurement & Turnover Planning
Time (year) 3 6 9
3
6
9
12 15
12
18
21
15
24
27
30
33
36
39
0 18
Life-cycle perspective of buying & turning over perishable items
Containerised Load Planning With Routing & Storage Considerations
Lot Synchronisation
If every pallet can be put away such that they can be retrieved without any blockage, why do we need racks?
Entrance
Main Aisle
Narrow Aisle
Narrow Aisle Narrow Aisle
Narrow Aisle
7 7 7 7
2 2
2 3
1 2
6 6 6
4 3
3 3
2 2
1 1
4
1 2 3 4 5 6 7
1 1 1
3 4 5
5 6 7
7
1 2 3 4 5 6 7
5 5 5 5 2 1
7 5 3 1
7 4 2 1
6 3 2 1
5 3 1 1
7 6 6 5
7 6 5 4
7 6 5 4
7 6 5 4
2 2 2
4 6 6
Floor Planner (Palletized Warehouse)
Dynamic Cross Docking
Total Safety Stock (Approx) De-centralised ≈ σ n √ (L + 1 ) Centralised ≈ σ √ n (L + 1 ) Cross Dock ≈ σ n √ (L1/n + L2 + 1 )
n identical warehouses, each with demand std dev σ, L is lead time
L1 L2
Crossdock
L Factory Factory Warehouses
Dynamic Cross Docking & Ports Why should ports only seek to process containers as
quickly as possible? What if one can dynamically cross-dock once customs is
cleared? Warehouse-on-wheels ??
Ports with cross docks
Cross docks in hinterland
Wholesale or Retail Pts
Cross docks in hinterland
Knowledge Content Distribution Hub Svcs Proven Supply Chain & Life Cycle Mgt Technologies
Implicit Mental Models
Explicit Formal Models
Organizational Learning
Commerce & Industry
Library
NLB Collection Planning POC Model
Model
Initial Collection
Loan-to-Collection
Ratios
Tiers
Books per Tier
Books to Buy
Projected Loans
Planned Budget
Planned Tiers
Planned Final
Collection
Planned Weeding
Book Cost
Constraints: Total Budget
Space Constraint Min/Max Size of Each
Category Limits on Change
Objective: Maximize loans!
Stock Mix Optimization Product Mix Optimization
For given budget & space allocated to each category in each store Determine product mix in
terms of new & existing products & their inventory which will maximize sales
Space constraint caters for step-wise increases in frontage of each product within the knapsack shelves
Shelf Frontage
A B C
Existing Products New Products
Library Selection
Top 1000
HRFIS & LCM
Auto pre- selection
Electronic recommendations
Selector’s choice
Demand Analysis
Gifts & donations
Unsolicited donations
Other suppliers
Traditional paper catalogues
Database Of Candidate
Titles
Residual Budget & Likely LCC
Estimated Demand & Lead Times
OCLC Connexion Holdings in Partner Libraries Rareness Out of Print Likelihood
POD Availability
Selected Titles
Acquisition Sys
VISTA Availability & performance in NLB’s Collection
NLB Portal
Patrons & Br recommendations
Reference Websites
Suppliers including Global Sourcing panelists
Feedback & Decision Support
Br Mgrs
Selectors
Integrated HRM (i-HRM) Suite Strategic Planning
Demand Forecasting Steady State MP Planning Transition MP Planning
Tactical Planning Vocational Career Planning
Operational Planning Succession Planning Posting Planning Ranking & Performance Mgt
Employee Post
Pool of new employees
Vaca
nt P
osts
Can
did
ates
’ Po
sts
Managers
Dir
Senior Executives
Executives
Attrition Flow
Recruitment Flow
PromotionFlow
SustainableEstablishment
20
200
80
300
Steady State MP Planning
Managers
Dir
Senior Executives
Executives
Attrition Flow
Recruitment Flow
Promotion Flow
Sustainable Establishment
20
200
80
300
An Equilibrium System Inflows = Outflows
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Gr 1 CEPGr 2 CEPGr 3 CEPGr 4 CEP
Grade 1
Grade 2
EntryGrade 4
Grade 3
Years of Svc
Organisational Grade Progression
Screen Shots of SSMP FLOW DIAGRAM
Transitional Analysis Transitional Analysis AttainabilityAttainability
CurrentCurrentProfileProfile
Year 10Year 10
Year 8Year 8
Year 4Year 4
Year 1Year 1
TargetTargetProfileProfileKey Annual IndicatorsKey Annual Indicators
* LOS Distribution* LOS Distribution* CEP Distribution* CEP Distribution* Career Progression Diagram* Career Progression Diagram
Transitional Planning
DESO 3/4
DESO 2
DESO 1
SS
400
300
50
150
EstablishmentsEstablishmentsfor DTG Engineersfor DTG Engineers
AttritionAttritionFlowsFlows
PromotionPromotionFlowsFlows
Estabs for sayEstabs for sayElectronics EngineersElectronics Engineers Recruitment FlowsRecruitment Flows
Vocational/Career Planning
Succession & Posting Planning
Employee Post
Pool of new employees
Vaca
nt P
osts
C
andi
date
s’ Po
sts
Determines posting chains which maximises person-to-job fit within the whole organisation – postings does not create new vacancies to be filled the next time
Considers succession plans, career development plans & personal preferences
Handles both incumbents & new employees
Screen Shots of Posting Planning
Changi Airport Pre-Board Screening
Passenger Arrival @ Gate
28
No Delay
Minor Delay
Serious Delay
OR in Healthcare
Surgical Operating Theatres
Loss of capacity found to be mostly due to poor forecasts
Why do hospitals rely on surgeons’ duration estimates when it is clear that they don’t really know how long they take?
Predictors like disease code, education, occupation, doctor rank & new/repeat visit were identified – dramatic improve-ment of appointment system is possible
Appointment Optimisation System Based on Yield Management
Sessions are dynamically optimised as date approaches Optimal overbooking based on profile of patients booked for given
session & historical patterns & trends to maximise probability of a full session finished on time
Optimal allocation of time inventory to urgency classes based on anticipated future bookings before session date to maximise chance of patients getting appointments within their urgency horizons
Appointments are booked with Accurate prediction of consultation/surgery duration with
uncertainty in duration considered in appt schedule Systematic urgency assessment of self-referral cases Optimal allocation of doctor where appropriate
Raising Productivity
Each company wants to know how competitors perform but are reluctant to share “sensitive” info about itself Secure benchmarking can overcome such a
problem preventing industries from knowing key performance data crucial to raising productivity of individual companies & industries over time
Secure Benchmarking Client Excel-spreadsheet
Server Application
Data Encryption
Data Validation
summary & a few samples
Client Data Regression
Global Regression
Analysis Reports
Further Investigation
raw transportation data
Statistical Analysis
Backend Aggregation & Analysis
Aggregation can be across companies, across lanes (corridor or region), or across time
Consolidated Summary 8083.62, 904.95, 293.44, 78670.62, 8142.881, 2738.37, 918.36, 297.23, 100
Aggregated Regression Equation Returned to Clients
Trucking Cost =
-0.1836 + 0.9371 Weight (tons) + 0.01215 Distance (km)
Example of comparisons for client A Y = - 0.187 + 0.938 Weight + 0.0123 Distance Weight rate is higher but distance rate is lower than “global” norm
Solution to get Asian businesses to truthfully benchmark their performance & costs?
Private Sector Logistics / Supply Chain
Distribution enterprise
Distribution enterprise
Distribution enterprise
Supplier
Supplier
Inventory
Transportation
Manufacturing enterprise
Manufacturing enterprise
Manufacturing enterprise
Retail enterprise
Retail enterprise
Retail enterprise
Customer Customer Customer Customer Customer Customer Customer Customer Customer
Response time? Service level?
Mode?
Where? How much?
How big?
Source from?
What price?
What to make?
Strategic Supply Chain Design
URUMQI M
TIANJIN M TIANJIN E SHENYANG M
QINDAO M ZHENGZHOU M XI’AN M
CHENGDU M WUHAN M TIACANG M
NINGBO E
DONGGUAN M
HONG KONG M
DALIAN M
CHANGCHUN M
WUHAN E
GUANGZHOU E
CHENGDU E
SHANGHAI E
Exxon-Mobil (As-Is)
URUMQI
TIANJIN SHENYANG
QINDAO ZHENGZHOU XI’AN
CHENGDU WUHAN TIACANG AND/OR NINGBO SHANGHAI
DONGGUAN
HONG KONG
Exxon-Mobil (Optimised)
Key Benefits of Mobil Study Models enable Mobil to 1. Bring products at best cost, response time &
service level to the regions in China 2. Assess impact of duties, production capacity/cost,
use of grey channel & various pricing policies 3. Design better matched sales & logistics territories 4. Strategise how to roll out RDCs & to organise
mfg, mktg & logistics to stay ahead of competition
Supply Chain Simulation
Warehouse Simulation
Industrial Real Estate
Traditional Business Model
Selling/leasing space to individual tenants & leaving them to manage each space themselves Static spaces not able to
deal with seasonalities Overlapping transporta-
tion needs ignored
Properties marketed individually & not as a valuable network in the context of tenants’ supply chains
45
Collaboration Amongst Tenants Why do tenants in all
warehouses currently all handle their logistics independent of each other?
Why not share common spaces & transportation services?
Need the following: Trust regime to ensure
that competing tenants know their business info is protected
Equitable scheme to share costs & savings
Proper framework to understand & manage collaboration
46
Fleet Routing & Scheduling
Bank ATM Inventory Routing Minimization of Total Cost
DC
Customer #1
Customer #2
Customer #3
Supplier decides when to order, how much
Optimized Inventory & Transportation!
l demand rate l storage capacity l product value
Demand forecasting Stowage capacity Network topology Traffic & routes
Service Logistics Optimisation
0 50 100 150 200Inventory Investment
0.5
0.6
0.7
0.8
0.9
1
1.1
Syst
ems
Avai
labi
lity
OptimalCurrent
Enable manufacturers to gain control of supply chain by helping downstream players – distributors, wholesalers, retailers – optimize their stock mix
Moves relationship with these players from “customer” to “partner” by helping them achieve higher sales yield per space given to the brand
Will lead to these players giving more space & holding more inventory for the brand while achieving a higher performance supply chain overall
“Optimal Stock Mix” Strategy
Demand Sensing Demand sensing & visibility
used to be difficult as distributors, wholesalers & retailers do not have any incentive to share their sales & stock data
Forecast Error as Multiple of Actual
“Optimal Stock Mix” persuades the players in the supply chain to collaborate with the manufacturer or brand owner enabling accurate demand sensing in the whole supply chain
“Optimal Stock Mix” Benefits Expectations of 5-20% savings compared with manual
forecasting & stock management With timely end-customer demand updates &
forecasting, supply chain turbulence & costs are reduced Sales teams become more organized to systematically
Collect market intelligence Build solid partnerships with distributors, wholesalers & retailers Develop more effective marketing campaigns Provide better guidance on how they should market & merchandise products in the
light of own & rivals’ campaigns
Leaner & higher performance supply chain
Collaboration Opportunities?
Partnership for Innovation
7/11/2013 54
Strategy (What do we do?)
Tactical Planning
(How do we do it?)
Operational Planning (Do it!)
Evaluation (How did we do?)
Integrated Decision Systems Strategy to Operations
To help clients: a. harness the power of information & decision technologies b. distill corporate wisdom into explicit models in order to: i. promote better communications ii. make decisions coherently & consistently iii. learn & build knowledge capital over time so as to gain & maintain the competitive edge
IDSC’s Mission
Collaboration
Relationships are important but may not lead to best results as humans are complex & cannot handle complex systems well without technological assistance IDSC seeks to work with partners to use OR
to help Japanese govt & companies do better
IDSC’s Branding Proven capability to develop unique solutions to
address challenges of scarce resources – same HR & space issues as experienced in major cities such as in Japan – innovation which can provide sustainable advantage
Experience in harnessing technology to lead in fostering public sector excellence – know-how to help organisations shift paradigms to institute progressive mind-sets (relationships + systems)
IDSC’s Business Strategy/Model
Training
Products & Internet Svcs
Report
Consultancy
Trg leads to product sales
Trg opens doors & develops long-term relationships
Synergy
Implementation involves trg to make changes permanent & successful
Consultancy to create unique customised solutions to provide competitive edge to industry leaders
Consultancy experience produces quality trainers
Generic products for non-core functions as well as industry-specific products
Summary of Possibilities Collaborate to help Japanese public sector raise
productivity – military, police, hospitals, libraries, HR, etc
Private sector opportunities Stock Mix Optimization Dynamic Cross Docking Secure Benchmarking – logistics, salary, productivity,
etc
Discussion
Comments? Questions? What’s next?