Embed Size (px)
Citation preview
Adexa Planning Webinars
MEIO Series:
The Optimization
Engine
• Multi-Echelon Inventory Optimization considers the following when optimizing inventory targets
– Forecast error and Stock out costs
– Reducing Manufacturing and Distribution Lead Time
– Reducing Inventory Costs with Postponement
– Lowering Volatility with Inventory Pooling
Better Service with Less Inventory
•Same Service Level
•Lower Cost
RETAILER
RETAILER
RETAILER
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
Total L/T 75 Days
% Service Level
$ Stock out
% Service Level
$ Stock out
% Service Level
$ Stock out
What the MEIO Optimizer Considers
Component Assembly DC Hubs
2 Days
RETAILER
RETAILER
RETAILER
Safety Stock levels will increase with lead-time
56 Days 17 Days 2 Days = 75 Days+ +
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
Shorten Lead-times to Reduce Inventory
Fabrication Assembly DC Customers
2 Days
RETAILER
RETAILER
RETAILER
Safety Stock levels will increase with lead-time
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
Shorten Lead-times to Reduce Inventory
Fabrication Assembly DC Customers
It is critical to set expectations on lead-time
for order when postponing and pooling
Buffer With Less Expensive Inventory
RETAILER
RETAILER
RETAILER
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
$30 $45 $70 $90
Fabrication Assembly DC Customers
Calculate the variation in demand using the BOM and sourcing
RETAILER
RETAILER
RETAILER
Less variation at common storage
CM2
PC Inc.
ComputekHD Supplier
Electronics
Inc.
Supplier
Canada
USA
Japan
Inventory Pooling Gains the Advantage of Large Number Averages
Fabrication Assembly DC Hubs
RETAILER
RETAILER
RETAILER
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
Total L/T 75 Days
% Service Level
$ Stock out
% Service Level
$ Stock out
% Service Level
$ Stock out
Balancing All the MEIO Factors
Component Assembly DC Hubs
RETAILER
RETAILER
RETAILER
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
Total L/T 75 Days
% Service Level
$ Stock out
% Service Level
$ Stock out
% Service Level
$ Stock out
Balancing All the MEIO Factors
Component Assembly DC Hubs
RETAILER
RETAILER
RETAILER
CM2
PC Inc.
Computek
HD Supplier
Electronics Inc.
Supplier
Canada
USA
Japan
Total L/T 75 Days
% Service Level
$ Stock out
% Service Level
$ Stock out
% Service Level
$ Stock out
Balancing All the MEIO Factors
Component Assembly DC Hubs
For More Information
Visit: www.adexa.com
Supply Chain
Planning Blog:http://web.adexa.com/adexa-blog/
For Questions:http://adexa.com/contact/contact.asp
Bill Green at: [email protected]
U.S. © 2010 Adexa, Inc. All rights reserved.
