Posts by Iman Niroomand

Forecasting and demand management for new events using machine-learning algorithm

ImanNiroomand

Football - demand planning and forecastingWhat does a machine-learning (ML) algorithm have to do with the Super Bowl?

When it comes to forecasting and demand management, a lot.

Consider this: According to the National Retail Federation, approximately 189 million people watched Super Bowl LI, and viewers spent an average of $82.19 on electronics, apparel and food specifically for the game, up from $77.88 compared to the previous year.

For events like the Super Bowl, retail demand planners create forecasts using data from a variety of sources to adjust product demand profiles in anticipation of which product, or group of products might be in demand the most.

This is a daunting task when one considers the variety of products available to football fans – from cheeseheads to cheezies and everything in between. In the past, only about one brand in 50 was able to precisely adjust their football-frenzy driven supply chain to meet demand during the short two-week window between the conference championship games and the Super Bowl.

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The importance of reverse logistics in your supply chain network

ImanNiroomand

Reverse logisticsReverse logistics is defined as the process of moving goods beyond their typical final destination for things like re-use, capturing value, or proper disposal.

In supply chain networks, materials flow from suppliers through to end customers. Supply chain executives measure the effectiveness of that flow using the on-time delivery (OTD) metric. It’s a common supply chain measurement, focused on ensuring delivery to the end customer is fast and efficient from the time the customer puts his or her order in place. However, the mission of your supply chain doesn’t necessarily end when the product reaches the end customer. There are many reasons customers return products, including:

  • The customer bought the wrong product
  • The product was damaged upon arrival
  • The product did not match its description
  • The customer no longer wants the product

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Supply and demand production challenges with new products

ImanNiroomand

Supply and demand productionSupply chain performance depends on the matching of product features with supply chain features. When a new product hits the market, the existing supply chain that is optimal for a given set of product lines will not stay optimal. Thus, a new product introduction will require a supply chain logistic network redesign.

A new product introduction leads to a potential risk of reduced service performance due to ‘discontinuity’. In supply chain, a discontinuity is the introduction of a change in the product range of a firm, such as a new product or a new product line. This reduction could be measured against difficulties in reaching service level targets and master production schedule accuracy. The master production schedule suffers from very intense and short term production schedule variations and purchased materials unavailability.

So when a new product is introduced, how can supply chains re-align supply and demand?

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Essence of optimization in supply chain and logistics

ImanNiroomand

optimization in supply chainSupply chain processes and transactions have been captured and automated by IT solutions. The process automation will help the supply chain planners and practitioners to do and track the operation tasks easily.  While these innovations would reduce the planners daily job hassle significantly but not necessary would help planners to get the most efficient and optimal solutions.

The planner requires a way to translate operational requirements and constraints into something that computer can understand and use to produce not just a solution but an effective solution. Let’s call this requirement, an operational model.  For example, the shipment of products into loads of a truck is an example of loading model. A very simple model uses product’s weight and volume as a loading requirement and produces an efficient load profile for shipment. One might ask, why this efficiency is matter and how we could gain this efficiency.

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Crossdocking a Way to Marry Your Supplier with Your Customer

ImanNiroomand

The major concern of big organizations in implementing an efficient supply chain network is improving the flow of material throughout a complex network. One way to improve the flow is with crossdocking and to expedite the process of materials throughout the supply chain channel. In this post, I would like to review the transformation of distribution center operations by using IT solutions to expedite the flow of products and minimize the cost of inventories.

The Trouble with Traditional Supply Chain Networks

Let’s start with a simple example (figure 1): The distribution center provides a consolidation point in the supply chain network and acts as a buffer to reduce the number of shipments and manage uncertainty. In a daily distribution process, the shipment of plants 1 and 2 arrive to distribution centers 1 and 2, are off loaded, and stored. When the distribution centers receive the demand from the customers (C1 to C4), they begin the replenishment process by retrieving the products from storage, loading them, and shipping them off. These processes are non-value added from the customer point of view, and considered waste. The best solution to eliminate or reduce these non-value added processes is to get the plants to the distribution centers at the right time, consolidate on the spot, and ship to customers with the right quantity.

This holistic view of supply chain operations was hard to achieve in the past. In traditional supply chain networks, each site only corresponds to its next level transfer site, and lacked the information and visibility to connect the supply and demand efficiently. However, the beauty of end-to-end supply chain solutions with the help of IT is having the visibility of the entire network beyond one site and customer.Cross docking

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Advantages and Pitfalls of Push and Pull Strategies in Distribution Networks

ImanNiroomand

What’s driving your supply chain – immediate consumer demand or future projections? In either case, the goal is likely the same: to provide the best customer experience. A truly customer-oriented supply chain strives to fulfill the customers’ demands on-time. Success is defined by the on-time-delivery to request (OTD-R).i In other words, when the product actually gets to the end consumer.

Supply chains are planned based on when a product is produced, delivered to distribution centers and made available at retail stores. The most common strategies for moving from upstream to downstream sites are push and pull strategies, or some mix of both. A pull strategy is when customer demand drives the entire production process. On the other hand, a push strategy is when production is based on long term customer forecasts.ii So which one is better? The answer is, it depends. There are pros and cons to using push vs. pull strategies within your distribution network.

Let’s put the concepts of push and pull strategies into a real-world example. Assume you own a restaurant and for simplicity sake, you only serve breakfast. The main processes (Figure 1) to get a customer his or her order would be procurement (buying ingredients), manufacturing (cooking), and delivery (serving the customers).

push-and-pull-strategies

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The shape of a supply chain distribution network

ImanNiroomand

Today, I’d like to discuss distribution networks shapes. A distribution network is a channel that a company uses to get its products from the manufacturer to the end customer. The shape of this distribution network could vary from a small and simple size network to very complicated networks such as power grid network. The factors that are involved in defining the shape of the distribution network are end customer product demands, product variety, product availability, response time, returnability, and customer experience. Among these factors, response time gets higher weight in establishing the distribution shape.

Response times are the time between when a customer places an order and receives delivery. If customers can tolerate a large response time, fewer locations are required in a distribution channel and the emphasis would be on the larger capacity at each location. However, if customers require short response times then the more locations should be built in the network.

Changing the distribution network is something that a company is often reluctant to do in short range since it has direct impact on supply chain cost elements such as inventories, transportation, facilities and handling. But it is just a matter of time and sooner or later a company needs to reshape its distribution network.

As a rule of thumb we can say, the more facilities in a network, it causes more inventory costs but less shipping costs. In opposite, the less number of facilities would lead to less facility overhead cost but more transportation costs for remote customers. So if we assume the distribution costs are a summation of facility and transportation costs and call it logistic costs, then would these two elements be enough to configure the shape of the distribution network? Where would the response times fit in this equation?

Distribution Network Figure 1

Figure 1

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