Capacity Planning The Antidote to Supply Chain Constraints

Capacity Planning The Antidote to Supply Chain Constraints

We live in headless & disconnected supply chains Supplier Factory Mfg DC Whol DC Retail DC Store Point of Sale The retail store is both the beginning & the end of the retail supply chain It is the beginning of information flow and the end of product delivery Yet, it is not connected to anything Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Headless Supply Chain = Questionable Execution Store Store Whol DC s Supplier DC Supplier Factory? When it comes to managing :. Space. People. Equipment 4. Working Capital We are stuck with the current order load Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Introducing Flowcasting Calculation Calculation Supplier Factory Mfg DC Whol DC Retail DC Store Calculation Point of Sale Driving the Retail Supply Chain from a single Sell-Through Forecast Integrated Business Model of the retail supply chain Jointly manage this Business Model to A Single Set of Numbers Complete visibility throughout entire Retail Supply Chain Once the consumer is connected to the factory every selling, transportation & warehousing activity that takes place from the time products leave the factory to the time we put it on the shelf is subject to review & change for the better. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Good Planning = Outstanding Execution Store Whol DC Supplier DC Supplier Factory Store Flowcasting Week Model of the Business Warehouse Management Transportation Management Work Force Management Drives WMS, TMS & WFM: How much whse space am I going to need in weeks months for the holidays? How many truckloads will I be moving in weeks months for the holidays? How much labor will I need in weeks months for the holidays? Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Objectives of this presentation To outline how integrated Flowcasting time-phased plans can be translated into various operating languages including capacity projections To demonstrate how the capacity projections can be used to identify exceptions and resolve the exceptions before they become problems Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning a Echelon Supply Chain Store #8 Store #6 Store #6 Retail Stores DC West DC East Wholesaler DCs Mfg DC Manufacturer DC Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Visibility Valid Simulation of Reality Short term Flowcasting s Medium to Long term Plan Long term plan becomes the short term plan (execution) Provides visibility to see and translate demand into meaningful information for all trading partners Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Real World Example Planning Shipping Activity Planning Receiving Activity Planning Required Space Planning & Execution Promotions Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Flowcasting provides A Single Set of Numbers Projections in Units: Demand, Inventory, Supply Multiply by Price/Cost Multiply by Cubic Feet or Weight Demand Sales Projection Outbound Volumes Inventory Inventory Level Projection Space Requirements Supply Purchases Projection Inbound Volumes Cash Flow Forecast Margin Analysis Projected Inventory Costs Rough Cut Capacity Planning Manpower Planning Space Planning Transportation Planning Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning Examples Store #8 Store #6 Store #6 Retail Stores DC West DC East Wholesaler DCs Mfg DC Manufacturer DC Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning Time (Weeks) 4 6 7 8 9 Shipping Requirements Projected On Hand 6 6 4 Yardworks Lawn Tractors in the DC Safety stock Planned Arrival Planned Order Time (Weeks) 4 6 7 8 9 Shipping Requirements Projected On Hand 84 67 69 77 6 6 8 66 8 4 4 7 4 6 44 74 9 Sylvania Microwaves in the DC Safety stock Planned Arrival Planned Order 44 44 44 7 7 44 44 44 44 with a promotion Time (Weeks) 4 6 7 8 9 Shipping Requirements Projected On Hand 9 9 8 4 9 8 44 6 4 4 Goodyear Eagle GPS Tires in the DC Safety stock Planned Arrival Planned Order 96 88 88 6 6 6 6 88 88 84 84 6 6 6 6 84 84 6 6 84 Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning Each product has a size, which can be expressed in cubic feet per consumer unit... = 66. cubic feet =. cubic feet =. cubic feet Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning Each product has a size, which can be expressed in cubic feet per consumer unit... = 66. cubic feet =. cubic feet =. cubic feet The output of our planning process is by item/facility in consumer units, so we can easily translate our plans for other purposes. These translated plans can then be aggregated to any level above item/facility that is required. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Aggregate Planning For example, the Yardworks Lawn Tractor and the Goodyear Eagle GPS Tire are both stocked at DC West = 66. cubic feet 4 6 7 8 9 Shipping Reqts (Units) 6 4 Shipping Reqts (Cubic Ft) 98 97 66 64 98 66 =. cubic feet Shipping Reqts (Units) 9 8 9 6 4 Shipping Reqts (Cubic Ft) 7 68 76 77 67 88 66 79 88 77 By expressing each item s projected Shipping Requirements in cubic feet... Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning we can project the total outbound cubic feet that DC West will need to ship each week, by adding up the cube for each product. 4 6 7 8 9 Shipping Reqts (Cubic Ft) 98 97 66 64 98 66 Shipping Reqts (Cubic Ft) 7 68 76 77 67 88 66 79 88 77 Outbound Cube 9 79 77 89 99 88 8 DC West uses this aggregate projection to look ahead and ensure that they will have enough manpower, equipment and available dock doors to handle the upcoming outbound load in each week. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning In a similar way, we can convert our Projected On Hand by item into cubic feet as well. 4 6 7 8 9 Proj On Hand (Cubic Ft) 79 97 98 98 98 98 98 98 Proj On Hand (Cubic Ft) 76 7 7 684 69 678 77 74 669 67 Space Reqts 499 99 46 889 876 9 9 867 869 This aggregate projection is used to ensure that we will have sufficient storage space in DC West to handle what is planned. In peak periods, for example, it may be necessary to rent rd party storage space. This requires planning ahead. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning By also converting the Planned Arrivals to cubic feet... 4 6 7 8 9 Pl Arrivals (Cubic Ft) 98 66 Pl Arrivals (Cubic Ft) 64 79 79 64 84 79 79 84 79 Inbound Cube 64 79 79 766 977 97 7 977 8 DC West can ensure that they have enough manpower, equipment and available doors to handle their receiving load in each week. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Capacity Planning By using Flowcasting s time-phased plans to produce item level projections by item/facility... DC East DC East our facilities get their capacity plans for free. Where appropriate, the plan can be converted to other units of measure as well (e.g. weight, pallets, trucks, picks, etc.). Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Total Manpower Planning DC West Shipping Hours 9 8 7 6 4 Receiving Hours Week Week Week Week 4 Week Week 6 Total Person Hours Normal Capacity Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Solving DC West problems before they occur Capacity Time Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

The Bottom Line The day you can plan, in a time-phased manner, your capacity requirements for capital, people, equipment, and space is the day you can identify and resolve 9 percent of your future capacity constraints. The capacity constraints you are left with are the hereand-now types of constraints inside your replenishment release horizon. Most of these here-and-now constraints can only be resolved by spending more money than you normally would want to: for example, shipping the next order immediately by a faster and more expensive mode of transport to avoid a stock out. As the old saying goes, You can solve any problem; it s only a matter of time and money. Time-phased planning systems like Flowcasting give you more time to solve your capacity constraint problems. Those few constraints that are left can only be solved with money. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL

Summary There are no secrets anymore on how Retail Supply Chains actually work today. We have the understanding, and the technologies to: Develop an Integrated Business Model of the retail supply chain Jointly manage this Business Model to A Single Set of Numbers Have complete time-phased product flow visibility throughout entire Retail Supply Chain so we can anticipate capacity constraints before they become a problem What is needed is the leadership and commitment to make it happen. Copyright 4 JDA Software Group, Inc. - CONFIDENTIAL