ORTEC Inventory Routing 06-10-2011 Huub Vankan (Product Manager)
Agenda Why ORTEC IR? What is ORTEC IR? What does ORTEC IR? Where to apply ORTEC IR? Where is ORTEC IR now? 7-10-2011 2
ORTEC IR Why? 7-10-2011 3
Trends in industries Increased Supply Chain Collaboration Merger and Acquisition ICT as an enabler Low Cost and Low CO2 Solutions -> Optimizing transport is a Win-Win Increase Vendor Managed Inventory (VMI) and Value-Added-Logistics (VAL) activities Improves customer intimacy
Collaborative Vendor Managed Inventory Definition: A means of optimizing Supply Chain performance in which the supplier is responsible for maintaining the customer s inventory levels. The supplier has access to the customer s inventory data and is responsible for generating replenishment orders Recently, AMR Research indicated that the global economic downturn and the need for improved inventory visibility and efficiency has led to a recent resurgence in vendor managed inventory (VMI) programs. 7-10-2011 5
Planning Decisions Decisions: 1. When to deliver a customer? 2. How much to deliver a customer? 3. Which delivery routes to use? 4. Which depots to source from & on what routes? 5. How to execute plan most efficiently? Multi Day Horizon: Decisions made today impact what has to be done beyond the planning period
Easy? We have 1 depot and 4 customers Each customer has 1 tank UNLEADED We have 1 truck with capacity 5000 1 10 2 100 100 140 Solution 1: Most obvious strategy 2 trip per day Total distance 420 D 100 100 3 10 4 Customer Tank Capacity Daily Usage 1 5000 1000 2 3000 3000 3 2000 2000 4 4000 1500 Daily Delivery 1000 3000 2000 1500 Trip 1: Volume 4000 Distance 210 Trip 2: Volume 3500 Distance 210 example: [Bell et al. 1983]
Easy? example: [Bell et al. 1983] We have 1 depot and 4 customers Each customer has 1 tank UNLEADED We have 1 truck with capacity 5000 1 10 2 100 100 140 Solution 2: A better strategy 3 trips in 2 days Total distance 760 per day 380 (Solution 1 total distance was 420 per day) Customer Tank Capacity Daily Usage 1 5000 1000 2 3000 3000 3 2000 2000 4 4000 1500 Day 1 Day 2 2000 3000 3000 2000 2000 3000 The second strategy gives a reduction of 10% in distance Multi-day planning can significantly save transportation costs! D 100 100 3 10 4 Trip 1: Volume 5000 Distance 210 Trip 3: Volume 5000 Distance 340 Trip 2: Volume 5000 Distance 210 example: [Bell et al. 1983]
ORTEC IR What is it? 7-10-2011 9
Real-time dispatching & visibility Actions: Plan now for now Combine inbound and outbound planning Dispatch communications with drivers Accommodate last minute order changes Accommodate unplanned events (e.g. breakdowns) Integrate with onboard GPS / Board computer Planned km/costs vs. actual km/costs
Inventory information Stock level info Delivery times Truck sizes 7-10-2011 11
Secondary Distribution Optimization Depot Gas Customer Plan is sent to Truck OVC Deliveries / Cancellations 1. Readings 2. Deliveries 3. Sales Routes Unplanned orders are optimized unto routes Updates Displays alerts Makes proposals Orders Automatically generated Manual entry Passed from ERP
ORTEC IR What does it? 7-10-2011 13
OIR Demand calculation 7-10-2011 14
Demand calculation Taking into account: Historical usage (levels, deliveries) Special days Usage periods Seasonal patterns 7-10-2011 15
OIR Order generation 7-10-2011 16
Order generation: basics explained Capacity Maximum Stock Usage Order Volume Safety Stock Bottom Stock TIME Next Visit (x days) 7-10-2011 17
Order generation Taking into account: Calculated demands Delivery windows Multiple products Truck sizes 7-10-2011 18
ORTEC IR Planning 7-10-2011 19
Planning Taking into account: OTD restrictions Delivery windows Compartments Axle weights Contaminations Congestion patterns 7-10-2011 20
Order sizing time dependent Capacity Maximum Stock Forecasted Order Volume Volume: Depends on moment of delivery, later delivery = more volume Usage Safety Stock Bottom Stock Length Delivery Window Safety Stock TIME 7-10-2011 21
Use additional orders Must go May go Attractiveness Bonus Now Plan window TIME
Usage of planned and realized volumes Planned/actual volume differs from ordered volume Planned volume is used for order calculation of next orders 7-10-2011 23
ORTEC IR Where to apply? 7-10-2011 24
Current footprint 7-10-2011 25
Other Industries 7-10-2011 26
ORTEC IR Where are we now? 7-10-2011 27
ORTEC IR - availabilty Product launch Pilots Other industries 7-10-2011 28
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