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Matthias Mekschrat Logistical applications and optimizations h_DA WS 2011 Logistical applications and optimizations 1 Matthias Mekschrat Logistical applications and optimizations h_DA WS 2011 Logistical applications and optimizations 1

Matthias Mekschrat overview Introduction October 28 - definition of business processes November 11 - Matthias Mekschrat overview Introduction October 28 - definition of business processes November 11 - overview of logistical business processes November 18 - functionality of purchase and supply processes December 02 - functionality of production processes December 16 - functionality of sales and distribution processes January 20 - special problems within the supply chain handling h_DA WS 2011 Logistical applications and optimizations 2

Matthias Mekschrat Review on the last session You have learned about business processes and Matthias Mekschrat Review on the last session You have learned about business processes and composed business process You have seen the different types of business processes 1. supply chain business processes 2. logistical crossover business processes 3. business support processes You have learned about procedures and tools to 1. analyse business processes 2. visualise business processes 3. document business processes You have seen the needed components to implement an IT application system 1. customizing 2. master data management 3. user exits and modifications You have learned 1. that translating business processes into IT application processes is a very challenging task which needs some experience 2. That process integration is an important factor for an optimal IT application system 3. Why to avoid individual developed interfaces if ever possible h_DA WS 2011 Logistical applications and optimizations 3

Matthias Mekschrat About this lecture All sessions are split into 2 blocks: from 08: Matthias Mekschrat About this lecture All sessions are split into 2 blocks: from 08: 30 to 10: 00 and from 10: 15 to 11: 45 Each session starts with a short review of the last lectures subjects Next I will give you a short theoretical overview of the days subject Next you probably will develop 3 different subjects in a brainstorming session in 3 groups Each group will then present the results of their discussions I will present theoretical explanations for the discussed subjects Then I will show a example solution for a potential written test question Finally I will give a summary of the key messages for this session h_DA WS 2011 Logistical applications and optimizations 4

Matthias Mekschrat overview Introduction October 28 - definition of business processes November 11 - Matthias Mekschrat overview Introduction October 28 - definition of business processes November 11 - overview of logistical business processes November 18 - functionality of purchase and supply processes December 02 - functionality of production processes December 16 - functionality of sales and distribution processes January 20 - special problems within the supply chain handling h_DA WS 2011 Logistical applications and optimizations 5

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 6

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 7

Matthias Mekschrat Overview of logistical processes, Part 1 Problems and potentials Usage of SCM Matthias Mekschrat Overview of logistical processes, Part 1 Problems and potentials Usage of SCM Tools in chemical industry (November 2008) none considered In use h_DA WS 2011 planned Logistical applications and optimizations 8

Matthias Mekschrat Overview of logistical processes, Part 1 Problems and potentials As a consequence Matthias Mekschrat Overview of logistical processes, Part 1 Problems and potentials As a consequence many companies do not use the potentials of an appropriate SCM Very often suboptimal SCM processes are implemented by the IT application system h_DA WS 2011 Logistical applications and optimizations 9

Matthias Mekschrat Overview of logistical processes, Part 1 Learning targets Understand the main component Matthias Mekschrat Overview of logistical processes, Part 1 Learning targets Understand the main component structure of a supply chain application system Understand the business support components, that are needed in assistance to run a supply chain application system Understand the need for both external and internal collaboration processes Understand the important inputs and outputs of each component Understand the involved acting logical business units h_DA WS 2011 Logistical applications and optimizations 10

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 11

Matthias Mekschrat Supply chain processes represent all main logistical activities for creation of value Matthias Mekschrat Supply chain processes represent all main logistical activities for creation of value according to the business definition Supplier h_DA WS 2011 Plant Store Transport Logistical applications and optimizations Customer 12

Matthias Mekschrat Supply chain processes Supplier Raw Material Store Plant Entry Stores Transportunit Production Matthias Mekschrat Supply chain processes Supplier Raw Material Store Plant Entry Stores Transportunit Production 1. level Transport Customer Production n. level A 1 A 2 A 3 h_DA WS 2011 B C Logistical applications and optimizations 13

Matthias Mekschrat Supply chain processes Customer C Prod. C B Tran sfer Customer B Matthias Mekschrat Supply chain processes Customer C Prod. C B Tran sfer Customer B Price s Prod. B Prod. A Plant A ices fer Pr ans A Tr Plant B Customer A h_DA WS 2011 Logistical applications and optimizations 14

Matthias Mekschrat Supply chain processes Business support processes Logistical crossover processes Production planning and Matthias Mekschrat Supply chain processes Business support processes Logistical crossover processes Production planning and scheduling Sales Shipment and distribution Purchasing h_DA WS 2011 Logistical applications and optimizations 15

Matthias Mekschrat OTC – order to cash AE - asset effectiveness APS FAC – Matthias Mekschrat OTC – order to cash AE - asset effectiveness APS FAC – finance & accounting BW business information warehouse FFG – forecast to finished goods chemistry services PTP – purchase to pay CS advanced Planning systems MITO material input to output Core Business Processes and X-over Processes core process cross process h_DA WS 2011 Logistical applications and optimizations 16

Matthias Mekschrat Supply chain processes Sales order Purchase requirements Sales and operations planning (SOP) Matthias Mekschrat Supply chain processes Sales order Purchase requirements Sales and operations planning (SOP) Forecast Materials requirements planning (MRP) MRP lists Planned order Conversion of planned orders release of production as process orders MES Production Papers Actual production Goods Issue Confirmation Goods Receipt Time and Material Production controlling Distribution h_DA WS 2011 Logistical applications and optimizations 17

Matthias Mekschrat Supply chain planning Purchase Distribution Sale Supply Chain Cockpit Demand Planning (DP) Matthias Mekschrat Supply chain planning Purchase Distribution Sale Supply Chain Cockpit Demand Planning (DP) Network Design (ND) Supply Network Planning (SNP) Procurement Planning Short Term Mid Term Long Term Monitor Production h_DA WS 2011 Production Planning & Detailed Scheduling (PP/DS) Distribution Planning & Deployment Transport. Planning & Vehicle Scheduling (TP/VS) Global ATP Logistical applications and optimizations 18

Matthias Mekschrat Supply chain planning Planning Horizon Demand Planning (DP) Supply Network Planning (SNP) Matthias Mekschrat Supply chain planning Planning Horizon Demand Planning (DP) Supply Network Planning (SNP) Production Planning (PP) Detailed Scheduling (DS) Deployment Transport Planning (TP/ VS) h_DA WS 2011 Logistical applications and optimizations 19

Matthias Mekschrat Supply chain planning model External customer Plant B Plant C External customer Matthias Mekschrat Supply chain planning model External customer Plant B Plant C External customer Plant A Internal customer External customer Plant E Supplier Plant D Customer External customer h_DA WS 2011 Logistical applications and optimizations Plant 20

Matthias Mekschrat From sequential supply chains. . . 1 st Supplier 2 nd Supplier Matthias Mekschrat From sequential supply chains. . . 1 st Supplier 2 nd Supplier Manufacturer Retailer w One-to-one Communication w Excessive Inventory (Bullwhip-Effect) w Manual Communication w Asynchronous Planning Cycles w Assumption bases Planning h_DA WS 2011 Logistical applications and optimizations 21

Matthias Mekschrat …. . to networked Supply Chains. Transportation Exchange Carrier Customer u u Matthias Mekschrat …. . to networked Supply Chains. Transportation Exchange Carrier Customer u u Retailer 1 st Supplier Collaboration One-to-many Communication u Synchronous/asynchronous Communication Synchronized Planning Cycles Automated Decisions Tracking and Tracing Technological Openness u u 2 nd Supplier h_DA WS 2011 Trade Exchange Logistical applications and optimizations 22

Matthias Mekschrat Advantages of Collaboration Customer Supplier No safety stock More precise demand planning Matthias Mekschrat Advantages of Collaboration Customer Supplier No safety stock More precise demand planning No purchase orders Automated consignment fill-up and consignment issue orders No quality inspection No printing of Cof. A‘s „Pay only what you have used“ No printing of invoices No incoming invoice No invoice verification h_DA WS 2011 Logistical applications and optimizations 23

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 24

Matthias Mekschrat Business support processes Business Support Processes represent all non logistical activities to Matthias Mekschrat Business support processes Business Support Processes represent all non logistical activities to support the main logistical activities Controlling Budgeting Invoicing h_DA WS 2011 Logistical applications and optimizations 25

Matthias Mekschrat Business support processes, strategic planning and reporting Cluster Business Warehouse Info Cube Matthias Mekschrat Business support processes, strategic planning and reporting Cluster Business Warehouse Info Cube CCCube Cluster B Cluster A ERP Systems h_DA WS 2011 CCInfo Cube Cluster C CCInfo Cube Cluster D . . . Logistical applications and optimizations 26

Matthias Mekschrat Practical part: developing the subjects Group A: Please design the SC Model Matthias Mekschrat Practical part: developing the subjects Group A: Please design the SC Model for 1. 4 Plants A, B, C, D 2. A, B, D have own Customers 3. C, B have own Suppliers 4. A supplies C and B, B supplies C and D 5. Please design as an sequential model 6. Please design as a network model Group B: Please design the SC Model for 1. 4 Plants A, B, C, D 2. A, C have own Customers 3. C, B, D have own Suppliers 4. A supplies C and B and D, C supplies B and D 5. Please design as an sequential model 6. Please design as a network model 1. 2. 3. you have 20 minutes for group discussion and writing down your ideas afterwards each group has 5 minutes for the presentation of your ideas your are free to use any presentation medium h_DA WS 2011 Logistical applications and optimizations 27

Matthias Mekschrat Example solution for a potential test task, Part 1 design the SC Matthias Mekschrat Example solution for a potential test task, Part 1 design the SC model for 1. 4 Plants A, B, C, D 2. A, B, D have own Customers 3. A, C, B have own Suppliers 4. A supplies C and B, C and B supply D Plant C Plant D Plant A Plant B h_DA WS 2011 Logistical applications and optimizations 28

Matthias Mekschrat Summary and key messages, Part 1 The SC components are sales, purchase, Matthias Mekschrat Summary and key messages, Part 1 The SC components are sales, purchase, production and distribution SC planning processes effect all SC components There are models and tools to describe SC processes SC networks are the basis for collaboration Business support processes are mainly calculation, budgeting and reporting Literature 1. Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, 2000 2. Dangelmaier, Busch (Hrsg. ) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 h_DA WS 2011 Logistical applications and optimizations 29

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 30

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 31

Matthias Mekschrat Overview of logistical processes, Part 2 Problems and potentials There are many Matthias Mekschrat Overview of logistical processes, Part 2 Problems and potentials There are many logistical processes, which do not belong to the main SC processes, but effect all those components The integration of these components assure the most effective use of the supply chain Distribution of information in case of disturbances is a challenge a high potential h_DA WS 2011 Logistical applications and optimizations 32

Matthias Mekschrat Overview of logistical processes, Part 2 Learning targets Understand the structure of Matthias Mekschrat Overview of logistical processes, Part 2 Learning targets Understand the structure of logistical crossover processes Understand the applications tasks to assure process integration Understand the important inputs and outputs of each component Understand the involved acting logical business units h_DA WS 2011 Logistical applications and optimizations 33

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 34

Matthias Mekschrat Logistical crossover processes Logistical crossover business processes represent all logistical activities to Matthias Mekschrat Logistical crossover processes Logistical crossover business processes represent all logistical activities to support the main logistical activities h_DA WS 2011 Logistical applications and optimizations 35

Matthias Mekschrat Quality management in the SC Product Structure Management Change and Configuration Management Matthias Mekschrat Quality management in the SC Product Structure Management Change and Configuration Management Life-Cycle Data Management Document Management Asset Life-Cycle Management Technical Assets Management Preventive and Predictive Maintenance Execution Work Clearance Management Program Management Project Planning Project Execution Interfaces Program and Project Management Life-Cycle Collaboration Design Collaboration and Analytics Audit Management Quality Management Environment, Health and Safety Collaborative Project Management Basic Data and Tools h_DA WS 2011 Product Safety Recipe Management Integration Quality Collaboration Enterprise Portal Content Quality Control Hazardous Substance Management Dangerous Goods Management Analytics Quality Improvement Waste Management Logistical applications and optimizations Industrial Hygiene and Safety Occupational Health 36

Matthias Mekschrat Quality management in the SC Procurement Production Service Sales § Q Info Matthias Mekschrat Quality management in the SC Procurement Production Service Sales § Q Info § In-process inspection § Inspection lots/Delivery § Technical delivery terms and conditions § Batch classification § Certificates § Inspection lots § Quality control charts § Customer reports § Quality reports § Service reports § Fault reports h_DA WS 2011 Logistical applications and optimizations 37

Matthias Mekschrat Quality management reporting in the SC Quality reports can be evaluated according Matthias Mekschrat Quality management reporting in the SC Quality reports can be evaluated according to different criteria. For instance, an overview of problems occurring with one material can be provided. Questions such as what happened during production or have complaints been received from customers can be answered easily. h_DA WS 2011 Logistical applications and optimizations 38

Matthias Mekschrat Quality management reporting in the SC h_DA WS 2011 Logistical applications and Matthias Mekschrat Quality management reporting in the SC h_DA WS 2011 Logistical applications and optimizations 39

Matthias Mekschrat Sample management in the SC h_DA WS 2011 Logistical applications and optimizations Matthias Mekschrat Sample management in the SC h_DA WS 2011 Logistical applications and optimizations 40

Matthias Mekschrat Inspection orders in the SC Goods receipt Periodically Outward stock movement Deadline Matthias Mekschrat Inspection orders in the SC Goods receipt Periodically Outward stock movement Deadline monitoring batch Manually In-process Create inspection lot Print inspection instruction/labels Record results Usage decision subsequent action ac h_DA WS 2011 Logistical applications and optimizations 41

Matthias Mekschrat R & D in the supply chain A manufacturer of chemicals has Matthias Mekschrat R & D in the supply chain A manufacturer of chemicals has to > comply with the respective laws > be able to provide seamless information about the properties of the products that leaves no room for doubt > provide foresighted information about handling > take preventive action against emergencies > have clearly structured development routines, production procedures and supply chains h_DA WS 2011 Logistical applications and optimizations 43

Matthias Mekschrat R & D in the supply chain Regarding R&D, the product life Matthias Mekschrat R & D in the supply chain Regarding R&D, the product life cycle management consists of Phases Strategic R&D planning Operational R&D handling Core Phase Compliance of R&D requirements in the running system h_DA WS 2011 Logistical applications and optimizations 44

Matthias Mekschrat R & D in the supply chain Requirements for an Operational R&D Matthias Mekschrat R & D in the supply chain Requirements for an Operational R&D handling > R&D handling is more than writing down structures and recipies > IT support of the total actual R&D process > Document the results of the R&D activities > Implementation of subsequent settings in the ERP environment h_DA WS 2011 Logistical applications and optimizations 45

Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Matthias Mekschrat Overview of logistical processes Part 1 Supply chain processes Business support processes Short break Part 2 Logistical crossover processes Applications tasks to assure process integration h_DA WS 2011 Logistical applications and optimizations 46

Matthias Mekschrat Applications tasks to assure process integration Lacking exchange of information is one Matthias Mekschrat Applications tasks to assure process integration Lacking exchange of information is one of the main problems, why business processes do not run optimal. Very often you will find human factors as a reason JIT manufacturing and outsourcing are creating many more shipments to a wider variety of destinations. The likelihood of breakdowns increases. h_DA WS 2011 Logistical applications and optimizations 47

Matthias Mekschrat Applications tasks to assure process integration Which logistical consequences emerge through a Matthias Mekschrat Applications tasks to assure process integration Which logistical consequences emerge through a missing Process integration? Work Arounds Badly designed Process flows Additional Manual effort for coordination Which costs arise through a missing Process integration? Costs for individual Interfaces Costs for necessary modifications What should already be considered during a project planning ? Cost analysis for the Process Integration Detailed functional Process analysis Preliminary Study h_DA WS 2011 Logistical applications and optimizations 48

Matthias Mekschrat Applications tasks to assure process integration § Process Integration is surely not Matthias Mekschrat Applications tasks to assure process integration § Process Integration is surely not given by creating interfaces between individual solutions afterwards, Process Integration is part of the System planning process § Process Integration is more than a try to connect two different Plugs, but rather a complex Challenge where the interactive details of a lot of components have to be identified and where the following implementation has to be kept in mind h_DA WS 2011 Logistical applications and optimizations 49

Matthias Mekschrat What is Supply Chain Event Management (SCEM)? SCEM is a solution to Matthias Mekschrat What is Supply Chain Event Management (SCEM)? SCEM is a solution to MONITOR and CONTROL Supply Chain Processes. It enables to react to events l l l immediately, over heterogenious systems, over company boundaries. h_DA WS 2011 Logistical applications and optimizations 50

Matthias Mekschrat What is Supply Chain Event Management (SCEM)? SC Event Management consists of Matthias Mekschrat What is Supply Chain Event Management (SCEM)? SC Event Management consists of four steps: Define: Monitor: Notify: Control: ã Event Profiles for business processes Event Messages Actual and coming Problems by As-Is Comparison by manual Interference, automatically, h_DA WS 2011 SAP AG 2001, SCEM, Logistical applications and optimizations Andreas Otto 51 51

Matthias Mekschrat Summary and key messages, Part 2 QM and material management are the Matthias Mekschrat Summary and key messages, Part 2 QM and material management are the most important crossover processes Distribution of information in case of disturbances is an important success factor A supply chain event manager (SCEM) is urgently recommended for an optimal SC organisation Literature 1. Stadtler, Kilger – Supply chain management and advanced planning, Springer Verlag, Berlin Heidelberg, 2000 2. Dangelmaier, Busch (Hrsg. ) – (in german) Integriertes Supply Chain Management, Gabler Verlag, Wiesbaden, 5/2004 h_DA WS 2011 Logistical applications and optimizations 52

Matthias Mekschrat Thank you very much for your participation …… and see you on Matthias Mekschrat Thank you very much for your participation …… and see you on Friday, 18 th of November h_DA WS 2011 Logistical applications and optimizations 53