Group 3

Operational Analysis
Overview of network and operational
planning

Planning methodology
 Phase 1: Problem definition and planning
 Phase 2: Data collection and analysis
 Phase 3: Recommendations and
implementations
Supply chain analysis method and techniques

2
Planning methodologies enable evaluation of
options in response of customer behavior

 Decisions often require complex

and data-intensive analysis

 Complexity is due to:

a. Large number of factors impacting total cost
b. Range of alternative solutions available

 Data-intensive is due to :
a. Large amount of information required to
evaluate each alternative

3
Generalized planning methodology
showing major phases of work

4
Phase 1: Problem Definition
and Planning
1 Feasibility Assessment
Steps:
1. Analyze the current situation
2. Develop supporting logic
3. Estimate the cost-benefit to proceed

2 Project Planning
Steps:
1. State objectives of proposed changes
2. State constraints to scope of study
3. Establish measurement standards
4. Select analysis techniques
5. Create a project work plan
5
 Feasibility Assessment

(1) Analyze the current situation

Requires an:
◇ Internal operational review
◇ Market assessment
◇ Technology assessment

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Feasibility Assessment
(2) Develop a supporting logic

1. Identify the value proposition

2. Critical fact-based evaluation of
current procedures and
practices
3. Identify potential alternatives

7
 Feasibility Assessment
(3) Estimate the cost-benefit

“
 Service improvements
 Cost reductions
 Cost prevention
 “Low hanging fruit” opportunities

8
Project Planning Involves
these Specific Task.
• States Objectives of Proposed Changes.
• State Constraints to scope of study
• Establish Measurement Standards
• Select Analysis Techniques * Create a
project work plan

(Plan before you plunge)

Statement of Objectives Should
be Stated Specially and in
Measurable Terms.
• Should define market segment, the time frame for change and
specific performance expectations.

• Example objectives
- Provide 100 most profitable customer with perfect order
performance on all orders.
- All other customers receive
a. 99% inventory availability for category A
products.
b. 95% inventory availability for category B
products.
c. Delivery of 98% of all orders withing 48 hrs
of placement.
 Statement of Constraints
Should Identify Restrictions
Placed by Senior
Management.
• Defines the specific organisational elements to be retained in
current system.
- Faculties, alliance, resources, system, procedural, or
channel constraints.
• Common examples
- Hold existing manufacturing facilities and product mix
constant
- Omit some divisions from a centralised logistics system
• "Why study things we don't plan to do anything about?"
Measurement Standards Direct
the Analysis by Listing
Assumptions About the Cost
and Performance.
• Standard should adequately reflect a total system
performance view.
- Avoid a suboptimal focus on logistics
functions.
• List assumption that support standards

• How each cost component to be qualified?

Develop a project work plan for the
remaining phases of the study
◇ Schedule of tasks
◇ Resource requirements
￭ Personnel
￭ Data collection and analysis
￭ Analysis Tools
◇ Meeting Schedules
￭ Updates to share progress with executives
13
DATA COLLECTION AND
ANALYSIS ACTIVITIES
Assumptions an data collection
◇ Define analysis approach and select techniques
◇ Define and review assumptions
◇ Identify data sources
◇ Collect data
◇ Validate data
Analysis
◇ Develop questions for analysis
◇ Validate the baseline analysis
◇ Analyze each alternative
◇ Compete sensitivity analysis 14
Analytical approach uses numerical
tools to evaluate each alternative
◇ Spreadsheet and statistical software availability have
increased use of these techniques.

15
Simulation is widely used, particularly
when significant uncertainty is involved
◇ Conduct experiments using a physical or numerical model
of the real system.
◇ Appropriate when limited number of variables are
evaluated.
◇ Need a more realistic representation of the process.
◇ Need customer order or level of detail.

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Optimization uses linear programming to
evaluate and select best alternative
• Appropriate for :
- Problems where objectives and constrains can be expressed in mathematical terms.

- Alternatives involving sweeping changes to the logistics system.

• Limitations include
- Demands on computing resources
- Models are similar scope than stimulations.

Examples :

- Determine the best location for distribution facilities subject to meeting supply, demand , and delivery
time constraints.
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 Define & Review assumption
• Business
- E.g relevant market , consumer and product trends, resource availability , and comptetive actions.

Management
- E.g alternative warehouse locations, transport models , ownership arrangements, logistics
processes, fixed and variable costs.

• Analysis
- Defines constraints and limitations to fit the problem to the technique selected .
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Analysis involves use of technique and data
to evaluate logistics alternatives

STEPS
1. Develop questions about alternatives and the
range of acceptable uncertainty
2. Validate the technique and model using a
validation data
3. Repeat the analysis for each alternative to be
valued
4. The best performing alternatives can be evaluated
for sensitivity to other factors or scenarios

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 Recommendations and implementation

Development of recommendations
 Identify best alternatives

“
 Estimate cost and benefits
 Develop risk appraisal
 Develop presentation
Implementation
 Define implementation plan
 Schedule implementation
 Define acceptance criteria
 Implement the recommendation

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Recommendations to management are developed through
critical review of the analysis results

 Identify best alternative

 Estimate cost and benefits
 Develop risk appraisal
 Develop presentation

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 Implementation is necessary to realize any business
benefits from the recommendations

 Define implementation plan

- Events, activities and decisions with dependent

“
relationships
 Schedule implementation
- Timeline of plan details
- E.g. acquire facilities, negotiate, agreements, mobilize
teams, and conduct training
 Define acceptance criteria
-How will we measure success?
 Implement the recommendation
- Establish controls to monitor plan and acceptance criteria

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 Methods and techniques of analysis for
supply chain decisions

 Design Decisions

“
 Design Logic
 Inventory Decisions
 Transportation Decisions
 Freight Lane Analysis
 Inventory Analysis

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 Design Decisions

 It focuses on selecting number and location

of plants, warehouses and other nodes.

“  Design decisions take into account human

considerations, from ergonomics to
cognitive capabilities. A good solution has to
be useable and useful.

26
 Design Logic
 It defines the method used to select from a
number of available options.

“
 An optimization model is a translation of the
key characteristics of the business problem
you are trying to solve. The model consists of
three elements:
 the objective function
 decision variables
 business constraints 27
“
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 Data requirements for supply chain analysis
include the following key elements

 Markets defined by geographic segments

 Products defined by the number of stock keeping units
required

“
 Network defines channel members and locations
including current and proposed
 Customer demand as shipment volume by market
geography
 Transportation rates for inbound and out-band volume
-For each shipment size
-For each potential transportation link
 Variable and fixed cost
 Tax incentives
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“
29
“
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 Evaluation of alternatives

 Baseline analysis is done first to validate

cost and establish credibility of the
analysis

“ 


Other alternatives are modeled and
analyzed

Results can be compared to baseline to

identify performance improvements

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“
33
“
34
Concerns of supply chain design tools
◇ Treatment of inventory carrying cost
◇ Assumption of shipment sizes over
range of alternatives
◇ Focus of analysis

35
36
 Illustration of the simulation
approach to inventory analysis
Transportation decisions range from
strategic to tactical in scope
◇ Strategic Routing Decisions
￭ Identify long term fixed transport modes
￮ Monthly or yearly routes

◇ Tactical Routing Decisions

￭ Allocate resources for the short term
￮ Daily or weekly routes

◇ Objective to minimize the combination of vehicles, hours,

and miles required to deliver product.
ILLUSTRATION OF TYPICAL TRANSPORTATION PROBLEM
TRANSPORTATION ANALYSIS
TECHNIQUES
• HEURISTIC APPROACHES
• EXACT APPROACHES
• INTERACTIVE APPROACHES
• COMBINATION APPROACHES

CRITERIA FOR EVALUATING

APPROACHES
• How general is the approach?
• How accurate is the approach?
Data Requirements for
Transportation Analysis
THREE TYPES OF DATA:
• NETWORK - defines all possible routes
• DEMAND DATA - defines periodic customer
pickup and delivery requirements
• OPERATING CHARACTERISITICS define:
- Number of Vehicle
- Vehicle limitations
- Driver constraints
- Operating Costs

41
 SEEKS TO BALANCE
VOLUME BETWEEN
ORIGIN & DESTINATION
POINTS
• FREIGHT LANE - refers to the shipment activity
between a pair of origin and destination points
• FREIGHT LANE ANALYSIS focuses on the
balance of volume between origin and destination
points.
• The objective is to identify imbalances that offer
opportunities for enhanced logistics productivity.
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Thanks!
Group 3:
1. Arguilles, Ivy L.
2. Benaning, Jowairiah
3. Carolino, Maxine Chloui
4. Cuaresma, Alexan
5. Emocling, Priscila
6. Ladao, AnneJelika
7. Mendoza, Lea
8. Pereno, Glydel Millen
9. Rivera, Bernadette
10. Soriano, Jeremiah
11. Taher, Hanaa Hadji
12. Tapang, Apet
13. Teves, James Karl