Effective logistics planning driven by the business goals
Integrated Business Planning (IBP) and Logistics
Developing your business requires aligning the operational level with the strategic targets. Executing the business strategy is not easy and companies can find that their actuals and forecasts are deviating from the agreed plans. Integrated business planning (IBP) has been developed to tackle this challenge with a collaborative approach that extends from strategic planning to the shop floor detailed scheduling. In its core IBP links the supply chain with business strategy and the aim is to use revenue as the driver for the operations management and business planning.
The system landscape for typical manufacturing business is shown below. Typically, the number of different systems is quite large and obtaining the collaboration and transparency required by IBP is difficult. On the way to fully fledged IBP process enterprises seek for platforms that can handle planning on multiple levels, ideally there would be only platform that is used for the IBP process.
IBP’s holistic approach enables us to do better in many ways, but one interesting area is the logistics since it is the glue between suppliers, company’s own facilities and customers. In this article we focus on the logistics planning puzzle.
More Information in addition to this article about the planning and logistics can be found in the following sources:
• Logistics Planning: Efficiency from the First to the last Mile
• Integrated Business Planning (IBP)
• Warehouse Management System (WMS)
• Roima Control Tower
Day of a life of logistics planner
Logistics planning is the process of gathering information and making decisions based on that information to make sure that the right items are in the right place at the right time. In today’s world, updating plans once a day or a week is not enough. ‘Leaner’ logistics practices have become the norm and fluctuations and disruptions are to be expected to happen and they can have larger effects. This means that disruptions in the logistics can lead to fluctuations throughout the whole value chain. Thus, a proper logistics plan needs to be responsive in order to keep production moving. The logistics planner has multiple business goals that drive the planning decisions that are shown below.
Decreasing the cost and improving efficiency is probably the most prominent goal. Minimizing the total mileage and resource usage using route optimization leads to reduced costs. This includes also optimal use of capacity, which is then again linked to the efficient inventory and production planning. When these are combined with other Logistics Solutions like Warehouse Management and Logistics Monitoring with Control Tower, you get seamless visibility to your materials flow.
When optimizing the delivery routes, planner needs to make sure that customers are happy. There are lots of business rules and service level agreements that need to be applied. This is coming increasingly important since having excellent customer service is becoming more and more important sales driver.
Safety is also an important part of the planning logistics operations. There are lots of rules and regulations around logistics such as rest times and carriage of dangerous goods. All these need to be included in the planning of operations.
On a higher level, the logistic plans are important from the asset utilization point-of-view. Having items at the right place at the right time, keeps the resource utilization high and this is an important input for the site planning. This also links to the inventory optimization. When done correctly, good logistics can lead to reduced working capital and improved service times. More information about Inventory Optimization in Warehouse Management System (WMS) Webinar.
Lastly, it is constantly becoming more important to run the business in sustainable way. Reducing the greenhouse emissions is expected and this could even influence the profitability due to the reduced carbon taxes.
As we can imagine, logistics planning becomes very complex very easily when considering the business goals and rules from above. Ultimately efficient manual planning becomes impossible. A classic example of the underlying complexity is the Traveling Salesman Problem. Brute force solution with the fastest supercomputer on earth to the puzzle with 26 cities would take over a year.
Levels of logistics planning
Logistics planning, as any other supply chain planning is executed typically on multiple levels. Starting from the strategic level, where mostly executive team discusses for example the structure of the network or opening new warehouses in the coming years. Strategic planning also utilizes scenarios to base the decisions on. Tactical level planning is done for weeks/months ahead and there the focus is capacity related decisions such as identifying bottlenecks, staffing levels, static tactical routes.
Operational level planning is all about creating transportation plans (building routes, assigning resources), dispatching the plan as well as planning depot activities (creating load plan, create schedules for loading resources). In the same day operations, the planner manages the execution of the plans and adjusts the plans for the disruptions and feedback from the field. Maps, GPS signals and geofences visualize plans and planner can do the monitoring in real time.
Roima & DELMIA Quintiq Logistics planner
Handling the whole logistics puzzle in a single planning platform is a challenge. DELMIA Quintiq Logistics Planner provides comprehensive solution to solve and manage you planning puzzle at all levels. As discussed above, there are lots of different rules that need to be configured in the system so that the system can provide good quality plans. DELMIA Quintiq is a highly configurable solution that makes it possible to implement all the business specific rules.
DELMIA Quintiq Logistics Planner uses KPI-based planning, because KPIs are the key to the good plans. Having KPIs visible and updating in real time helps the planner the evaluate the impacts of the planning decisions. DELMIA Quintiq has also record-breaking optimization engine that helps the planner to achieve the optimal results.
During the years Roima consultants have gained deep and extensive knowledge about logistics planning challenges and solutions. First and last mile as well as line haul planning are familiar to us. For more information on logistics planning, please see the Roima Webinar Logistics Planning: Efficiency from the First to the last Mile.
The Best Planning Result also requires accurate timely feedback from the operations. The best feedback to planning can be provided by the dedicated execution systems for each domain. In Factories and Terminals Warehouse Management System (WMS) provides the execution and information for Planning. In Logistics it is provided by Transportation Management System or Logistics Control Tower.