Monthly Archives: April 2010

MCA Solutions – Bringing the Aftermarket Forward, Part I

MCA Solutions, a Philadelphia, PA company that specializes in after market service (and service parts) optimization, is still going strong despite the recent struggles of a few of its direct competitors (namely Click Commerce and Servigistics who were recently acquired by Marlin Equity Partners). If anything, the recession (although it did considerably lengthen the sales cycle) only bolstered the need for after market service (as no one could afford new equipment) and optimization thereof (as everyone is strapped for cash and every penny counts).

As I indicated in my first post on MCA Solutions and their strategic service parts management platform, many large manufacturing, semiconductor, high-tech, aerospace, defense, and oil & gas companies often have tens of millions, if not hundreds of millions, of dollars tied up in inventory in their attempts to meet specified service levels, and every dollar in inventory costs them money in overhead. Since many of these companies typically have 10% to 20% more inventory than they need, they’re tying up tens of millions of dollars in working capital needlessly as well as throwing away millions of dollars in inventory holding costs — a situation which is easily remedied by a service level optimization platform that can optimize your multi-echelon parts inventory storage network such that your contracted service levels are met but your costs are minimized. Furthermore, as per the value of after market service in a down economy, done right, this optimization will also improve cash flow by roughly 10%, reduce inventory by 15% to 50%, and even improve service levels by 5% to 20%.

Since the last time I covered MCA in depth, which was almost two years ago, they’ve made a number of significant enhancements to their platform, the most notable being flex reporting, performance management, and plan analysis. Of these, flex reporting and plan analysis excite me the most, because the former lets you construct any report you can imagine (if you’re willing to write some SQL*) and the latter lets you build, optimize, and compare as many what-if scenarios as you want, which is the (one of the) most powerful feature(s) of any good optimization platform.

Their plan analysis tool not only allows you to define your service parts strategy (fill rates, inventory/investment caps, number of echelons to consider simultaneously in stock planning, etc.) and run an analysis on that strategy (to determine total cost and inventory distribution), and not only allows you to compare one strategy against another (how much do I save by sacrificing 1% of fill rate? how does inventory distribution change? etc.), but also allows you to define a rules-based sanity check that can be run against every model and the resulting inventory solution. For example, if the inventory levels change by more than 20%, the overall investment changes by more than 10%, shortages or excesses at any location exceed pre-defined maximums, etc., the product will immediately warn you that the new model might not be an acceptable replacement over the current one. Also, each of these rules can be defined by location, SKU (or family), or segment (or lane), which gives you a lot of flexibility in your analysis and sanity checks. (Other checks can include replacement rate, forecasting model [parameters], export mode, horizon, manual overrides, time factors, intermittence, thresholds, and other relevant measures tracked and/or computed by the platform.) Furthermore, they’ve also added the ability to generate plans by Average Customer Wait Times, which is becoming important in aerospace and defense, oil and gas, and other sectors where you have equipment that can’t be unavailable for more than a very short amount of time and service (availability) levels aren’t good enough.

While we’re talking analysis, they’ve also added a new multi-period budget report which is a system generated report that is very useful as it not only calculates total forecast, condemnation forecast, repair forecast, overall metrics, TSL, average inventory position, scheduled demand, new buy, and cost across your entire operation to anywhere between 12 and 36 months in the future, but does so using a successive series of automated optimizations where the output of one period is used as the input to the next. It will take anywhere from a few minutes to a few hours to run, but it clearly allows you to see the long term effects of any change to your aftermarket service (parts) strategy.

In the next post, we’ll talk about their new performance management solution.

* Yes, I’ll admit that I’m not your average user but I have to applaud them for acknowledging their expertise is not in the creation of report builders, that no set of canned reports, no matter how extensive, will please everyone, and that the right thing to do is expose the schema and let power users do what they want — which isn’t dangerous when you also give them the ability to make as many copies (partial or full) of the database as they want and to mess around with the copies, and not the production data.

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IEEE Electrical Power & Energy Conference: Final Call for Papers

The Call for Papers for IEEE Canada’s Annual Electrical Power and Energy Conference, the premier conference on Energy Generation, Distribution, and Markets held north of the 49th parallel, which is being held in beautiful and historic Halifax, Nova Scotia, from August 25 to August 27 at the Halifax Marriott Harbourfront Hotel, has been extended until April 15th.

The topics being solicited for this year’s conference include:

 

  • Computational Intelligence Systems
  • Electricity Markets
  • Energy Storage
  • Wind Power
  • Solar Power
  • Wave & Tidal Power
  • Hydrogen Power
  • Bio-Thermal Power
  • Small Hydro Power
  • Fuel Cells
  • Smart Grid
  • Computational Methods in Power Systems
  • Transmission & Distribution
  • MicroGrids
  • Power System Communications
  • Energy Systems for Buildings
  • Energy Conservation and Efficiency
  • Technology Trends
  • Clean & Renewable Energy Markets
  • Novel Methods of Power Generation

 

Submit your paper, attend the conference, and you’ll also be able to enjoy

Shakespeare by the Sea, Ghost Walks, the Nova Scotia Provincial Exhibition, and, if you stay an extra week to enjoy the uniqueness of Halifax and Nova Scotia, you can enjoy the 20th Atlantic Fringe Festival. (A complete list of summer festivals can be found on the Destination Halifax and Nova Scotia.com sites.)

 

 

 

The Annual IEEE Electrical Power & Energy Conference is one of the premier global conferences on Energy and Power generation that attracts hundreds of leading researchers and practitioners from all over the globe. Don’t miss your chance to experience it when it is in historic Halifax, Nova Scotia.

Don’t Squander Your Intelligent Failures!

A recent HBR post that asked if you were “squandering your intelligent failures” noted that instead of learning from failures, many executives seek to keep them hidden or to pretend that they were all part of a master plan and no big deal, which is all too true and a shame because you can often learn more from a failure than from a success (which sometimes, in CPG, is just pure luck and hard to learn from).

Furthermore, some scholars believe that learning from failure is crucial to organizational learning, because they demonstrate where assumptions are wrong, where future investment would be wasted, and where directions need to change. More succinctly, failures are about the only way in which an organization can re-set its expectations for the future in any meaningful way … but only if you take the time to learn from them!

According to some scholars, including Sim Sitkin (who is mentioned in the post), the most useful failures (from a learning perspective) is an intelligent failure, which he defines as a failure that results from an action that is:

  • carefully planned (which allows you to identify when things go wrong),
  • genuinely uncertain,
  • modest in scale, and
  • managed quickly.

Such an action plan not only prevents a catastrophe, but allows you to identify not only when something goes wrong, but why. If you take the time to figure out the way, and do so in a timely fashion, you can learn from the action and propagate that knowledge throughout the business, especially if you insure that underlying assumptions (which turned out to be wrong) are explicitly declared and that you can test results at well defined checkpoints. As such, should a failure occur, it is an excellent learning opportunity and should not be squandered!

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SYSPRO: Forecasting and Inventory Optimization for Small & Mid-Sized Businesses, Part II

In Part I, we covered the inventory forecasting solution for SMBs contained in the new SYSPRO 6.1 solution suite, which is built on the Microsoft .NET platform and which is (tightly) integrated with Microsoft Office and other Microsoft products. We concluded that the forecasting solution, which allows you to create forecasts and the product family / grouping level as well as the SKU level, is quite robust and extensive for an SMB offering, as well as being quite easy to use, and left off noting that it provides the foundation for a true inventory optimization solution that is newly available from SYSPRO in SYSPRO 6.1.

Today we’re going to cover their new inventory optimization solution. Since I am assuming you read my recent posts on the Basics of Inventory Management and the Basics of Inventory Optimization, I’m not going to repeat them and dive right into an overview of the SYSPRO product.

The SYSPRO inventory optimization solution starts with a forecast and current stock levels, your storage (warehouse) network, and your inventory policies and produces an optimal inventory plan that will minimize your inventory requirements, and, thus, your corresponding inventory costs. The key to optimizing your costs in the SYSPRO tool is the definition of an appropriate inventory policy for each product family and/or SKU and the accurate definition of relevant warehouse information regarding stock levels and associated costs.

For each product family and/or SKU, you define the lead time, any necessary gross requirements or batching rules, the economic batch (order) quantity, and any maximum inventory levels (by count, value, or volume). In addition to these basic inventory policies, you can also define more advanced “risk” policies, using the distribution algorithm of your choice (normal, poisson, etc.), if you are forecasting a family or SKU where demand can be highly variable. And for each warehouse, you define, at a minimum, the cost and UOM cost, the stock on hand (available, and free, if different), in transit, allocated, and on (back) order. When this is combined with a forecast and a time period is defined, the system is able to compute an optimal suggested inventory plan by SKU and individual warehouse location. It can then become your draft inventory plan as-is, or you can manually alter it first. Once the draft plan is accepted, it becomes the new, current, inventory plan.

And since the module is tightly integrated with the forecasting module, it’s easy to go back to a forecast, revise it, and return to the inventory plan. (For example, if you simply click on the selected forecast in the inventory optimizer, up pops the forecast module.) And once you have an optimized inventory plan, you can immediately jump into the MRP (Material Resource Planning) module which will take the inventory plan (and the forecast it is based on), the sales order, WIP (Work In Progress) data, and other associated information and produce a raw material requirements plan if you also have the association material planning information (either in SYSPRO or another ERP or database you connect to).

Finally, between the integrated Crystal Report Writer, it’s support for VB scripting, and its direct Excel integration, you can product just about any report you want (although it might take some work on the part of the developer if it isn’t a report that’s already in, or similar to what’s already in, the system). As for getting data in, the system can accept CSV, XML, and SQL database scripts (as the schema is exposed). In summary, SYSPRO provides a solid forecasting and inventory optimization offering for SMBs.

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Want that new Supply Chain System? Avoid These Hot Buttons

A recent article over on the Harvard Business Review that chronicled “eight things executives hate about IT” just handed you a checklist that you can use to make sure your request for that new IT system isn’t immediately denied. All you have to do is find a system that doesn’t have any of these issues.

  1. IT Red TapeIf your organization has an IT bureaucratic process that rivals the tax code in complexity, and approval depends on IT’s okay, you’re probably already sunk.
  2. Heavy Internal Support RequirementsIn most organizations, high level people in IT are never available and the low level tech support is overworked. Although this won’t be a show stopper, if enterprise history is that most platforms with heavy internal support requirements end up becoming shelf-ware, you’ll be fighting an up-hill battle.
  3. Fixed Process RequirementsYour business, and the process that run it, are always changing. If it’s hard to change the workflow, that software essentially comes with an expiry date that’s not much further out than a litre of milk.
  4. Flashy Bells and WhistlesYou’re in business to make money. Flash doesn’t add to the bottom line, features do. And paying for functionality you’ll never use is one of the reasons Gartner says that eight out of ten IT dollars is “dead money”.
  5. Extensive Implementation/Integration Requirements Chances are there are already too many never-ending IT projects in the organization. The last thing the C-suite wants is another one.
  6. Not Forward LookingOrganizations want to be strategic and proactive, not tactical and reactive.
  7. No Innovation SupportEven if they don’t actually do it, everyone wants to say they’re innovative. So the platform better support innovation!
  8. High Likelihood of Bad NewsExecutives know that even a successful launch is always accompanied with the inevitable onslaught of bugs, crashes, and change requests. If it looks like the number of these will be higher than usual, you’ll have a lot of eye rolling to deal with, at best.

I’m not saying finding such a solution will be easy, but if you can do it, you’ll probably get your system (provided it doesn’t cost more than the GDP of some smaller countries).

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