Sequenz G1: An Innovative Stock Replenishment System

An innovative stock replenishment system Authors of the presentation: Marcin Skonieczny Piotr Cyplik 24th International German Logistics Congress and Eurolog Berlin, October 2007 Agenda Aim of the presentation: Showing the idea of implementing the inventory management decision support system on an example of cooperation between the Institute of Logistics and Warehousing and GRUNDFOS POMPY Ltd. Presentation agenda: About us Reasons for undertaking the project Target of the project Scope and course of the project Final conclusions About us GRUNDFOS POMPY LTD. Company creation date 01.05.1995 Company opening in BARANOWO 21.05.1999 About us GRUNDFOS POMPY LTD. Five regional offices: Poznań Warsaw Katowice Wrocław Gdańsk Employment 90 employees Including 60 sales people About us ACHIEVEMENTS The biggest foreign pump unit supplier for the Polish market We have approx. 35% of the market share in Poland ISO 9001 and 14001 norms Business prizes and trade fair medals About us Institute of Logistics and Warehousing Foundation year – 1967 Founder – Ministry of Economy Research & Development Unit GS1 member, GS1 system management - in Poland since 1990 129 employees Pillars of the Institute GS1 Poland Logistics Expertise Department e-logistics centre Reasons for undertaking the project Reasons for undertaking the PLOGBEST project: • an issue with the inventory level • logistics costs reduction including warehousing costs • an issue with inventory shortages of some assortments Target of the work Create such a stock replenishment model which will enable reducing the level of final products and spare parts stock in the company The very beginning PO − Pn SL(2) = *100% = 98% PO 2 ⋅ PO ⋅ K Z PO EWD = = 76,7 szt. ld opt = ≈ 13 deliveries/year KU EWD σ PT = σ P ⋅ T + TO = 13,76 szt. 52weeks TO = = 4 weeks ldopt Pn nb = = 1,53 szt. ld opt I (ω ) = nb = 0,1112 ω = 0,85 SL(1) ≈ 80,2% σ PT Project start Project start The most important questions that have to be answered are: what to order? how much to order? when to order? Course of the project Stage 1: Multidimensional classification of final products and spare parts range Stage 2: Identifying the decoupling point in the company Stage 3: Analysis of final products and spare parts stock in the decoupling point Stage 4: Selection of an appropriate stock replenishment system adjusted to the condition and type of the company with the use of multiaspect simulation Stage 5: Parameterization of the worked out solution Stage 6: Creating an appropriate computer tool to support stock replenishment decisions Course of the project STAGE 1 Classification of final products and spare parts range Course of the project turnover [%] ABC Analysis 100 80 Issue frequency CVA Analysis • products of the highest priority • important products 60 • products of medium priority • products of low priority 40 123 Analysis 20 0 Quantity 0 8 20 50 100 A B C Course of the project STAGE 2 Identifying the decoupling point in the company Course of the project Deliveries Materials Assembly Products Market Make and 1 ship to stock t m en u ire 2 Make to stock t r eq m en e nt u ire e nd 3 Assemble to order req ep n t D n de e 4 ep Production for order Ind 5 Purchase and production for order Procurement Semi-finished Central Regional Consumer Supplier sale goods Warehouse warehouse. warehouse Warehouse. warehouse. Course of the project STAGE 3 Analysis of final products and spare parts stock in the decoupling point Course of the project How can we measure the stock? Absolute measure Relative measure Value Quantity Coverage Rotation indicator SR Stock structure CS CS CS SS SS SS Course of the project Structure of final products 16% 41% Zapas nadmierny Surplus stock Zapas rotujacy Safety stock Zapas stock Cycle zabezpieczajacy 43% Course of the project STAGE 4 Selection of an appropriate stock replenishment system adjusted to the condition and type of the company Course of the project Starting point Replenishment system based on reorder Replenishment based on cycle level review ZMax Q Q Q T T T ZI T T T T T T0 T0 T0 T0 T0 Course of the project Adjusting the stock replenishment system - suppliers’/producers’ terms - different replenishment systems for products classified in different groups Course of the project Simulation Course of the project CVA Analysis ABC/123 HP IM MP LP Analysis A1 ”reorder point” „reorder point” „reorder point” ”reorder point” A2 ”reorder point” ”reorder point” ”reorder point” ”reorder point” A3 „lot for lot” ”lot for lot” ”for order” ”for order” B1 ”reorder point” ”reorder point” ”cycle review” ”cycle review” B2 ”reorder point” ”cycle review” ”cycle review” ”cycle review” B3 ”lot for lot” ”lot for lot” ”for order” ”for order” C1 ”reorder point” ”reorder point” ”cycle review” ”cycle review” C2 ”lot for lot” ”cycle review” ”cycle review” ”cycle review” C3 ”lot for lot” ”lot for lot” ”for order” ”for order” D ”lot for lot” ”lot for lot” ”for order” ”for order” Course of the project STAGE 5 Parameterization of the worked out solution Course of the project Main parameters of particular stock replenishment models Customer service level Reorder level Maximum stock level Essential data: The demand in supplier’s lead time The alternation of the demand in supplier’s lead time.