Scheduling Solution Generates Optimal Production and Inventory Plan

Logistics Insight Asia - Technology & Market Trends, 18/11/2008

ILOG recently unveiled ILOG Plant PowerOps 3.1, the latest version of its integrated planning and scheduling solution, featuring support for dynamic safety stocks. This capability can help companies both reduce inventories and improve service and is a major step towards achieving demand-driven manufacturing.

Plant PowersOps (PPO) 3.1, part of ILOG's LogicTools suite of Supply chain applications, is said to be the first product on the market with global optimization capability that can plan production by taking into account service level targets and demand variability. PPO 3.1 also provides new plant design and process design capabilities that enable both industrial engineers and production planners to collaborate on decision-making for plant profitability.

Rising prices of raw materials is pushing the food and beverage and fast-moving consumer goods industries to focus on reducing inventories and to produce in smaller batches while maintaining very high levels of service. Before the availability of PPO 3.1, safety stock targets would be set at the plant using guess-work, formulas or algorithms that make strong assumptions on the production lead times. Based on the safety stock targets, planners would build a production plan that may be far from the initial assumptions, therefore invalidating the stock targets. This scenario could then lead to maintaining the wrong amount of inventory, resulting in either higher inventory levels than necessary or stock-outs which hurt service levels.

Leveraging a global optimization model, PPO 3.1 provides a holistic view spanning from demand variability to safety stock targets to production plan. This capability limits decisions making based on product plan assumptions - and vice-versa, production plans that are generated based on faulty safety stock decisions. The benefits of this new global optimization capability are that the safety stock now perfectly covers production and demand variability, leading to improved service levels and reduced inventories.

BETTER COLLABORATION BETWEEN DESIGNERS AND MANUFACTURING

Before the availability of PPO 3.1, using simulation tools, engineers were able to model the details of chemical and biological reactions but due to the limited optimization capabilities of these tools, they were unable to generate realistic schedules taking into account all manufacturing constraints. PPO 3.1 provides extended functionalities for what-if analysis, master data editing and reporting with interfaces for industrial engineers and production planners, allowing them to share the same data. Industrial engineers can easily simulate different plant configurations using a simple user interface. It enables them to discover hidden bottlenecks and to make strategic decisions based on realistic simulations of manufacturing schedules. This greatly improves collaboration between design and manufacturing.

This collaboration is essential in the biotech and the pharmaceutical industries where plant and process design are often a top priority due to high equipment costs and the long time necessary to obtain FDA approvals.

OTHER FEATURES INCLUDE:

· Import/export to Excel: planners and industrial engineers are now able to run what-if analysis by modifying planning data in MS Excel.

· Master data editing: changing the master data can be complex and time consuming. PPO 3.1 offers extended functionalities to perform this type of simulation extremely easily.

· Multi-site planning: production planners can now consider different plants and warehouses in a distribution planning view. A warehouse summary view has also been added to analyze the details of a multi-site plan.

· Interactive Production Planning: planners can now easily interact with a Master Production Schedule by changing and fixing production or delivery decisions and re-optimizing the plan.

ILOG, www.ilog.com.