Logistics technology: New ILOG applications focus on supply chain efficiency, reducing costs
Jeff Berman, Group News Editor -- Logistics Management, 6/30/2009
SUNNYVALE, Calif. and PARIS—ILOG, a provider of enterprise-class business rule, optimization, and visualization and software components and services—and subsidiary of IBM—recently released new supply chain-focused applications focused on helping shippers to better analyze data flow and make more informed operational decisions.
With this release, the company’s supply chain applications are geared to analyze more detailed parameters like tax applications, as well as track supply chain carbon emissions, among others, according to ILOG officials. They added that these supply chain applications help shippers address global supply chain design and sourcing strategies, transportation planning, and inventory placement and flow.
The new desktop-based applications are:
· IBM ILOG LogicNet Plus XE 7.0—a supply chain design and planning application that allows measuring of the carbon footprint within a supply chain. It allow enables shippers to analyze tax implications when designing supply chains, taking into account global tax regulations with other costs and constraints; and
· IBM ILOG Plant PowerOps 3.2—an integrated production planning and scheduling application that helps professionals anticipate and solve potential problems up to five times faster. It has a “re-plan and reschedule” capability, enabling customers to run more ‘what-if’ business scenarios.
“These releases were driven by customer needs in various areas,” said ILOG Chief Science Officer David Simchi-Levi in an interview. “One area is tax-efficient supply chains. We heard from many customers that the impact of taxation in global networks can be equal to or higher than the impact of transportation costs. And when you optimize a supply chain you want to look at production, transportation, and inventory costs and the impact of taxation. As a result, we were driven by our customers to incorporate [IBM ILOG LogicNet Plus XE 7.0] into our technology.”
Simchi-Levi explained that ILOG worked with three customers to determine how to best incorporate this functionality into a tool in a way that was easy and effective for users.
Another chief focus for ILOG with this release is carbon footprint reduction for shippers. Simchi-Levi said that ILOG has customers in Europe, U.S. and Asia that are actively leveraging this software to reduce their carbon footprints—particularly in Europe where there is a sharp focus on cap-and-trade policies.
“We have included more powerful capabilities around this area—based on feedback from our customers—than our previous version,” said Simchi-Levi. “It has data on carbon footprint associated with transportation, warehousing, manufacturing, production processes, among others…coupled with the ability to do cap-and-trade optimization.”
The final driver for this release, he said, was more requests from shippers for various types of “easy-to-use” features in the area of flexible supply chains to help gauge how much flexibility to build into their supply chain processes.
In terms of how these offerings can help shippers, Simchi-Levi cited various examples of how it helped a large consumer goods shipper create regular meetings that bring together supply chain, transportation finance, sales, and manufacturing units to discuss production sourcing strategies, reduce raw materials and supply inventory expenses by about $6 million, reduce transportation mileage spending by 2 percent at a time when its revenue has grown, and it has saved more than 12 million cases of product available to be sold due to a reduction in out of stock levels.
“This reduction in out of stock levels effectively added 1.5 production lines of capacity to the shipper without any additional capital expenditures,” said Simchi-Levi.
IBM ILOG Plant PowerOps 3.2: This release, said Simchi-Levi, focuses on solving problems through a series of algorithms by up to five times faster than previous versions. And it allows users to “solve larger problems and run “what-if” analyses and consider other scenarios, too.
A main focus of this application is what Simchi-Levi called dynamic safety stock.
“This is an estimate of the average time it takes until the next production cycle in the process manufacturing industry,” said Simchi-Levi. “A lot of these estimates are based on how much safety stock is needed, and then they decide what the right size is…by using a planning and scheduling tool. The problem is the average time until the next production may be different than the previous one, leading to the problem of having too much safety stock or not enough.”
With this release, ILOG is actively combining the batch sizes of safety stock to significantly reduce inventory by up to 25 percent and also reduce reduction and changeover costs by up to 27 percent.
“By optimizing safety stock and batch sizes, we can allow shippers to improve supply chain efficiency,” said Simchi-Levi.
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