edX Supply Chain fundamentals course by MIT

Not long ago, platforms like Coursera (https://www.coursera.org/) or edX (https://www.edx.org/) started offering the possibility to enroll free courses, ranging from Law to Arts, Management, Sports and many more.

 

Since then thousands of people have had the opportunity to develop their skills, I’m among those thousands, and currently I’m working through passing the first of three courses offered by edX and focused on Supply Chain Management.

This first Course (CTL.SC1x Supply Chain and Logistics Fundamentals) runs for eleven weeks and covers all the basics of Supply Chain focusing on three main areas Demand Forecasting, Inventory Management, and Transportation Planning.

If you have the time and interest, this first course developed by the MIT presents each of the above topics in a clear and very structured way, including examples and assignments that will help you get the foundation you need to accomplish the following two courses.

Below you can see the Course schedule, taken from the edX website should you are interested in starting the course.

•   Overview of SCM

An overview of supply chain management perspectives, core concepts, and basic approaches. It is a chance to get familiar with the edX platform, the discussion forum, and the course materials.

•   Forecasting I: Introduction  

We introduce demand management and focus specifically on demand forecasting. We will develop and use basic time series models.

• Forecasting II: Exponential Smoothing

We will expand the use of time series models to include Exponential Smoothing. We will develop and test different model forms for stationary, trend, and seasonality patterns.

• Forecasting IV: Causal Analysis & Special Cases

We introduce ordinary least squares regression that can be used for causal analysis. We finish the Forecasting section by discussing two special cases: intermittent demand and new product forecasting.

• Inventory I: Overview & Deterministic Demand

The inventory section opens up with the simplest inventory model: the Economic Order Quantity (EOQ)

• Inventory II: Stock Outs & Single Period Models

We now expand from our initial assumptions of deterministic and constant demand to allow for stochastic or random demand. In this module we restrict the time frame to a single period and develop what is called the Newsvendor Model.

• Inventory III: Probabilistic Demand Models

This week is spent developing and using the most common inventory policies in practice for both continuous and periodic review situations. We will spend a lot of time developing models that either minimize costs or meet a specified level of service.

• Inventory IV: Special Cases

We will show some methods for applying these inventory models for multiple items and multiple locations at the same time. We will wrap up the inventory section by discussing some real world implications and concerns.

•  Transportation I: Fundamentals

The transportation section focuses on understanding the fundamentals of freight transportation from a global perspective. We will show how to make routing decisions with multiple legs and demonstrate how this also applies to any mode selection. We also show how to handle uncertainty in lead-times and demonstrate how this relates back to inventory policies.

• Transportation II: One To Many distribution

In this final transportation lesson, we introduce an approximation method for determining transportation costs. We demonstrate this approach on a common one-to-many distribution situation that most firms face. We finish this week – and the entire course – with a wrap up of the major concepts and some suggestions on using them in practice.

• Final Exam

The final exam covers all of the material in this course.

So here you go, if you feel like you want to give it a go, just register and look for the below course!

“CTL.SC1x Supply Chain and Logistics Fundamentals”

Enjoy!

The Beer Game

Not long ago I had the opportunity to play what is one of the most famous games in the Supply Chain sphere; The Beer Game.

The Beer Game was developed in the late 1950s professor Jay Forrester. Initially it was played with pen, paper, printed plastic tablecloths, and poker chips, but nowadays there are on-line versions as well as board games. 

The Beer Game simulates the supply chain of the beer industry.The object of the game is to meet customer demand for cases of beer through the distribution side of a multi-stage supply chain with minimal expenditure on back orders and inventory. There are four units, retailer, wholesaler, distributor, and manufacturer, with a two week communication gap of orders toward the upstream and a two week supply chain delay of product towards the downstream

The goal is to keep operating costs as low as possible, teams will be penalized for having too much inventory (0.5 units per case of beer per week) or unfilled back orders (1 unit per case per week). Each link in the supply chain keeps track of its own costs, but a team’s score is the sum of these tallies. In the end, the lower the score, the better.

Usually 50 rounds (which represent weeks) are played, and to simulate the incomplete information we deal with in real life, players cannot communicate across stations. Each retailer draws a card indicating consumer demand for cases of beer; at the same time, all the units send their orders up the supply chain. In response, cases of beer, represented by poker chips, move in the opposite direction, from manufacturer to retailer. A small number of chips are already at every station when we start.

In the next video there is a detailed explanation of the game (min. 8:23) after a brief introduction on Supply Chain Management.

  

The principal effect shown by the Beer Game is the so called bullwhip effect. It refers to the effect that the amount of periodical orders amplifies as one move upstream in the supply chain towards the production end.

As a consequence of the bullwhip effect a range of inefficiencies occur throughout the supply chain:

• high safety stock levels
• poor customer service levels
• poor capacity utilisation
• inaccurate demand forecasting
• high cost

The main causes of the Bullwhip effect are

• The lack of information

In the Beer Game no information except for the order amount is shared up the supply chain, hence, most information about customer demand is quickly lost.

The game simulates supply chains with low levels of trust, where only little information is being shared between the parties and where all forecasting has to rely solely on the incoming orders at each supply chain stage. 

•   The structure of the supply chain

The supply chain structure itself contributes to the bullwhip effect. The longer it takes for an order to travel upstream and the subsequent delivery to travel downstream, the more aggravated the bullwhip effect will be.

The next video contains an example that explains the impact of the Bullwhip effect in the stock levelsas well as shows the obstacles the Supply Chain needs to overcome to  ensure a steady flow of stock up and downstream the Supply Chain. 

Finally, if you want to experience first-hand how it feels to play the Beer Game, in thelink below there is an online version where you can test yourself!

http://www.masystem.com/o.o.i.s/1365

Supply Chain fun Friday!

It's Friday! Some "Supply Chain fun"

Enjoy!

Where is Supply Chain heading to?

A few days ago an article from a leading magazine regarding where Supply Chain is heading fall in my hands and now I can’t do anything but share with you some of the insights from that article, as I do believe are a condensed extract of what most companies and senior members think about the future Supply Chain and the challenges that will face in the coming years.

A few words kept repeating constantly: multichannel, customer collaboration, strategic role etc.

These are the key messages and conclusions I extracted from the article:

• Multichannel is the future, and the present. Adapting to multichannel is more and more the top challenge by both manufacturers and suppliers. Even though the key focus of the supply chain remains service level, forecast accuracy and cost, these challenges are being made harder by the advent of multichannel.
  
• There has been a change in the way Supply Chain is perceived by the industry and the distributors. From a more tactical vision we are moving now towards a strategic vision of the Supply Chain within the business.
•  Leadership remains the single most important capability, recognizing that it is the people that will drive the change and ensure success.
•  Customer collaboration is the way forward when it comes to improving the Supply Chain, even though the initial reluctantly expected from some customers, sharing information such as sales forecast, promotional and media plans or sell out data will result in a win-win situation for both parties. Manufacturer can expect tangible reductions in stock levels and obsoletes whereas distributors will increase OSA as well as their service level leading to an increase in customer satisfaction overall.

This is it. You know now where Supply Chain is and where is heading. Know is time to try and put in place all look at the future, and the present, with renovated eyes!

RDIF technology....in the future!

What´s RDIF technology?

For those of you that know the infinite possibilities of RFID, check out the video below, and prepare yourself for what the future might look like...

For those that are not familiarised with RFID technology yet, in my next post I´ll go into detail, and explain what it is, how it works and also some advantages and disadvantages. After that post, I´m sure you will realise that you knew what RFID technology is, and that you were already using it every day!

When Supply Chain becomes a matter of life or death

Not so long ago I published a post about the challenges that products that need cold temperatures to be preservedface, and the different aspects that make the cold chain a very particular type of Supply Chain and probably the fiddliest in terms of transportand reliability (you can find the post here).

Continuing with this topic, this post is an approach to what probably is the most challenging type of delivery and hence the one that entitles most complications. Organ transplant.

Organs for transplant are one of the most critical shipments. To ensure viability of the organs, transportation and logistics must be flawless and perfectly coordinated, quality and speed are the key factors.

Organ transport requires an extraordinary level of 24/7 readiness over a wide geographic area. Some organs, such as a heart or lungs, can stay viable for only 4-6 hours, the cold ischemia time, (the maximal time that the organ outside the body can be kept in a storage solution), making their delivery to the operating room a true race with time.

The transplantation process starts in the hospital when a potential donor is notified. The organ is then prepared and stored before it can be transported.

Considering the limited time for transport and the fact that the smallest mistakewill probably hinder the success of the transplant, reliability in transport is a must in these cases.

Thinking of organ donation as an end-to-end Supply Chain we should also consider a few facts that make things even more complicated:

- You never know when your “product” will become available

- You have multiple products coming from the same “supplier”, which are going to different destinations, with a limited shelf life.

- You need to obtain the “product” from the “supplier” with specialists and each extraction requires a different approach. Furthermore, until the “product” is actually extracted, its viability is unknown.

- When it is known that a “product” is becoming available, there is a search to find who the customer is who is most in need. The customer could be a few (or a hundreds)kilometres away.

- As the customer is identified, there is a need to assemble specialists at the “customer’s” location for “installation” of the part.

- And during this entire time, the actual logistics for the transport will need to be put in place in a last minute scenario, with transportation “experts” accompanying the “product”

If you though your Supply Chain was challenging and stressful and your customers too demanding, I guess it’s time torecap!

The best Supply Chain ever!

As we are now in that hectic time of the year, and not long ago Gartner published the Top 25 Supply Chains it’s a good time to write about one supply chain that unfortunately the esteemed analyst firm continues to overlook. And it just happens to be the greatest supply chain of all times!! I'm talking about The Santa Claus Supply Chain, whose demonstration happens every Christmas Eve, each and every year, with perfect execution!

Only an elusive such as Santa Claus could possibly manage the adversity and diversity that the Christmas supply chain demands of him. His reputation speaks for itself. He has been in business for as long as I can remember, and yet, he has managed to deliver great service year after year.In this Supply Chain, the difference between 'just-in-time' and 'just-too-late' may result in a flood of tears from a deserving child who was sure that when the letter was sent to Santa his/her request would arrive on Christmas Eve in a neatly wrapped package with a special note written personally by Santa himself.

During the summer months, the North Pole's post office is usually a placid place. But when the calendar turns to October 1, the pace of activity quickens. Letters from boys and girls around the world start arriving. Hundreds of letters a day arrive in October, thousands in November and millions during the second and third weeks in December and each one must be carefully sorted and checked twice by the audit and compliance department. Each letter contains lists full of special requests. Mr. Claus expects perfection so everyone working at the company is focused on the critical mission. There can be no identification and delivery mistakes and no disappointed customers.

But, how does Santa manage such a complex supply chain and how come he can manage to deliver timely an average of 3, 9 billion presents and overcome the several setbacks he has to face every year?

Let’s take a closer look at Santa’s supply chain superiority:

Order taking

Traditionally Santa has taken a large number of orders personally, usually by face to face customer meetings (whilst sitting on his knee) or from lettersdelivered via the mail system. Thankfully Santa accepts now orders electronically through popular social networking sites like Facebook or Twitter.

Next he has to translate requirements into detailed bills of material for the elves in the manufacturing department, as they are the ones who are going to produce the gifts.

Manufacturing and Distribution Facility

At first glance, Santa’s manufacturing and distribution facility in the North Pole is not ideally located from a logistical perspective. However he does have total control of his manufacturing and makes good use of economies of scale in production by having a single manufacturing facility located in a land that in addition is free from bureaucracy.

Customer Service

No doubt, Santa has the toughest crowd to please, but yet, he has a reputation for delivering what was promised, there’s never a late delivery, and in my experience, he usually delivers more than expected! I’d say that he deliver a perfect order rating of over 100%.

Supply Network Collaboration

There is no official count of how many suppliers Santa deals with but some analysis indicates that 1, 9 million suppliers might be a reasonable accurate figure.Santa requires a phenomenal level of visibility to orchestrate purchase orders, shipments, in transit inbound inventory of raw materials and components to get all his supplies to the North Pole on time.

He seamlessly collaborates with his suppliers all year to make sure he has all the materials needed for the hottest toys

Supply Chain Planning

Demand forecasting must be another area of concern for Santa. With millions of SKU’s that all peak at exactly the same time he also has to deal with unbelievably short planning.

Transportation and Logistics

Santa has the logistical and fulfillment challenge of visiting every customer in a 24 hour period. This is all done through a fleet of a miniature sleigh, and eight tiny reindeers.

I imagine that the area of delivery is partially outsourced. A 3PL partner must be assisting in the delivery of all this presents on Christmas Eve!

Another likely area of outsourcing must be in the area order entry and administration. The initial order place by any child is changed an average of 3 or 4 times before delivery, surely Santa must have some help with this aspect of the supply chain.

Inventory Management

Santa’s manufacturing facility needs to produce over six million presents every day of the year. As a result, inventory of billions of end products are built up towards the peak season creating the ultimate warehouse management challenge.

Santa also seems to have perfected his Inventory Optimization and safety stock planning, as you never hear of a “Santa Sale” on December 26th.


But although it seems like Santa has everything under control, even he faces occasional supply chain disruptions that negatively impact on businesses, on the short as well as on the long run however, this Christmas Eve, we shouldn't worry about how Santa does it, we should just be grateful that he does perform perfectly year after year. 

Merry Christmas to all and to all a good night.

Christmas time!

Ohhh the joy of Christmas, it´s almost this time of the year again. It seems like it was yesterday when we were singing Christmas songs and cooking the turkey, and here we are, getting ready to wrap the presents and put them under the tree...but have you ever though about the journey of your present from you to your beloved folks?

Don´t miss the next video because it shows as we have never seen before how a superhub of a courier company work during Christmas!

Now, don´t you think it´s a miracle to get our parcels right during Christmas? I bet Santa uses a similar system to manage to get all the present delivered timely on the 24th!!

It´s still early to say it but....Merry Christmas!!

Busiest container shipping sea ports

Following the last post, here is a quick snapshot of the world´s busiest container shipping seaports. No need to say that Southern Asia is now the giant behind the exportation of most of the products we consum everyday around the globe.

There are no other countries that can rival with the Asian potential when it comes to producing and moving goods, and the below image is the prove.