Supply Chain Optimization & Planning in Heracles General

Supply Chain Optimization & Planning in Heracles General

Supply Chain Optimization & Planning in Heracles General Cement Company Dikos, George, and Stavroula Spyropoulou. "Supply chain optimization and planning in Heracles general cement company." Interfaces 43.4 (2013): 297-312. Scott J. Mason, PhD [email protected] Fluor Endowed Chair in Supply Chain Optimization and Logistics Professor of Industrial Engineering Company Overview 2 Founded in 1911

Part of Lafarge group (2013) Headquartered in Greece Manufactures cement from raw materials like limestone, clay and schist Heracles General by the numbers Type Units Number of manufacturing plants 3 plants at Volos, Halkis, and Milaki Annual production capacity 9.6 million tons Number of quarries for raw materials 10 quarries Number of DCs

6 Road transportation fleet size 330 road tanker trucks Scott J. Mason ([email protected]) Locations in Greece 3 Scott J. Mason ([email protected]) Company Overview 4

Type of product delivery: Cost-insurance-freight (CIF) vs. Free-on-board (FOB) Cost-insurance-freight Delivery to customer location using Heracles fleets or contracted trucks Product cost includes transportation cost Lead time based on the delivery location, fleet availability etc. Free-on-board Pick up purchase onsite using customers own transportation No transportation cost added to product cost Lead time in the range of a few hours 1 day Used spreadsheet for production planning, MRP and

distribution resource planning Scott J. Mason ([email protected]) Supply Chain Optimization and Planning Developed an in-house tool Supply Chain Optimizer and Planner (SCOP) Objectives of SCOP Improve decision making process by synchronizing production plans, inventory control and transportation policies Integrate planning and budgeting of supply chain operations Global optimization and system wide cost reduction Scott J. Mason ([email protected]) 5

Characteristics of SCOP Helps decision making process for Fleet sizing and planning Capacity optimization Network optimization Optimizes supply chain operations for cement and its raw materials Provides necessary inputs for enterprise resource planning (ERP) system Purchase raw materials Schedule transportation Scott J. Mason ([email protected]) 6 SCOP Platform

7 Scott J. Mason ([email protected]) Basic Operations Module Minimize cost Bulk and bagged production costs Hauling Customer delivery Cost of transportation of raw materials Inputs

Demand forecast (Based on historical ERP data) Planning Horizon Production locations Types of multimodal transportation (sea and road) Enhance customer service level Continuous replenishment with lower lead time Higher penalties for no-deliveries Scott J. Mason ([email protected]) 8 SCOP Outputs 9

Generates production, fleeting, and logistics plan Assigns customer regions to production plants or DCs Allocate production plants to each DCs to meet demand Production quantities at each plants Transportation quantities to various DCs Determines actions for procurement, maintenance, shift production planning, scheduling, and dispatching Determine the size and number of ships needed to satisfy customer demand Scott J. Mason ([email protected]) Advantages of SCOP Led to centralized production planning Cross functional and coordinated decision making Identified opportunities to cost savings by integrating fleeting decisions into tactical decision makings

Evaluate What-ifs scenarios and plan for uncertainties Decision making for multiple planning horizons Short term planning (1 4 weeks) Medium term planning (1 month 1 year) Long term planning (> 1 year) Scott J. Mason ([email protected]) 10 SCOP Performance Evaluation Key performance indicators Fleet efficiency Fleet size and utilization Fleet chartering costs Percentage of CIF sales transported by sea to DCs before delivery Implication of SCOP implementation

Fleet management strategy Saturating specific ships on specific routes Implement right ship to right route strategy rather than all ships to all route strategy Provide a steady ship chartering requirement Uncertainty management Changing dispatching plan for higher demand than forecast scenarios Simulates multiple scenarios by varying forecast-capacity-demand Scott J. Mason ([email protected]) 11 SCOPs Organizational Benefits Integrate decision making process across organization Formulate strategies for optimal planning and replanning policies Standardized models used by both senior

management and tactical planners Enhanced communication between various departments Replaced empirical rules or rules-of-thumb with models that helps in quantitative decision making Scott J. Mason ([email protected]) 12

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