Frequently asked questions
End-to-end supply chain management (E2E) is a comprehensive concept that aims to achieve an efficient supply chain from a holistic perspective, taking into account all elements that influence the efficiency of the supply chain.
Supply chain management usually strives for a continuous and efficient process chain through planning, procurement, production, warehousing, distribution and customer service. E2E complements this dimension by incorporating the interfaces between supply chain management and other areas of the company into supply chain management. This begins with a product design that enables an efficient supply chain, influences the design of the product portfolio from a supply chain perspective and also takes into account the requirements of repair, return logistics and recycling.
The aim of E2E is not to subject all product aspects to the requirements of an efficient supply chain, but to achieve the highest possible overall efficiency in value creation.
Economic advantages resulting from the “selfish” consideration of a specialist area must not be negated by resulting economic disadvantages elsewhere. As in practice, the focus is currently still mostly on the economic concerns of purchasing, production and sales, without taking into account the resulting costs for the supply chain, E2E aims to counteract this.
End-to-end supply chain management (E2E) is a comprehensive concept that aims to achieve an efficient supply chain from a holistic perspective, taking into account all elements that influence the efficiency of the supply chain.
Supply chain management usually strives for a continuous and efficient process chain through planning, procurement, production, warehousing, distribution and customer service. E2E complements this dimension by incorporating the interfaces between supply chain management and other areas of the company into supply chain management. This begins with a product design that enables an efficient supply chain, influences the design of the product portfolio from a supply chain perspective and also takes into account the requirements of repair, return logistics and recycling.
The aim of E2E is not to subject all product aspects to the requirements of an efficient supply chain, but to achieve the highest possible overall efficiency in value creation.
Economic advantages resulting from the “selfish” consideration of a specialist area must not be negated by resulting economic disadvantages elsewhere. As in practice, the focus is currently still mostly on the economic concerns of purchasing, production and sales, without taking into account the resulting costs for the supply chain, E2E aims to counteract this.
The aim of a Sales and Operations Planning (S&OP) process is to ensure the company’s own supply readiness as well as possible in the event of strongly fluctuating market requirements, unreliable procurement quantities or a lack of resources, such as capacities or funds.
If sufficient material and resources cannot be provided for the necessary market requirements and if the anticipated or already known market requirements cannot be met on the desired dates and in the desired quantities, sales and operations planning culminates in “shortage management”. Customer orders must be prioritized and delivery quantities adjusted.
In the run-up to this final strategic decision-making step, many calculation and accounting steps with extensive data are required. A prerequisite for an efficient S&OP process is therefore usually the use of suitable software. The use of spreadsheet tables is only sufficient for a few items and simple manufacturing processes.
Our tip:
A company does not always need an S&OP process. To avoid repairing problems caused at the beginning of the process chain using S&OP at the end of the process chain, you should first check whether it is sufficient,
- correctly adjust the “logistics business model”,
- improve the quality of automatic demand forecasts,
- correctly set planning and scheduling parameters in the ERP system.
If an S&OP process is required, then the tools you use to support your S&OP process must be so easy to use and so automated that you can run through the S&OP cycle once a month.
Sales planning is part of corporate planning and involves determining which products are to be sold within a certain period of time. It is therefore an essential basis for further corporate planning, as capacity utilization, personnel requirements and thus investment requirements and financial requirements, among other things, depend on the sales plan.
Sales planning and sales forecasting are often confused or not clearly separated. While sales planning describes what is to be sold, sales forecasting attempts to determine what can be sold. In sales planning, there is a regular tendency to overestimate sales opportunities. On the one hand, to meet the expectations of management and, on the other, to ensure that the sales department is supplied with sufficient product quantities and can reliably exploit sales opportunities.
The term safety stock management (SBM) refers to the safety stock-oriented improvement of the process stability of a value chain.
SBM is based on the insight that in the field of materials management, a disruption or weak point in the system must either be resolved or compensated for by safety stock in order to achieve a stable process. This is not just about demand uncertainty, which is absorbed with the help of the classic safety stock in an ERP system. It is about safeguarding against all disruptions in a process chain, starting with unreliable replenishment times, quality problems in production and with procured parts, unplanned machine breakdowns, fluctuating transportation times, etc.
If the required safety stocks are calculated for all these process uncertainties, a good measure of the costs of the respective process instabilities is obtained. No management would accept the calculated safety stock pile and it should not be built up at all. The calculation of the theoretically required (imputed) safety stocks should rather help to evaluate the costs of process instabilities and derive the priorities for improving process stability.
The SBM is also exciting because it continuously demonstrates the cost of process uncertainties. Even if no corresponding safety stocks are built up, these costs are incurred in the form of “friction losses”, delivery problems, additional work, special trips, etc.. However, they seep into numerous cost centers and are therefore not clearly visible.
Storage costs represent the total of all costs incurred in the course of storing goods. The main components of these costs are interest on tied-up capital, ageing and wear, loss and breakage, transportation and handling, storage and depreciation, warehouse management and insurance costs.
Knowledge of inventory costs is important for determining the running costs of inventories and for calculating economical batch sizes. In both cases, they are not of interest as absolute values, but rather the inventory cost rate, which is calculated from the ratio of inventory costs to inventory value.
Inventory costs are therefore imputed costs. It is hardly possible to calculate them separately for each individual material. If necessary, certain components of this can be determined for different warehouses or different goods or product groups in order to arrive at warehousing, product or goods group-specific warehousing cost rates. In addition, not all components of inventory costs increase proportionally with stock, such as capital commitment costs. Many cost components are fixed costs that change by leaps and bounds as inventories increase or decrease, such as warehouse management costs or depreciation costs.
Our approach to inventory management aims to optimize your stock levels while improving delivery quality to significantly increase customer satisfaction. We recognize the crucial importance of efficient inventory management for the agility and competitiveness of your company. Successful in 75% of cases, we were able to reduce our customers’ stock levels by at least 20% on average. This not only results in a more efficient use of resources, but also reduces the amount of capital tied up.
To achieve this, we use data from your ERP system to create a digital twin of your value streams and planning processes. This innovative approach enables us to precisely analyze and optimize your inventory management and the associated processes. By simulating future inventory management scenarios, we identify the most effective strategies and use supporting software to further refine and automate processes.
A central goal is to minimize the planning and scheduling effort for your employees by establishing efficient and automated processes. In addition, we develop approaches to increase delivery readiness and define sensible safety stocks that enable your company to react flexibly to market changes.
Our quick potential check [verlinken?!] offers an efficient initial assessment of your inventory to identify optimization potential. The optimization of inventory management leads to considerable cost savings, particularly in the areas of warehousing and logistics. By using advanced analytical tools and methods, we make data-based decisions that increase the efficiency of your inventory management. In addition, an improved inventory strategy minimizes the risk of overstocking and stock-outs, which leads to an overall more stable and efficient value chain.
Planning and scheduling master data must be continuously adapted and maintained to the changing boundary conditions of each article. If this does not happen, planning and scheduling results are inevitably wrong, work is done to the best of one’s knowledge and belief and delivery readiness and stocks become the random results of arbitrary decisions.
A simple calculation shows that an average planner would have to spend three to six months of their working time on maintaining planning and scheduling data alone.
Planners and schedulers usually do not have the time to set up planning and scheduling master data correctly and some of them also lack the necessary specialist knowledge of ERP algorithms.
Master data can be maintained automatically using modern tools. With our simulation approach, we help you to develop and implement the right economic rules for your planning and scheduling parameters.
Our inventory potential check is a specialized service aimed at uncovering unused potential in your warehousing and helping you to optimize your inventory management. Through a detailed analysis of your current stock levels, we identify areas in which you can achieve significant improvements. Here are the key benefits of our potential check:
- Maximum stock reduction potential: We show you how you can effectively reduce your stock levels without jeopardizing your ability to deliver.
- Liquidity gains: Find out how you can free up valuable liquidity reserves within six months.
- Sustainable stock reduction: We offer solutions for reducing your stock levels in the medium to long term.
- Optimized inventory reduction curve: Visualize the improvements in your inventory management with an optimized inventory reduction curve.
- Yield increase: Discover measures that will noticeably improve your annual yield.
- Efficient stock range and stock turnover: Optimize your warehousing to increase stock turnover and improve stock range.
Our ESA (Excess Stock Assessment) method uses your item master data and statistical analyses, based on extensive experience from numerous inventory optimization projects, to precisely identify excess stock and develop tailored optimization strategies. With our inventory potential check, you can lay the foundations for more efficient and profitable inventory management.
Inventory optimization refers to the process of adjusting and managing your inventory levels to maximize efficiency, reduce costs and increase customer satisfaction. The aim is to maintain the ideal stock level that is sufficient to meet demand without tying up unnecessary capital in surplus stock. The main benefits of inventory optimization include:
- Reducing storage costs: By minimizing excess stock, companies can significantly reduce their warehousing costs.
- Increased availability: Optimized inventory management ensures that products are available when they are needed, which improves customer satisfaction.
- Improving capital efficiency: By reducing unnecessary inventories, capital is freed up that can be used elsewhere in the company.
- Increased agility: Companies can react more quickly to market changes as they become more flexible in their supply chain through effective inventory optimization.
Inventory optimization is a continuous process that requires regular reviews and adjustments to ensure that inventory levels are in line with business goals and market requirements. By using advanced analytical tools and methods, companies can make data-driven decisions to effectively manage and optimize their inventories.
- Constraint analysis is a method for identifying and eliminating bottlenecks in supply chain processes. Bottlenecks are system elements that slow down the performance of the overall system
- Constraint analysis uncovers the root causes of inadequate outcomes or perceived weaknesses by establishing a cause-and-effect network between the observed symptoms and the underlying root causes
A constraint analysis begins with recording the company’s value stream or the processes of all relevant areas of the company. This step creates transparency and makes it possible to understand the overall context. Subsequently, partial fragments of the cause-and-effect network are identified in workshops and interviews with the departments involved. If necessary, correlations can be proven, refuted or examined in terms of their effectiveness by means of analyses and simulations. The cause-and-effect network is developed from the results of the analysis until the core causes have been identified. These represent the bottlenecks in the technical-organizational system that must be eliminated in order to increase the efficiency of the overall system.
A reality tree is the result of a constraint analysis that, like a circuit diagram, represents the cause-and-effect network between recognized symptoms and the underlying core causes. A reality tree shows the logical connections between the various elements of the system and makes it possible to identify the levers that are suitable for eliminating the core causes.
Constraint analysis offers several advantages for increasing the efficiency of supply chain processes, such as
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- It helps to systematically and effectively uncover the key bottlenecks and create remedies.
- It solves many individual problems, which would have been tackled in separate sub-projects and work steps in a conventional process analysis, virtually by itself
- It enables a constructive view of a better future without getting lost in coming to terms with the past or apportioning blame
- It breaks down the complex problems into digestible slices and prioritizes the fields of action and measures.
The effectiveness of the defined measures can be checked using various methods, e.g:
- Carrying out simulations that show the effects of the measures on the overall system.
- The use of key performance indicators that measure the improvement of the system’s performance, such as delivery readiness, inventory turnover rate, throughput time, quality or profitability.
- Observing the changes in practice that confirm the elimination of bottlenecks and the increase in efficiency.
Typical bottlenecks in supply chain processes can be both technical and organizational in nature, such as
- Insufficient capacities or availability of machines, materials, logistics or personnel.
- Inappropriate process design or control, leading to long waiting times, high inventories, poor quality or low flexibility.
- Unclear or contradictory goals, requirements or rules that lead to conflicts, wrong decisions or inefficiencies.
Constraint analysis is a powerful method, but it also has some challenges or limitations, such as:
- It requires a high level of participation and cooperation from the specialist departments in order to gather the relevant information, understand the interrelationships and implement the measures.
- It cannot cover all aspects of a system, but must focus on the essential and critical elements that influence performance.
- It cannot guarantee that the bottlenecks that have been eliminated will not reoccur or that no new bottlenecks will arise, but must be regularly reviewed and adjusted.
Constraint analysis differs from other process optimization methods in several aspects, such as
- It does not focus on improving individual process steps or areas, but on improving the overall system by identifying and eliminating the bottlenecks that limit the performance of the system.
- It is not based on statistical or mathematical models, but on logical and causal relationships that reveal the causes and effects of bottlenecks.
- It uses not only quantitative data, but also qualitative information obtained from workshops and interviews with the specialist departments in order to understand and solve the bottlenecks.
Do you have an individual question?
Talk to us. We look forward to hearing from you and will be happy to help.