Distribution & Inventory Plan

Service Background

Supply chain planning services as a service providing technology support that allows a company to manage, link, align, collaborate and share its planning data across an extended supply chain. It supports demand creation through to the detailed supply-side response and from strategic through execution-level planning. A supply chain planning (SCP) solution is the planning decision repository for a defined end-to-end supply chain and is the environment in which end-to-end integrated supply chain decisions are managed. It establishes a single version of the truth for the plan data and decisions, regardless of the underlying execution technology environment.

The foundational capabilities of the SCP solution are:

Demand planning (e.g., demand forecasting and consensus demand planning)

Supply planning (e.g., inventory planning, replenishment planning, order promising, production planning, production scheduling)

Support for aligning planning decisions across the enterprise and across multiple planning time horizons

Support for financial impact analysis and planning

The optional capabilities of an SCP solution are:

• Advanced analytics and AI

• Digital supply chain twin

• Integrated business planning

• Continuous planning

• Supply chain segmentation

Service OBJECTIVE

Plan

• Provide the system with the inventory of finished products and inputs adequate to meet the demand at the desired level of service.

• Stabilize supply chain requirements persistently in the very short term, within resource capabilities in the short term, and communicating resource requirements in the medium term.

Schedule

• Determine the quantities to be delivered daily from each PT to each Loading Point and DC to meet the inventory levels defined by the Dispatch and Manufacturing Planner.

• Satisfy the characteristics of the resources involved in the short term, that is, availability in central location, storage capacities, capacity and characteristics of transport fleets, etc.

Service SCOPE

The service uses a single model that aims to:

1. Satisfy demand at stores (minimize lost sales)

2. Maintain safety stock at stores

3. Maintain safety stock at central warehouse

4. Purchase only what is necessary (minimize excess stock)

The model has the following restrictions:

1. Minimum sourcing lots

2. Minimum distribution

3. Sourcing capacity

4. Warehouse capacity (Store and Central location)

5. Purchase and distribute according to the planning logic described in the following section.

Service APPROACH

Purchase and distribution plans are generated following a series of rules:

Ideal Scenario: The ideal scenario occurs when there are no capacity restrictions. The demand of the stores is attended in the same period that it is generated.

a. The stores seek to purchase in the period in which the stores have to be dispatched.

b. Central location seeks to distribute as close to the period demanded by the stores.

c. It avoids making shipments and maintaining high stocks in stores.

d. It also avoids sourcing and maintaining high stocks in central location and stores.

Proportionality: In cases where there is a shortage of resources, the aim is to meet the forecast and/or safety stocks while maintaining proportionality between the stores.

a. It avoids completely depleting some stores

b. It avoids completely supplying some stores, when there are depleted stores.

c. In the event that the warehouse does not have capacity, sourcing is sought in previous periods.

Transport: Shipments to stores are loaded onto transports with a determined capacity. The distribution plan seeks to load all the transportes according to a certain tolerance

a. In case the transportes are incomplete, it seeks to complete the transports with orders that would have been dispatched in subsequent periods

b. The sourcing plan is advanced to be able to complete trucks.

detailed design of the prototype SC OPERATIONAL process

3 steps are performed:

1. Statistical review to determine the level of service to be charged to Distribution Resource Plan DRP per product per Store

2. Calculation of inventory policy, in excel for each product by CDA

3. Calculation of Distribution Resource Plan results with the calculated service level

The analysis included the review by ABC based on the volume – margin of each product by Store and takes into account the proximity of the Store to the source of supply.

Step 1 – Statistical review

Statistical analysis allows us to place the level of historical service above 92%.

This service level works for the current business situation, in case of modifications in strategy, distribution channels, and even portfolio, it will require adjustments

Step 2 – Calculation of inventory policy

Step 3 – Calculation of Distribution Resource Plan

Daily execution:

• Through the DRP system (suggestions)

• With demand planning information updated weekly

• Direction / adjustment from daily indicators

• Product without stock / Fill rate

• Missing product

• Inventory Coverage

• Cost per box transported T1

Monthly execution:

• With the support of the algorithm

• From the monthly demand plan

• With specific criteria for the management of information

• Inventory available only in distribution warehouses

• Transits only to distribution warehouses

• Calculating an inventory peak

• Calculating a distribution peak

• To validate "thick cut" storage and distribution capacities

Step 4 – RESULTS

Projected Inventory

• Calculate the estimated inventory each warehouse will have at the end of the week

• It includes the safety inventory component, the cycle inventory and in the first week that is calculated, it includes transit and actual inventory.

• Includes what the warehouse will receive calculated as the missing to cover the week of sale that starts plus the security inventory

DRP Plan

• Calculates the required product to be sent to each warehouse per week

• The formula contemplates the component of security inventory, the cycle inventory and in the first week discounts transit and real inventory.

• Once calculated it is copied in values to the DRP execution

Peak Inventory

• This output is used to calculate warehouse spaces

• It is based on the information of the "projected inventory"

• A information is added, referenced to the calculation of the "projected inventory" and it is calculated that, in the peak week (of greater storage, usually week 3 or 4), there will be a moment that will take 65% of the sale and 85% of the distribution.

• The result, fits complete pallets with the factor of boxes / pallet

DRP execution sheet for calculation of T1's

• This information is used to calculate primary distribution resources

• It is based on the information of the "DRP execution"

• T1's is considered to be the transits from plant to lungs and from lungs to consignment stores and logistics operators

• In this case, all the projected product will be sent to each warehouse, so the complete data must be taken into account, the work instructions "Instructive calculation of primary distribution requirements T1's" must be followed.