A selection of recently completed LMS design projects

Optimizing parts availability in the ASML supply chain

Planning and controlling the supply chain of lithography systems at ASML is very challenging. The current planning system at ASML is based on Material Requirements Planning (MRP-1) in combination with a Master Production Schedule (MPS).

ASML experienced serious limitations in this planning system with respect to the visibility of the supply chain possibilities to increase availability of parts, to show possible future outputs and to control the system options available to the market.

In the LMS design project, a planning tool, called SPOT (Scenario Planning and Optimization Tool), was developed that enables ASML to balance the expected demand and supply chain possibilities of lithography systems. The tool makes it possible to determine (1) what the output will be given the current state of materials and capacities in the supply chain, and (2) what additional materials have to be released to bring the future output in balance with expected demand, given the available capacity.

The tool is thus able to optimize the planning from a supply point of view.

Moreover, the tool can be used to create in a controlled way mix flexibility regarding the variants and options of the systems.


Designing  a leading indicator dashboard for the supply chain at Philips Lighting

Logistics Key Performance Indicators such as customer service level and total stock level are important tools to measure the performance of the supply chain. However they do not provide the logistics managers in the supply chain with the information needed to control he performance.

In the LMS design project, a system of ‘leading indicators’ has been designed that allows the managers to relate the detailed state of the supply chain to future performance in the market, enabling them to take corrective actions long before harm in the market or on the cost sheet is done.

The leading indicator system makes the supply process more transparent and more proactive. Several tools were developed to measure and analyze each leading indicator. Guidelines were provided for managers  to monitor and evaluate the stock replenishment performance in each phase and, if necessary, to take corrective action. The leading indicator dashboard has been implemented using different perspectives to satisfy the needs of different stakeholders.

Redesign of the international shipments in the Dow supply chains

Being a worldwide operating company with production facilities and sales in many parts of the world, international shipment and transportation is a major activity in many of Dow’s supply chains.

In the LMS design project, a tool was designed that enables Dow to determine for each of its supply chains the best so called ‘transfer country’, under the constraint that the transfer country is either the origin or the destination of the materials in a supply chain.

This redesign aims at minimizing transportation costs and decreasing control complexity with a given delivery performance.

Application of the tool to the Dow supply chains revealed cost effective alternative shipment structures which would affect about 30% of the yearly volume.



Redesign of the European Lens Care distribution structure at Bausch+Lomb

The existing European distribution network for lens care products of Bausch+Lomb, an international operating Eye Health company, consisted of two main DCs, several satellite DCs, and distributors in the emerging markets. Developments in sales and costs within Europe raised doubts about the optimality of this network.

In the LMS design project, three possible distribution networks were developed and tested with respect to resulting costs under a delivery performance constraint. In the  first option, one of the main DCs is eliminated and all satellite DCs and distributors are served from the remaining DC. In the second option the two DCs remain in operation, but serve a different set of countries. In the third option, two major European countries are each split up in two regions, which are served from different DC’s.

Analysis of the three designs revealed that substantial cost saving can be achieved with option two and three, or a combination of these options. The design is completed with conditions that need to be fulfilled for implementation of the design options.


Design of a Bull Whip control system at Royal DSM

Royal DSM is a Dutch life sciences and performance materials company that experienced plummeting sales during the worldwide financial crisis in the second half of 2008.

This unprecedented drop in sales however was not aligned with the fluctuations seen at the end markets, some of these were dropping, but nowhere near the levels seen at DSM.

Analyzing data from the supply chain revealed a generalized de-stocking wave as the main cause of the appearance of  an amplification or bull whip effect throughout the supply chain. The inherent structure of supply chains, information delays and inventory dynamics explain the observed effects.

In the LMS design project, a systems dynamics model was built to predict the dynamics in the orders and stocks in the supply chain. This model enabled management to institute several new control policies, resulting in continued investments and rebuilding stocks ahead of market pick up.


Design of a dynamic Demand & Supply match system at Nike

Nike is a worldwide operating manufacturer and distributer of sports ware working on an overall strategy to transform the marketplace in order to increase the customer experience and become the brand of choise when the customer decides to buy. This strategy requires a differentiated strategy regarding the matching of supply and demand from different customers and different areas. This process is called the Demand & Supply Match (DSM), which main objective is to assure the optimal use of Nike inventory taking into account performance parameters such as time delivery, order coverage and service level. 

In the LMS design project, a tool was developed to incorporate early market information and differentiated contract terms in the process of allocating over time the available pipe line inventory to demand, meanwhile enhancing inventory flexibility. In the project, three variants of the tool were developed and tested.

The test revealed that substantial improvements could be obtained with using the tool, with different variants of the tool used in different phases of the season, and improvements being dependent on the quality of the market information.


Redesign of the European distribution structure of imaging supplies at Océ

Océ is one of the leading printing and copying specialists in the world, providing products and services for reproduction, presentation, distribution and management of documents.

The business group Imaging supplies faced the challenge to reduce its distribution costs and commissioned a project to design the optimal distribution structure for its European customers, given the set of available locations of warehouses in Europe.

In the LMS design project a number a possible structures where developed, varying both the geographical flows and the logistics service providers engaged in the various parts of the process. The structures were evaluated on their performance, taking into account transportation costs, materials handling costs, inventory costs, and differentiated service levels.

The evaluation revealed a design that made savings possible of up to 6%, while maintaining the customer service at its current level. The design implies a number of non- trivial changes in the current distribution structure.