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ChainScope User manual

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1. The cumulative value is the total value of one piece of the item One can calculate the cumulative value by summing up all the added values of all the input items Service criterion Cumulative value 33 The average demand and the standard deviation of the item demand are stated in the EDComp and SDComp columns In the Stock column one can find the average number of items in each stock point in the optimal situation This average stock quantity for each stock point is the changeable variable in an optimization and after the optimization this is the input parameter for the new situation by which one can achieve the optimal situation The stock in time is the average number of periods of stock held in each stock point If the demand for an item is 2 items per period and the average stock in the stock point is 6 items the stock in time will be 3 periods The stock invest is the value of the average stock In our example case 1 the stock invest value of the item Subassembly is 200 this is because the average stock Stock is 28 59 and the cumulative value Cum value of one item Subassembly is 7 and 7 x 28 59 200 Dead stock is surplus inventory of items and thus useless items in a stock point The dead stock does not tribute to customer service and in the output table the dead stock is expressed in time value and numbers The remnant stock value is the number of items which are in the stock point be
2. Actual ready rate 89 40 89 30 75 60 Actual fill rate 96 60 96 60 95 00 Stock on hand 0 7 0 7 0 6 Dead stock 0 0 0 Remnant stocks 0 0 0 Pipeline 7 2 7 2 7 2 Total stock 7 9 7 9 7 8 Table 4 5 Results optimization The outcomes of the optimization can be found in the last column of table 4 5 Optimization One can see that the total costs of the optimal situation are below the current situation and that the desired fill rate is achieved After the optimization one can find in the output screen the new optimal target stock levels Stock For GrandBike these target stock levels are showed in table 4 6 With these target stock levels GrandBike can achieve the desired service levels and it will also save money in comparison with the current situation Item no Stock Front wheel 103 39 Back wheel 103 39 Handle bar 47 83 Frame 106 18 DC NL 67 02 DC BE 249 5 Granbike 80 28 Colored Frame 68 62 Frame and wheels 47 83 Table 4 6 Optimal target stock levels for GrandBike 4 4 Decision support The manager of GrandBike wonders if reducing or accessing the lead time of the transport to the Belgium DC would reduce the total costs The lead time reduction of one week would cost 2 extra and lead time accessing of one week would save 5 on the added value of the item Belgium DC The price of the bike in Belgium can not be raised and thus the margin would in or decr
3. a N Product Raw 1 R1 Product Sub Assembly SA Product Final Fi Customer order i Customer 1 4 Decoupling Customer order lead time 4 point Stock point Stock point Sub Stock point Raw 1 R1 Assembly SA Final Fi 7 x 7 ae fi N 4 N Number of products A used in B 3 Number of products B used in C 3 A A Y A N T Lead time i R1 2 Release Lead time SA Release Lead time Fi Expected demand 4 Costs SA 2 Costs Fi 2 2 2 Standard deviation PERITO Added value 5 Added value Fi demand 4 SA added 2 2 i Target ready fill rate Yield R1 2 Yield SA 2 Yield Fi 2 a Target Tai ani Margin 4 Stock R1 2 Stock SA 2 Stock Fi 2 Review Review Review period R1 2 period SA 2 period Fi 2 Figure 2 7 Graphical representation Excel input parameters In the sections 2 2 2 till 2 2 4 one can find thorough definitions and explanations of the input parameters presented in figure 2 7 2 2 2 Item input The Item code is the name or number for an item In the Item description Item code and field a more extensive description of the item can be given description The lead time is the throughput time between the moment of release of
4. 47 49 49 52 53 55 58 Preface What is in the user s manual The ChainScope user manual provides a global overview of how to use ChainScope itself The first chapter is aimed at first time users and will introduce ChainScope and the benefits of ChainScope The getting started chapter is sufficient for a quick start with ChainScope and will provide all the information needed for working with ChainScope The second chapter also includes many screenshots of ChainScope and a way of working for many functions The last chapter of this manual is the definitions chapter where all the terms used in ChainScope are defined The third chapter will provide a better and thorough understanding in the ChainScope world The overall principles needed for ChainScope modeling optimization and decision support are explained in this chapter In the fourth chapter the functionalities and way of modeling in ChainScope are shown with an example case of a bike manufacturer Reading this chapter will give you a simple real business example of the possibilities with ChainScope and how real business can be translated into a ChainScope model With the index of this manual one can search for ChainScope screens buttons or term explanations in this manual In the manual hyperlinks are inserted for quick references and ease of searching through the manual Supported platforms Licenses The developers Manual structure Modeling validatio
5. Demand 5 Customer Customer order Z lead time 1 Figure 2 2 Graphical representation simple customer demand case 1 Next to the parameters and structure presented in the above figures it is important to know the added values yield review period and current target stocks for each item For end items it is also important to know the demand standard deviation of demand customer order lead time margin and target ready and fill rate as service level for each of these items With this information one can create a supply chain model for ChainScope A complete schematic representation of the input parameters is given in figure 2 3 The input parameters are presented in a colored box or arrow In this figure the input parameters for a part of the supply chain of figure 2 1 and 2 2 are presented In the next sections of this chapter the procedure to create such model and denotation of each parameter will be given A lt Product Raw 1 R1 L Stock point Raw 1 R1 gt f y 4 DN Gs Lead time RI Release Costs SA Added value R1 Yield R1 Target Stock R1 Review period R1 Figure 2 3 Schematic representation ChainScope Input parameters Periods per year Interest rate year Product Sub Assembly SA Product Final Fi Product Final and Customeri1 gt gt A q Stock po
6. Graphical summary Du Pont sch D Project result summary Annual capital cost 154 207 Annual material cost 132 600 132 600 Annual dead capital cost 0 0 Annual release cost 2 860 1 430 Total annual cost 135 614 134 237 Stock on hand 287 462 Dead stock 0 0 Remnant stocks 0 0 Pipeline 228 228 Supply Chain 515 690 Fixed asset 150 000 150 000 Total Investment 150 515 150 690 Actual ready rate 83 4 87 0 Actual fill rate 95 0 95 0 Stock on hand 0 6 0 9 Dead stock 0 0 Remnant stocks 0 0 Pipeline 0 4 0 4 Total stock 1 1 4 Ready Project ChainScope Structure Supply Chain Scen Figure 2 31 Project result table summary The annual capital costs are the cost for holding inventory in the stock points and Annual capital the stock in the pipelines The capital in the stock points is equal to the stock cost invest output parameter and is equal to the average number of items in the stock multiplied with the total value of one item The capital in the pipeline for items with no other item input is equal to the added value multiplied with the pipe stock quantity For items with input items the capital in the pipeline is equal to the sum of all the input item values plus half of the item added value multiplied with the average number of items in the pipeline Over the total number of items in stock and pipelines one has to pay the interest costs The total capital in stock and the capital in the pipelines multiplied with the interest rate will
7. In ChainScope it is possible to build different scenarios and compare them For example scenarios with different suppliers and different lead times or the use of different distribution centers Decisions with influence on the input parameters of the supply chain operations planning function can be evaluated by ChainScope and based on the evaluation of these different scenarios the optimal scenario can be selected Next to this scenario selection the SCOP function can be optimized for given service constraints The forecasting of the demand the supply chain design and bill of material structure can be seen as input for ChainScope Based on these input ChainScope is able to evaluate different scenarios and different supply chain designs ChainScope can also be used as an optimization engine for the output of this engine is very relevant for the parameter setting of your MRP system In figure 1 1 one can see the relevance and influence of the output of the ChainScope software on the material requirement planning framework What is ChainScope This Chapter Supply Chain Operations Planning Decision support ChainScope and Material Requirement Planning Supply chain design Resource H AEA Demand planning procuction management planning Xe Front end Moe cal Master production intel a schedulng Capacity planning a Material TN E amp B re
8. in value or time with the items divided in the selected subclasses Above the summary graphs one can select Value or Time and on the left of the graph one can select one item class and more item subclasses of the selected item class In figure 2 28 the graphs represent the effective stock in time and the item class Product type is selected with all the item subclasses of the item class In the graphs the dead stock is colored red the dead stock is the surplus inventory and thus the useless items in the stock point which do not contribute to the achieved service level 35 ChainScope File Help aa Projects Scenario graphical summary LL Manage Projects Importance High T Master Data Low Stock in time J Evaluate Product type I Raw EZ Optimize J Assembly I End ll Reporting Assembly End IMI Effective stock in time EM Dead stock in time j Stock in time a to amp e a Subassembly GMB Effective stock in time BE Dead stock in time j Project ChainScope Structure Supply Chain Scenario Alternative Figure 2 28 Graphical summary example case 1 2 6 4 Du Pont Scheme The Du Pont scheme is a method of performance measurement that was started by the Du Pont Corporation in the 1920s With this method assets are measured at their gross book value rather than at net book value in order to produce a higher return on investment ROI The Du Pont identity br
9. 1 The ChainScope input parameters Before one can enter the input parameters the basic structure with items and The items customers has to be constructed In ChainScope items are physical products ina customers and unique form and place combination with a stock point Each ChainScope item basic structure must have the possibility to be dropped in a stock point and an item without a stock point cannot be modeled as an item in ChainScope For the transformation of an item into another item a so called transformation process is needed Customers in ChainScope are entities which demand minimal one ChainScope item a ChainScope customer s entity could just be one single person but one can also model an entire country as one ChainScope customer If all the ChainScope items are modeled the next step is to create the bill of materials where one can describe the relations between the items In the supply chain we want to describe the successor relations and the thus the number of pieces of each item that are needed in other items After the first three modeling steps it should be possible to create a drawing of your supply chain like figure 3 2 42 Rawi Lead time 2 P 4 V dina sub 4 N Customer Sw Assembly Customer order __ d Pari time N A lt leadtime 2 N 4 E VN we o Number 8 y Number 4 Demand 4 h x Vv a Raw2 x o 4 Lead time 4 y 7 _ gt Lead time 2 i a T S P
10. 100 fixed transport costs per order regardless of the order size this 100 has to be modeled as the release costs for the item ordered by the outside supplier During the transformation process an item can get broken and becomes useless The yield value is the ratio of the number of products which are not broken Broken products are not brought to the stock points and immediately after the transformation process removed from the supply chain The yield ratio in ChainScope works independent on every single item and a defect item has no effect on other items in the supply chain The added value is the value that is added to the item during the transformation process that creates the item In ChainScope the added value of a product is added in a linear way so the value of an item halfway during the transformation process is the cumulative value of al the input items for the item plus half of the added value of the item The release costs are the costs for releasing an order for the item If for example an outside supplier has 10 fixed cost per order the release cost for this item are 10 The review period is the period between subsequent release decisions for an item If one checks the inventory only once a month or an outside supplier only delivers once a month one can state that the review periods is then 1 month The item target stock is the targeted average number of items in the stock point Based on stock policies and parameter s
11. 1700 8 2400 1800 9 1800 1500 10 2100 1700 11 1800 1500 12 2100 1800 Table 4 1 Demand for Granbiket In the case description of GrandBike we can find nine ChainScope items Parts Bill of material of these are the four raw materials front wheel back wheel handle bar and frame A painted frame is another item than the unpainted frame thus in ChainScope we also have the item colored frame The first assembly process where the wheels and frame are combined makes another ChainScope item which we name the Frame and wheels In the last real production step the handle bars and the frame with wheels are assemblied and the item Granbike is complete After the completion of the Granbike we can identify two different ChainScope items namely a Granbike in the Dutch distribution center and a Granbike in the Belgium distribution center This will lead to the bill of material structure showed in figure 4 1 Frame Colored Frame 4 1 3 Back wheel Frame and wheels DC NL yO W Granbike Sg 2 Front wheel 3 Handle bar Figure 4 1 Bill of material GrandBike Grandbike can order every item once a week and thus the review period for Input every item is 1 week Because of this review period and the smallest lead times Parameters of one week we will define one ChainScope period equal to one week In ChainScope this will make 52 periods per year The selling prices of the Granbike is 143 or 162 and
12. 2 6 Standers Excel format overview H TargetP1 TargetP2 Create a new project Project and scenarios can be imported in ChainScope but first they have to be The Excel made in the specific ChainScope Excel project format This standard format project format consists of four sheets with the names Project input Item input Relation input and Item customer input The table 2 1 till 2 4 shows the structure of the standard Excel format and a brief description of each column Sheet Column name Description 16 Project input AI Project CODE Name for the project BI Structure CODE Identity name of the structure CI Scenario CODE Identity name of the scenario DI Class1 Name of item class 1 El Class2 Name of item class 2 F1 Class3 Name of item class 3 Table 2 1 Project input sheet Sheet Column name Description Item input Al Item code Item no BI Item description Item description CI EL Expected lead time DI AddValue Added value of the item El Release Costs Cost of releasing the item Fl Yield The yield of the item Gl RevPeriod Review period HI CPT Target stock Il The subclass of class 1 of which the Class1 item is part of Jl The subclass of class 2 of which the Class2 item is part of Kl The subclass of class 3 of which the Class3 item is part of Table 2 2 Item input sheet Sheet Column nam
13. Project ChainScope Scenario Alternative Figure 2 11 Manage projects screen A selected scenario can be copied with the Copy Scenario button After entering the new scenario name the selected scenario will be identically copied In this copy of the original scenario one can make changes in the input data or supply chain structure The different scenarios can be evaluated or optimized to compare these different scenarios The date of the last evaluation can be found in the last column of the scenarios table The interest rate per year is the percentage interest on capital invested This Structure Scenarios Interest rate 23 invested capital also includes the capital in the stock points and in the so called pipe lines 2 4 Masters Data Supply chain projects in ChainScope have a data structure with projects scenarios and the evaluation or optimization input In figure 2 10 on page 18 this data structure was presented in hierarchical blocks In this section we will discuss the master data The master data can also be seen as the scenario data 2 4 1 Items An item is a unique product or state in the supply chain This unique item has to be created due a transformation process or can be ordered from an outside supplier For example product X in distribution centre Europe is in a different state than product X in distribution centre America so they are different items in ChainScope models The Items screen is sh
14. Projects DER File Help wha e Projects Project selection Name Periods Year D Set active project User Manual Project 260 LL Manage Projects Structures S cenarios PG Master Data Items Bill of materials Customers Item customers Graphical representation wi Evaluate Item customer input Input Evaluate a Optimize O Item customer input Input Optimize E m CK 4 ici _ hi Reporting Item class tem subclass _ a Item customer output gt Importance e gt High Output Product type e Low Graphical summary Du Pont scheme Project result summary MA LAA hido re LDD PPA i A lt Dal MA AAi hido ea LDD PA a 2a Ready Project ChainScope Structure Supply Chain Scenario Original Figure 2 5 ChainScope start screen 14 In this manual and in ChainScope we use a lot of logistic terms like supply chain stock point item and bill of material For the consistency we want to state here the definitions of these terms ChainScope is used to model and optimize your supply chain and our formal definition of a supply chain is The functions inside and outside a company that enable the value chain to make products and provide service to the customer And with value chain in this definition we mean the function within a company that add value to the goods or services that the organization sells to customers and for which it receives
15. an order Item lead time for the item and the moment at which the ordered item is available for usage in other items and or delivery to customers 18 If we have a transformation process for a final item which needs 2 raw materials The process starts only with the first raw material and after 1 week the second raw material is needed in the process and after another week of transforming the final item is finished The lead time for the transformation process will then be 2 weeks For determining the lead time one has to assume that there is enough stock of the input items at the moment of ordering The added value is the value that is added to the item during the transformation process that creates the item One can also say that the added value is the monetary value of the specific item minus all the values of the input items In ChainScope the added value of a product is added in a linear way so the value of an item halfway during the transformation process is the cumulative value of al the input items for the item plus half of the added value of the item Items which are ordered from other suppliers have an added value that is equal to the total price one pays for the items and for the pipeline investment these added values are not added in a linear way but immediately after the order is placed The release costs are the costs for releasing an order for the item this are fixed costs for each order If for example an outside supplier has
16. chain has to be constructed In figure 3 1 this basic structure of a supply chain is presented in orange ChainScope Input parameters Project Input 1 Item input 2 Project Code Structure Code Scenario Code Item Class 1 Item Class 2 Item Class 3 Item code Item description Item subclass 1 value Item subclass 2 value Item subclass 3 value Periods per year Interest rate year A A Wo ie o 1 _y A Product Raw 1 R1 Product Sub Assembly SA x Product Final Fi Product Final and Customer 1 x VV NY i ONY we Vv qu time 4 _ Customer 1 4 Stock point CROSS gt point Sub Stock point Raw 1 R1 TRE HI gt l Number of products A used in B 3 gt Number of products B used in C 3 2 VA GN GN 4 Lead time 3 ams minor R1 2 egaa ead time Release ead time Fi Expected demand 4 CERA 2 Costs Fi 2 2 Standard deviati dii vue Added value Added value Fi GESSO Ton e SA added 2 Ti t ready fill rate Yield R1 2 Yield SA 2 Yield Fi 2 arget feat ill rate Target Tar Margin 4 get Target Stock R1 2 Stock SA 2 Stock Fi 2 Review Review Review period R1 2 period SA 2 period Fi 2 Figure 3
17. give the annual capital cost The annual dead capital cost is the interest paid over the dead stock and is calculated with the number of dead stock items multiplied with the cumulative value of the item and multiplied with the interest rate The annual material cost is the total costs in one year for producing all the Annual material expected demand in one year For our example case the total average demand per cost period is 15 units 260 periods year and the cumulative value of one Final item is 34 thus we have annual material cost of 132 600 15 260 34 For each order of an item one has to pay the release cost If one releases 100 Annual release orders a year one has to pay 100 times the release costs In our example we order cost 39 every item every period P_Order is always 1 thus we order each item 260 times The order for the Final item costs 3 and the release cost for the other four items is 2 This will lead to the annual release cost of 28 620 260 3 4 260 2 The stock on hand investment is the average value of your total stock If there is only one stock point with on average 10 number of items in stock and the cumulative value of one item is 10 the stock on hand investment will be 100 In our example case the stock on hand investment is 620 1 10 1 10 2 10 2 1 3 1 2 10 4 7 2 4 15 where we multiplied the cumulative added value of each item with the average stock of each item The dead
18. gt Graphical representation Jf Evaluate Optimize idl Reporting Ready Project ChainScope Structure Supply Chain Scenario Alternat Figure 2 20 Graphical representation screen Graphical representation 28 2 5 Evaluation and optimization The evaluation and optimization screens in ChainScope have the same sub screens A change in the parameter values in the evaluation section will also change the parameter values in the optimization section and vice versa In this chapter of the manual we will give information about how to create a quick evaluation or optimization 2 5 1 Item customer input In the Item customer input screen one can see and change the values of parameters that describe an item customer relation As one can see in figure 2 21 the item customer parameters are the demand standard deviation of the demand target ready and fill rate margin and order lead time More information about these parameters can be found in section 2 2 ChainScope File Help a Projects Item customer evaluation input LD Manage Projects Item customer Input Item no Customer no ED sD Target ready rate Target fill rate Margin Order leadtime Ml ac a a a A Evaluate Final i 1 00 0 95 0 95 1 00 1 D gt Item customer input Input Evaluate LZ Optimize lil Reporting Me 146 oi CS ni 3 ae Ready Project ChainScope Structure Supply Chain Scenario Alternat Figure 2 21 The item
19. on the total value of the item and partly based on the stock holding costs ChainScope can deliver you the optimal target stocks for each item The release costs are the costs for releasing an order for the item this are fixed costs for each order If for example an outside supplier has 100 fixed transport costs per order regardless of the order size this 100 has to be modeled as the release costs for the item ordered by the outside supplier During the transformation process an item can get broken and becomes useless The yield value is the ratio of the number of products which are not broken Broken products are not brought to the stock points and immediately after the transformation process removed out of the supply chain The yield ratio in ChainScope works independent on every single item and a defect item has no effect on other items in the supply chain In for example SAP this phenomena is described with the assembly scrap parameter The review period is the period between subsequent release decisions for an item If we can order items once a day the review period is one day but if we could only order once a week the review period would be 5 work days It is possible that ordering and reviewing your stock point is done daily but that an outside supplier collects all the orders on Fridays and delivers the next week on Friday In ChainScope this can be modeled as a review period of 5 days and a lead time of one day The target stock i
20. stock Backlog Low Level Code Order quantity 34 average ordered quantities of the items The column name E Order stands for information expected average order size and S Order stands for standard deviation of the expected average order size The P_Order of an item is the change that in one period one has to order the item In our example case all the P_Order values are 1 this means that every item will be ordered every period if the P_Order value would be 0 50 than on average one in the two periods the item would be ordered The column name Rev Period F stands for feasible review period The review Feasible review period value is the number of periods between subsequent release decisions for period an item in the supply network If in our example case the review period for the Final item would be 2 periods the feasible review periods for Raw 3 would become 2 periods because items of Raw 3 would only be ordered once in the two weeks because of the review period of the Final item The effective stock is the opposite of the dead stock the effective stock is the Effective Stock stock which does contribute to the customer service The total stock investment is the dead stock plus the effective stock The effective stock is in the output table expressed in value and time 2 6 3 Graphical summary In the graphical summary screen one can create graphs with the stock presented Graphical
21. stock investment is the same as the stock on hand but only for the number of items which are part of the dead stock In our example case we have dead stock for item Raw 1 and Raw 3 what will make the dead stock investment of 17 Remnant stock investment is calculated in the same way for the average remnant stock per item The pipeline investment is the average number of items in the pipeline multiplied with the average value of one item in the pipeline For items with no input items the pipeline value is equal to the total added value of the item and for items with input items that pipeline value is equal to the sum of the added values of all the input item plus half of the added value of the item Thus the pipeline value of one item of Sub assembly is 6 2 1 3 1 1 2 2 and the total pipeline investment for our example case is 228 20 1 60 1 3 75 2 10 6 2 5 32 Most of the above explained output parameters are also expressed in time in the same table The conversion from quantity or investment to time is made with the demand per period for each item The supply Chain investment is the stock on hand investment plus the pipeline investment In our example case the total supply chain investment per period is 848 620 228 The fixed asset investment is the sum of all the investments in fixed assets and can be inserted in the evaluation or optimization screens If different scenarios have different fixed assets this is an i
22. 5 000 Project ChainScope Sales Sal EM les TA 353 600 7 165 515 Fixed Assets Current Assets hsoooo 15 515 Cash Inventory 10 000 515 Other CA 5 000 Structure Supply Chain Scenario Alternati Figure 2 29 The Du Pont scheme Abbreviation ROE Return on equity ROA Return on assets EM Equity multiplier PM Profit margin TAT Total asset turnover NI Net income TA Total assets COGS Costs of goods sold SGA Selling general and administrative expenses Other CA Other current assets Table 2 6 Du Pont abbreviations The net income are the sales minus the total costs and the total costs is the sum Net income of the costs of goods sold interest taxes and selling general and administrative expenses The sum of al the assets can be found in the TA block The value of the total Total assets assets is the fixed assets plus cash plus the other current assets 37 In the ChainScope Du Pont screen one can see the terms and operations which Du Pont system lead to the return on equity In formula form the Du Pont scheme can be described as follow NI y Sales A Sales TA ROE ROA EM PM TAT EM EM ROE Sales TotalCosts EM FixedAssets CurrentAssets ROE Sales COGS SGA Interest Taxes EM FixedAssets Inventory Cash OtherCA 2 6 5 Project result summary The last screen in ChainScope is the Project result s
23. 90 Service level o stock capital scope User Manual 95 Service level Lead time reduction versus material cost a nvested stock capital and material cost June 2008 About ChainScope Company Philosophy Contact Companies using ChainScope include ChainScope Users 1 Introduction to ChainScope 1 1 What is ChainScope used for 1 2 Why use ChainScope 1 3 Installation Getting started 2 1 Guidelines for users 2 1 1 Starting ChainScope 2 2 2 2 Projects 2 2 1 Create a new project 2 2 2 Item input 2 2 3 Relation input 2 2 4 Item customer input 2 2 5 Set active project 2 3 Manage projects 2 4 Masters Data 2 4 1 Items 2 4 2 Bill of Materials 2 4 3 Customers relations 2 4 4 Graphical Representation 2 5 Evaluation and optimization 2 5 1 Item customer input 2 5 2 Input 2 5 3 Evaluation 2 5 4 Optimization 2 6 Reporting 2 6 1 Item customer output 2 6 2 Output 2 6 3 Graphical summary 2 6 4 Du Pont Scheme 2 6 5 Project result summary Modeling validation and interpret the output data 3 1 Modeling and collecting the input data 3 2 Validation and verification 3 3 Interpret the results ChainScope case example 4 1 Building a project 4 2 Validating a project 4 3 Optimize a project 4 4 Decision support 5 Definitions Contents oo 00 cA 12 14 16 16 18 20 21 21 22 24 24 25 26 28 29 29 29 30 31 32 32 32 35 36 38 41 41 46
24. Supply Chain Scenario Alternative Figure 2 25 Item customer output screen The values of the capital column represent the value of the products in the stock Capital and point which are in the stock point because of the customer In our example allocated stock 106 74 of the Final item are in the stock point because of customer 1 demand The allocated stock is like capital but in numbers instead of euros The average backlog value is the number of items a customer ordered but not Average receives on time The abbreviation EW stands for the expected waiting time backlog and this is the average time a customer has to wait if an order can not be delivered waiting time on time 2 6 2 Output On overview of the output parameters of ChainScope can be found in figure Output 32 2 26 The values of all these output parameters can be found in the ChainScope Output screen In figure 2 27 the output screen for the example case 1 is presented ChainScope Output parameters AL E i Ca y AI Du lt Product A Product B gt lt Product C gt lt Product C and Customer 1 gt 4 7 N Le NY L Customer 1 SOSIA Stock point B Stock point C S N n O o CA A Number of products A used in B e b 4 x V x Pipe stock B Pipeline Dead stock time B EDIES Comp B Allocated sto
25. als Customers Item customers Graphical representation A Evaluate Item customer input Input Evaluate 7 Optimize Item customer input Input Optimize HL ey ll Reporting a item class Item subclass Item customer output gt Importance gt High Dp Product type G Low Graphical summary Du Pont scheme Project result summary CE e a DD PPA Dal 16411440 id aPa LDP DPA Ha i L Ready Project ChainScope Structure Supply Chain Scenario Original Figure 2 9 The set active project screen In the periods per year field one can determine the standard time unit used in Periods per ChainScope If one states here for example 2 periods per year the amount of year demand per customer and all the other parameters should be per half year A project file made in the standard Excel format can be imported in ChainScope Import project with the import button amp J This button can be found in the upper left corner of the screen 2 3 Manage projects Supply chain projects in ChainScope have a data structure with projects Data structure scenarios and evaluation input In figure 2 10 this data structure is presented in hierarchical blocks As one can see in the figure a project structure can have more than one scenario and each scenario has optimization and evaluation input 22 Project data Periods per year Items class Item subclass Project structure a Scena
26. an orange box because this parameter is used as the variable in an optimization ChainScope Output parameters Product A X Product B a Product C Product C and Customer 1 gt Stock point A Stock point B Stock point C A x 7 7 n h i N Number of products A used in B y Number of products B used in C ni L Oo n y Doe L Y a 1 V F7 LNN N J TAX V _ Pipe stock B Stock B Item demand B Allocated stock Pipeline Dead stock B investment Order Quantity B Average backlog Remnant stock B Backlog B Actual Ready Fill rate Low Level Code B Capital Feasible Review Period B Expected waitingtime Cummulative Value per unit B Figure 3 3 the ChainScope output parameters All the parameters presented in figure 3 3 except the target Stock parameter are part of the output of an evaluation Based on this output one can for example evaluate the service performance of different scenarios Parameters that indicate a performance in terms of costs are summed in the total annual cost and if the different scenarios have different fixed asset investments the fixed asset investment is also important for the output evaluation Information and definitions of all the output parameters can be found in section 2 6 and in chapter 4 the output is interpret for an example case Like stated earlier the tar
27. are differences between the evaluation and optimization figure 2 23 and 2 24 in the optimal situation there will be less inventory of the end items but more inventory for the level code 2 items More information about the level codes can be found in section 2 5 3 The table and graphs can be copied with a right mouse click ChainScope File Help ala Projects Optimize LL Manage Projects Service criterion Ready rate Fill rate Interest rate year f Master Data Results Evaluati Era Supply chain information tangible cost EG Optimize Annual capital cost 154 Item customer input Annual material cost 132 600 Input Annual dead capital cost 0 D gt Optimize Annual release cost 2 860 Total annual cost 135 614 Stock on hand investment ikl Reporting Stock on hand investment 287 Dead stock investment it Remnant stocks investment D 2 Pipeline investment 228 Supply Chain Tier Supply Chain investment 515 Fixed asset investment 1 234 Total investment 1 749 Stock on hand time Actual Ready rate 83 4 Actual Fill rate 950 Stock on hand time 06 Dead stock time 0 Remnant stocks time 0 Pipeline time DA 3 2 Total stock time 1 Supply Chain Tier Project ChainScope Structure Supply Chain Scenario Alternative Figure 2 24 The optimization screen for example case 1 Result and validation Optimization The results for the annual costs investments and stock performances of
28. bill of material If one would make the Final item an input item for Raw 1 this would create a cycle in the bill of material in the example case 1 2 4 3 Customer relations In the Customers screen one can add customers with the Add customer button on the bottom of the screen In figure 2 17 the Add customer screen is presented where one is able to create new customers identity and give a description of the customers Edit bill of materials Cycles in bill of materials Add customer 26 ChainScope File Help a Projects Customers LO Manage Projects Customer no Description Customer 1 lt q mese ata GPL i Customer 2 Customer 2 iS Items Bill of materials D Customers Item customers Graphical representation A Evaluate Z Optimize fal Reporting Add customer Project ChainScope Structure Supply Chain Scenario Alternat Figure 2 16 Customers screen Add customer Customer ID Customer 2 Customer description Customer 2 Add Cancel Figure 2 17 Add customer screen In the Item customers screen the relation between customers and items can be Item customer created or changed Item customer relations can be added with the Add item relation customer combination button In figure 2 19 the Add item customer combination screen is presented One can select an item and customer with the dropdown menus and one has to e
29. cause other items are not available and also needed for a transformation process If in the example case 1 items of Raw 1 are backlogged and the items of Raw 2 are not backlogged and ready in the stock point these items of Raw 2 is called remnant stock In the pipe stock column one can find the average number of items of a product that are in the transformation process before they are in the stock point of the item If a transformation process would take 2 weeks and every week one product is ordered the pipe stock of the product would be 2 items In the output table one can find the abbreviation BL which stands for backlog The number of items presented in the BL column is the average number of items backordered in each period The abbreviation LLCode stands for Low Level Code which represents the hierarchical level code of the item End products have level code 1 and all the input products for the end products have level code 2 and so on In our example case 1 the items Raw 1 and Raw 2 have the level code 3 and Subassembly and Raw 3 the level code 2 If Raw 3 was also an input item for Subassembly the level code of Raw 3 will not change because an item will take the lowest as possible level code In the columns with Order in the heading one can find information about the Component Demand Stock quantity Stock in time Stock invest Dead stock Remnant stocks Pipe line
30. ck investment S E P_Order B Remnant stock B One Average backlog Backlog B il intoa coe ERO Actual Ready Fill rate Feasible Review Capital Period B Ae Expected waitingtime Cum Value EW per unit B Figure 2 26 ChainScope output parameters ChainScope File Help aa Projects LI Manage Projects E ltem rrrry rrr__rrrr_rr_r__T __ _____ Description Ready rate Ext Fill rate Ext Ready rate Fill rate Cum value EDComp SDComp Dead stock Subassembly D 0 86 0 95 0 00 0 42 7 0 5 0 11 0 00 Y Evaluate Raw 3 c 0 86 0 95 0 16 0 72 2 0 1 3 0 3 0 00 IG Master Data E Optimize Raw2 B 0 32 0 83 10 15 0 3 2 w 1 A 0 06 0 69 10 10 0 2 1 id Reporting tr End 0 00 0 84 34 0 1 3 0 3 Item customer output D Output Graphical summary Du Pont scheme Project result summary i Ready Project ChainScope Structure Supply Chain Scenario Alternative Figure 2 27 Output screen For the value of the service criterion we make distinction between the external and internal value The external service level can be recognized by the Ext extension in the column name and these are the service level values which the customer will experience For items with customer demand the ChainScope algorithm creates an extra stock point for the items before they are dedicated to the customers The internal service levels for end items are the service levels of the factiously by ChainScope created stock points
31. ction section 3 2 Validation and verification Margin Target service levels Entering the data 45 3 2 Validation and verification Validation is the process of establishing documented evidence that provides a high degree of assurance that a product service or system accomplishes its intended requirements It is sometimes said that validation ensures that you built the right thing and verification ensures that you built it right In the case example chapter one can find a validation example in section 4 2 It is impossible to have a simple button in ChainScope to check if the constructed supply chain model is valid and it is possible that the validation process will take more time than the model construction time For a model without validation an optimization or decision support will be doubtful and thus useless Before one can validate the scenario has to be modeled and evaluated in the evaluation mode The outcomes of the evaluation and the performances in real business of the modeled scenario will be used as input for the validation Like stated before the input for the validation process are the output parameters of the ChainScope evaluation and the values of these parameters in real business It is important that the validation parameter in ChainScope has the same meaning and way of calculating than the parameter value in real business For example if the Ready rate in the business means the percentage of t
32. customer input screen 2 5 2 Input Evaluation and optimization Item customer input screen All the important item input variables for an evaluation or optimization can be Input screen found in the input screen As presented in figure 2 22 these parameters are the review period lead time added value target stock release cost and yield information about these parameters can be found in section 2 2 For the evaluation the target stocks are important but for the optimization no target stocks are needed because the optimization will determine the new and optimal target stocks 29 ChainScope File Help dA Projects LD Manage Projects Master Data A Evaluate Item customer input D Input Evaluate 2 Optimize tal Reporting Ready Figure 2 22 Evaluation input item Description Rev period Leadtime Addedvalue Targetstock Release cost __ Yield Raw2 Raw3 c Subassem D Final End DER Project ChainScope The input screen Scenario Alternative 2 5 3 Evaluation In the evaluation screen there is only one button the Evaluate button For the Evaluation evaluation the selected service criterion is not important and the interest rate will only influence the annual capital costs but not the stock on hand or investment costs In the table one can change the value of the fixed asset investment which refers to the investment in fixed capital and in general this is the investme
33. customer relation parameters as presented in table 4 3 Target ready Target fill Order lead Item no ED SD rate rate Margin time DC NL 500 71 95 0 95 0 95 0 1 1 DC BE 400 123 99 0 90 0 95 0 2 Table 4 3 Item customer relation parameters If one inserts the above presented input parameters and bill of material structure an evaluation with an interest rate of 30 per year will show the results of figure 4 2 Evaluation 51 Results Supply chain information tangible cost Stock on hand investment Annual capital cost 283 078 Annual material cost 6 188 000 Annual dead capital cost 1 575 Annual release cost 0 Total annual cost 6 471 078 Stock on hand investment 89 000 Dead stock investment 5 250 Remnant stocks investment O Pipeline investment 854 592 Supply Chain Tier Supply Chain investment 943 592 5 Stock on hand time Fixed asset investment O Total investment 943 592 Actual Ready rate 89 4 Actual Fill rate 96 6 Stock on hand time 07 Dead stock time 00 Remnant stocks time 0 Pipeline time 72 Total stock time 7 9 Supply Chain Tier Figure 4 2 GrandBike evaluation results 4 2 Validating a project Validation is the process of establishing documented evidence that provides a high degree of assurance that a product service or system accomplishes its intended requirements It is sometimes said that validation ensures that you built the ri
34. d a description for the item can be entered The third and fourth field are for the item classes in the example case 1 the item subclass for Importance and Product type can be chosen with a dropdown menu In the Item type field one can choose for End Middle or Start item In the bottom of the Add new item screen the values of the item input parameters can be entered In section 2 2 2 more information about these parameters can be found 2 4 2 Bill of Materials In the Bill of materials screen one can change the supply chain structure and number of input items required for a transformation process for the creation of the stated successor In figure 2 14 the Bill of materials screen is shown for the example case 1 In figure 2 14 there are two successor items Final and Subassembly In the Bill of materials screen one can change the successor item description and the number of items needed for the creation of the successor In figure 2 14 one can see that the successor item Final is a successor of the items Raw 3 and Subassembly The description of the successor item relation between Subassembly and Final is described as End and 4 items of the item Subassembly are needed for one item of Final Item input parameters Bill of materials 25 ChainScope File Help 2A Projects Bils of Material LL Manage Projects S
35. e Description Relation input Al Item code Item no Bl Successor Item Item no of the successor of the item code stated in column A Cl Number of successors of the item Number stated in column B of the item stated in column A Table 2 3 Relation input sheet Sheet Item Column name Description customer input Al Item code Item no Bl Customer code Customer no Cl Customer description Customer description D1 ED Expected demand El SD Standard deviation of the demand 17 Fl CLT Customer order lead time Gl Margin on one item of the item Margin stated in column A H1 TargetP1 Target ready rate level Il TargetP2 Target fill rate Table 2 4 Item customer input sheet In figure 2 7 all the input parameters needed to create an Excel project file are Graphical schematic located Each input parameter is presented in one of the colored boxes representation The number of the Excel sheet on which the parameter is stated can be found input between brackets after the parameter name parameters ChainScope Input parameters Project Input 1 Item input 2 Project Code Structure Code Scenario Code Item code Item description Item subclass 1 value Periods per year Item Class 1 Item subclass 2 value ea Gar s Item subclass 3 value Interest rate year N N Product Final and Customer1 gt gt
36. eaks down return on equity that is the return to equity that investors have contributed to the firm into three distinct elements This analysis allows the analyst to understand where superior or inferior return is derived from by comparison with companies in similar industries or between industries The return on equity ROE ratio is a measure of the rate of return to stockholders In the DuPont system the ROE is decomposed into various factors influencing company performance The ROE will be determined with the return on assets multiplied with the equity multiplier The equity multiplier is the amount of percentage of assets owned by each euro of equity invested in a business In figure 2 29 the Du Pont scheme for the example case 1 is presented The red values can be changed in the ChainScope screen and the black values are What is the Du Pont scheme Return on equity Du Pont scheme 36 determined based on the evaluation or optimization In the screen many abbreviations are used and in table 2 6 these abbreviations are described ChainScope DER File Help aa Projects LO Manage Projects v IG Master Data A Evaluate 7 Optimize lp Reporting IS Item customer output Output Graphical summary D gt Du Pont scheme Project result summary Du Pont scheme PM 0 54 I 191 986 f Total costs Sales 161 614 353 600 COGS SGA 135 614 20 000 Interest Taxes 1 000
37. ease due a lead time change The price of one bike in Belgium is 162 and 27 is profit for GrandBike 20 margin The lead time reduction would decrease the margin and the lead time accession would increase the margin In table 4 7 an overview of this information is presented results Decision description 55 Current situation Lead time Lead time accession reduction Added value item 0 5 2 Belgium DC Margin 20 24 62 17 52 Extra cost 0 104 000 41 600 Table 4 7 GrandBike decision description Based on the above presented information one would suggest that the lead time accession would be the best option Lead time accession would increase the uncertainty and thus should increase the stock in the Belgium DC With this information know one should perform an optimization for all the three scenarios to make the decision In ChainScope one can build the three scenarios with the differences presented in table 4 7 An evaluation would not be fare because the target stocks would influence the result and the target stock was based on the current situation With ChainScope and thus the optimal situation known it is plausible to compare the optimal situations for the scenarios In table 4 8 the results of all these optimization are presented Lead time Current accession Lead time Scenario code situation optimal reduction Service criterion Fill Rate Design mode Optim
38. ei Demand 5 7 Number 1 Sr Customer A N ea N Customer order _ o 7 e Li leadtime 1 Raws 7 Lead time 3 y Figure 3 2 Basic structure of a ChainScope model 3 1 2 Collecting the input parameters data After the items and the basic structure is modeled one can start searching for the Collecting the right values for each input parameter In figure 4 1 all the parameters are presented in blue boxes with an arrow leading to the place where the parameter has effect It is very important to have a thorough understanding of the definitions of each parameter and to perform a consistency check if you take over parameter values from your ERP MRP software In the next part of this section we will discuss all the input parameters The lead time is the throughput time between the moment of release of an order for the item and the moment at which the ordered item is available for usage in other items and or delivery to customers The lead time is equal to the in ChainScope modeling language transformation time If we have a transformation process for a final item which needs 2 raw materials The process starts only with the first raw material and after 1 week the second raw material is needed in the process and after another week of transforming the final item is finished The lead time for the transformation process will then be 2 weeks For determining the lead time one has to assume that there is enough
39. el can be achieved but not the total amount of invested capital will automatically lead to this maximum service level The allocation of this stock capital among the stock points is very important and will influence the achieved performance level In the figures 1 3 and 1 4 the invested capital service level and stock allocation are graphically presented The current situation is in these figures presented as the red dot and the location of this red dot can be found with ChainScope evaluations Performance loop Invested stock capital and service levels Service level Item itema Item C oO Item A Current situation Item C a Current stock allocation Invested stock capital Figure 1 3 Service level versus invested stock capital and allocation 1 Like one can see in figure 1 3 there is a situation where one can achieve the same service level as in the current situation but the invested stock capital is reduced This situation is in figure 1 3 represented with a gray dot the bars on the horizontal axis of figure 1 3 represent the stock allocation over the different stock items The picture on the right also represents the current situation and a situation with a new stock capital allocation the same service level and less invested capital scope 90 Service level el Invested stock capital 90 Service level scope Service level ui el Invested stock capital 95 Se
40. essor of the items Sub Assembly and Raw 3 In the standard Excel project format the Supply chain of figure 2 8 would look like table 2 5 Item code Successor item code Number Raw 1 Subassembly 2 Raw 2 Subassembly 3 Raw 3 Final 1 Sub Assembly Final 4 Table 2 5 Example case 1 structure in the Excel standard format 2 2 4 Item customer input In the last sheet of the standard Excel project format the parameters which concern the item customer relation are stated Customers with their code and description can be created in this sheet by stating them in the customer code column The demand is the number of products per period the customer wants to receive The standard deviation of the demand indicates the demand uncertainty The standard deviation can be calculated with a formula where all the difference between the known demand and average demand is squared and shared through the total number of periods minus one All these values are summed and square rooted and the result is the standard deviation In formula format with Xi as the demand in each period the formula for the standard deviation will be 5 X AverageDemand i l n l The customer order lead time are the number of periods between the moment a customer places an order and wants to receive the ordered items A customer item relation can only have one lead time for example if you modeled the Dutch market as one customer bu
41. etting an average stock quantity can be Added value Release costs Yield Added value Release costs Review period Item target stock 19 achieved For reporting and analysis it can be helpful to create classes for example the Item class class importance or type of product 2 2 3 Relation input For the relation input it is important to know the structure of the supply chain Structure and the complete bill of material for every product In figure 2 8 a simple structure with item successor relations is given In each arrow the number of items needed in the transformation process for creating the item at the end of the arrow is stated In figure 2 8 two items of Raw 1 and three items of Raw 2 are needed in the transformation process for creating one item of Sub Assembly N Raw 1 Lead time 2 SE x Number 2 Sub x SS Assembly 7 P time 2N y N 7 Tv Number 3 Number 4 x k J A Raw 2 N Final Lead time 4 A wo N Lead time 2A 4 e Cali VA _ N Raw3 Lead time A N Figure 2 8 Supply chain successors structure example case 1 In ChainScope a successor of item i is an item for which item i is needed during Successor the transformation process to create the item the successor In figure 2 8 the item Sub Assembly is a successor of the items Raw 1 and Raw 2 and the item Final is succ
42. fill rate Capital backlog stock EW DC NL 0 97 1 00 32499 97 1 49 250 0 DC BE 0 80 0 93 27000 02 29 01 200 0 Figure 4 4 GrandBike evaluation results Based on the given business performance parameters and the evaluation output we will use the ready and fill rates as the validation parameters A validation based on more parameters would be more accurate For the Belgium DC the measured fill rate of 92 96 matches almost perfect with the expected fill rate 93 based on the model in ChainScope The not accurate measured ready rate in the Belgium DC would be laying around the 80 based on the DC manager s experience This also matches with the ChainScope outcome of 0 80 for the Belgium DC Based on these results we can conclude that the model created in ChainScope is valid for the Belgium DC For the Dutch DC we only know the fill rate performance 96 10 The ChainScope evaluation expects a fill rate of 1 and an average backlog of 1 49 The outcomes of the ChainScope model are not valid due this difference so further research on the input parameters or measured performance is needed Now we concluded that the model is not valid and it will not make sense to perform an optimization Due further research on the invalid results of the validation we found that there was a two week strike in the Duth DC Due that strike all the demand for the two weeks could not be delivered on time The total demand in the week before the demand and in the f
43. get Stock value for each items is used as variable for the optimization Implementing the new target stock values would lead to the optimal situation with minimal annual cost and achieved service levels Information and definitions of all the output parameters can be found in section 2 6 and in chapter 4 the output is interpret for an example case In the last part of this subsection we will discus the most important overview output parameters The annual capital costs are the cost for holding inventory in the stock points and the stock in the pipelines The capital in the stock points is equal to the stock invest output parameter and is equal to the average number of items in the stock multiplied with the total value of one item For The capital in the pipeline for The output data Evaluation output Optimization output Annual capital cost 47 items with no other item input is equal to the added value multiplied with the pipe stock parameter value For items with input items the capital in the pipeline is equal to the sum of all the input item values plus half of the item added value multiplied with the average number of items in the pipeline Over the total number of items in stock and pipelines one has to pay the interest costs The total capital in stock plus the capital in the pipelines multiplied with the interest rate will give the annual capital cost The annual dead capital cost is the interest paid over the dead stock a
44. ght thing and verification ensures that you built it right GrandBike knows the number of backordered bikes during the last year for each DC In the Dutch DC there where 1015 backorders during the entire year In the Belgium DC there were no peculiarities and the total number of backorders was 1465 The manager of the Belgium DC also told that every week the DC became empty on Thursday afternoon or Friday morning Based on the above stated case information we can conclude that the fill rate of the Dutch DC under normal conditions would be 96 10 500 52 1015 500 52 Of the Dutch DC no information about the ready rate is known For the Belgium DC the percentage of demand that was satisfied on time would be 92 96 52 400 1465 52 400 Based on the not accurate information that in a five week workweek the DC is empty on the end of the week on the Thursday afternoon or Friday morning will give us an indication that the ready rate will be around the 80 1 out of 5 days no stock in the DC If one inserts the in section 4 1 presented input parameters and bill of material structure an evaluation with an interest rate of 30 per year will show the results of figure 4 2 The information showed on the item customer output screen is presented in table What is validation Business performances GrandBike Evaluation 52 4 4 below Actual Actual Average Allocated Item no ready rate
45. he achieved Actual ready fill ready rate is the achieved fraction of time during which the net stock is positive The fill rate describes the fraction of customer demand that is met routinely without backordering or lost sales rate 48 Chapter 4 ChainScope case example In this last chapter of the ChainScope user s manual we discuss a fictitious case This chapter about a bike manufacturer GrandBike With this simple case we want to give you some feeling with the ChainScope parameters modeling and output The first part of the chapters starts with a case description and how to build the project and at the end of this chapter after validation the outcomes of the case study are presented 4 1 Building a project Our example case is of a Dutch company called GrandBike which makes and sells only one type of bikes called the Granbike By outside suppliers GrandBike orders front wheels back wheels handle bars and frames by which the pedals and chain is included In the GrandBike factory the frames are painted by a contractor but GrandBike is responsible for the inventory before and after the painting process After the painting the frames are assembled with the front and back wheel and stored in a stock point The last step is the assembly of the handle bar on the bike GrandBike has two distribution centers DC one in the Netherlands and one in Belgium Both distribution centers deliver the national demand The demand of the las
46. he total time orders are on time it does not make sense to validate this business ready rate value with the ChainScope evaluation ready rate In most scenarios it is advisable to use the fill and ready rate as the important validation parameters For an honest comparison it is important to notice that ChainScope evaluates models under normal conditions and the model in ChainScope are only influenced by the input parameters The meaning and measurement method of the input parameters for the validation have to be the same and both measured only under influence of the ChainScope input parameters If for example your warehouse was closed for two weeks due a hurricane and the total demand for these two week was backordered the performance in real business logically will be lower than the expected service level ChainScope does not have a hurricane change input parameter thus the influence of the hurricane has to be eliminated out of the validation process To eliminate the hurricane influence the demand and backorders in the hurricane weeks has to be removed from the fill rate calculations Validation and verification Validation in ChainScope Validation parameters Honest comparison 46 3 3 Interpret the output data After an evaluation or optimization ChainScope generates many important output parameters In figure 3 3 the output parameters are graphically presented in colored boxes The Stock B parameter is presented in
47. ice levels If ChainScope performs an optimization it will take the selected target service criteria as a constraint and shows an optimal situation where these criteria are met Due this service constraint it could happen that in the optimization the total annual cost would be higher than in the evaluation of the current business situation In the current business situation the service criteria would than be lower than the target service levels used for the optimization The third column shows the optimal situation if we want to achieve the same service levels than that GrandBikes achieves now Structure code GrandBike GrandBike GrandBike Granbike Granbike Optimal Optimal same desired Scenario code Granbike service levels service levels Service criterion Fill rate Fill rate Design mode Evaluate Optimize Optimize Accounting data Periods year 52 52 52 Interest rate year 30 30 30 Results Cost Annual capital cost 283 078 281 239 277 043 Annual material cost 6 188 000 6 188 000 6 188 000 Annual dead capital cost 1 575 0 0 Annual release cost 0 0 0 Total annual cost 6 471 078 6 469 239 6 465 043 Investment Stock on hand 89 000 82 871 68 885 Dead stock 5 250 0 0 Remnant stocks 0 0 0 Pipeline 854 592 854 592 854 592 Supply Chain 943 592 937 463 923 477 Fixed asset 0 0 0 Total Investment 943 592 937 463 923 477 Time
48. int Sub Assembly SA Customer order lead time Customer 1 VA Stock point Final Fi ill Release Costs Fi Lead time SA Added value SA added Yield SA Target Stock SA Review period SA input parameters A Number of products A used in B N A Number of products B used in C L 4 i Added value Fi Lead time Fi Yield Fi Target Stock Fi Review period Fi Expected demand Standard deviation demand Target ready fill rate Margin 13 2 1 1 Starting ChainScope After staring ChainScope the warning presented below will occur Starting Warning ChainScope 1 All data changes and calculation results will be saved instantly Figure 2 4 Start warning The occurrence of this warning is normal and wants to make the user clear that ChainScope will save every change instantly This means that every input change will overwrite the earlier input When one wants to work with different settings for a project one has to create different scenarios Before one can really start working with ChainScope a project has to be created in the standers Excel project format Section 2 2 will explain how to create your first project for ChainScope When ChainScope is started one will see the window of figure 2 5 and one is located in the Set active project screen ChainScope
49. irst week of the strike was 930 bikes If there was no strike in the Dutch DC the total number of backorder would be 89 ChainScope evaluates the standard stochastic situation thus a situation without strikes If there was no strike in the DC the fill rate would be around the 99 67 500 52 85 500 52 The in ChainScope expected backlog in one year would be 77 1 49 52 and the total number of backlog was 85 Based on the adjusted results one can conclude that the ChainScope model is also a valid representation of the GrandBike supply chain for the Dutch DC 4 3 Optimize a project Before one can make an optimization the validation of the created model in ChainScope is very important In section 4 2 we proved that the created model for GrandBike in section 4 1 is valid In this section we are going to optimize the supply chain of GrandBike The current performance of GrandBike can be found in figure 4 2 and in the second column of table 4 5 The achieved and desired performances per Validation parameters Adjustments Optimize the GrandBike project Current performance 53 customer can be found in table 4 4 Actual Actual Target Target Item no ready rate fill rate ready rate fill rate DC NL 0 97 1 00 0 95 0 95 DC BE 0 80 0 93 0 90 0 95 Table 4 4 Achieved and desired service levels In the above table one can see that for the Belgium DC GrandBike does not achieve the desired serv
50. is Getting started chapter 2 1 Guidelines for users As a beginning user of ChainScope the best starting point to learn ChainScope Beginning is working through this chapter and reading the case example chapter For a users thorough understanding of the meaning and how to collect the value of the input parameters chapter three is strongly recommended ChainScope starts from a supply chain structure consisting of items and a Constructing a market structure consisting of customers 1 Items and the bill of materials 2 supply chain Customer item combinations As starting point each item successor relation has to be known For beginning users and small supply chains it is advisable to make a drawing of the supply chain with all the item successor relations lead times and demand In figure 2 1 a simple example of such drawings is given In the figure each triangle represents a stock point and each arrow a transformation process where value is added On the arrows the lead times and the number of input items are presented In our simple example the transformation process to create one item of subassembly will take 2 weeks and needs 2 items of Raw 1 and 3 of Raw 2 Number 2 kee Number 3 Number 4 N Pe Le Final Lead time 4 di gt Lead time 2 di eil Figure 2 1 Graphical representation simple supply chain case 1 12 Customer Customer order sl PA lead time 2 ae Demand 4 we ee
51. ize Accounting data aa aa Periods year 52 Interest rate year 30 Results i ae Cost es ee Annual capital cost 259 748 Annual material cost 6 229 600 Annual dead capital cost 0 Annual release cost a o 0 Total annual cost 6 489 348 Investment fra Stock on hand 62 834 Dead stock 00 0 Remnant stocks O o 0 0 Pipeline 854 592 903 592 802 992 Results 56 Supply Chain 923 477 976 505 865 826 Fixed asset DSS IRR 0 Total Investment 865 826 A fs Time fe SI Actual ready rate 73 70 Actual fill rate 95 01 Stock on hand 0 5 Dead stock CC 0 Remnant stocks Oo o o 0 Pipeline 7 1 6 7 Total stock 7 8 8 3 7 2 Table 4 8 Scenario optimizations GrandBike In table 4 9 the overall results with capital investment cost and margin change Conclusion effects are presented In this table one can see that lead time accession is the best scenario and that lead time reduction will lead to extra costs and these cost are more than the advantages Granbike Lead time Lead time Scenario code Optimal accession __ reduction Extra costs O 104 000 41 600 Annual extra capital cost 0 88 091 24 305 0 Result cost change 15 909 17 295 Table 4 9 Overall results GrandBike scenarios optimization 57 Chapter 5 Definitions This chapter is like the dictionary for ChainScope modeling on the right side of This chapter each paper the terminology is presented and left
52. l synchronized stock reallocation ChainScope will lead you to this optimal situation scope Lead time reduction versus material cost a a Invested stock capital and material cost A supply chain is always subject to change and for example lead times margin or demand will change By generating scenarios in ChainScope one can evaluate these different scenarios Many changes in the supply chain will influence your supply chain performance and will change the position in figure 1 4 With ChainScope you can monitor and evaluate these changes and determine the new optimal control parameters for your supply chain In the figure On the left a new scenario with lead time reduction due a new and more expensive supplier is presented The capital invested in stock is presented in blue and the total production cost in gray In ChainScope one can easily evaluate both scenarios and from the picture on the left we could conclude that a contract with the new supplier would be advisable Evaluate changes in the supply chain 10 1 3 Installation Installation 11 Chapter 2 Getting started In this chapter we will give you guidelines how to get started with ChainScope This chapter We do not give extensive information about how to determine the input parameters for supply chain models in this chapter extensive information about this topic can be found in chapter 3 We recommend every beginning user to glance through th
53. n and interpret output data Case example Searching the documentation Supported platforms Licenses Prof dr de Kok Chapter 1 Introduction to ChainScope ChainScope is a stand alone tool that identifies the relationship between inventory capital invested and operational customer service in complex value networks and supports optimisation ChainScope can generate the control parameters for complex operational planning systems Because of this functionality the last part of the name ChainScope is an abbreviate for Supply Chain Optimization Planning Engine This chapter is written for first time users of ChainScope and users who want to acquire a quick insight in supply chain operations planning 1 1 What is ChainScope used for ChainScope can be used for design of the Supply Chain Operations Planning function in a company The objective of Supply Chain Operations Planning SCOP research is to coordinate the release of materials and resources in the supply network The most widespread implemented SCOP function is MRP I The SCOP function should be designed such that customer service constraints are met at minimal costs ChainScope can be used to build a supply chain model for evaluation of as is situations and optimization towards to be situations From such a model it is a small step to the design and implementation of the company specific SCOP function within currently available ERP systems and associated work processes
54. nd is calculated with the number of dead stock items multiplied with the cumulative value of the item and multiplied with the interest rate The annual material cost is the total costs in one year for producing all the expected demand in one year For our example if the total average demand per period is 15 units 260 periods year and the cumulative value of the item is 34 we have annual material cost of 132 600 15 260 34 For each order of an item one has to pay the release cost of an order If one releases 100 orders a year one has to pay 100 times the release costs In our example we order every item every period P_Order is always 1 thus we order each item 260 times The annual capital material and release cost together are the total annual cost In figure 3 4 the output parameters concerned with the pipeline and stock investment are graphically presented Capital cost __ Pipeline ci investment Stock on hand investment Pipeline investment Stock on hand mmulative value input item aR Cummulati alue input items Pipeline Stock on hand investment investment N fe k a ss 7 Figure 3 4 Graphical representation pipeline and stock investment Cummulative value input items Annual material cost Annual release cost Total annual cost The actual service criterion describes the achieved service levels T
55. nfluential parameter for example the fixed asset for an extra distribution centre Stock investment Supply Chain investment Fixed asset 40 Chapter 3 Modeling validation and interpret output data In this chapter the modeling steps and language are explained in a more abstract This chapter way After a model is build it has to be validated and in the middle part of this chapter the validation will be discussed The last part of this chapter we will discuss the understanding and effects of the ChainScope output data 3 1 Modeling and collecting the input data Modeling refers to the process of generating a model as a conceptual Modeling representation of some phenomenon A model in science is a physical mathematical or logical representation of a system entity phenomenon or process It is a type of formal interpretation which deals with empirical entities phenomena and physical processes in a mathematical or logical way Typically a model will refer only to some aspects of the phenomenon in question and two models of the same phenomenon may be essentially different that is in which the difference is more than just a simple renaming Models are like this manual created in a specific language To create a model in ChainScope one has to use the ChainScope language thus the ChainScope definitions process linkage and bill of material structure It is important that you are conscious of the fact that you have to model a
56. ns 15 2 2 Projects 2 2 1 Create a new project Before one can work with ChainScope a project has to be created in Microsoft Excel There is a standard Excel format in which the project has to be created This format file can be found in your ChainScope directory with the name CHAINSCOPE_PROJECTFORMAT XLS In figure 2 6 this structure is presented with the column headings on each of the four sheets of the Excel workbook ki Microsoft Excel vb file xls Ea File Edit View Insert Format Tools Data Window Help A REFE MIKA E ce ne a Aly ina ener At 1 Si f A B E DI E DE Project CODE Structure CODE Scenario CODE Class1 Class2 Classi A A E Microsoft Excel vb file xls read ERI File Edit View Insert Format Tools Data Window Help HEREA alle A Li 10 Classi Classi RevPeriod CPT Class2 AddValue Release Costs Yield Item code Item description EL 2 map EI Microsoft Excel vb file xls lt Read E9 File Edit view Insert Format Tools Data Window Help M EEN EA an Bz K2 f v 1 AA E Microsoft Excel vb file xls Ready E File Edit View Insert Format Tools Data Window Help B C D E P Succesor ltem code Number ltem code ie dalle AL Ge x i i 10 P G Margin ltem code Customer code Customer description ED M 4 x Project input Item input Relation input Item customer input lt Ready Figure
57. nt in fixed assets like machinery In figure 2 23 one can see the evaluation for the example case 1 ChainScope File Help aa Projects LD Manage Projects Pi Master Data A Evaluate Item customer input Input D Evaluate LZ Optimize ll Reporting Evaluate Service criterion O Ready rate Fill rate Interest rate year Results Supply chain information tangible cost Annual capital cost 254 Annual material cost 132 600 Annual dead capital cost 5 Annual release cost 2 860 Total annual cost 135 714 Stock on hand investment 620 Dead stock investment 17 Remnant stocks investment it Pipeline investment 228 Supply Chain investment 848 Fixed asset investment 1 234 Total investment 2 082 Actual Ready rate 689 Actual Fill rate 852 Stock on hand time 1 2 Dead stock time 00 Remnant stocks time 0 Pipeline time 04 Total stock time 1 7 Project ChainScope Stock on hand investment 2 Supply Chain Tier Stock on hand time 2 Supply Chain Tier Structure Supply Chain Scenario Alternative Figure 2 23 The evaluation screen for the example case 1 The red parts in the graph represent dead stock in our evaluation there is dead Level code stock in the Raw 3 stock point The numbers in the graph on the horizontal axe represent the level code of the products presented in the column The end products have level code 1 and all the input products for the end produc
58. nter all the input parameters values for the selected item customer relation ChainScope DEK File Help av Projects Item customers LO Manage Projects Customer no uid Master Data Customer 2 Items i Bill of materials Customers D gt Item customers Graphical representation wA Evaluate Optimize ll Reporting Add item customer combination PI Project ChainScope Structure Supply Chain Scenario Alternat 4 Item Customer Input parameters Order leadtime sol Average demands Margin fl Stew demand j Review period if Ready rate xs Sales price I Fill rate s Cancel 27 Figure 2 19 Add item customer combination screen 2 4 4 Graphical Representation A graphical representation of the bill of material structure with lead times and number of successor relations can be found in the Graphical representation screen With a click on the Draw button a graphical representation will be shown With a click on the more zoom options hyperlink text the scale of the triangle length height and font size of the graphical representation can be adjusted A copy of the representation can be made with a right mouse click and a click on copy ChainScope File Help aa Projects Graphical representation i O LI Manage Projects more zoom options Zoomif wd Master Data Raw 1 Items Bill of materials Subassembly Customers Item customers
59. own in figure 2 12 In the third and fourth column heading of this figure the item classes Importance and Product type of our example case 1 can be found In these columns the item class value can be found the item subclass to which the products belongs The value of this subclass can be changed due clicking on the value and select another subclass The item class or item subclasses names can be changed in the Project screen ChainScope DER File Help aa Projects v Items LO Manage Projects y item no Description Importance Product typ 3 Master Data Q A High Raw D Items Ran a i Bill of materials sad Raw ua Raw 3 c Low Raw 8 Item customers Sub Assembly D Low Assembly Graphical representation A Evaluate Optimize y ikl Reporting Fiona Ready Project ChainScope Structure Supply Chain Scenario Original Figure 2 12 Items screen In the left bottom of the Items screen one can find the Add item button If one wants to add an item to the supply chain one can click the button and the screen shown in figure 2 13 will appear Data structure Items Add item 24 te New item Master data 1D Description Importance Product type Item type Input parameters Leadtime Release cost Added value Yield Review period Add Cancel Figure 2 13 Add new item input screen In the first field an identity and in the secon
60. payment In the supply chain we have items and stock points and in ChainScope these two terms are coupled and an item without a stock point is no ChainScope item and vice versa Items in ChainScope are physical products in a unique form and place combination with a stock point For the transform of an item into another item a so called transformation process is needed With the term bill of materials we mean the list of input items for each item which also describes the relations between all the items in the supply chain In this bill of materials one can find for example the number of products B that are needed to create one unit of item A In ChainScope some buttons are used in different screens a summation and description of these buttons is given below al Import With this button a project and scenario in the Excel format can be imported or updated overwritten H Save as scenario With this button the active project and scenario can be saved in the ChainScope Excel format gt A Select With clicking on the blank field before a record this record will be selected A selected record can be recognized by the gt sign inside the field before the record In our example the record A is selected e Delete Using this butting and confirming your choice will delete the selected record Append record Add a record to the selected Item class or Item subclass Frequently used concepts ChainScope butto
61. quirements status Routin Bills of planning data file material x Detailed Timed phased Engine capacity i Requirement planning records J Material and capacity plans Order SR Purchasing Back end Vendor Shop floor folllow up control systems Figure 1 1 ChainScope and the Material Requirement Planning 1 2 Why use ChainScope Exaggerated one can suppose that the objective for each company is to make as much profit as possible ChainScope focuses on the capital spend in the supply chain and the service levels for customers The amounts of capital spend on stock keeping effects the customer service level and both will influence the cost or revenues Based on these effects the invested stock capital and customer service level will influence the business performances In figure 1 2 this performance loop is presented ChainScope will influence and will search for the perfect balance between invested stock capital and the customer service level Performance loop Pai Invested x Customer Cost ta service level Revenues a capital Figure 1 2 Business performance loop Like one sees in the performance loop there is an optimal balance between the invested stock capital and the service level ChainScope delivers you the optimal situation where the invested stock capital and service level are balanced With each value of the invested stock capital a maximum service lev
62. rio or Master data Interest rate year Item parameters Bill of Material Customer data ltem customer relations Scenario Scenario Evaluation input Target stock e Evaluation Optimization Evaluation On Figure 2 10 Data structure ChainScope Optimization Optimization input Service criterion The project data will be in affect for al the scenarios below the project The scenario data can be changed in the Master data screens and so is also called master data For an optimization additionally the service criterion is needed and for an evaluation the target stock values need to be known After selecting a project one can select a scenario A scenario is part of a project and the input parameters are part of the selected scenario and can be different for each scenario of the project In figure 2 11 the Structure Scenarios screen is shown in our example there is an Alternative and Original scenario ChainScope Deo File Help aa Projects Manage structures and scenarios Structures Set active project Structure ID LM Pi ts oe ae gt Supply Chain D Structures Scenarios I Master Data A Evaluate LZ Optimize ikl Reporting Copy Scenario Description Scenarios Interest rate Year Last evaluated 30 00 30 00 Structure Supply Chain Scenario ID gt Alternative Original
63. rvice level The blue dot in figure 1 3 represents a situation where no extra capital is invested in the stock but a higher service level is achieved This service level can be achieved with a smarted and synchronized stock allocation ChainScope is able to lead your company from the red dot to the gray or blue dot in figure 1 3 of 1 4 The picture on the left also represents the new allocation where with the same total amount of invested capital a higher service level is achieved Reduce inventories while maintaining service level Higher service level with identical inventory hojpstope Optimal situation T E th Y Current situation 2 Vv n reni Optimal stock allocation tma PH Current stock allocation Invested stock capital Figure 1 4 Optimal situation The maximum achievable service level with the current spend capital can be too expensive for the considered pay off for this service level The achieved service level can also be too low and thus another service level has to be optimal ChainScope can also deal with this situation an will lead you to the blue dot situation represented in figure 1 4 In this case ChainScope will give you the control parameters for an optimal situation where the service level is higher and less capital is invested in the supply chain Due smart and 90 Service level I T inventory and Service level service level scope The optimal Invested stock capita
64. s the average number of items one wants to have in the stock point The demand is the number of products per period the customer wants to receive The standard deviation of the demand indicates the demand uncertainty The standard deviation can be calculated with a formula where all the difference between the known demand and average demand is squared and shared through the total number of periods minus one All these values are summed and square rooted and the result is the standard deviation In formula format with X as the demand in each period the formula for the standard deviation will be 5 X AverageDemand il n 1l Release costs Yield Review period Item target stock Demand 44 The margin is a ratio of the total value added which is the profit for the supply chain owner on every item sold to a specific customer If the margin value is 0 20 the value added by the supply chain will be sold for 120 1 margin of the added value The TargetP1 is the target value for the ready rate level The ready rate level is the fraction of cycles in which the on hand stock does not drop to zero The TargetP2 is the target fill rate the target fraction of customer demand that is met routinely without backordering Information about how to enter the data in ChainScope is presented in chapter 2 of this manual The sixth step on the road to a ChainScope model is the validation and this step will be discussed in the next se
65. stock of the input items at the moment of ordering The customer order lead time are the number of periods between the moment a customer places an order and wants to receive the ordered items A customer item relation can only have one lead time for example if you modeled the Dutch market as one customer but the Dutch Queen has a shorter lead time than the other Dutch people you have to model the Dutch Queen as one separate customer The added value is the value that is added to the item during the transformation process that creates the item One can also say that the added value is the monetary value of the specific item minus all the values of the input items In ChainScope the added value of a product is added in a linear way so the value of an item halfway during the transformation process is the cumulative value of al input data Lead times Added value 43 the input items for the item plus half of the added value of the item Items which are ordered from other suppliers have an added value that is equal to the total price one pays for the items Items at the beginning of the supply chain raw materials also have an added value but this value is not added in a linear way during the lead time The added value for raw materials is added immediately after an order is released The pipeline investment for raw materials is the added value multiplied with the average pipe stock of the item In ChainScope the stock holding costs are based
66. supply chain in ChainScope and not just entering parameters from you Enterprise Resource Planning ERP software The different steps before one has created a ChainScope model are presented in figure 3 1 Understanding Describe Collecting the CR the ChainScoep Create the item Create the item item item and input data and Model Suppl ue modeling and customers and customers item customer set input validation RS language relation parameters oce Figure 3 1 The ChainScope modeling steps 3 1 1 ChainScope modeling A modeling language is any artificial language that can be used to express The ChainScope information or systems in a structure that is defined by a consistent set of rules modeling The rules are used for interpretation of the meaning of components in the language structure With the ChainScope language we want to describe the supply chain 41 with stock point and inventory characteristics demand quantities and uncertainties and the transformation processes and bill of material structures Chapter 5 of this manual can be seen as the dictionary for all the words and definitions in the ChainScope modeling language In figure 3 1 all the input parameters for ChainScope models are presented The The ChainScope input parameters give information about the whole supply chain or an item input Before one can give information about the supply chain or item the items have to be defined and the structure of the supply
67. t the Dutch Queen has a shorter lead time than the other Dutch people you have to model the Dutch Queen as one separate customer The margin is a ratio of the total value added which is the profit for the supply chain owner on every item sold to a specific customer If the margin value is 2 the value added by the supply chain will be sold for three 1 margin times the added value The TargetP1 is the target value for the ready rate service level The ready rate is the fraction of time during which the net stock is positive The TargetP2 is the target fill rate the target fraction of customer demand that is met routinely without backordering 2 2 5 Set active project The Set active project screen is the first screen of ChainScope and the screen where one can select the project to work with A project can be selected by clicking on the row of the project or on the select box in front of the row In the Set active project screen the project no name or the number of periods per year can be changed And an item class or subclass can be added by clicking the l append record button on the bottom of the screen Customer Demand Customer order lead time Margin TargetP1 TargetP2 Set active project 21 ChainScope Projects File Help 2A Projects Project selection D gt Set active project Name Periods Year LL Manage Projects Structures Scenarios I Master Data Items Bill of materi
68. t two years of the Dutch NL and Belgium BE market can be found in table 4 1 The time between GrandBike releases an order for frames and receives is 4 weeks for wheels this is 3 weeks and for the handle bars 2 weeks The prices for the frame front wheel back wheel and handles bar are 40 15 20 and 10 The frames are painted inside the GrandBike factory by a contractor which has the responsibility of the paint inventory The paint contractor has to deliver orders within one week and charges 5 for each frame during the painting process 5 of the frames become useless After the frame is painted it will be stored in a stock point and waits before it will be used in the assembly where the wheels and frames will be combined In this first assembly process it takes 2 weeks before an ordered frame with wheels will be received in the specific stock point The last assembly before the Granbike is finished is placing the handle bar on the bike An order for a Granbike in the factory will have a lead time of 2 week From the stock point in the factory the Granbike s are transported to one of the distribution centers For the Dutch distribution center the lead time is 1 week and for the Belgium center 2 weeks The selling price in the Netherlands is 143 and in Belgium 163 Case description 49 Month NL BE 1 2000 1800 2 2100 1500 3 2000 1700 4 2200 1800 5 2600 1700 6 2300 1900 7 2400
69. the Result 31 optimization can be found in the optimization screen but the values of the parameters to create the optimal situation can be found in the Reporting screens 2 6 Reporting The last section of ChainScope is the reporting section where one can find the Reporting results of the last performed evaluation or optimization The tables or graphs can be copied with a right mouse click and Copy 2 6 1 Item customer output The Item customer output screen will show the values of output parameters Item customer which describes the item customer relation In figure 2 25 output of example output case 1 is presented The actual ready and fill rate show the gained values in the evaluated or optimized scenario Figure 2 25 shows the optimization of the example case 1 with the fill rate as service criterion Due the service criterion setting the ready rate for customer 2 can be below the value of 0 95 ChainScope File Help 2A Projects LD Manage Projects Item customer output P ___ Item customer ali _ Opat item no Customer no Actual ready rate Actual fill rate Capital Average backlog Allocated stock EW Final Customer 2 0 95 53 50 0 25 Pe Master Data f Evaluate LZ Optimize ll Reporting O lt lt lt lt lt lt lt lt Kc D Item customer output Dutput Graphical summary Du Pont scheme Project result summary HEA 444 DLP DE i i Ready Project ChainScope Structure
70. the definition Definition Terminology The value that is added to an item during the transformation process that creates Added value the item BOM quantity BOM structure 58 Added value 1 2 54 Index 59 Disclaimer The ChainScope program enables the analysis of a supply chain or value network Choosing an appropriate value network structure is part of the design process and requires a thorough understanding of the CODP concept and the definitions of the various input parameters No liability is accepted for any consequence that results from using the ChainScope program or user manual 60
71. the total costs before transportation to one of the distribution centers is 110 The transportation cost 50 to the Dutch DC is 5 per bike en transportation to the Belgium DC is 10 per bike The sum of the raw material prices is 85 for each bike and 5 for the paint contractor The cost of the first and second assembly step are 25 and 10 for each bike This makes the total value of a bike in the Dutch DC 130 and the value of a bike in the Belgium DC will be 135 Combining this information with the stated selling prices the margins are 10 and 20 The yield and lead times can all be found in the case description and in table 4 2 Rev Lead Added Target Release Item no period time value stock cost Yield Frame 1 4 40 50 1 Front wheel 1 3 15 50 1 Back wheel 1 3 20 50 1 Handle bar 1 2 10 50 1 Colored Frame 1 1 5 50 0 95 Frame and wheels 1 2 25 100 1 Granbike 1 2 10 100 1 DC NL 1 1 5 250 1 DC BE 1 2 10 200 1 Table 4 2 Item input parameters In table 4 1 the demand of Granbikes in the Netherlands and Belgium are given per month Based on this data we would have an average month demand of 2167 and 1733 bikes with a standard deviation of 235 and 161 bikes More detailed data not in this user manual included shows us that the average demand is 500 and 400 bikes per week and the standard deviations are 71 95 and 123 99 bikes per week This will lead to the item
72. ts have level code 2 and so on In our example case 1 the items Raw 1 and Raw 2 30 have the level code 3 and Subassembly and Raw 3 the level code 2 If Raw 3 was also an input item for Subassembly the level code of Raw 3 won t change because an item will take the lowest as possible level code low level code If all the parameter values are correct the result of the evaluation describes the modeled scenario situation More information about the presented output values can be found in section 2 6 5 In our example case 1 the current performance of our service levels should be around the 71 5 and 88 2 If the measured service levels in the business are completely different the model can not be validated Validation is the process of establishing documented evidence that provides a high degree of assurance that the modeled supply chain with the input parameter values are correct One can validate the modeled supply chain in ChainScope with a comparison of the output parameters like service levels and the capital or investment costs of an evaluation with the real measured output parameters More information about validation will be given in chapter 3 2 5 4 Optimization Before optimization one has to select the service criterion The value of the selected service criterion will be used as a constraint for the optimization In figure 2 24 the optimal situation for the example case 1 is presented There
73. uccessor item no PR Master Data Item description Successor item description pi Successor item no Final Items D gt Bill of materials Raw 3 Cc Subassembly D Successor item no Subassembly Raw 1 A Raw 2 B Customers Item customers Graphical representation A Evaluate E Optimize lil Reporting Add EditBOM Checkforcycles Ready Project ChainScope Structure Supply Chain Scenario Alternat Figure 2 14 The Bill of materials screen With the Add Edit BOM button in the left bottom of the screen one can change the bill of materials In the Output Item dropdown menu one can select the successor item In figure 2 15 the successor Final is selected After selecting an item from the All available Items list one can make that item an input item with the blue right arrow button Likewise with the double blue right arrow button all the items in the All available Items list will be added to the Input Item s list With the blue left arrows items can be deleted from the Input Item s list w Add Edit Bill of Material Output Item Input Item s Raw 3 Subassembly Figure 2 15 Add Edit Bill of Material screen If one made a mistake with the bill of material a so called cycle could be created If there are items direct or indirect successors of each other and thus an item would be an success of itself this is called a cycle in the
74. ummary here one can find Project result a graph or table In the Project result summary one can select more scenarios summary to compare them The graph and table are exactly the same as the table and graph in the evaluation or optimization screen In figure 2 30 and 2 31 the results of the example case 1 are compared with an alternative scenario with the only difference that the review period for the Final item is 2 periods ChainScope E Projects Project result summary LD Manage Projects ChainScope Results Graphs Supply Chain k aiii B Alternative Stock on hand investment A Evaluate V Alternative 2 E Optimize fal Reporting Item customer output Output Graphical summary Du Pont scheme D Project result summary Supply Chain Tier Stock on hand time Supply Chain Tier Project ChainScope Structure Supply Chain Scenario Alternative 2 periods per year 260 Figure 2 30 Project result graphical summary 38 ChainScope File Help aa Projects y Project result summary LD Manage Projects ChainScope Supply Chain f Master Data RI Alternative Structure code Supply chain Supply Chain Scenario code Alternative Alternative 2 Y Evaluate x V Alternative 2 A Optimize Service criterion Fill rate Fill rate hl Reporti x Design mode Optimize Optimize eporting 2 Item customer output Periods year 260 260 Dutput Interest rate year 30 30

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