Event Takeaways from LLamaCon Japan
LLamaCon Japan 2019, a supply chain conference took place in October 2019
At LLamaCon Japan 2019, Carlos Valderrama, senior vice president of customer success at LLamasoft Inc. gave a keynote speech. Hitachi Transport System and PepsiCo shared their success stories and best practices.
Platinum sponsor: Nomura Research Institute, Ltd.
(Carlos Valderrama, LLamasoft Inc.)
During the keynote session, Carlos addressed the importance of data-based decision making in response to its growing need in the supply chain.
Due to accelerated speed of change of inside and outside market in recent years, uncertainty is increasing. With high pressures on the supply chain, decision making has been more difficult. Historically, many organizations built processes for each department, such as procurement, manufacturing, warehouse, inventory, and transportation with the level of communication and cooperation among departments lagging. Collaborating and combining strategies and good tactical planning and operational planning enable companies to respond to rapid changes. Considering short-term decision making is a key, it is also important to decide to have a reference system of supply chain to determine policies used to run the supply chain.
LLamasoft breaks down silos in the supply chain, connects supply chain functions and enables stakeholders to analyze trade-offs across the organization. As a result, organizations are able to run the supply chain in a beneficial manner. Analysis capabilities need to be leveraged by more people for decision making, rather than limit people. LLamasoft continues to help companies quickly change to address upcoming needs and issues that conventional packaged applications cannot easily handle. LLamasoft’s mission is to improve people’s lives and organizations by supporting them to make data-driven, smart decisions.
(Takahiro Nishikawa, Hitachi Transport System, Ltd.)
Founded in 1950, Hitachi Transport System is a global company with a wide range of businesses centering on 3PL, with 740 bases and more than 16,000 vehicles in Japan and overseas. Hitachi Transport System has driven smart logistics from the viewpoint of automation, visualization and optimization. In recent years, they have been solving challenges in business as well as society by strengthening their supply chain design capabilities and building warehouse and transportation platforms in collaboration with partners. In this session, Takahiro Nishikawa, an engineer in the company’s smart logistics development department, discussed one of their projects which they conducted in 2018 and then how Hitachi Transport System manages their supply chain with LLamasoft’s products and services in conjunction with their own tool.
The company has been shifting from conventional quotation-type proposal approach to a problem-solving approach based on dialogue with customers in order to adapt to the market environment. From 2018, they decided to collaborate with LLamasoft to handle more complex issues that they cannot handle with their own tools. For more complex problems, they use LLamasoft solution to evaluate variable elements/dimensions such as number, location, distribution centers’ (DC) function in multi-layer, line haul routing for each DC, inventory costs with allocation/location of transportation resource considered, service level and taxes and duties. In addition, they can now analyze cross-border, multi-pick/multi-drop, optimal allocation of transportation assets by using LLamasoft solutions. Hitachi Transport System is now expanding their solving capabilities to multi-axis evaluation not only in Japan but also in the global region, as well as strengthening them from both a strategic and tactical point of view to make maximum use of resources.
As a result of the project, they identified an opportunity where the number of vehicles could be reduced by 16% if the resources of the four companies were shared. Hitachi Transport System continues to make efforts to solve issues and challenges in society through further digitalization with logistics digital transformation and supply chain design capabilities. (SCDOS Web, PDF)
(Minoru Muragi, LLamasoft K.K.)
Linking supply chain strategy and implementation to business competitive strategies, it is possible to drive corporate innovation. Decision making in supply chain plays a very important role in helping companies maintain a competitive advantage in the market.
To address ever-changing supply chain challenges which companies are facing today, based on 20 years of supply chain expertise and experiences, LLamasoft is developing a platform “Digital Design & Decision Center” where an organization can build digital twins quickly to enable their smart decision making. A demonstration of the platform was given, as well as a preview of App Builder which will be offered through the platform. The platform enables analysis of current supply chain performance and visualization to identify potential problems and threats, in addition to supply chain modeling, scenario creation, scenario analysis and demand modeling. It is possible to build and deploy micro-apps that facilitate decision making across multiple supply chain functions such as strategy, tactics and operations.
Sponsor session: “How should supply chain design be handled? Findings from success/failure within Japan companies”
(Hiroyuki Nakagawa, Nomura Research Institute, Ltd.)
Nakagawa explained that supply chain management has a three-layer structure of design, planning and execution and that the design plays an important role as the “engine” for supply chain management. He talked that supply chain-specific solution is required to solve end-to-end supply chain optimization problems which are extremely difficult because complex constraints and functions need to be considered.
With the deep knowledge that Nakagawa and NRI have, he described the importance of data processing for supply chain projects and said it is key. 80% of modeling work and 90% of quality are related to data processing, which must be done carefully against designated outputs. Lastly, he discussed the status of supply chain design in Japanese companies, the challenges and the need for continuous supply chain design as a company’s competency.
“Capabilities and the value of LLamasoft solutions”
LLamasoft’s solutions can flexibly respond to companies’ business needs, from small-scale optimization projects to specific applications in each department, to end-to-end supply chain optimization projects across different departments or functions that traditional packaged applications cannot adapt.
In this session, Kaoru introduced three use cases – out of over 3,000 global projects for 750+ users – Demand Guru use case by the United States Air Force Air Mobility Command, a network optimization project for Cisco, a high-tech company, and an advanced micro app use case with BELCORP (a leading cosmetic company based in Colombia).
The U.S. Air Force often leverages commercial cargos in addition to its military aircraft when they airfreight resources and supplies (commercial cargos are less expensive compared to military aircraft). Due to the explosive expansion of eCommerce in recent years, it has become more difficult to secure commercial cargo planes immediately, resulting in the necessity to make better forecast air-transportation. Since their traditional time-series-based demand forecasting was not sufficient to meet their needs, they chose to adopt LLamasoft’s Demand Guru in combination with various databases and external factors in order to analyze causal factors which impacts demands. As a result, demand forecast accuracy has been improved and commercial cargo can be arranged for 12 months in advance. (See the Demand Guru Case Study.)
(Nishant Kumar, PepsiCo)
The last session of LLamaCon Japan 2019 was delivered by Nishant Kumar, PepsiCo’s Network Design Lead.
PepsiCo is a global food and beverage company with more than $64 billion (US) in sales (based on 2018 estimated annual retail sales) with a number of brands including Tropicana, Quaker, Doritos and Cheetos. Kumar discussed the evolution of network design in Asia, the Middle East and North Africa region (AMENA) at PepsiCo.
PepsiCo AMENA includes snacks, beverages and nutritional supplements categories. It’s a highly diverse region that has a network with 45 manufacture plants and 335 facilities.
The network design at PepsiCo is just like a coin with two sides (front and back) – PepsiCo’s operations and value chain strategy support each other. PepsiCo has established a network strategy with various perspectives such as sourcing, production factories, warehouses and transportation. Through network design, they evaluate where to procure and what/where/how much to manufacture. They analyze cost minimization from a tactical aspect including whether to have production capacity and how to mitigate the cost impact of sudden events. In addition, from a long-term perspective, network strategies include when and where to invest and strengthen capacity, were to close, how to minimize sourcing costs to win the market and a combination of transportation assets.
PepsiCo first set goals and has been gradually evolving their supply chain through leveraging LLamasoft Supply Chain Guru and Data Guru. In 2017, they started a project which addressed limited supply chain issues for specific business units. From 2019, an end-to-end approach was adopted, modeling from procurement of raw materials to delivery of finished products. They build models that can be repeatedly used and apply them frequently. After establishing a dedicated center of excellence team, the network design’s role within the company has grown rapidly, improving efficiency throughout the value chain. Now, the company recognizes its value and importance that network design facilitates the appropriate processes and enables a proactive approach for a comprehensive supply chain strategy to the entire region. Kumar said that importance will continue in the future within the entire company.
Thank you to everyone who participated in LLamaCon Japan 2019. See you next year! Check out more LLamasoft events here.