This is often the most difficult phase, but you can start with a small data set and add on over time. You need to locate and organize data from multiple sources across your organization. You'll likely discover that some data doesn't exist in its ideal form, and you'll need to make reasonable assumptions.
DO NOT HESITATE TO MAKE ASSUMPTIONS TO GET STARTED BUILDING A MODEL. If you wait for complete or perfect data, you risk never getting started. Simulation is a great tool to point out which data or information has the most impact on the KPIs and therefore can be used to determine where to spend time gathering complete and accurate input data and where you can keep some high level assumptions.
These foundational data elements should already exist in your systems. Your role is to extract and organize them.
Master Data (Customers, Sites, SKUs, Suppliers)
Master Data (Customers, Sites, SKUs, Suppliers)
These foundational data elements should already exist in your systems. Your role is to extract and organize them.
Data Element | Common Source | Key Attributes |
Customers | Customer master file, CRM, billing system, network design model | Name, lat/long, customer ID |
Sites | Facility master, warehouse management system, network design model | Name, lat/long, storage capacity, site ID |
SKUs | Product master, inventory system, procurement, network design model | SKU ID, weight, cube, units per case |
Suppliers | Supplier master, procurement system, vendor management, network design model | Name, lat/long, supplier ID |
Customer Orders
Customer Orders
Customer order history is the heart of your baseline model. You'll need:
• Order ID – Unique identifier for each order
• Customer – Which customer placed the order
• Order Date – When the order was placed (or when you received it)
• Due Date / Requested Delivery Date – When the customer expected delivery
• Order Lines – For each order, the SKU and quantity ordered
Common Sources:
• Order management system
• ERP system (SAP, Oracle, NetSuite, etc.)
• Warehouse management system (WMS)
• Demand planning system
Inventory Policies & Parameters
Inventory Policies & Parameters
These data elements describe how your supply chain operates. Some may exist in your systems; others you may need to research or reasonably estimate.
How does each site replenish inventory for each SKU? Simulation supports Min/Max (s,S) and Fixed Order Quantity (r,Q) policies. For (s,S), you specify:
Reorder Point (s) – The inventory level below which a replenishment order is triggered
Reorder Quantity (S) – The amount ordered when the reorder point is reached is S minus the current Inventory Position of this SKUL
For (r,Q), you specify:
Reorder Point (r) – The inventory level below which a replenishment order is triggered
Reorder Quantity (Q) – The amount ordered when the reorder point is reached is always Q
Common Sources:
Inventory management or planning system
Inventory Optimization Analysis Output
Conversations with inventory or supply planners
If unavailable: You can calculate reasonable estimates from historical average demand and lead times
Customer Sourcing Policies & Profiles
Customer Sourcing Policies & Profiles
Which sites can fulfill orders for each Customer? If there are more than one, what is the priority of ordering from one site verses another? Simulation supports a priority ranking policy.
Each of these customer sourcing policies will need to be assigned to each Customer. (note: If this information is unknown, begin by making assumptions and revisit when further research has been done).
Does this customer allow their orders to be backordered? If so, if there a time limit for how they will wait for the backorder?
Does this customer allow their orders to be partially filled? Does this customer allow their order lines to be partially filled?
Does this customer allow their orders to be fulfilled from more than one Site? Does this customer allow their order lines to be fulfilled from more than one Site?
Supplier Sourcing, Lead Times & Order Policies
Supplier Sourcing, Lead Times & Order Policies
Which suppliers (or other Sites) can replenish each SKUL (Site/SKU)? If there are more than one, what is the priority of ordering from one supplier verses another? Simulation supports a priority ranking policy.
Optional: How long does it take to receive shipments from each supplier to each site?
This is considered Planned Lead Time. Note: The simulation will add this time to any travel time provided in the IntersiteLanes table.
Optional: Do any suppliers require a minimum amount to be ordered each time an order is placed or that product must be ordered in certain multiples? Minimum Order Quantities can be defined for each Site/SKU/Supplier combo
Optional: Do any suppliers require orders to be placed in fixed batch sizes? Buying Multiple can be defined for each Site/SKU/Supplier combo
Common Sources:
Supplier agreements or contracts
Procurement or sourcing team
Historical shipment records
Transportation Modes and Lanes
Transportation Modes and Lanes
How do you ship from sites to customers, suppliers to site and maybe site to site?
Define each transportation mode with:
• Mode name (e.g., LTL, Parcel, Truck Load)
• Weight ranges (minimum and maximum weight for this mode)
• Constraints on Cube (minimum and maximum Cube for this mode)
• Transportation costs (fixed cost per shipment, cost per pound)
• Transit times (travel time from origin to destination)
Define Lanes for each Origin/Destination (Site to Site, Supplier to Site, Site to Customer) and which modes are supported for each Lane
Common Sources:
Transportation team
Freight contracts
TMS system
Network Design Model
Optional Data
Optional Data
Costing
Inventory Carrying Cost: Cost per Unit per day when inventory is held at a site. Can be defined for each SKUL (Site/SKU) combo
In Transit Carrying Cost: Cost per Unit per day when inventory is in transit on its way to a site. Can be defined for each SKUL (Site/SKU) combo
Revenue Per Unit: Can be defined for each SKU or for each Customer/SKU combo
Transportation Costs: Costs for inbound and/or outbound shipments. Can be defined for each Lane (origin/destination/mode combo) and can be a Fixed cost per shipment and/or a rate cost per weight of the shipment.
Loading/Unloading Costs: Costs for the unloading or the loading activity. Can be defined for each Site/SKU combo and is based on a quantity unit of measure.
Yard Detention Cost: If your model will constrain either storage capacity at a site and/or unloading capacity at a site, shipments will wait in the Yard until there is enough capacity. You can add a cost per unit when product is waiting in the Yard
Operational Schedules
You can optionally add schedules to a Site or to an operation at a Site. A schedule indicates when the operations at a Site are operational or not. For example, a Site can close all operations on Saturdays and Sundays or it can only perform Unloading on the weekends but not loading (shipping).
Capacity Constraints
A site can have a defined storage capacity or a limit on the amount of product that is unloaded or loaded per day. If either the storage capacity or the receiving capacity is hit at any given point in time, the simulation will not allow any additional product into the Site and it will wait in the Yard until capacity is available.