March 2002 | Commentary | Supply Chain Technology

Logic Tools Addresses Network Design, Decision Support

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The key to doing good business when providing supply chain solutions is to have a handle on network design and decision support. This means having support systems in place that have the functional clout and services required to sustain these applications. Network design and decision support are strategic components of any company's long-term and tactical planning processes. These applications provide critical workable alternatives to challenges such as running out of capacity, or intelligently adjusting a company to meet seasonal demands.

LogicTools Inc., based in Chicago, Ill., has cornered this market, offering two applications—LogicNet and LogicChain—which help companies make decisions that reduce costs and increase profits through supply chain analysis. LogicTools has designed these applications to resolve supply chain challenges, especially those involving capacity and variable demands.

LogicNet provides strategic network design. The application's focus is on taking costs out of the supply chain and improving service levels. The user inputs customer locations; demand by location; plant sites and production capacity; warehousing costs, sites, and sizes; transportation costs for each lane; service level requirements; inventory turns; and holding costs. As output, LogicNet provides the overall minimum cost, taking into account production, transportation, inventory, and warehouse costs. It also offers the optimal number, size, and location of warehouses and production quantity for each product at each plant. In addition, LogicNet can give information about the flow of products through the network.

Features of LogicNet include:

  • Inbound and outbound network modeling.
  • Information on a regional, national, and international level.
  • Optimization technology.
  • What-if analysis.
  • Baseline modeling.
  • Ease of importing and exporting data

The LogicChain application product makes it possible to create an optimal master plan for the supply chain. It coordinates warehousing, production, and inventory decisions according to the user's demand plan. This plan offers data on required production quantities, shipment sizes, and requirements by product for storage, such as locations and time periods. It also provides cost minimization and profit optimization opportunities.

LogicChain is specifically designed to:

  • Improve demand shaping. The LogicTools' version of demand shaping forecasts determines marketing plans such as pricing, promotion, new product introductions, and rebates based on supply chain capacity and the relationship of the user's product promotion to profitability.
  • Improve production scheduling. LogicChain's production scheduling application avoids the limitations of ordinary finite scheduling that cannot cope with multiple plants, making the same product, seasonal demands, and other challenges. LogicChain's production scheduling can input plans to the finite scheduler that take into account future demand and the entire supply chain.
  • Maximize profits. Profit maximization can help determine the profitability of different products and markets. The application does this by acknowledging that all customers and all demand may not be profitable, and pricing that may seem profitable may not be when looked at within accurate supply chain costs or where there is limited capacity, components, or raw material. Profit maximization looks at and selects customers and products that are profitable while under particular constraints.
  • Maximize working capital investments. LogicChain's working capital function answers questions such as what goods should be produced, when they should be produced, where inventory should be stored, and how to reduce working capital. LogicChain creates a master plan for the supply chain that minimizes these costs.
  • Develop a global sourcing strategy. LogicChain's global sourcing function takes into account costs related to international trading and their production requirements.

When used together, LogicNet and LogicChain provide an integrated, optimization-based set of decision support software for logistics and supply chain management.

LogicTools can be reached at www.logic-tools.com

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