• Which customers , distribution chanels and products generate cash?
• How can we increase the profitability of our product-mix?
• Should we grow by new product sales or by developing new markets?
• How sensitive is our export revenue to forex fluctuations?
• What should we do if profitable orders in reality prove to be loss makers?

DESIGN SALES TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decision making time from weeks to hours.

USE PARAMETRIC SALES DESIGN TO MAKE DYNAMIC DECISIONS.

Design different Price, Payment Terms, Discounts and Returns for different customer types and groups that depend on customer’s position in the Distribution Channel and its geographical location.

Determine the customer  types and groups as per Distribution Channel and geographical location.

Vary Payment Terms for special days and sales campaigns.

Differentiate Discounts for Product, Customer and Distribution Channel.

Base Sales Quantity Returns on Product to avoid production quantity miscalculations.

Use Inventory Target Quantity to avoid stock outs.

For the period ending inventory, assign number of days –NOT quantity–the ending inventory is expected to meet the next period’s sales.  For example, “the ending inventory should cover next period’s 40 days of sales.”

If the Inventor Target Quantity is assigned as a quantity but not as a days to meet next period’s sales, the simulation results will show either “excess inventor” or “ stock-out”,  depending whether the sales are expected to decline or increase during the simulated period. Please note that 40 days is assigned before the expected sales simulation is made.

Thus, the inventory policy rules should be stated as “days to meet the expected sales”

Sales Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

• How can we identify the suppliers that do not create value for our company?
• İf there is more than supplier for the same SKU, which supplier should we favor?
• How can we calculate a single value cost if there is more than one buying price for the same SKU?

DESIGN SUPPLY CHAIN TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decision making time from weeks to hours.

USE PARAMETRIC SUPPLY CHAIN TO MAKE DYNAMIC DECISIONS.

Determine SKU’s Price, Quantity and Payment Terms depending on the suppliers type and group.

Determine the supplier types and groups as per Supply Chain and  geographical location.

Vary Payment Terms for special days and purchase campaigns.

Differentiate Discounts for the supply SKU, supplier and Supply Chain.

Base Purchase Quantity Returns on supplied  SKUs to avoid production quantity miscalculations.

Use Inventory Target Quantity to avoid supply stock outs.

For the period ending inventory, assign number of days –NOT quantity–the ending inventory is expected to meet the next period’s production.  For example, “the ending inventory should cover next period’s 60 days of production.”

If the Inventor Target Quantity is assisgned as a quantity but not as a days to meet next period’s production, the simulation results will show either “excess inventory” or “ stock-out”,  depending whether the productions are expected to decline or increase during the simulated period. Please note that 60 days is assigned before the expected production simulation is made.

Thus, the inventory policy rules should be stated as “days to meet the expected production.” Caution:  Production depends and is arithmetically tied to sales.

Match the SKUs obtained by “exploding” the product tree BOMs (Bill of Materials) with the suppliers.  In order to calculate the SKU’s arithmetic average cost,

For different suppliers that sell the same SKU, assign a percentage value to the SKU, showing the suppliers’ share in the total quantity of the SKU.  All percentages should add to 1.00 indicating that different suppliers share the supply of that SKU.

Multiply the percentage point of the supplier by the total purchasing cost of that particular supplier, finding the weighted cost of that supplier as compared to other suppliers.  Find a single weighted cost for that particular SKU to use it in inventory usage.

For the SKUs supplied by a single supplier, use 1.0 as the weighted cost of that SKU.

Use the currency and Payment Terms for each supplier as stipulated in the purchase contract.

Prepare the SUPPLY CHAIN DESIGN for parametric simulation with Supply Price, Supply Currency, Supply Chain Cost and other cost elements.

Caution:  SKU based Supply Quantities are calculated automatically by PRODUCTION DESIGN, which in turn is triggered by the Sales Quantity in the SALES DESIGN.  Therefore the organic chain relationship between Supply decisions and Sales decisions is established by the Sales Quantity thru PRODUCTON DESIGN.

Supply Quantity can also be posted as a direct input into SUPPLY CHAIN DESIGN if the user prefers to do so.  However, if this is preferred, the automatic supply chain optimization stops working since the user  breaks the organic chain relationships.  As such, inventory levels are arithmetically calculated without any optimization.

Supply Chain Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

• Do we have sufficient capacity to meet or sales target?
• Can we eliminate capacity bottleneck by outsourcing production?
• What is the added value of our product mix managed by our sales team?
• How can we increase added value despite our constrained capacity?
• How sensitive is our production costs to foreign exchange fluctuations?
• What can we do if the apparently profitable sales orders, when in fact the are loss makers?

DESIGN PARAMETRIC PRODUCTION TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decision making time from weeks to hours.

USE THE PARAMETRIC PRODUCTION DESIGN TO MAKE DYNAMIC DECISIONS.

Balance sales quantity targets with capacity constraints to achieve coherence  and consistency among all business processes and units. To this effect;

• Measure capacity as quantity per hour.
• Start from theoretical machine hours as 720 hours per machine per month.
• Deduct from 720 hours, holidays (official and religious), planned maintenance hours, hours lost during chift changes, hours lost to tooling changes, and unplanned interruption hours such as power cuts, breakdowns, etc. to reach practical attainable hours available for production per machine per month.
• Clone on Reflex, the parameters of PRODUCTIN DESIGN such as Machines, Routes and Product Trees, as replicas of the ERP system.
• Set semi-finished product Target Inventories.
• Use the same concept of “days required” in the SALES DESIGN, to decide the days necessary to keep the production going when switching form one production phase to the other.  This way semi-finished products serve as buffer stock automatically  and can be used for example, to accomodate unplanned power cuts in scheduling.

If and when Reflex faces a bottleneck in capacity, it automatically tries to overcome the bottlenck by taking the following corrective actions:

• It shifts production to alternative routes if they are specified by the user
• It reduces gradually the number of days required given in Target Inventory  of Finished and Semi-Finished Products
• It goes back to the previous month preceding the month of the bottleneck and uses the excess capacity to produce buffer inventory to carry to the following month to overcome the bottleneck. If the buffer stock falls short, then it goes back 2 months preceding the bottleneck.  This iteration is repeated until the last permitted preceding month is reached, which may be the first month of the budgeting period.

If Reflex cannot overcome the capacity bottleneck it stops working automatically and signals that given scenario parameters are conflicting and should be revised manually.  At this point outsourcing needed capacity becomes a solution alternative at the discretion of the user.

Manual revision may require lowering sales targets, designing new production routes, revising product trees, and investing in new machines.  Even changing the type and nature of raw materials may change capacity calculations.

Automatic stopping of Reflex is an emergency measure ensuring  that monetary values  can only be assigned if all the quantity flows from end to end are coherent and consistent with each other and with the system as a unified whole.  Reflex prevents making wrong decisions at the earliest possible stages of scenario simulations.

Production Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

• Which expenses should we cut or eliminate to speed up making money?
• Why does Breakeven calculation mislead us?
• Whic company activity brings forth which expense?
• Can we disragard some expenses and still make correct decisons?
• Which expenses continue accruing if we stop production?
• How do we improve our forsight if we also use Quantity componet of Expenses as a simulation parameter?

DESIGN PARAMETRIC EXPENSES TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decison making time from weeks to hours.

USE PARAMETRIC EXPENSE DESIGN TO MAKE DYANMIC DECISIONS.

Determine the parameters of simulation by:

• Selecting automatically the Expense Codes from the Chart of Accounts
• Setting a different currency, Payment Term, and VAT for each expense
• Ralating a special change coefficient to each expense
• Calculating expenses as a function of sales types, sales quantity or sales value
• Allocating each expense to different products, and different department using different “expense allocation rules”
• By calculating “Monthly Excess Capacity” expenses based on “General Manufacturing Overhead” account
• By reporting different expenses for different groups for different decisions
• By decomposing each expense into “quantity X price” elements

By measuring the impact of monthly expense variations on profitability and cash flow.

Expense Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

• Should we shutdown completly for annual leaves, or workers take their normal turns to go on leave?
• Should we opt for “overtime” or increase the number of shifts?
• How much the opening wage increase should be at the strat of collective bargaining?
• Under what labor union demands is lockout decison justified?
• Under what conditions replacement of workers by machine investment is to the advantage of the company?

DESIGN WORKFORCE TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decison making time from weeks to hours.

USE PARAMETRIC WORKFORCE  DESIGN TO MAKE DYNAMIC DECISIONS.

Transfer, with payroll details,  all accruals and payments related to workforce, including expected terminations and new hirings, automatically to Income Statement, Balance Sheet and Cash Flow Statement.

• Determine parameters to simulate scenarios under all conditions.
• Allocate labor costs automatically to products.
• Transfer today, to future Balance Sheets the seniority provisions of workforce to be terminated in coming months.
• Since the effect of workforce decisons will reflec on futur cash flows, do not use annual averages, such that:
• Calculate the annual decrease due to progressive income tax, in net wages of the workforce.
• İncrease the wages in the begiining of the year so that the workers benefit by paying the first bracket income tax.
• Calculate correctly the cost of Labor to the Employer, by separating the social security obligations of the company and the workers.
• Favor giving non taxable benefits to workers to reduce the total cost of the benefits to the Employer whle decreasing the worker’s tax burden.

Covert net wages to gross automatically. If the net wage is foreign currency convert it to TL athe expected exchange rate.  To this effect, separate “monthly wage earners” since overtime payment  is based on monthly 225 hours.

Use government incentives to individuals based on their status as Retired, Disabled etc..

As per collective bargaining agreement, calculate “pure wage” and “enriched wage” by automatically including all benefits that workforce is entitled.

Strengthen your position in union negetiations by simulating union demands. Calcute costs to be beared in case of a strike.

Workforce Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

• What should be share of loans in debt finace to leverage shareholders’ profitability?
• Should we use long- term loans in place of short-term loans
• Under what conditions debt restructuring is to the company’s advantage?
• Sould we finance working capital by capital increase?
• Should we issue long-term bonds instead of borrowing long-term?
• Should short-term financing needs be met by bank credits or by mutual extension of suppliers’ payment terms?

DESIGN PARAMETRIC LOAN TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decison making time from weeks to hours.

USE PARAMETRIC LOAN DESIGN TO MAKE DYNAMIC DECISIONS.

Determine the parameters of existing or planned Loans as:

• Banks and credit institutions
• Loan types (LC, export, capital investment etc..)
• Payment terms (short-medium-long)
• Currency Types
• Bank interest year (360 or 363 days)
• Incentives
• Interst rates and payment dates
• Loan repayment amounts and repayment dates
• Non-interest expenses(commisions, blocked funds, syndication fess, etc..

Transfer automatically, interest accruals of future months to Income Statement, interest payments  and principal repayments to Cash Flow Satement and to Balance Sheet.

Prepare simulation scenairos that forsee interet rate and exchange rate changes taht can risk debt servicing.

Ask for loan restructuring before debt servicing is adversly affected.

Prepare for “off balance sheet financing” if legal limits for bank loans are reached.

Calculate costs of factoring, sale of receivables, islamic finance instruments.

Loan Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decison making time from weeks to hours.

USE PARAMETRIC INVESTMENT DESIGN TO MAKE DYNAMIC DECISIONS.

Design the parameters of the investment by decomposing the investment into:

• Investing comapnies
• Investment projects
• Project departments
• Depreciation rates and their groups depending on the nature of fixed assets
• Currencies of the outlays
• Outlay months

• The starting month of depreciation when the on-going investment item transforms into a fixed asset
  • Depreciation expense is posted at the Income Statement automatically
  • The fixed asset is separated from “on-going investments” and is placed under relevant “fixed asset group”
• Incentive Measures of the public authorities

Capitalize the interest expense of investment loans until the fixed asset is identified and charge it as a period cost afterwords.

If investment loans are in foreign currency, capitalize the foreign exchange gains or lossesuntil fixed asst is identified and charge them as period gains or losses afterwords.

Run simulation scenarios by changing the design parameters.  Be prepared the worst scenario where the investment project is halted or completely abondened.  Assume a proactive attitude for all risks affecting the capital investment projects.

Investment Design yazısı ilk önce Reflex üzerinde ortaya çıktı.

Are Income Statement, Balance Sheet and Cash Flow Statement correct, coherent and consistent with each other?  Especially  is “Profit for the Period” figure identical for Balance Sheet and Income Statement?

Despite arithmetical consistency, do the results make “business sense”? For example, is the “receivables turnover” measure in conformity with the measures of the sector of the company?

Do we need more resources to achieve the targeted scnarios? Is it worth the cost of procuring the needed reources?

DESIGN A PARAMETRIC BALANCE SHEET TO:

Account for dynamic constraints to balance incompatible targets.

Design resources, processes, variables, parameters and targets completely.

Test performance by simulating targets and constraints.

Use prices, promotions and operating volumes as parametric decision variables.

Adjust customer service level to achieve strategic profitability.

Save time by reducing analysis and decison making time from weeks to hours.

USE THE PARAMETRIC  BALANCE SHEET DESIGN TO MAKE DYNAMIC DECISIONS.

Parametric Balance Sheet design keeps all the other business processes consistent from end to end.

Balance sheet does not function as a safety measure,  until all contradictions, inconsistencies, and deficiencies are accommodated by the user.

After all accommodations take place, Income Statement, Balance Sheet and Cash Flow Statement are generated simultaneously.  As such, Reflex converts all business processes from end to end,  into a fully integrated and monolithic holistic system

By making parametric scenario simulations under capacity constraint:

• Make cash flow based value increasing decisions today.
• Refrain from decisions that lower the NPV of the cash flow.
• Announce the simulation parameters that optimize the value of the company as operation targets.
• Determine the cost of additional resources that are required to attain the targeted scenarios.
• Decide whether additional resource costs should lead to the revision of targets.

The decisions that increase the value of the company are fed constantly by cash flows.  Thererefore the concept and the set-up of Dynamic Cash Flow is the irreplaceable vital essence of Reflex.

Balance Sheet Design yazısı ilk önce Reflex üzerinde ortaya çıktı.