Jan 13, 2016
1. What are Supply Chain Management Systems?
2. How do they work?3. What can they do?4. What can they not do?5. An economic model of virtual
organizations – The WS paradigm
TopicsTopics
Traditional supply chain obsolescence
Direction of flow of demand Direction of flow of product
Raw Material vendor
Tier-II Suppliers
Tier-I Suppliers
Manufacturers Distrib
ution Centers
Retailers Custo
mer Zones
Point of Point of differentiatiodifferentiatio
nnDistribution Distribution
costscostsMarket Market
mediation mediation costscosts
RFID Tags
Tags can be attached to almost anything:
pallets or cases of product vehicles company assets or personnel items such as apparel,
luggage, laundry people, livestock, or pets high value electronics such
as computers, TVs, camcorders
What is RFID? -- The TagsWhat is RFID? -- The Tags
Are All Tags The Same?Are All Tags The Same?
Basic Types:Active
Tag transmits radio signal Battery powered memory,
radio & circuitry High Read Range (100
meters)Passive
Tag reflects radio signal from reader
Reader powered Shorter Read Range
(10cm – 5 meters)
RFID the Supply Chain
Tag ReaderAntenna Middleware Supply chain execution- Coiled
antenna ofreader creates magnetic field with coiled antenna of tag
- Transmits identification data to a reader
-Transmit data tomiddleware
-Associates tag info with product info
-Process information from reader
-Filters data
-Sends data to backend servers
- Backend SCE or ERPsystems receives Information
How far, how fast, How far, how fast, how much, how many, attached to whathow much, how many, attached to what??
Low Frequency No regulation Penetrate materials (water, wood, tissue well) Slow read speed Small range No penetration of iron and steel
Medium Frequency Little data, small distance Thin tags Low cost High data rates Govt regulated Non mental penetrating
High Frequency Penetrate materials Small tag size High data transfer Long range Non-water or tissue penetrating Non-regulated in some regions expensive
Where can RFID add value?
From Manufacturing
Into a Store’s Back Room Inventory
On the Shelf At the Cash
Register
Through Distribution Transportation
Out the Door as an anti-theft device
Top 100 Suppliers: Suppliers will mark inbound cases and
pallets with RFID - 1 January 2005 - May, 2003 specification calls for ≈256 bit read/write tag
• 1 EPC tag per carton – 100% read on conveyor
• 1 EPC tag per pallet – 100% read at Inbound dock
• Conveyor speed of up to 600 feet per minute
• 3 Texas Distribution Centers
• January 2005
Why???
Stock management /perishables (field to fork)
In-stock levels Invoice reconciliation: damaged,
deductions, performance penalties, etc. Scan Based Trading or VMI Improved analytics & POS data All reads available to suppliers within
30 minutes
Guidelines for using RFID Bar codes cannot be used Counting versus identification (reverse
logistics) Use of 3Party logistics and suppliers Data collection is chaotic (battlefields,
hospitals, retails shops) Exact configuration of the good must be
maintained Counterfeit protection High Risk scenarios, drugs, hospitals Collecting data outside of retailer (smart
refrigerators, medicine cabinets, etc)
Traditional supply chain obsolescence
Direction of flow of demand Direction of flow of product
Raw Material vendor
Tier-II Suppliers
Tier-I Suppliers
Manufacturers Distrib
ution Centers
Retailers Custo
mer Zones
Point of Point of differentiatiodifferentiatio
nnDistribution Distribution
costscostsMarket Market
mediation mediation costscosts
Example Problem Space
ClientPO Service
Credit Service
Inventory Service
Purchase Order
Credit
Check
ReserveInventory
Credit
Response
InventoryResponse
InvoiceConsolidate
Results
Sell 50,000 computers with only 4 days of inventory
Keep few suppliers very close 30 suppliers 75% of materials When order is made, signal is sent to
supplier, 90 minutes later, supplies are delivered to Dell.
“We sell what we have, we don´t sell what we don´t have”
Dell From HBR
Have as few suppliers as possible In real time, communicate your
inventory levels and replenishment needs to them
Order from suppliers only when you receive demand from customers.
Example Problem Space
ClientPO Service
Credit Service
Inventory Service
Purchase Order
Credit
Check
ReserveInventory
Credit
Response
InventoryResponse
InvoiceConsolidate
Results
Example: Self-describing data
“ABC47-Z”, “100”, “STL”, “C”, “3”, “28”Data stream in a typical interface…
<INVENTORY><PART_NUM>ABC47-Z</PART_NUM><QUANTITY>100</QUANTITY><WAREHOUSE>STL</WAREHOUSE><ZONE>C</ZONE><AISLE>3</AISLE><BIN>28</BIN>
</INVENTORY>
Same data stream in XML…
XML Auction Demo
Other Web Services
Partner Web Service
Partner Web Service
Data Access and Storage Tier
Application Business Logic Tier
YourCompany.com
Internet + XML
Web Services Overview Application Model
Other Applications
End Users
Calendar
News
Finance
Weather
Other
Svcs
Ads
Web Services Overview Portals
Web Service Demos
WebMethods.net http://www.webservicelist.com/ http://www.xmlwebservices.cc/
index_Samples.htm#Top http://www.asitis.co.uk/web-services/
Underlying Technologies Web Services Stack
Ubiquitous Communications: Internet
Universal Data Format: XML
Wire Format: Service Interactions: SOAP
Description: Formal Service Descriptions: WSDL
Simple, Open, Broad Industry Support
Directory: Publish & Find Services: UDDI
Inspection: Find Services on server: DISCO
Underlying Technologies Web Services Stack
Directoryhttp://www.uddi.org
UDDI
DISCO
WSDL
SOAP
Inspectionhttp://www.ibuyspy.com/ibuyspy.disco
Descriptionhttp://www.ibuyspy.com/ibuyspycs/InstantOrder.asmx?wsdl
Wire Format
Locate a Service
Link to Discovery Document (XML)
Request Discovery Document
Return Discovery Document (XML)
Return Service Description (XML)
Return Service Response (XML)
Request Service
Request Service Description
Web
Ser
vice
Clie
nt
UD
DI o
ro
ther
directo
ry service
Web
Service
SCM Software –Who?
What does SCM software do?
2 Main Functions: Tracking & Optimization
Factory Scheduling Bar Code Warehouse Management Transportation Routing and Scheduling Inter Organizational Systems Collaborative Planning & Optimization Multi – echelon optimization E-Procurement & Marketplaces Supplier Contract Management RFID Management Systems
The Bullwhip Effect
Customer Retailer Distributor Factory Tier 1 supplier Equipment
Upstream amplification of demand variationProgression of a brushfire to an inferno!
Machine Tools at Bullwhip Tip
-100%
-50%
0%
50%
100%
19
61
19
63
19
65
19
67
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
Data from United States, 1961-1991 (GDP, vehicle production, and machine tool orders
% C
ha
ng
e, y
ea
r to
ye
ar
% change GDP
% change vehicle production index
% change net new orders machine tool industry
The Diaper Supply Chain!
010
203040
5060
7080
Week
Ord
er
Factory
Distributor
Wholesaler
Retailer
Customer
Ripples to tidal wavesStockpiles and stockoutsInsufficient or excessive capacitiesHigher costs
Interorganizational Systems: CRP
P&G
Warehouse 1
Warehouse 2
BIG RETAILER
< 3% stock outs
< 14days inventory
Before CRP
P&G
Warehouse 1
Warehouse 2
BIG RETAILERBudget
Actual
•Volume discounts•New product promos
•Here and now discounts•Trade marketing
•Bonuses….
Differences
Bringing vertical coordination to the network… but how?
3,500 modular parts30+ suppliers
Over 1,000,000 parts in just one car!
Ronald Coase (1937)
Why do we have firms?
there must be some cost in using the price mechanism.
• Price discovery/search costs• Contract negotiation• Long term stability of supply sources
(uncertainty)
Ergo, operation of the market costs something, and by forming and organization and letting some authority to allocate resources, some costs are saved
Basic attributes of transactions
Specificity Frequency Duration Complexity Uncertainty Difficulty of measuring performance Connectedness
Asset Specificity
Investments made to allow two parties to exchange but has little or no value outside of the exchange relationship
Site specificity Physical-asset specificity Dedicated assets Human capital Lead to higher transaction costs and
the problem of “hold-up”
Specificity & Frequency
Standard Medium High
Standard Equipment Customized Equipment Constructing a plantOccasional Machinery, PCs, Automobiles Machinery requiring some custom config. Turn-key projects
Markets Company to company negotiation Company to company negotiation
Frequency Once off negotiated transaction Semi-complex contracts Very complex contracts/government regulation
Standard Raw Material Customized Material Value adding processes as specific site
Frequent Sugar, RAM chips, Steel Raw mat. with special process unique to customerproduction processes within one or several
factories within same location/proximity
Markets Joint ventures, transfer of equity HierarchiesContracts short to medium term Long-term binding contracts with Internal integration/ vertical conglomerate
I year supplier: price based on index significant investment
Specificity
Market
Hierarchy
Asset specificityAsset specificity
Pro
du
ct C
om
ple
xit
yPro
du
ct C
om
ple
xit
y
IT, Complexity & Specificity
Example Problem Space
ClientPO Service
Credit Service
Inventory Service
Purchase Order
Credit
Check
ReserveInventory
Credit
Response
InventoryResponse
InvoiceConsolidate
Results
Traditional supply chain obsolescence
Direction of flow of demand Direction of flow of product
Raw Material vendor
Tier-II Suppliers
Tier-I Suppliers
Manufacturers Distrib
ution Centers
Retailers Custo
mer Zones
Point of Point of differentiatiodifferentiatio
nnDistribution Distribution
costscostsMarket Market
mediation mediation costscosts