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1/27/2014
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Data Based Decision Making in Manufacturing Supply Chains
N. ViswanadhamComputer Science and Automation
Indian Institute of Science, Bangalore
January 23-24, 2014
IGSTC workshop on
Strategies and Concepts
for Advanced Manufacturing
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ContentsContents
High Performance Supply Chains
Big Data
Ecosystem Framework
Governance
Conclusions
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High Performance Supply Chains
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Integrated Supply Chain Network
Supplier Distributor
Supplier Retailer
Manufacturer
Service Provider
Information Network
Enterprise System or Web-site
Logistics Network
Logistics Hub
Financial Network
Banks
Supply Network
Service Network
Demand Network
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sConsolidation and ConnectednessConsolidation and Connectedness
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Ten mega corporations control the output of almost everything you buy; from household products to pet food to jeans.
37 banks have merged to become just four — JPMorgan Chase, Bank of America, Wells Fargo and Citi Group.
High concentration Clusters and connected networks are highly vulnerable
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Triggers of Global Supply Chain Disruptions
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sThe Great Trade CollapseThe Great Trade Collapse
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• Globalization & Highly Connected Supply Chains amplified & transmitted market collapse across the globe.
• Organizations extraneous to Supply Chain (Governments, Traders, Energy, .. Social, Political factors) influence its performance
The Great Trade Collapse: Causes, Consequences and Prospects A VoxEU.org Publication Edited by Richard Baldwin page 3
GLOB
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Big DataBig DataFireflies on each component
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Recent Advances:Internet of Things,..
IoT technologies can be categorized into Tagging things, Sensing
things and Embedded things .– The tagging things provide item identification, things can be connected to
the databases.
– The sensing things enable us to measure and detect changes in the physical status of our environment.
– The embedded things yield information about the status of the embedding object.
Cyber Physical Systems
Systems of Systems: comprise of multiple, autonomous, embedded diverse global complex systems.
Network of Networks
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sBig data Enables Cognitive Supply Chains
During the last decade ERP, CRP etc analyzed internal data – sales, shipments, inventory, etc .
Now companies analyze external data to gain insights into customer fancies, markets, partner ecosystem and possible risks & consequences, etc
– Many Devices gather and store data: mobile, TVs, cars, Web, social media, traffic & security cameras, etc
– Data is in several forms: Images, sensor outputs, GPS, Internet of Things, text from email, blogs and reviews.
– Data on political, social, economic, meteorological factors
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Big data Enabled Business Processes Big data Enabled Business Processes
Procurement: Supplier & logistics provider selection, manufacturing locations, Delivery scheduling & Inventory management, Cost & Risk Evaluation,.
Dispersed Cognitive Manufacturing: Smart Factories, Embedded Machines, Smart parts, Cognitive PLCs
Distribution & Retail: Warehousing, Packaging, Tagging B2C Logistics, Customer preferences from recommender systems, In store customer moving & buying patterns
Service Chains: Logistics networks, Repair & Maintenance of Machines, Fleet of Trucks, Aircrafts, etc
Risk Mitigation Processes: Mitigating Cascading of network failures, Self Adaptive Machines, etc
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sBig data should aid in Decision Making that
results in Desired Business Outcomes
In Global supply chains, "What is the most sought after customer value, and what marriage of data and algorithms gets us there?"
The Big Question is “what data from suppliers, customers, governments, and local & economic environment should one collect and process” to get desired business outcomes.
What data you analyze every day, every week, every month.
A framework is needed to answer this question
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Ecosystem FrameworkEcosystem Framework
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Eco
syste
m A
ware
Glo
ba
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pp
ly C
hain
Man
ag
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Supply Chain
Deliv
ery
Serv
ices
Infra
stru
ctu
re
Reso
urc
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Institutions
The Basic EcosystemThe Basic Ecosystem
Investment ClimateCo-Evolution, Risk Propagation
SUPPLYCHAIN
ECOSYSTEM
DE
LIVER
Y SE
RV
ICE
MEC
HA
NISM
S
IOT and Cognitive control systems
Logistics & IT companies
Delivery Channels
Decision Making Tools, BPO, Control Towers
RESO
UR
CES
Industry Clusters,Social Media, Web Blogs, Recommender systems
Human, Financial & Natural Resources Location Factors
Infrastructure: Ports, Airports, Roads,
Cloud and other storage resources
Customs , Export & Trade Other Govt. Regulators
INSTITUTIONS
Quality Control & Environmental Issues
Social, Legal and Privacy issues,Labor Unions
SUPPLY CHAIN
Retail Chains Distribution Manufacturing Suppliers
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sSES Framework Can Help To Study
Governance
Risk
Innovation
Performance
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GovernanceGovernanceHierarchy , Market or Network Hierarchy , Market or Network
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sThree Types of Network Governance Three Types of Network Governance
Supply Chain networks are Globally dispersed, independent organizations, connected only through Service agreements, Internet, FIIs, etc
The Network Governance model
– Highly Centralized External Broker (Li & Fung, Olam Intl.)
– Participant Shared Governance by Elected Board (Healthcare , Dairies, Cooperatives)
– Participant Shared Governance with a Lead Player Producer-driven (Cisco, Nike)
Buyer-driven (Wal-Mart, Carrefour, Levi)
All three governance forms are in practice.
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Governance: Partner Selection, Coordination & Control
A separate chain is formed for each order
Partner selection based on Transaction Cost and the risks in the ecosystem
Coordination : Determining who does what and when and communicating to everyone
Execution: Monitor order status so that processes work as per plan & control exceptional events
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sData Based Governance: Data Based Governance:
Partner selection, Coordination & ExecutionPartner selection, Coordination & Execution
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OtherAgencies
Coordination
Partner Selection
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Risks in the EcosystemRisks in the Ecosystem
Sr. No Risk classification Risk Elements
R1
Supply Chain
Location risk
Outsourcing risk
Design, manufacturing defects, Inventory deficit
Delay or unavailability of materials from suppliers
Breakdown of machines, power failure
R2
R3
R4
R5
R6
Resources
Raw material, Human, Financial
Social unrest, War
Infrastructure deficit, talent shortage
Credit squeeze, Energy & water shortage
R7
R8
R9
R10
Institutional
Regulatory risk
Political
Labor issues
Trade agreements
R11
R12
R13
R14
Delivery infrastructure
Failure of IT infrastructure
SC visibility decreases
Inbound and outbound logistics failure
Failure of governance mechanism
R15
R16
R17
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Supplier Selection using Transaction Costs
Delivery
Institutions
Shipping, Inventory, Asset specific Hard & Soft
Infrastructure
Taxes, Tariffs, SEZs, FTAs,
Social groups
Transaction Cost
ResourceAsset Specific
Clusters, Human, Financial, Power
Supply Chain Production, Quality, Transport
Coordination Costs Broker fees
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CoordinationCoordination
Coordination is to bring different complex activities or organizations into a harmonious relationship.
The coordination includes– For every order, selection of suppliers; assigning functions to them
such as what to supply, how is it to be produced (e.g., product tolerances and process standards), the production and delivery schedules , etc
– Identifying key parameters such as the product specification, the technology and the quality systems, labor and environmental standards along with the targeted price and communicating to the chain partners.
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sSupply Chain Control Tower
A command centre for visibility, decision-making, and action, based on real-time data.
Concept that has been around for a while in logistics called 4PL
Make real time decisions (exceptions) based on data
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ConclusionsConclusions
New technology developments such as IOT, cloud computing, mobile devices; Internet, Cognitive control, Big data analytics have immense impact on performance & competitiveness.
Our framework identifies the data to collect and analyze to make the needed decisions
The same methodology can be used to analyze service value networks and public networks for infrastructure building and food security.
Talent is need of the hour.
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sMathematical Models for Design of Mathematical Models for Design of
Governance MechanismsGovernance Mechanisms
The partner selection problem can be formulated as Fuzzy AHP or MIP problem. One can rank order the suppliers for each component based on the ecosystem parameters based on TCE.
Coordination, scheduling problems can be solved using Optimization techniques
Expert systems, Decision support systems, Case based reasoning and Hybrid control systems are useful for Exception Management and Execution
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