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Monday, November 13, 2006

REA, a semantic model for Internet supply chain collaboration

REA (Resource-Event-Agent) is a semantic model for internet based Supply Chain collaboration developed by Dr. William McCarthy of Michigan State University. In this presentation for the ACM Conference on Object-Oriented Programming, Systems, Languages, and Applications (OOPSLA 2000), Dr. McCarthy and Robert Haugen, Logistical Software LLC outline a web-based semantic model for collaboration.
Before I dived into this thing - I asked myself what do these good people mean by using the word semantic in a semantic model for internet based supply chain collaboration? You can look up the definition here

se.man.tic: Spelled Pronunciation[si-man-tik]
– adjective
of, pertaining to, or arising from the different meanings of words or other symbols
Eg: semantic change; semantic confusion.

So in other words, a semantic model is really a language meaning based model. So, what do the authors mean by using the term sematic model?
By "semantic model" we mean a computer software model of real-world supply chain activities. Another term for semantic model from the field of knowledge representation is "ontology": the set of classes, relationships, and functions in a universe of discourse.

Read the rest of the post here.

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Friday, November 10, 2006

Using Prediction Markets for Collaboration

Prediction Markets Blog talks about Using Prediction Markets for Collaboration the use of collaborative tools and lists a few applications of such technology.
The post lists three particular directions for collaborative products namely:
New Lines of Communication

Prediction markets have the ability to open up new lines of communication within the organization. In a lot of companies, especially large ones, the executives don’t get to hear what the “normal” employees on the ground are thinking because the two groups are insulated by multiple layers of management hierarchy.

This is precisely what is called "Going to the Gemba" in Lean thinking and that's really what this sort of collaboration technology opens up. However, there is more than merely creating a common place/market where people can interact but actually going down to the floor and physically interacting with people is the way to go. Perhaps, collaboration takes us part of the way there but I don't think that it can or should be a substitute for taking the time and effort of going to the gemba.

Read more here.

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Tuesday, November 07, 2006

Understanding supply chain risk: A McKinsey Global Survey

Understanding supply chain risk: A McKinsey Global Survey (Free registration required) is a new article put out by McKinsey & Co in the McKinsey Quarterly online magazine. They surveyed executives at publicly and privately held businesses across a range of industries in September 2006.
The key findings:

Nearly two out of three executives say they face increasing risks to their ability to supply their customers with goods and services cost effectively

The executives identify a wide variety of risks; topping the list is the availability of well-trained labor.

The executives most likely to say that their company's level of risk has risen are those in retailing, manufacturing, and energy; those in the energy industry are by far the most likely to say their risk has increased significantly.

The executives rank labor, regulation, and suppliers as the top three supply chain risks on which they focused during their most recent round of planning.

Executives at the smallest companies (those with annual revenues under $500 million and with fewer global resources) are also particularly likely to say that labor is a problem.

The degree of disconnection between risk and its mitigation may be one reason that executives rate "fairly poor" their company's ability to mitigate their key supply chain risks, 39 percent say they are at best slightly capable of doing so. Furthermore, 41 percent of executives say that their company does not devote enough time or resources to mitigating risk-nearly five times the number who say that too much time and too many resources are allocated.

More than half of all respondents say their company either undertakes no formal risk assessment or conducts only a qualitative assessment.

Only 18 percent of respondents believe that the Sarbanes-Oxley reporting requirements3 help them reduce their supply chain risks.

I'll just plug my fellow blogger riskape on this topic - Riskape. I'm sure that managing supply chain risk in a systematic manner is high up there in the area of real needs for supply chain professionals and I'm sure that I'll be devoting more time to that as well.

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Monday, November 06, 2006

Fiscal Visibility In Supply Chain = Money Saved

Fiscal Visibility In Supply Chain = Money Saved is the title of a new opinion piece by author Michael Stolarczyk who also blogs at BlogonLog.
Michael notes,

A typical apparel company, for example, might source fabric from China, manufacture garments in Malaysia, send them to Italy for custom design work, then ship final products to a 3PL warehouse in the United States for delivery to major department stores around the country.

The above is an example of how dramatically the options for manufacturing, coupled with logistics options and supply chain technology, for any firm anywhere has shifted in less than two decades. However, this shift has also laid the axe to traditional notions of ownership and control driving up risks across the supply chain and thus inventories (in part to cover the lead times and in part to act as a buffer to rising risk) as well. You might have been used to bull whip effects in a supply chain on a domestic scale. What about bull whip effects on an international scale and what effects will such phenonmenon have on local economies that form part of such global supply chains?
Also remember that a customer's notion of product availability has not been downgraded as a result of the increased lead times and coordination that firms have taken upon themselves. Instead, if anything, a customer's notion of product availability and customer service has migrated northwards fueled by better communication and awareness i.e. trends are communicated in real-time these days.
So how have companies executed upon their strategic decision to outsource or offshore or some combination of the two?

Read the rest of the review here.

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Managing the Financial Supply Chain - Part 3

In Managing the Financial Supply Chain - Part 1 and Managing the Financial Supply Chain - Part 2, I reviewed the first two parts of a recent Supply Chain Management Review article titled - Managing the Financial Supply Chain by Roland Hartley-Urquhart in their online magazine.
In this concluding post of the series, I want to review Roland's proposed solutions and recommendations for managing the financial supply chain. Roland proposes three main solutions for managing certain aspects or processes of the financial supply chain. They are:

  1. Early-Payment Programs

  2. Inventory-Ownership Solutions

  3. Virtual Consignment Financing With Assignment of Proceeds

Read the rest of the review here.

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Friday, November 03, 2006

Managing the Financial Supply Chain - Part 2

In Managing the Financial Supply Chain - Part 1, I reviewed the first part of Supply Chain Management Review recent article titled - Managing the Financial Supply Chain by Roland Hartley-Urquhart in a recent edition of their online magazine.
In this post, I want to go deeper into Roland's article about Managing the Financial Supply Chain because of its critical importance in how the efficacy and direction of progress of supply chains are decided under the headings of New Processes & New Competencies, Forex Risks and Capital Cost Inefficiencies
So a firm has decided to go the route of outsourcing or offshoring some of their non-core competencies, what is the immediate effect of such a strategic decision on the financial processes within the firm.

Read the rest of review here.

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Thursday, November 02, 2006

Managing the Financial Supply Chain - Part 1

Supply Chain Management Review has an article titled - Managing the Financial Supply Chain by Roland Hartley-Urquhart in a recent edition of their online magazine.

Understanding and managing all aspects of the financial supply chain is an essential ingredient for business success. While that statement has always been true, it takes on a new level of importance in today's world of global sourcing and production outsourcing. The recommendations offered in this article can help supply chain professionals more effectively integrate the physical flow of goods with the financial flow.

As the previous series on Creating the Optimal Supply Chain amply demonstrated, there are three essential flows in a supply chain - Material, Information and Financial flow. While the first two are often frequently dissected and analyzed, the third is comparitively less so and thus I thought that I would do a piece on that.
Never have truer words been spoken:
Global sourcing and outsourcing have the added benefit of generating cash for many companies, as investments in plants, equipment, and working capital shift from the brand owners and original equipment manufacturers (OEMs) to their trading partners, who in many cases are overseas. While these benefits can't be denied, business leaders need to assess the unintended consequences of their global sourcing and outsourcing strategies beyond direct cost and capital savings. In particular, they need to recognize that the labor cost advantage of moving these activities offshore masks hidden costs and risks within the financial supply chain.

Read the rest of the review here.

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Monday, October 30, 2006

Creating the Optimal Supply Chain - Review (Supply Chain Enterprise Systems: The Silver Bullet?)

In this concluding review of the report titled - Creating the Optimal Supply Chain published by experts from Wharton and BCG, I take a look at the section titled - Supply Chain Enterprise Systems: The Silver Bullet?. In earlier posts, I had reviewed the first three sections namely, You Can't Manage What You Can't Measure': Maximizing Supply Chain Value, Avoiding the Cost of Inefficiency: Coordination and Collaboration in Supply Chain Management and Flexibility in the Face of Disaster: Managing the Risk of Supply Chain Disruption. The report - Creating the Optimal Supply Chain is available online as well.
There can be little doubt in the minds of supply chain professionals and practitioners that managing the supply chain is no easy task no matter how simplified the meta level process diagram looks like that neatly shows product flows in one direction and information flows in the other. It is precisely because supply chain management is such a complicated issue that Supply Chain Enterprise systems have appeared on the scene from a variety of vendors - SAP, Oracle, i2, Manhattan etc. However, since supply chain management is a rather complex task in itself, systems deployed to facilitate supply chain management are also complex such that a practitioner now has to deal with supply chain complexity through a complex system. And thus go I to say - "Have you really solved a problem when your solution creates two new problems?" This task is not made any easier when you have to wade through not only a complicated solution set but oodles of marketing gimmicks, ploys (and well meaning marketing professionals as well), endless half promises with inflated verbiage and out and out term misuse.

Read the rest of the post here.

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