intelligent e supply chain decision support pdf

University of Minnesota – Digital Technology Center
December 2002
Intelligent e-Supply Chain Decision
Support
Norman M. Sadeh
Norman M. Sadeh
e
e
-
-
Supply Chain Management Laboratory
Supply Chain Management Laboratory
School of Computer Science
School of Computer Science
Carnegie Mellon University
Carnegie Mellon University
Copyright
©
2002 Norman Sadeh
Outline


Supply Chain Management: New Context
Supply Chain Management: New Context


Agent
Agent
-
-
Based Collaborative Decision Support

Based Collaborative Decision Support


Mascot
Mascot


Available
Available
-
-
To
To
-
-
Promise/Capacity
Promise/Capacity
-
-
To
To
-
-
Promise
Promise
Functionality
Functionality


Empirical Results

Empirical Results


Dynamic Supply Chain Management Practices
Dynamic Supply Chain Management Practices


Early Results
Early Results


TAC
TAC
’
’
03: A Supply Chain Trading Competition
03: A Supply Chain Trading Competition


Summary and Concluding Remarks
Summary and Concluding Remarks
Copyright
©
2002 Norman Sadeh
Supply Chain Management


Planning and coordinating procurement, production and
Planning and coordinating procurement, production and
distribution activities

distribution activities


From raw material suppliers to manufacturers
From raw material suppliers to manufacturers
…
…
to
to
distribution centers
distribution centers
…
…
to retailers and consumers
to retailers and consumers


Trillions of dollars annually
Trillions of dollars annually


Good practices directly impact the competitiveness of
Good practices directly impact the competitiveness of
companies
companies


Timely and cost
Timely and cost
-

-
effective delivery of products to
effective delivery of products to
customers
customers


Extends to product design and configuration
Extends to product design and configuration
Copyright
©
2002 Norman Sadeh
Why is SCM Difficult?


Involves multiple organizations
Involves multiple organizations


Each organization tries to satisfy multiple objectives
Each organization tries to satisfy multiple objectives


Cost, timeliness, quality, market share, etc.
Cost, timeliness, quality, market share, etc.


Each organization operates subject to:
Each organization operates subject to:



Internal Considerations
Internal Considerations
:
:


Finite capacity, existing inventory, etc.
Finite capacity, existing inventory, etc.


External Considerations
External Considerations


Available suppliers and their capacities, order
Available suppliers and their capacities, order
quantities and due dates, contractual
quantities and due dates, contractual
arrangements, transportation constraints, etc.
arrangements, transportation constraints, etc.


Numerous sources of uncertainty
Numerous sources of uncertainty


Capacity, supplies, demand, etc.
Capacity, supplies, demand, etc.
Copyright

©
2002 Norman Sadeh
Historical Perspective
Purchasing Production Sales
Distribution
Materials
Management
Manufacturing
Management
Distribution Customers
Suppliers
Suppliers
Internal
Supply Chain
Customers
Buyers/
Sellers
Buyers/
Sellers
Buyers/
Sellers
Buyers/
Sellers
Inventory
Control
e-Commerce
e-Markets/Exchanges
e-Supply Chains
Functional
Silos

Enterprise
Integration
Dynamic
Internet-enabled
Supply Chain
Supply Chain
Integration
Copyright
©
2002 Norman Sadeh
Beyond the Early eMarket Hype


Dynamic business practices are mainly confined to
Dynamic business practices are mainly confined to
MRO
MRO


Suppliers don
Suppliers don
’
’
t like being evaluated solely based on
t like being evaluated solely based on
price
price


Covisint

Covisint
, E2open exchanges: more emphasis
, E2open exchanges: more emphasis
on supporting collaboration
on supporting collaboration


Requires richer environments
Requires richer environments
•
•
Multiple attributes
Multiple attributes
–
–
not just price
not just price


Lack of adequate standards
Lack of adequate standards


Lack of adequate decision support tools
Lack of adequate decision support tools


Evaluate a large number of options
Evaluate a large number of options



Standardization efforts are taking time
Standardization efforts are taking time
Copyright
©
2002 Norman Sadeh
Some Open Research Issues


Long vs. Short term contracts
Long vs. Short term contracts


Information exchange
Information exchange


Collaborative decision support
Collaborative decision support


Multi
Multi
-
-
attribute negotiation
attribute negotiation


Peer

Peer
-
-
To
To
-
-
Peer/local view vs. more
Peer/local view vs. more
lobal
lobal
view
view


P2P Challenge
P2P Challenge
: Coordinating negotiation across
: Coordinating negotiation across
multiple tiers
multiple tiers


Challenge for the Global View
Challenge for the Global View
:
:


Creating the right incentives for information sharing

Creating the right incentives for information sharing


How global? How often do you clear? etc.
How global? How often do you clear? etc.
Copyright
©
2002 Norman Sadeh
MASCOT:
Collaborative Decision Support


Decisions are evaluated in
Decisions are evaluated in
collaboration
collaboration
with
with
potential business partners
potential business partners


Supply chains can be
Supply chains can be
dynamically
dynamically
set up in
set up in
response to changing market requirements
response to changing market requirements



Emphasis on Mixed Initiative Decision
Emphasis on Mixed Initiative Decision
Support
Support


Don
Don
’
’
t try to automate everything!
t try to automate everything!
Copyright
©
2002 Norman Sadeh
MASCOT Supply Chain Agent
Bidding & Order Mgmt.
Planning & Scheduling
Procurement
Business
Entity
Enterprise
Level
Mascot
Agent
Tier 1
Suppliers
eMarket

eMarket
eMarket
Site Level
Mascot
Agent
Site Level
Mascot
Agent
Prospective
Customer
Request for
Quote
eMarket
Copyright
©
2002 Norman Sadeh
MASCOT: Overall Objectives


Leverage benefits of finite scheduling
Leverage benefits of finite scheduling


Rapid and accurate evaluation of partner
Rapid and accurate evaluation of partner
-
-
dependent
dependent
decisions :

decisions :


Bids & Requests for Quotes
Bids & Requests for Quotes
•
•
including real
including real
-
-
time ATP/CTP
time ATP/CTP


Alternative product/subcomponent designs
Alternative product/subcomponent designs


Make
Make
-
-
or
or
-
-
buy decisions
buy decisions



Customizable mixed
Customizable mixed
-
-
initiative functionality
initiative functionality


Collaborative solution development,
Collaborative solution development,
workflow management
workflow management


Facilitate integration with legacy systems
Facilitate integration with legacy systems
Copyright
©
2002 Norman Sadeh
A Customizable Agent Wrapper
Blackboard
Control KB
Agenda
Controller
Control
Profile
GUI
Event Queue
Enterprise

System
eMarket
Portal
Potential
Business
Partner
Potential
Customer
Bidding/Order Mgmt KS
BOM/Flow Config. KS
Demand Explosion KS
Communication KS
Knowledge Sources
Contexts
External
Systems
Outgoing messages
Incoming Events
Scheduling/CTP KS
RFQ/Procurement KS
Current
working
context
Copyright
©
2002 Norman Sadeh
Main Architectural Features


Blackboard

Blackboard
Contexts
Contexts
:
:
“
“
What
What
-
-
if
if
”
”


Different assumptions (e.g. demand, resources,
Different assumptions (e.g. demand, resources,
suppliers) and different solutions
suppliers) and different solutions


Unresolved issues
Unresolved issues


Extensible set of Knowledge Sources
Extensible set of Knowledge Sources
(

(
KSs
KSs
)
)


Allows for modular & reusable
Allows for modular & reusable
KSs
KSs


Provides for easy integration with legacy systems
Provides for easy integration with legacy systems


Mixed Initiative Control
Mixed Initiative Control


Customizable user profile
Customizable user profile
Copyright
©
2002 Norman Sadeh
Unresolved Issues


Help keep track of

Help keep track of
incomplete, inconsistent and
incomplete, inconsistent and
unsatisfactory
unsatisfactory
aspects of a context solution
aspects of a context solution


Examples: unprocessed RFQ, insufficient availability
Examples: unprocessed RFQ, insufficient availability
of supplies, missed prior delivery commitment
of supplies, missed prior delivery commitment


Automatically updated
Automatically updated
as the solution is modified
as the solution is modified


Supports flexible mixed initiative
Supports flexible mixed initiative
workflow
workflow
management
management


Associated with KS activations, scripts and goals

Associated with KS activations, scripts and goals
Copyright
©
2002 Norman Sadeh
Three Levels of Problem Solving


Knowledge Source Activations
Knowledge Source Activations


e.g. Demand Explosion (RFQ1)
e.g. Demand Explosion (RFQ1)


Scripts
Scripts


e.g. Evaluate (RFQ1)
e.g. Evaluate (RFQ1)
1. Copy_Current_Context
2. Incorporate(RFQ1)
3. Demand_Explosion (RFQ1)
4. Reoptimize_Schedule_with_Net_Demand (RFQ1)
5. Procure_Subcomponents_Net_Demand(RFQ1)
6. etc.
• Goals: Search among multiple options
Copyright
©

2002 Norman Sadeh
Mixed Initiative Workflow
Management
U/C:
Incorporate event
into Context
Blackboard:
Update
Unresolved Issues
U/C:
Select Unresolved
Issue to Resolve
U/C:
Select Resolution
Method
KS:
Execute
Resolution Method
Controller:
Activate
Resolution Method
U/C:
Modify Assumptions
within Context
(“What-if”)
Modified
Context
Modified
Context
Unresolved

Issue
Selected
Unresolved
Issue
Selected
Resolution
Method
Activated
Agenda
Item
Modified
Copy of
Context
U/C = User or Controller
Copyright
©
2002 Norman Sadeh
Status


Customized to support coordination between a
Customized to support coordination between a
machine shop and a tool shop at Raytheon
machine shop and a tool shop at Raytheon


Over 150 machine centers & over 100 people
Over 150 machine centers & over 100 people



50% of incoming orders require new tools
50% of incoming orders require new tools


alternative BOM & process planning options
alternative BOM & process planning options


Reduced tardiness by 23 percent
Reduced tardiness by 23 percent


Integration of process planning & scheduling
Integration of process planning & scheduling


Tighter coordination
Tighter coordination


Used to study the benefits of different supply chain
Used to study the benefits of different supply chain
coordination policies and different order promising
coordination policies and different order promising
policies
policies
Copyright
©
2002 Norman Sadeh
Dynamic Supply Chain

Coordination
•orders
•requests for bid
•bid acceptance/rejection
•order cancelation/modification
•products
•bid submissions
•revised delivery dates
Supply chain
entity
Supply chain
entity
Supply chain
entity
Supply chain
entity
Copyright
©
2002 Norman Sadeh
The Coordination Challenge


Generate
Generate
robust yet competitive and cost
robust yet competitive and cost
-
-
effective
effective

promise dates
promise dates


Multi
Multi
-
-
tier
tier
“
“
capacity
capacity
-
-
to
to
-
-
promise
promise
”
”
functionality
functionality


Sources of
Sources of

uncertainty
uncertainty
are both internal and external
are both internal and external


incoming orders, supplies, internal capacity, etc.
incoming orders, supplies, internal capacity, etc.


Is it possible, through dynamic coordination, to reap
Is it possible, through dynamic coordination, to reap
the benefits of
the benefits of
finite scheduling
finite scheduling
, while offsetting the
, while offsetting the
brittleness
brittleness
of its solutions ?
of its solutions ?
Copyright
©
2002 Norman Sadeh
Real-Time Promising(RTP):
General Considerations


Net Demand

Net Demand
: Inventory Allocation & Demand
: Inventory Allocation & Demand
Explosion
Explosion


Scheduling
Scheduling


Available vs. modified capacity
Available vs. modified capacity


Schedule around prior commitments vs.
Schedule around prior commitments vs.
reoptimization
reoptimization


Schedule
Schedule
Reoptimization
Reoptimization


Assess impact on prior commitments
Assess impact on prior commitments



Costs & Priorities: order priorities, late delivery
Costs & Priorities: order priorities, late delivery
penalties, inventory costs, etc.
penalties, inventory costs, etc.


Other Tradeoff: Speed versus
Other Tradeoff: Speed versus
“
“
optimality
optimality
”
”


Assess desirability & decide whether to submit quote
Assess desirability & decide whether to submit quote


Micro
Micro
-
-
Boss RTP module
Boss RTP module
: real
: real
-

-
time
time
reoptimization
reoptimization
-
-
user specifies desired response time
user specifies desired response time
(Sadeh et al.
(Sadeh et al.
‘
‘
94
94
-
-
99)
99)
Copyright
©
2002 Norman Sadeh
RTP: Further Refinements


Profitable
Profitable
-
-
To

To
-
-
Promise
Promise


Selective RTP Validation
Selective RTP Validation
Copyright
©
2002 Norman Sadeh
Profitable-To-Promise


Overall Profit = Total_Revenue
Overall Profit = Total_Revenue
-
-
Total_Costs
Total_Costs


Total_Revenue:
Total_Revenue:
Sum over all orders
Sum over all orders


Total_Costs:

Total_Costs:
Production costs, inventory costs
Production costs, inventory costs
(raw materials, in
(raw materials, in
-
-
process, finished goods), late
process, finished goods), late
delivery penalties, etc.
delivery penalties, etc.


Takes into account impact on prior
Takes into account impact on prior
commitments
commitments


e.g. late delivery penalty when another order
e.g. late delivery penalty when another order
gets bumped
gets bumped


Bid only if overall profit increases
Bid only if overall profit increases


Other variations can be considered

Other variations can be considered


e.g. strategic customers, market share
e.g. strategic customers, market share
considerations
considerations
Copyright
©
2002 Norman Sadeh
Empirical Study:
Multiple RFQ Processing Policies


Response:
Response:


Always bid
Always bid
-
-
no due date negotiation
no due date negotiation


Only submit a bid if overall profit increases
Only submit a bid if overall profit increases



Bid conditional on acceptance of possibly relaxed
Bid conditional on acceptance of possibly relaxed
promise date
promise date


Capacity
Capacity
-
-
To
To
-
-
Promise Computation
Promise Computation


Leadtime
Leadtime
-
-
based
based


Local finite capacity scheduling & supply
Local finite capacity scheduling & supply
leadtimes
leadtimes



Coordinated finite capacity scheduling
Coordinated finite capacity scheduling
Copyright
©
2002 Norman Sadeh
Empirical Study: Assumptions


A lot
A lot
-
-
for
for
-
-
lot make
lot make
-
-
to
to
-
-
order environment
order environment



Internal sources of uncertainty at each tier due to resource
Internal sources of uncertainty at each tier due to resource
breakdowns and variations in processing times
breakdowns and variations in processing times


Stochastic order arrival
Stochastic order arrival


Finite capacity schedules regenerated daily
Finite capacity schedules regenerated daily


Micro
Micro
-
-
Boss scheduling system
Boss scheduling system


JIT objective: minimize sum of tardiness & inventory
JIT objective: minimize sum of tardiness & inventory
costs
costs


Execution priority in accordance with the latest released
Execution priority in accordance with the latest released

schedule
schedule
Copyright
©
2002 Norman Sadeh
Evaluation Criteria


Number of bids refused or rejected
Number of bids refused or rejected


Number of tardy orders
Number of tardy orders


Average utilization of the most utilized resource
Average utilization of the most utilized resource


Average supply chain
Average supply chain
leadtimes
leadtimes


Average due
Average due
-
-

date adjustment (as part of bid negotiation)
date adjustment (as part of bid negotiation)


Profit (sales revenue minus costs)
Profit (sales revenue minus costs)


Total in
Total in
-
-
system inventory costs (WIP and finished
system inventory costs (WIP and finished
goods)
goods)


Total tardiness costs
Total tardiness costs


Promise date accuracy
Promise date accuracy
Copyright
©
2002 Norman Sadeh
Basic Supply Chain Configuration
Agent 1
Agent 2

Agent 3
Agent 4
Agent 5
Agent 9
Agent 10
Agent 6
Agent 7
Agent 8
External
customers
Supply chain
Tier3 Tier2 Tier1