Trends in-om-scm-27-july-2012-2


Published on

Today Operations Management is dominated by concerns in supply chain such as design of a good performance measurement system, revenue or resource sharing, customer centric and/or process view of the supply chain.

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • There are four key focuses to On-Demand: Integration – Providing the linkage between people, processes, and data Open – Supporting a strong commitment to standards for OS, Language and Web Services/SOA Virtualized – Providing a flexible Build time and Runtime environment for developing and running applications across a highly distributed IT architecture Autonomic – Self regulating … self healing … self maintaining
  • SOA represents a focused approach towards implementing/developing component oriented solutions – it comes directly from the mandate of MDA/MDD – by representing discrete functions as services and promoting application assembly (versus “development from scratch”), it enables a “building block” approach which encourages the reuse of assets to solve problems as well as enabling the ability to choreograph services to create higher level coarse services. Most importantly, it is founded on open standards to promote interoperable solution design and delivery.
  • These concepts really form the underlying context for SOA – of all of them, service discovery is still in an evolutionary phase although many initiatives around UDDI and other service repository initiatives will provide more context in this area in the near term. Today – service description is largely WSDL-based – service interaction is over an ESB/”smart” messaging framework to enable delivery as well as routing/transform/mediation – service choreography via BPEL – and service creation via MDA/MDD and tools approaches akin to the WebSphere Studio family for application assembly, process choreography, software development management and component definition/discovery.
  • From an IT perspective – moving to the world on On-Demand from an integration perspective comes down to three key focus areas – MDA – To provide a solution framework that maps directly to the business processes and provide abstraction services to build platform independent implementations that can be used to implement integration solutions SOA – To provide a runtime environment that encourages component/service design and construction across distributed environments BPMS – To monitor both IT as well as Business metrics as part of the operational management of the distributed SOA solution foundation
  • Trends in-om-scm-27-july-2012-2

    1. 1. Dr S G DeshmukhABV-Indian Institute of Information Technology & of Research in OperationsManagement :A case of SCMPresentation @FDP @iiitm GwlOn 27 July 2012
    2. 2. The business function responsible for planning,coordinating, and controlling the resourcesneeded to produce products and services for acompanySource: Operations Management. Dan Reid & Nada R. Sanders, Wiley,2010, 4th Edition2Operations Management
    3. 3. • A management function• An organization’s core function• In every organization whether Service orManufacturing, profit or Not for profitSUPPLY CHAIN MANAGEMENT – an importantdomain within OM !3Operations Management
    4. 4. • Opening remarks• Track 1: Performance Measurement System• Track 2: Revenue Sharing• Track 3: Information security issues• Track 4 :Service Oriented Architecture• Closing remarksSpeaking points..
    5. 5. • Manufacturing as ServicesOpening Remarks..
    6. 6. • Source:• Cuthbertson R and Piotrowicz, 2011,Performance measurement systems in Supplychains: A framework fro contextual analysis,Int J of Productivity & PerformanceMeasurement , 60(6),583-602Research Track 1: PerformanceMeasurement System
    7. 7. • As early as 1985 A T Kearney Consultants haveidentified a high correlation between superiorperformance & development /use ofsophisticated assessment/measurementcapabilities– Firms engaging such systems reported realizedimprovements in productivity of 14 to 22 %Performance MeasurementSystem
    8. 8. What Is Performance Management? It is a systematic process of Planning work and setting expectations Continually monitoring performance Developing the capacity to perform Periodically rating performance in a summaryfashion Rewarding good performance
    9. 9. Performance Management CyclePlanningRewardingRatingDevelopingMonitoring
    10. 10. • How well the organization is doing?• Is the organization meeting its goals?• Are the customers happy?• Are the processes in control?• If and where improvements arenecessary?Issues in performancemeasurement system
    11. 11. • Measuring the activity (volume) and the SCperformance• Setting goals and comparing the actual situation• Following a plan• Determining the levers that will help achievegoals and single out the priority action programs• Revealing the degree of flexibilityObjectives of Metrics
    12. 12. Speed, reliability , and simplicity are the maincriteria for efficient metrics• Arranging indicators by priority• Segmenting the metrics• Visualizing the function content• Classifying objectives of the function or team• Selecting indicators that deal with quality• Formatting the metrics effectivelyPrinciples of metrics design
    13. 13. • Independence• Appropriateness• Objectivity• Regularity• Linkage with otherindicators• Coherence• Simplicity• Cumulative• RealisticCharacteristics of Effective Metrics
    14. 14. • Transparent• Simple• self-regulating• Objective• Motivating and stimulating to allstakeholdersPerformance measurement system (PMS):Desirable Features
    15. 15. • PMS should have multiple criteria• Primary purpose should not be to reward or to punish• Performance-to-schedule measures must use group, notindividual results• Specific goals must be established and reviewed• PM must be understood by those whose performance isbeing measured.• PM data must be available for constant reviewPerformance measurement system (PMS):Desirable Features (contd.)
    16. 16. • Measurements of multiple performance factorsoccur frequently at each stage in the supply chain• Time and cost are key measures, but others are usedas appropriate to the specific supply chain.• All measures must relate to the ultimate supplychain goals.Quantitatively based performancemanagement
    17. 17. • Cost { total cost, cost/unit, cost/sales, inbound freight,outbound freight, warehouse cost, admn, processing, directlabor etc.}• Customer service {fill rate, stock-outs, shipping errors, on-time delivery, back-orders, cycle time, customer feedback}• Productivity {units shipped/employee, units/labour Rs.,orders per sales person, etc.}• Asset Measurement {Inventory turns, Inv. Carry costs,obsolete Inv., ROI etc.}• Quality {frequency of damage, Rs of damage, Customerreturns, Cost of returned goods etc.}Internal Performance Measurement
    18. 18. • Customer Perception Measurement• Best Practices benchmarking– World Class Logistic- CLM– Logistics Excellence - Michigan State UniversityExternal Performance Measurement
    19. 19. • Framework 1: Function based measurement system• Framework 2: Dimensions based measurementsystem• Framework 3: Hierarchical measurement system• Framework 4: Balanced scorecard system• Framework 5:SCOR modelVarious frameworks for measurement
    20. 20. • Covers detailed performance measuresapplicable at different linkages of SC– Marketing, Operations, Finance etc.Framework 1: Function based measurement system
    21. 21. • Any SC can be measured on three dimensions– SERVICE– ASSETS– SPEEDFramework 2: Dimensions based measurementsystem
    22. 22. Performance in the functional areas of• Inbound Logistics• Operations• Outbound Logistics• Marketing• Service-after-salesFramework 3:Hierarchical System
    23. 23. • quality• inventory• customer service• cost• flexibility• time, and• productivity.Framework 3:Hierarchical System :Indicators
    24. 24. • cost structure of the warehouse operations (handling-in, storage, andhandling-out)• total investment• total cost of the warehouse• total capacity concerning output volume• costs warehouse operations per unit volume (m3, ton)• total number of trucks loaded/unloaded per worked time unit• labor hours per unit of output volume ( m3, ton)• labor costs per unit of output volume (m3, ton)• labor costs as percentage of salesIndicators: Outbound logistics
    25. 25. • Compare each of the metrics and compute the relative weightagefor each• Compare each of the links (inbound logistics, manufacturing etc.)on each of the metrics above and compare relative weightages .• Compute the aggregate weight for the links.• Rank the links on the basis of weights arrived• Devise an action plan to improve the performance ofweakest/weaker links in the supply chain.• Monitor the performance and repeat steps above on a continualbasis.Hierarchical System :Procedure
    26. 26. • Various perspectives such as the followingshould be Balanced!– Financial– Innovation & learning– Customer service– Internal businessBalance scorecard balances and links financial and non-financial indicators, tangible and intangible measures,internal and external aspects, performance drivers andoutcomes.Framework 4: Balanced scorecard
    27. 27. The Supply-Chain Council (SCC) has developed andendorsed the Supply Chain Operations Reference-model (SCOR) as the cross-industry standard forsupply chain managementThe SCC was organized in 1996 by 69 voluntarymember companies and the European Chapter wasstarted in 1998. 5:SCOR model
    28. 28. PlanDeliverMakeSource DeliverMakeSourceDeliver SourceSupplier(Internal or External)Your Company Customer(Internal or External)ReturnReturnReturnCustomer’sCustomerSupplier’sSupplierSource Make DeliverReturnReturn ReturnReturnReturnSCOR ModelSCOR ModelProcesses Best Practices Metrics TechnologyBuilding Block ApproachSCOR FrameworkDemand ChainSupply Chain
    29. 29. • Performance measurement system and its linkageswith strategy ?• Behavioral issues related to performancemeasurement system?• Development of Multi-criteria decision makingframework ?• Role of information system in measurement?• Benchmarking and performance measurementsystem?Performance Measurement:Research Issues ..1..
    30. 30. • What to benchmark and how?• Industry/sector specific measures?• Revenue /Profit/Cost sharing ?Performance Measurement:Research Issues ..2..
    31. 31. • Source:Arshinder, Kanda Arun and Deshmukh, S G,2008,Supply Chain Coordination: Perspectives,Empirical Studies and Research Directions,International J of Production Economics,115(2), 316-335Track 2: Revenue Sharing Contracts
    32. 32. • It increases the total supply chain profits• It involves in risk sharing among supply chainpartners• It may be possible with supply chain contractsthat a member achieves more profits than hewould do without contracts• Hence, result in win-win situation for bothsupplier and his buyerObjective of Supply Chain Contracts
    33. 33. Revenue sharing model parametersSuppliercBuyerqω, ΦpdWhere,c is the marginal unit cost of supplierω is a wholesale unit price charged by the supplier to the buyerp is the selling price of buyer per unitΦ is the fraction of supply chain revenue that the buyer keeps and (1- Φ) is thefraction the supplier earnsq is the buyer’s order quantity
    34. 34. • The buyer orders single product• The demand is uncertain with probabilitydistribution function fd(d) in a single sellingperiod• The wholesale price is less than the unitmarginal cost (ω < c)Assumptions
    35. 35. • To determine the total supply chain profits• To determine the optimal order quantitiesto achieve the optimal supply chain profitsObjectives of revenue sharingcontracts
    36. 36. • Most models in the form of network of “newsboy’ problem.There is still room for simple yet imaginative models exploringother inventory concepts• Time evolution of decisions not fully explored• Use of Game theoretic frameworks: Static games built in sMarkov decision process• More complicated demand and supply structures (correlation,advance information, disruptions etc.)• Information availability• More sophisticated Supply Chain structures• Implementation issuesResearch Issues
    37. 37. • Source:• Arup Roy, 2012, Management of InformationSecurity in Supply Chains- A ProcessFramework, Presented at 42ndIntentional Con.On Computers in Industrial Engg, Cape town, SAfrica, July 16-18Track 3: Management of InformationSecurity in Supply Chains
    38. 38. What is Information Security?Information“Information is an asset that, like otherimportant business assets, is essential toan organizations business andconsequently needs to be suitablyprotected”Information Security“Preservation of confidentiality, integrity andavailability of information”(Reference: ISO 27000)
    39. 39. Security in Supply Chains“The application of policies, procedures, and technology to protect supply chainassets (product, facilities, equipment, information, and personnel) from theft,damage, or terrorism and to prevent the introduction of unauthorized contraband,people or weapons of mass destruction into the supply chain”.– Closs & McGarrell (2004)There are 2 aspects:• Soft aspect – Intangible vulnerabilities such as information theft• Hard aspect – Tangible vulnerabilities such as physical theft /physical damages / terrorismInformation Security – one of the soft aspectsHard aspects influence the soft aspects
    40. 40. Why do we need InformationSecurity?• Measure and mitigate risk related to information assets.Key motivator –• Management of business and financial risk• Reduction of threat to both reputation and customers.• Ensure compliance to regulatory/ legislative/ contractualrequirements.
    41. 41. Summary of concerns• Information leakage & misappropriation in supply chain networks, which canlead to:• Demand imperative overriding information imperative• Product & service deliveries may not be optimal• Firms may lose their competitive edge• Vulnerabilities in IT infrastructure may not be adequately controlled• Information reliability and consequently knowledge generation may becompromised• Human security requirements may be overlooked
    42. 42. What is a Process Framework?• Formal description of processes in a company• Formally existing / ad-hoc / need to be developed• KPIs defined to “measure” the process, with industry benchmarks• Improvements based on the KPI s achieved• Methodologies – used to actually improve the process
    43. 43. Why do we need a ProcessFramework?To enable organizations develop and maintainconsistent business practices• Helps in managing a companys keyprocesses and roles & responsibilities• Aligns processes and performanceimprovement with corporate strategy• Can be implemented at any level of anorganization
    44. 44. Research Propositions• Identify weaknesses related to informationsecurity in supply chain processes• Analyze information security related risks• Study relationship between supply chainperformance metrics and information security
    45. 45. • Source:Giannakis M, 2011, Management of servicesupply chains with service-oriented reference :A case of management consulting, SupplyChain Management: An international Journal,16(5), 346-361Track 4: Service Oriented Architecture
    46. 46.  Integration◦ Providing the linkage between people, processes, and data Open◦ Supporting a strong commitment to standards for OS, Language and WebServices/SOA Virtualized◦ Providing a flexible Build-time and Runtime environment for developing andrunning applications across a highly distributed IT architecture Autonomic◦ Self regulating … self healing … self maintaining46Four Characteristics of On Demand
    47. 47. 47SOA: Service Oriented Architecture• An approach for building distributed systems that allows tightcorrelation between the business model and the IT implementation.• Characteristics:◦ Represents business function as a service◦ Shifts focus to application assembly rather than implementationdetails◦ Allows individual software assets to become building blocks thatcan be reused in developing composite applications representingbusiness processes◦ Leverages open standards to represent software assets
    48. 48. What is a service? A coarse grained, self-contained entity that performs a distinct businessfunctionWhat is a service description? A standards based interface definition that is independent of theunderlying implementationHow do services interact? Through loosely-coupled, intermediated connectionsHow are SOA solutions created and enhanced?Using tools and middleware according to SOA principles48SOA Concepts
    49. 49.  Build –Model Driven Architecture◦ A style of enterprise application development and integration based onusing automated tools to build system independent models andtransform them into efficient implementations1 Run –Service Oriented Architecture◦ An approach for designing and implementing distributed systems thatallows a tight correlation between the business model and the ITimplementation Manage –Business Performance Management◦ An approach to systems management that tightly links IT concerns withbusiness process concerns49Three Key Concepts for theFoundation for On Demand
    50. 50. • How to define service standards?• What is the role of technology in SOA?• How to align business strategy with SOA?• Issues related to flexibility ?Research Issues
    51. 51. • Supply chain management: an opportunity forseamless integration• Research issues involving a variety ofdomains : performance measurement,modeling, security, on-demand business• Borrowing terminology & frameworks fromIT !• Research : interdisciplinary !Concluding remarks..
    52. 52. ••• web linkages
    53. 53. Thank