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Webinar: Plan for profit in Real time with Supply Chain Optimisation

WTG is hosting a free webinar : Plan for profit in real time with Supply Chain Optimisation (sic) which is presented by Shaun Phillips from Infor.

Hopefully it’s as interesting as it sounds… Check it out.

Real-time anything is really hard to achieve – so it would be interesting to see whether it is really real-time or near real-time or as real-time as you should expect it to be and no more.

Supply Chain Optimization – careful with those words now…

Abcoautomation has a post up on How Supply Chain Optimization can help you beat your competition. Except that, the sort of optimization that is referred to there is not Optimization. I suppose that I have to start making a distinction between Big “O” optimization and small “o” optimization. However, that is a topic for another day. The topic for today however is two fold – Ernst Haeckel and the effect of Dr. Haeckel’s pithy summation on almost every and anything that we engage in. In very broad and general terms.

Ernst Haeckel, for those of us who are not likely to be avid readers, was a contemporary of Darwin (Yeah, that Darwin) championed a notion in evolutionary theory that can be summed up as, “Ontogeny recapitulates Phylogeny.” I assure you that you’re perfectly within your rights as a blog reader to switch to another page right now. It’s about to get a lot worse.

The following is the clarification of the terms: Ontogeny – the development of the form of the creature and Phylogeny – the location of the creature in the general scheme of evolutionary descent. Dr. Haeckel proposed (hypothetical creatures, drawings etc al), that Ontogeny recapitulates Phylogeny, which is to say that creatures in development exhibit developmental characteristics associated with creatures situated earlier in its evolutionary descent. This was quite an assertion which however in time turned out to be entirely wrong.

The surprising thing is that while “Ontogeny recapitulates Phylogeny” has little support in the natural world, something quite akin to it can be readily observed in the world of intellectual ideas and their application.

Here’s the content from the above story:

I heard a story one time about a Vice President of Distribution for a very well-known health and beauty aid manufacturer who gave this talk about when he took over as VP.  He asked what is the cash to cash cycle line for a particular brand of shampoo?

What is the time from the point where we spend money on boxes bottles or whatever you need for the shampoo and the manufacturing process to the time you get the money back from Wal-Mart (their end customer). Guess how long that process was?

Really, write it down and make a commitment you might be surprised at the answer. Well despite the fact that I’m not Vanna White, here is the answer. 47 weeks, 47 weeks of time. From the time that they bought bottles of goop, and paint and to the time they got their money back from Wal-Mart.

Now the next question he asked was this of those 47 weeks how much time do you really take to add the value process?

That is to make the product. Surprise again. 90 minutes. So out of the 47 weeks of time they only spent 90 minutes actually producing the product, and the final question how much of the corporate attention was on the 90 minutes?

The Supply Chain as an idea or the very recognition of the idea of a supply chain occurs quite later in the development of the capitalistic economy. So, quite akin to Dr. Haeckel’s formulation, this is a prime exhibit of later forms of organization and complexity recapitulating similar variances of thoughts and problems that were exhibited in earlier forms of organization. So while “Ontogeny recapitulates Phylogeny” was the mantra of an age past, I offer that “Novel forms of organization repeat the same problems exhibited in earlier developmental eras.” Or in other words, “Ontology recapitulates teleological gaps”.

Ontology has to do with the “that which is” and in this case would be the idea of the supply chain or manufacturing or putting things together. Teleology is about the purpose or end driven action that one undertakes day in and day out. So all that the statement above is referring to is the gaps in purpose that often exist in the recapitulation of newer ontologies.

This is precisely what prompted this long winding post – You see in the article above from abcoautomation, there is the suggestion that 47 weeks of lead time can be improved such that the non-value added proportion of this lead time can be reduced. However, that can only be done to a certain point i.e. as far as there is slack capacity to drive down the lead time. However, is there really slack capacity?

My simple point is this – these are problems that has been discovered and addressed in manufacturing – sometime well and sometimes not so well. The supply chain as a newer ontology (vis a vis Manufacturing) seems to recapitulate the same gaps in purpose.

Avoiding this recapitulation and the associated costs of this recapitulation is the only free lunch available – the question is whether you even realize the free lunch offer.

Decision Management– Rules, Optimization and Visualization come together…

This is an interview with Pierre Haren, CEO of ILOG prior to its acquisition by IBM on what decision management is and how it came to be used in various situations. A look back (and forward) at 20 years of Decision Management.

This is also my particular field of expertise and Pierre alludes to the case of the product that I work with gaining acceptance in IBM’s wafer fabrication facility in East Fishkill, NY.

We had a great moment when we were able to successfully deploy a complex mix of ILOG and IBM tools at IBM Fishkill, in what was considered the most modern and fastest changing semi-conductor plant in the world. At that time, before our acquisition by IBM, IBM was a reluctant customer. I visited the head of the plant and promised that we would install the complete system for free. He would only pay if he kept the system in operation for more than a month.

Understandably, he was skeptical that a small decision management company could improve on the work of hundreds of excellent engineers who continuously tuned the $4B plant. We deployed a system which every five minutes re-computes the optimal plan for the whole plant for the next eight hours. It combines real-time data from the MES system to rules-based processes, an optimization-based scheduler, and advanced graphics to enable the plant operators to "see the current future" for the next eight hours.

The first day’s objective was low: do no harm. Within a month, all the operators where convinced and we were paid. More important, we changed forever the balance of what computers do and what operators do in that plant.

What’s important about this confluence of components i.e. Rules Management, Optimization using CPLEX and Visualization as it used in that fab (and since then in other fabs in the world) is how such a system can be used for execution. Not planning, Not strategy. But execution on a near real time basis – that means that actual tools on the fab floor act on the recommendations produced by the decision management system which in turn sees the action of the tools and then uses that as an input in further decisions. When operators and managers assert manual control in the operation of the tools or fab in general, the system accepts that and continues without issue. So the system takes into account the dynamic nature of the fab, recomputes and proceeds. I’ve blogged about this system : FabPowerOps in earlier blog postings – take a look.

Now I’m hoping to take this to the next level, deploying a federated system of such applications that not only interact with the fab floor as well as human operators, engineers and managers but with other apps taking their inputs and working on that.

Great stuff, I assure you!!

Lessons learned when selling optimization to business users

Jean-Francois Puget is a distinguished engineer at IBM in the Optimization and Analytics practice. He has made available a slide deck about lessons learnt when selling optimization to business users. He offers his prescient views on how businesses approach the topic of optimization – worth a read.

Follow him at his own blog @ IT Best Kept Secret is Optimization.

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APICS Webinar to Answer the Question: Is your Inventory a Competitive Advantage?

Logility Inc is hosting a Webinar on September 28th on this very topic : Is your Inventory a Competitive Advantage? The write up of the webinar promises:

Every supply chain faces inventory challenges which impact the bottom-line. High inventory levels tie up working capital, and stock-outs decrease revenue. When inventory levels need to be optimized across a multi-echelon manufacturing and distribution network, the complexities become even more challenging. Inventory optimization right-sizes inventory levels, boosts competitive response and grows market share during the economic recovery.

The webinar is presented by:

Sean Willems Ph.D. Associate Professor of Operations Management, Boston University

and

Michael Martin Manager, Global Supply Planning Strategy, Stanley Black & Decker

My quick take on the subject is that neither Inventory nor Inventory Optimization (which I think will be the focus of this webinar) are competitive advantages. Competitive advantage has a very specific meaning and I’ve spent considerable time and effort delving into it. The simple reason that these actions don’t qualify as competitive advantage is that their easily duplicated across the breadth of the competitors.

For my views on Competitive Advantage and the Supply Chain:

Supply Chain Network Optimization and Competitive Advantage – Part 1

Supply Chain Network Optimization and Competitive Advantage – Part 2

The New Economics of Semiconductor Manufacturing – Part 3 (Final)

In this final part of my review of The New Economics of Semiconductor Manufacturing, an article that you can find at the IEEE Spectrum site, I mean to go over the capabilities of Fab PowerOps (FPO) and contrast it with the essence/framework that Toyota Production System (TPS) offers. In the earlier two parts, The New Economics of Semiconductor Manufacturing – Part 1: I looked at the core outline of the consulting experience that the researchers (Clayton M. Christensen, Steven King, Matt Verlinden, and Woodward Yang) and in The New Economics of Semiconductor Manufacturing – Part 2: I delved further into the essence of earlier research that identified a few rules distilled from TPS that those researchers (Spear and H. Kent Bowen) claimed describe essential parts of the system that is internalized within the organization primarily as an outcome of iterative growth over the last five decades.
A brief about FPO – What is FPO? FPO is a scheduler for a wafer fab (but it can be extended to other industries as well) – pure and simple. It is a first generation scheduler in its class – the class being (near-)real time optimization (MIP: Mixed Integer Programming) based scheduling. It is rapidly customizable (aren’t they all? No, Seriously!) – it is so customizable that you can swing from one extreme of weighing it down by the whims of those who don’t know any better to direct it to the other extreme of it being light and flexible for those who mean to get certain scheduling behaviors realized and every other point in between. Fast! Now, while some solutions can achieve this as well, for example: "Do activity A if condition B for tool-space C", there are two immediate problems with this approach:
  1. It doesn’t scale very well – multiple statements and overlapping tool-spaces lead to conflicts that must be resolved and accounted for. Otherwise, you’d default to FIFO (First in, first out) or some other simple rule.
  2. Is it the best solution available? Is it a really good solution, good solution, solution, workable solution, bad solution, very bad solution?
It is also highly extensible in the sense that while there is a product architecture, layered on top of it is an customizable interface that a client can write pretty much whatever he wants (i.e in Java) and since the bulk of the product is in Java, it is cross platform compatible as well.

For some of us who might be aware of an SAP or like system that plans out a day in advance, week in advance or maybe even a month in advance, FPO is a breath of fresh air, it generates schedules every five minutes. No, that is not a typo. Every five minutes, FPO accesses the state of the wafer fab (from an MES (Manufacturing Execution System) – it is flexible enough to be hooked up to several MES-es) and computes a schedule for all tools that it is in charge of scheduling. What type of tools? Batch tools, single chamber tools, multi-chamber tools, parallel chamber tools and so on. When things change on the floor within a five minute interval, it becomes a state change that figures into the next computation run or iteration (five minutes later) and the schedules update accordingly taking the event(s) into account – however many events there are. The last piece of this powerful scheduler is access to the data it uses in several transformational states and forms for monitoring, information, review, investigation and continuous improvement.
Now, back to the TPS story, the connection between the consultants and the earlier researchers (Spear and Kent) is that the four rules distilled by Spear and Kent informs some of the questions that are used in the exercise. From, the examples listed in the article:
The first rule, on activities, states that

The New Economics of Semiconductor Manufacturing – Part 2

In this part of The New Economics of Semiconductor Manufacturing, an article that you can find at the IEEE Spectrum site, I mean to look at the specific claims and experiences that the authors of the article had in their TPS consulting journey at the unnamed IDM. The following are the four specific "distilled" rules (that earlier Harvard researchers have conducted research on – Decoding the DNA of the Toyota Production System. My own foray into this matter is in this review – Toyota, Toyota

About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

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