@ Supply Chain Management


Review of Energy use in Manufacturing

Manufacturing.net has an article about the efforts of an MIT professor to study energy use in manufacturing which led me to further searches and discovery. The article titled – MIT Prof To Study Energy Use In Manufacturing by Amy Radishofski talks about Professor Timothy G. Gutowski and his efforts to

study energy use in manufacturing processes from machining and grinding to injection molding and microelectronics fabrication methods

The article is cross-referenced at MIT news office in this article.
Amy notes,

Gutowski wants to compare the environmental performance of traditional methods versus that of alternative processes and product designs and proposed new processes.

In an earlier life of being a mechanical engineering student studying product design as an activity, the customer figured as one of the most important players (if not the most important) as well as durability, configurability etc etc. Today, another player has entered the matrix of competing demands or needs – environmental factors that were in the past dismissed as an externality.
Here’s an important thing to note from the article:

According to Gutowski, efficiency and increased production go hand in hand, thus the increased production would offset gains in efficiency. “Hence, energy efficiency alone has not resulted in an absolute reduction in energy use,” he added.

That is quite true because the market (local or global) is not even close to be satisfied yet. However, when looking at a firm which has innovated efficiency gains in their production, increased production would be the resultant if customers seek to take advantage of efficiency gains. But other firms in the competitive space who have not been able to innovate similarily would lose market share and thus production through inefficient technology or of inefficient technology would tend to decrease as long as customers actually desire to take advantage of the efficiency gains. I accept that this is a simplistic scenario because customers (such as I) are looking not only for efficiency gains, say in MPG with respect to cars, but a total value proposition or to be more specific (thanks to marketing genuises) a percieved total value proposition. If you watch cable TV in the US, you have been bombarded with the advertisement of a VW Jetta in an accident over, over and over again. Notwithstanding my general reaction that when I buy a car, I’m not thinking of accidents that might happen, passenger safety is one of the criterion that one must take into account. That’s what I mean by total value proposition or percieved total value proposition.

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Podcast: Jim Womack, China – Part 1

Mark Graban of Lean Blog has put up podcasts with James P. Womack of the Lean Enterprise Institute.

Check it out here.

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Artificial Intelligence in Supply Chains – cont’d

In this addendum to the post – Artificial Intelligence in Supply Chains, I want to highlight a paper (part of a book on the subject) titled: Supply Chain Management and Multiagent Systems: An Overview published by Thierry Moyaux, Brahim Chaib-draa, and Sophie D’Amours available online here.

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Artificial Intelligence in Supply Chains

InformationWeek has a dated article about Artificial Intelligence making a foray into the Supply Chain Management space. The article by David M. Ewalt talks about how

Software makers such as IBM, i2 Technologies, Manugistics, and SAP are rushing to imbue supply-chain-management tools with artificial intelligence, allowing them to make better choices and even learn from mistakes.

Since the article is dated to April 2002, which is roughly 4.5 years ago, now would be an appropriate time to evaluate the progress made so far.
Have you heard anything remotely intelligent in Supply Chain Management from SCM software players? (Hah, haha!!)
On a more serious note,

Supply-chain-management programs are structured sort of like flow charts, following a make-and-sell model of supply and demand. Software that IBM Labs is building works more like bees in a hive, with lots of autonomous agents going out into the world collecting data. The result, says Grace Lin, a senior manager at IBM’s T.J. Watson Research Center, is a system that can more easily consider new sources of information. These “sense and respond” systems make their own decisions based upon the variables at hand and aren’t strictly confined to a set of rules.

Further as to what this AI would be doing,

IBM’s effort essentially gives the program artificial intelligence, so it compares current business conditions to historical ones and forecasts what’s likely to happen next. “It doesn’t just react, but anticipates,” Lin says. And based on what actually does occur, the program can compare its forecast against reality, learning if it made a mistake. Lin says she expects a finished prototype later this year and a commercial version within five years.

Its about 4.5 years since this article and so I went searching for an IBM AI based software that is either in its last developmental stages or commercially deployed for supply chain management.

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Healthy paranoia drives investment in supply management – Part 2

In Part 1 of Healthy paranoia drives investment in supply management, I explored issues in supply management as illustrated in Global Logistics & Supply Chain Strategies Magazine (online version) – an article in their recent edition is on Investment in Supply Management. The article was authored by Jean V. Murphy.
In the previous part, I explored what firms view as supply management and what solution providers view as Supplier Relationship Management (SRM). In this part, I will explore how firms think about supplier management and supplier networks and the steps that firms could take to structure their relationships vis a vis their suppliers as outlined in the article.
Jean outlines the steps that comprise supplier management as follows:
Core Suppliers
Jean notes that the first step is,

identifying key suppliers that are core to a company’s operations and that warrants establishment of joint processes and communications.


So the first step in formalizing a supplier management program is having visibility to your suppliers and how much of your enterprise they supply.

What I find surprising is that when it comes to supplier management, firms are sometimes clueless about where and how they spend their dollars. This point would not have arisen if firms had a firm idea of the power of their suppliers (harkening to the Five forces model from Michael Porter).

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Uncle Sam’s looking for a few good bids (Something I worked on)

The Defense Department is looking to outsource the management of its domestic freight-a contract that could run into the billions of dollars. The program is intended to cut costs and boost service; it could also shake up the industry.

DC Velocity has an article about the DTCI – Defense Transportation Coordinator Initiative that is finally getting some well needed publicity.
I’m pleased to see something that I was part off for more than a year finally seeing the light of day. And I choose the word “part off” very carefully because you can only be a “part off” something like this – the DTCI project was just huge. The dataset was huge. The dollar amounts were more than huge. The meetings lasted days. The computational times were spread over weeks. And so on…
So what is the DTCI all about?

Perhaps it’s no surprise that the people who brought us stealth technology have launched an all-out war on freight spending and nobody seems to have noticed. And the Department of Defense (DOD) surely is thinking big. In August of this year, DOD began reviewing proposals submitted under its Defense Transportation Coordination Initiative (DTCI)—a program through which it will outsource the management of all DOD freight moving commercially in the continental United States.
The goal of DTCI is to improve the speed, predictability and reliability of transportation while simultaneously reducing costs by as much as 20 percent. The rest of us call it third-party logistics (3PL), but hey, this is the government, which rarely misses an opportunity to make up its own acronym.

Nothing could be truer that governments make up acronyms on the fly. This is especially painful if you as an outsider have to sit through meetings where you get bombarded with acronymns every third or fourth sentence. I mean that they have a whole different language unto themselves.

Now, DTCI is no secret … the DOD has been working the circuit since early 2004, talking the vision and addressing concerns. It has even created a public Web site devoted to the initiative. But outside of the defense world, it hasn’t generated much buzz, and it should.
We’re talking billions of dollars in freight over the life of the contract. That’s not a typo. Billions of freight dollars. And when you start shifting that kind of money around in a market, changes happen. Not just for the players involved, but for everybody playing in the sandbox.

The last thing you want is for the government to make a move because when a governmental department the size and scope of the DOD shifts its way of doing things, its like an elephant in a china shop, more or less. With the DTCI, the government wanted to make a significant first step of bringing in private parties to manage the DOD’s domestic freight. The DOD in any case doesn’t use its own fleet for domestic freight shipments except in some special cases and contracts carriers to ship stuff already. However, in DTCI, its trying to bring in a 3PL for very much the same reasons that a firm would bring in a 3PL.

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Healthy paranoia drives investment in supply management – Part 1

Global Logistics & Supply Chain Strategies Magazine (online version) has an article in their recent edition on Investment in Supply Management. The article was authored by Jean V. Murphy.
The lead-in into the article reads,

With the growth in offshore sourcing and manufacturing, supply lines have become longer, more complex and more vulnerable to disruptions. Concerned companies are meeting this challenge with a disciplined approach to supply management.

While in the past (or even today), supply chains experienced bullwhip effects on a local or regional level. Several factors contributing to the bullwhip effect are summarized below:
* Forecast Errors
* Lead Time Variability
* Batch Ordering
* Price Fluctuations
* Product Promotions
* Inflated Orders
Now imagine that the scenario confronting supply chain managers in a global context. Will there be a global bullwhip effect? Maybe yes and maybe no. If you looked at the contrinbuting factors above, all of the above factors exist in the global supply chain but because of a larger lead time (not Lead time variability which is also a factor), the effects are either going to be highly exacerbated or well damped.
Perhaps, highly exacerbated effect is easy to imagine because multiple orders to cover non-existent demand would quickly spiral out of control given longer lead times. However, there is also the possibility that one might find a well-damped effect. The volumes of inventory that have to be maintained are going to be quite large at all points in the supply chain and this serves as a buffer in the system.
If you’ve had the opportunity to play the beer game and had a situation wherein a particular node in the game had a lot of inventory at some point early in the game, that node would buffer the upstream nodes from the imaginary demand occuring in the supply chain.

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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.

@ SCM Clustrmap

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January 2021