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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!!

Starting the New Year by design

Happy New Year to all of you…

Start designing you life is an article by Tim Brown, CEO of IDEO which is an interesting way to start off the year. I’m a great believer and user of mind mapping tools

- As a way of brainstorming

- Documentation and sharing

The tools that I tend to use are also free and open source, Freemind and Freeplane (which is a fork of the former). There are a lot more cloud based mind mappers too these days.

Apple’s new Foxconn inspections could start chain reaction

According to this news report: Apple’s new Foxconn inspections could start chain reaction, Apple has asked for inspections of Foxconn’s operation from an independent team of labor rights experts. Good for them.

According to Apple, a team of labor rights experts started inspections Monday at Foxconn City. Foxconn makes the iPad and iPhone for Apple. The Fair Labor Association (FLA) described itself this way: "Incorporated in 1999, the Fair Labor Association (FLA) is a collaborative effort of socially responsible companies, colleges and universities, and civil society organizations to improve working conditions in factories around the world. The FLA has developed a Workplace Code of Conduct, based on ILO standards, and created a practical monitoring, remediation and verification process to achieve those standards."

Tim Cook, Apple CEO, said in a statement: "We believe that workers everywhere have the right to a safe and fair work environment, which is why we’ve asked the FLA to independently assess the performance of our largest suppliers.

Cook has bristled at the argument that Apple doesn’t monitor its supply chain conditions. As noted before, Apple isn’t the only company that relies on China manufacturers for its wares.

In the relationship between Apple and Foxconn, I think it’s obvious where the leverage lies. For now. But tomorrow, who knows?

I wonder if this will not turn out into a shot from Rick’s café:  I’m shocked, shocked to find that gambling is going on in here!

Multinational CEOs Say Outsourcing Has Gone Too Far

That’s probably a rather safe thing to say as long as everyone is saying it. I would add that they might be whispering, “Well, what do you think would happen given the costs of in-sourcing?”. That’s probably not a safe thing to say, if you were a CEO.

Square with me a little, ought it not to be said? Perhaps, it bears frequent repetition as far as I’m concerned. The article titled Multinational CEOs say outsourcing has gone too far from Manufacturing and Technology News recounts:

Chief executive officers and senior manufacturing executives working for multinational corporations predict the United States will become an even less competitive location for manufacturing, according to a survey conducted by Deloitte on behalf of the U.S. Council on Competitiveness. Over the next five years, the United States is expected to slip further behind the world’s current leading manufacturing nations — China, India and Korea. The CEOs say Brazil will surpass the United States as a better destination for manufacturing by 2015.

The CEOs "see a fundamental shift — a new world order in manufacturing — that replaces the 20th century dominance" of the United States, Germany and Japan, says Craig Giffi, vice chairman of Deloitte. "It’s a virtual restart from the 21st century."

The CEOs are nervous about what this means for their children and grandchildren if the United States can’t get back into the global manufacturing game. They recognize that outsourcing of manufacturing has not worked in the way they had envisioned. "We overestimated the issues associated with outsourcing jobs to low-cost nations and the consequences of that," says Giffi. "The executives underestimated the erosion that would have in their overall capabilities in places like the United States and how that would fundamentally shift their supply chains."

and

But the United States government can’t dither in putting together policies that favor production over consumption. "This isn’t something that can be debated indefinitely," says Giffi. "Business leaders are forced into a world of making decisions 24 hours a day seven days a week on where they have to make investments in plants, equipment and new jobs." If the United States does not address its cost structure, talent gaps, trade polices and infrastructure "then we will see a continual gradual deterioration and downward spiral. . ."

Now, in the pages of this blog, I’ve gone over back and forth over the outsourcing, off-shoring and in-sourcing arguments countless times. Whether the decision to outsource or offshore manufacturing is based on flawed cost modeling, the growth of a global culture of some weird shape or form, easy credit or some other combination of other factors – what is obviously true is that it has been happening for more than a decade now.

One of more pathetic slogans that I have heard during this recession/depression is – “Buy American.” Well, I’ve been hearing this slogan even before that too. The implication of such a statement is staggering.

Allow me to explain. If the only recourse the American manufacturer has left in his arsenal to the onslaught of “cheap” foreign manufactured items is patriotism i.e. “Buy American”, it’s time to remove the last tatters of a once delicate fig leaf that has been long defending the promise of American manufacturing. If using that same flawed cost modeling, it costs ten times more to manufacturing something here in the USA than in some place far far away – there are two glaring questions – Why? and Where is the equilibration point?

The first question is :Why?

Well. that’s quite easily answered if one is prepared to be crude. Life doesn’t cost as much over there. Being paid 50 cents an hour to stitch shoe soles might inflame the passions of the very flammable over here but 50 cents an hour is a life changing event in some parts of the world. In other words, the difference in costs (using the same flawed cost modeling) is purely because of divergent cultural attitudes, wants and desires – after all, needs are the same for the human being. And this divergence has been effected in the course of less than a century. The corollary of this statement is that rights, benefits and freedoms come at an enormous price and you have to be willing to pay it.

The second question is : Where is the equilibration point?

Now, we all know that there is never going to be perfect equilibrium between the manufacturing options from overseas and those over here i.e. because of backgrounds, resource distribution etc, there are going to be quite a different set of initial conditions for any operation/endeavor. So, the natural question is whether the equilibration point is at three, five or seven times wage differential or does it lie on some other dimension itself? Is it going to be dictated on a dimension of response time or quality or some other critical cost impacting dimension? In the real world, it is a function that intersects all of these and as we muddle from one crisis to another, it will become quite apparent.

But the proof of equilibration is in the pudding. Consider for a moment, that all tax breaks for US corporations that move jobs overseas are eliminated, the currency exchange rate differential between the US$ and other foreign currencies are eliminated and so on and so forth – will there still be a significant wage differential remaining? Will the American manufacturer still have to utter the words, “Buy American!!”  as a rejoinder to those who weigh the output stateside and overseas and votes with their dollars to buy overseas? For American manufacturing to win, there has to be an exceptional value delivered even to American buyers be they consumers or intermediates. Only exceptional value can force equilibration at a higher wage differential – so the real message to the American manufacturer seems to be – where is the value that I ought to be getting for this high a wage differential? And I’m afraid that the answer just doesn’t cut it.

You see, I fear that it is not the multinational CEO that has been shipping jobs overseas as much as it is the lack of value that was being created that forced the issue. It  may not be that one fine day, a couple of CEOs figured out that it is better to ship everything, lock, stock and barrel to some god forsaken place far far away. Instead, a few CEOs looked at what they were getting for what they were paying and decided not to pay that differential any more.

I fear that in a very general sense, the American brand as far as manufacturing was concerned (and maybe in some other aspects as well) has lost its way and that’s why it becomes necessary to invoke the fig leaf of patriotism.

The words of General Patton concerning patriotism ring true –

Don’t be a fool and die for your country. Let the other sonofabitch die for his.

That’s the be all and end all of patriotism. For everything else, bring Value.

Manhattan Associates sees uptick in supply-chain business

That sort of view should warm the cockles of anyone inhabiting this space but what is it based on? In this article Manhattan Associates sees uptick in supply-chain business, an interview with the CEO of Manhattan Associates is presented.

If you read the article, you would be able to immediately grasp the underlying thought process that produces this sort of view namely the theory of business cycles and the availability of new technology. Perhaps that is sufficient to warrant the intimation that there is going to be an uptick in the supply chain business but color me the skeptical – me thinks only green (i.e. dollars) indicate that.

Even though that lesson has been drilled into CEOs time and again, many aggressively cut R&D and key projects during tough times, just like they do with operating expenses.

But when important capital investments are put on the back burner, companies risk future growth in what can be a penny-wise, pound-foolish move.

Still, many did just that during the height of this recession — if one bellwether firm’s experience is indicative. Some had no choice, given the credit crunch.

“Companies didn’t know where they would get cash, so they postponed investment,” said Pete Sinisgalli, president and CEO of Manhattan Associates.

That’s business cycles right there – nothing more. As for new technology, well, it’s the same old technology – just different this time.

Instead of focusing on just one part of a company’s supply chain, such as inventory control, Manhattan Associates is now selling software that ties together the different stages. The software can maximize efficiency throughout the entire process, from planning to inventory control to distribution.

That’s in contrast to individual software packages that can produce the optimum result in one area, but neglect to factor in others. Without stitching the software together, a company could arrive at the right inventory solution, but it might be tying up too much capital.

I did find this particularly humorous though

“We’re constantly inventing new math and science to help companies operate more efficiently,” said Sinisgalli, who has headed Manhattan Associates for the past six years.

Maybe, we could do with less “new math and science” in the business world for a little while longer until we’ve recovered some business-skeptical sense, given how that just “old math and science” did just a few years ago.

I’ll take the time now to laugh : A very dignified guffaw.

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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