Web-based technologies and decision models in supply chain management

Applications Decision Models Supply Chain Management

How will emerging web-based technologies and decision models change supply chains in the future? The response to this question has incredible stakes. It is projected that the Internet has the prospect to capture more than $1 trillion from the $7 trillion spent every year on mechanisms, supplies, and services globally (USA Today, 2008, p. BI). How this will occur is a high-priority subject in many industries and companies at the moment. In this paper, I endeavor to develop our indulgent of this serious issue by developing a conceptual framework for how supply-chain companies may react to emerging technologies in order to make competitive leeway's. The model suggests that one method by which buyers and suppliers can together perk up their competitive position is to study how to intelligently incorporate the new technologies into their day by day activities and methods. This can be done through watchful deliberation of the Relationship-Technology line.

In this paper we sketch upon a generic information exchange/execution plan chart for interrelated product development (PD) decision models, already existing a market-determined information exchange structure, and characterize the idea of Information Technology powered product development IT-PD. We then argue that information exchange patterns linked with the IT-PD use decision models bestow the PD processes with distinctive capabilities.

There is a symbiosis between the continuing exchange relationship and up-and-coming technologies that can and ought to be methodically understood and administered. To a certain extent, this may make clear why we see starkly diverse outcomes among companies who try to fit in new technologies in their supply-chain actions. Think about the situation of a firm exploiting the Web as an inexpensive channel for getting new customers. On one side, there are instances such as Herman Miller (HM) and its dealers (Garner 1999). HM, recognized for its high-end, ergonomic office furnishings, usually sells its best booth partition systems to most important corporations under big deals at capacity discounts. In 2008, the company started to contact via the Web to individual clients for instance telecommuters, freelancers, and SME's. After a communication and instruction drive, HM fruitfully persuaded all of its network dealers (its most tactical dealers) that the Internet decision model reaches new clientele without wearing away the dealers' present customer base. The dealers understood that the management and promotion costs for these clients did not validate the edge on the acquisition, so dealers did not mind that the online store took these customers, because their actual focus was helping the major deals. As a consequence, HM was able to productively make use of the Internet as a way of reaching new clients and increasing sales.

Applications Of Decision Models In Supply Chain Management

The acceptance of internet and web browsing technologies in mainstream business processes has altered the execution of product development (PD) processes. This chapter explores the notion of Information Technology driven product development (IT-PD) from a process management perspective.' The Internet has become a virtual sandbox in which designers play with a host of development and information resources. Over 99% of design engineers and engineering managers have access to the Internet and they spend 15 to 25% of their productive time using it. The Internet is being used to touch every aspect of the product development process ranging from product evaluation, establishment of specifications, seeking design tips, and problem solving support, to selecting a supplier and purchasing piece parts.

In a study conducted in the aerospace and the automotive industry we have learned that design automation tools including conventional Computer Aided Design and Manufacturing (CAx), in conjunction with Web technologies, are fundamentally changing the structure of the development process (Joglekar and Whitney 1999). For instance, the use of these technologies speeds up the existing design processes in only 30% of the cases on average. The users tend to restructure the tasks in another 32% of instances, and these technologies result in improved designs rather than a speeded up process in 18% of the cases.

Most interestingly nearly 20% of the productive effort is expended in what we have defined to be infrastructure development. Infrastructure is defined as supporting information technologies and allied artifacts such as design objects, methods, and know- how needed for product realization. These dramatic changes raise many interesting questions: Who makes these large IT infrastructure investments? Have the omnipresent software applications changed the way PD tasks get done? How have managers adapted to these changes while managing PD processes? And has the co-evolution of B2B E-commerce and supply-chain management technologies brought about new forms of market mediation within PD processes?

We have taken a closer look at the aggregate data by conducting interviews with design managers and by reviewing several graduate theses in the electronics, automotive, and aerospace industries. We draw upon these data and cases in the body of the text when discussing specific models. The overall trend is clear: there is a new breed of IT driven product development process being put in place. This paper is aimed at synthesizing the state of our knowledge within the IT-PD space rather than introducing new analytical results. Our argument is rather straightforward: . A large body of engineering and management science literature has been built around the information exchange view of product development (Clark and Fujimoto 2001; Whitney 1999; Eppinger et al. 2006). IT-PD is characterized by information exchange that allows for new types of market mediation. Market-mediated processes ought to be modeled by introducing intermediate agents within existing models. We identify research issues related to design process management decisions for both conventional PD and IT-PD environments. PD process efficiency is measured by the speed of the over- all development process. Stability is described by the ability of the process to converge (that is, finish) over time. Learning is measured in terms of the improvement in development productivity and quality over time. Collaborative environments refer to set- tings where all agents (principal and supplier) have congruent incentives to share information. Market-mediated environments describe settings where the agents form a market facing supply chain, such that the incentives for information sharing cannot be taken for granted. Local tasks refer to work conducted within a small group, whereas system tasks have a global mandate. System tasks may involve market mediation. Infra- structure is defined as supporting information technologies, design object, and methodologies needed for product realization.

Interconnected PD Tasks

Figure 1 demonstrates the mapping between the information structure and the execution strategy of interconnected PD tasks (Yassine, Chelst, and Falkenburg 2009; Joglekar et al. 2010). The information dependencies between development tasks constitute the structure of the development process. In this domain, development activities are classified into three types: dependent, interdependent, and coupled (Eppinger et al. 2006). Two tasks are said to be dependent if one task depends on the other for input information. On the other hand, if both tasks depend on each other for input information, then the two tasks are coupled. Finally if there is no information dependency between both tasks, then they are independent. The execution strategies employed in the development process determine the development process schedule. The information structure could be mapped to three different execution strategies via different rework (that is, development iteration) risk levels.

FIGURE 1. I Mapping between information structure and execution strategies for interconnected PD tasks.

The sequential execution of development tasks requires that upstream tasks completely finish before downstream tasks can be started. In the overlapped execution strategy upstream tasks are scheduled to start first but downstream tasks start before the completion of upstream tasks. Finally the simultaneous start and finish of tasks characterize the concurrent execution strategy. One such mapping model is due to Krishnan, Eppinger, and Whitney (2007). They construct a model for overlapping nominally sequential activities using the notion of information evolution and PD task sensitivity These mappings do not explicitly address the issue of market-mediated coordination between a principal (that is, a product development organization) and its suppliers.

Models of Market-Mediated IT-PD Processes

To the best of our knowledge, not many PD models attempt to capture the nuances of the market-mediated PD decision space. In this section we discuss how conventional models, discussed earlier, may be augmented to accommodate market mediation mechanisms. As noted in the previous section the coupling of supply-chain considerations with IT-PD results in different types of augmentations to the PD process models. There can be a variety of inter-organizational efficiency models under market mediation involving sequencing of PD tasks, optimal frequency of information exchanges, and design of product components with the supply-chain considerations. In most conventional development projects, the transaction costs for getting market feedback are rather large and developers tend to use rough estimates for costs and market feedback to expedite the process. Arguably if there is an incentive for the developers to get information about component valuation in a market-mediated setting, it may be possible to get this information through an online auction at a low cost.

Conclusion

Information technology plays a central role in determining the efficiency stability in Supply Chain Management; and learning associated PD processes. This paper discusses ways in which information technology is leading to structural changes within PD and Supply Chain processes. We have described some models that can be used to make these processes more efficient and stable. This paper is focused on a process management view of the IT-PD phenomenon. It may be worthwhile to look beyond the process view Some alternative perspectives within this domain are: 3D Concurrent Engineering (Fine 1998), PD process implementation in the AI/Computer Science literature (Tong and Sriram 1992), organizational behavior (Fleischer and Liker 1997), and the role of the Web in product definition (Dahan and Srinivasan 2000). It might also be interesting to think about who owns the oversight of IT-PD in an organization: is it the CEO, CTO or CIO? In conclusion, this paper argues for coupling IT-PD and supply-chain management decision models in market-mediated settings and posits that IT and infrastructure investments set up the context for learning across multiple generations. Productivity of technology decision models in supply chains is predicated on effective management of IT-PD processes.