The Boundaryless Value-Chain

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Peter Evans-Greenwood Chief Technology Officer The Boundaryless Value-Chain

description

How real-time computing will transform supply chain decision-making This presentation will provide a plain-English account of how real-time computing will transform supply chain decision-making and control. Peter Evans-Greenwood will illustrate the emerging leading practices with lessons learned from case studies, featuring clients across the globe. The biggest challenge for today's supply chains is to be adaptive. While tremendous gains have been made over the last thirty years, today's applications are not as flexible as promised. New tools and techniques are required to capture and automate the non-linear, exception-rich, business logic that we currently rely on employees to deliver. Extending the technology stack will allow us to leverage the higher capacity of technology to deliver globally optimal solutions and to introduce innovations such as the moving warehouse into all our supply chains.

Transcript of The Boundaryless Value-Chain

Page 1: The Boundaryless Value-Chain

Peter Evans-Greenwood

Chief Technology Officer

The Boundaryless

Value-Chain

Page 2: The Boundaryless Value-Chain

© 2009 Unico – All rights reserved

Yesterday: mass based

• More is better• Mountains of stuff

measured in days of supply

• Mass begets mass and slows everything down

• Metric: Mass

Today: just in time

• On-time is better• Inventory is reduced

to a minimum and kept moving

• Works great, except when it doesn't

• Metric: Velocity

Tomorrow: dynamic

• Agile is better• Virtual supply chains• Inventory dynamically

positioned• Distributed, adaptive

operations• Metric: Acceleration

A roadmap…

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Yesterday: isolated applications

• Separate planning and execution systems• Logistics planning is actually production planning

• Users forced to deal with business exceptions• Identify root cause

• Resolve exception

• Manually update production plan

Planning

Execution

Planning

Execution

© 2009 Unico – All rights reserved 3

Page 4: The Boundaryless Value-Chain

Yesterday: isolated applications

• Separate planning and execution systems• Logistics planning is actually production planning

• Users forced to deal with business exceptions• Identify root cause

• Resolve exception

• Manually update production plan

Planning

Execution

Planning

Execution

© 2009 Unico – All rights reserved 4

Iron Mountain• 1991: Persian Gulf• Out of 50,000 containers,

22,000 became “invisible”

Page 5: The Boundaryless Value-Chain

The heritage of an application centric approach

• Focused on delivering major IT

assets• Historically, the only

economically sensible

approach to IT• We’ve been through a few

generations of technology• Main frame• Client-Server• Thin Client (Internet)

© 2009 Unico – All rights reserved

Data

Logic

UI

We were worried about solving the big problems, but not how these problems were connected

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We’ve come a long way since then

© 2009 Unico – All rights reserved

U.S. software sales in billions of dollars

Source: INPUT

SOAP 1.0

WS-I foundedSAP WS

J2ME Web Services

ESB

Apache SOAPMS SOAPIBM Web Services

Apache Axis

JAX-RPCOracle WS

Sun WSWS (J2EE & .NET)

WS-* starts exploding

WS-*OASIS SOA Reference

ModelOASIS SOA Blueprints

SAP Netweaver Oracle Fusion

JAX-WSMS Indigo

BPEL BizTalk 2004Oracle BPEL

WBI-SFWS-Policy and WS-

Security

2004 200520032002200120001999

The Past Yesterday Now

A standards development timeline

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Page 7: The Boundaryless Value-Chain

Now we worry about end-to-end processes

• The challenge has moved• From delivering more

functionality…

• … to effectively leveraging

the applications we have

• Now we’re focused on• End-to-end processes

• Supporting users

© 2009 Unico – All rights reserved 7

The gaps between applications are becoming more important that the applications themselves

Application Silo

Application Silo

Application Silo

End-to-End Processes

End-to-End Processes

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Today: joined-up logistics

• Explicitly connect planning to operations

• Provide users with a single consolidated view of logistics

functionality

• Simplify identifying and correcting business exceptions© 2009 Unico – All rights reserved 8

Planning

Execution

Planning

Execution

CompositeApplication

CompositeApplication

Page 9: The Boundaryless Value-Chain

Today: joined-up logistics

• Explicitly connect planning to operations

• Provide users with a single consolidated view of logistics

functionality

• Simplify identifying and correcting business exceptions© 2009 Unico – All rights reserved 9

Planning

Execution

Planning

Execution

CompositeApplication

CompositeApplication

LEAN• Small, off site, warehouses

with hours or days of stock

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© 2009 Unico – All rights reserved

Our focus is filling gaps & extending our reach

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Mobility• Extending the reach of our

back office• Providing field workers with

joined-up IT support

Sensor Networks• Leverage technologies such

as RFID and smart appliances to instrument operations

Composite Applications &Mash-ups• Enable end-to-end processes

• Lower error rates• Increased throughput

• Lower user workload• No more swivel-chair integration• Provides the right data, at the

right time, presented to enable users to make better decisions

Partner Integration• Sales and operational data• Responsibility for end-to-end

business processes• Facilities and other assetsCustomer Integration• Self-service• More timely information• Reduce swivel-chair

integration

Process & Information Integration

Platform

Application Services

UI UI UI

Field Operations Back Office Partners & Customers

Platform

Application Services

UI UI UI

Platforms

Application Services

UI UI UI

Page 11: The Boundaryless Value-Chain

But this is only a consolidation of functionality

• Enables end-to-end

processes• Lowers error rates• Increases throughput

• Lowers user workload• No more swivel-chair

integration• Provides the right data, at

the right time, presented

to enable users to make

better decisions

• Focused on removing

negative-value• Created by application

silos

• Does not deliver new

functionality

© 2009 Unico – All rights reserved

Benefits Limitations

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Page 12: The Boundaryless Value-Chain

… which is creating a boundaryless environment

© 2009 Unico – All rights reserved

The old definitions of inside and outside the business are beginning to make little sense

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Page 13: The Boundaryless Value-Chain

… which is creating a boundaryless environment

© 2009 Unico – All rights reserved

The old definitions of inside and outside the business are beginning to make little sense

13

• Handed most of their supply chain to suppliers

• Now considered the most efficient supply chain in the US

• Stepped around the barrier of supply chain completely

• Vendors directly responsible for stocking, store layout and pricing

• Provide vendors with a direct feed on sales

• Significantly reduced operating costs

• Greatly increased sales per SKU

Target Home Depot Amazon

• Unlocking their enterprise functionality and providing it as an online service

• Latest installment is Amazon Fulfillment

• Allows you to forward deploy stock into Amazon facilities

• Dispatch on demand

Page 14: The Boundaryless Value-Chain

Our two biggest challenges

© 2009 Unico – All rights reserved

Data Quality

Information that is:• Incomplete• Inconsistent• Uncertain• Dead

Supporting Our Planners

• Stuck between silod solutions

and incomplete information• Faced with a rapidly

changing business

environment• Not enough time to make

good decisions

The emerging environment is only making this worse

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Page 15: The Boundaryless Value-Chain

Tomorrow: distributed, real-time planning

• Automate day-to-day exception management• Users move to a supervisory/process-improvement role

• Leverage benefits of technology to optimize the logistics management• Move from locally acceptable solutions…

• …to globally optimal solutions

© 2009 Unico – All rights reserved 15

Planning

Execution

Planning

Execution

CompositeApplication

CompositeApplication

AutomationOptimization

AutomationOptimization

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Tomorrow: distributed, real-time planning

• Automate day-to-day exception management• Users move to a supervisory/process-improvement role

• Leverage benefits of technology to optimize the logistics management• Move from locally acceptable solutions…

• …to globally optimal solutions

© 2009 Unico – All rights reserved 16

Planning

Execution

Planning

Execution

CompositeApplication

CompositeApplication

AutomationOptimization

AutomationOptimization

Agile• Inventory

dynamically positioned

• Delivery“at the moment”

Page 17: The Boundaryless Value-Chain

Three strategies that might help

© 2009 Unico – All rights reserved

Steal an idea from

Web 2.0 and

mashups• Stop thinking about

applications• Start thinking about

creating spaces to

support the decision

making process

Extend out data

models• Look beyond master

data• Build a model of the

data we‘d like to use

to make decisions• Leverage external

information sources• Actively integrate

data into the model

Better informationSupporting stakeholders Buying time

Create more space

and time for users• Capture and

automate the easy

80% of exceptions• Let the users focus

on the hard 20%

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1. Supporting stakeholders

From siloed applications... ... to productive planning spaces

Leverage Web 2.0 & mashups to create a more productive environment

Case

Client CaseWorker

PartnerTeam

Case

ClientCaseWork

er

Partner Team

Integrating applications

and collaboration

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1. Supporting stakeholders

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Markup a la Mojito

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Click through to connected spaces

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Data

Data we have, or that we can get • Plans• Transactional data• Operational data• Public data• Data scrapped from

competitive sources• ...

Information

Trends we‘ve noticed• Business intelligence• Our partners‘

performance• Our customers

behaviour• Observations of how

our competitors operate

• ...

Knowledge

Making connections• Connecting a pick-up

to a passing truck• Connecting a news

report to a potential disruption

• Connecting our prices to signals from the market

• ...

2. Create better information

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© 2009 Unico – All rights reserved 21

2. Create better information

SeatHandlebars Frame

Front Wheel Back Wheel

Drive Train

A bike consists of a frame, two wheels, handlebars, a seat, drive train, and each wheel has a tyre. We also offer three types of bike: mountain, racing and hybrid

Let’s steal an idea from flexible manufacturing

… and build a planning component model

Page 22: The Boundaryless Value-Chain

© 2009 Unico – All rights reserved 22

2. Create better information

SeatHandlebars Frame

Front Wheel Back Wheel

Drive Train

A bike consists of a frame, two wheels, handlebars, a seat, drive train, and each wheel has a tyre. We also offer three types of bike: mountain, racing and hybrid

Let’s steal an idea from flexible manufacturing

… and build a planning component model

Business Rules• Recognising

situations• Deciding on

actions

Predictions• Material prices• Competitor

prices• Events• ...

Concepts• Drivers• Events• Plans• ...

Assumptions• Simplifying our

understanding

Page 23: The Boundaryless Value-Chain

3. Buying time

Clerks

Workflow toolsScripting languages

Composite Solutions

Business Transactions

3rd party applicationsNetwork services

Service WrappedLegacy Applications

Agents

Human users

Agents &Business Webs

Planning

Execution

CompositeApplication

Role BasedAutomation

PlanningMashup

PlanningModel

Other DataSources

Automate the easy 80%, letting people focus on the hard 20%

Page 24: The Boundaryless Value-Chain

3. Buying time

Clerks

Workflow toolsScripting languages

Composite Solutions

Business Transactions

3rd party applicationsNetwork services

Service WrappedLegacy Applications

Agents

Human users

Agents &Business Webs

Planning

Execution

CompositeApplication

Role BasedAutomation

PlanningMashup

PlanningModel

Other DataSources

• We need to support the richness of human

deliberation• non-linear• trial-and-error

• Conventional enterprise technologies are not

up to the challenge• Java, C# etc are too focused on technical

concerns• BPM & rules engines cannot easily

support the conflicting rules and business

exceptions• We need to pull in new ideas and concepts

• Adding a layer to our conventional

enterprise toolkit

Automate the easy 80%, letting people focus on the hard 20%

Page 25: The Boundaryless Value-Chain

The future: dynamic business webs

Identify Sources Select Provider Deliver Materiel

Traditional • Static default source • Next unit up chain • Only from local units

Boundaryless • Search all providers• All units can supply and

consume

• Select “best” based on readiness

• Dynamic positioning within supply chain

• Different and larger transport mix required

4PLMarketplace

3PL

Monitoring& Auditing

3PL 3PL

3PL

3PL

Generate Demand

Identify Sources

Deliver Material

Select Provider

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Where is this leading?

Enterprise Applications Logistics

Yesterday • Applications are silos• Users mediate between

applications

• Logistics managed by production planning

• Manual exception management• Massive inventory used as a hedge

against uncertainty• Months – weeks

Today • Joined-up systems• Users focused on the task

at hand

• Just-in-time delivery• Prediction and static optimization • Some support for exception

management• Weeks – days

Tomorrow • Online, real-time, planning• Users focused on tuning

and innovation

• Elimination of DCs & creation of the moving warehouse

• 4PLs and dynamic supply chain formation

• Days – now

Page 27: The Boundaryless Value-Chain

Conclusions

Organisationalboundaries mean little

• Organisational boundaries

are being eroded to create

a boundaryless

environment• We now have:

• Visibility across the

value-chain• Influence across the

value-chain• Less responsibility

• Today, our biggest asset—

our people—is holding us

back

Knowledge is keyif we want to move on

• Focus on creating the right

environment for our users• Tacit knowledge• Collaboration

• Extend our data models

beyond traditional

transactional data to

include other planning

drivers, business rules and

assumptions• Capture the easy 80% of

decisions, allowing our

stakeholders to focus on

the hard 20%

The end game isfulfillment network

• Elimination of DCs• Creation of moving

warehouse• Dynamic, virtual supply

chains• Moving our stakeholders

• from operational roles...• ... to process

improvement and

optimisation roles

Page 28: The Boundaryless Value-Chain

© 2009 Unico – All rights reserved