A Proposed Supply Chain Risk Management Framework Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM Thessaloniki, Greece, 2011 1. City College – International Faculty of the University of Sheffield 2. South East European Research Centre 3. The University of Sheffield
BRIEF AIM OF THE PAPER PERFORM A LITERATURE REVIEW ON ICT DEVELOPMENTS FOR SCRM
IDENTIFY LITERATURE GAPS
PROPOSE A SCRM FRAMEWORK WITH A DSS FOR RM
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
OUTLINE • What is SCM and SCRM • Current issues in SCM and SCRM • SCM and SCRM Developments • Current Requirements for Effective SCRM • The Role of ICT Paradigms • Literature Gaps • The proposed framework
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
WHAT IS SCM AND SCRM ? SCM • Supply chain management (SCM) is the management of the
network of interconnected businesses involved in the provision of products and services required by the end customer. • Involves design, planning, execution, monitoring, control, synchronisation, etc.
SCRM • Supply chain risk management (SCRM) the intersection of risk
management (RM) discipline with SCM and aims to deal with potential supply chain (SC) disruptions that affect the normal flow. Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
CURRENT ISSUES IN SCM AND SCRM I • Increased competitive pressure • Stagnating markets • Decreased stocks • Longer transportation • Increased inter-dependency • Disruptions • Terrorism Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
CURRENT ISSUES IN SCM AND SCRM II • Supplier failure • Environmental instability • Business network issues
SUPPLY CHAIN RISKS “these uncertain variations affect the flow of information, materials or products across organization borders” (La Londe, 1997)
“the variation in the distribution of possible supply chain outcomes, their likelihood and their subjective values” (March & Shapira, 1987)
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
THE SCRM ENVIRONMENT RISK SOURCES • Environmental • Network • Organizational (Jutna et al., 2003)
• Endogenous • Exogenous (Zsidisin, 2003)
RISK OUTCOMES
RISK MITIGATION • • • •
Control Avoidance Flexibility Cooperation
• • • •
Identification Analysis Control Monitoring
(Miller., 1992)
(Enyinda et al., 2008) Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
SCM AND SCRM DEVELOPMENTS I BACK IN TIME • Centralized frameworks • Local supply chain structures • Interaction among partners only through the main centre • Manual decision making
TIMELINE
WHY ?
NOW • Decentralized frameworks • Distributed partners on long distances • Heterogeneous actors • Heavy interpartner interaction • Automated decision making
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
SCM AND SCRM DEVELOPMENTS II DUE TO MANY FACTORS ... GLOBALIZATION
MARKET COMPETITION
ICT DEVELOPMENTS
MARKET LIBERALIZATION
PROCESS INNOVATION
POLICY DEVELOPMENTS
PUBLIC DEMAND
BUSINESS REQUIREMENTS
and many others... Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
THE ROLE OF ICT • ICT developments had a great impact on the advancements of SCRM frameworks, aiming to achieve automated reliable decision making (Giannakis & Louis, 2011). • Relevant ICT paradigms: Agent Based Systems Decision Support Systems Data Mining Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
AGENT BASED SYSTEMS I • Agent = “a system/entity that operates without the direct
intervention of humans and has certain control over its action and internal state as well as it has the ability to interact with other agents” (Genesereth & Ketchpel, 1994)
• Agents deploy collaboration, intelligence and mobility (Julka et al., 2002)
• Multi-agent systems (MAS) allow efficient interaction in
decentralized environments among heterogeneous actors • Deal efficiently with emergent and concurrent actions (Moyaux et al., 2006; Parunak, 1996 and Verdicchio & Colombetti, 2002)
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
AGENT BASED SYSTEMS II In simpler words, agent systems are useful because: AUTOMATICALLY SOLVE PROBLEMS COLLABORATE AND SHARE INFO ARE EFFICIENT IN DESCENTRALIZED ENVIRONMENTS DEAL WITH REAL-TIME ISSUES THEY PERFECTLY SUIT THE REQUIREMENTS OF NOWADAY’S SUPPLY CHAIN ENVIRONMENT AND ARE A VITAL STRUCTURE FOR THE INTEGRATION WITH A RISK DSS Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
DECISION SUPPORT SYSTEMS • DSS = interactive software based systems used for information
compiling (that take advantage of data mining and knowledge and data discovery (Piramuthu, 2005) with the ultimate goal of reaching a decision for a specific purpose (Zarandi & Zarandi, 2008).
• Data is transformed in information and information in knowledge • Knowledge is used for decision making – automated informed decisions for managers
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
DATA MINING • Data mining = the application of algorithms for extracting
specific patterns from data
• In SCM, data mining is usef for: • • • • • • • •
market analysis inventory scheduling customer and supplier categorization (Chatzidimitriou & Symeonidis, 2009) abnormality detection market opportunities identification inventory control (Mileff et al., 2006) cost reduction (Thotappa & Ravindranath, 2010) MAS WHAT ABOUT DM FOR SCRM ?
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
LITERATURE GAPS • Little emphasise is given to SCRM, most of the focus being rather on SCM and optimisation to increase profit • The concept of “risk” is not thoroughly defined • Few MAS for SCRM that incorporate a DSS for RM • DM is not used at its full potential in SCRM
GAPS
OPPORTUNITY
SOLUTION
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
THE PROPOSED FRAMEWORK
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
BRIEF FRAMEWORK DESCRIPTION I Forecasting agent
• generates scenarios for future supply chain working environments • foresees potential risks in all the possible configurations/scenarios and to send those scenarios to the risk DSS module.
Corporate Strategy Agent
• deals with all the business goals • has a decisive role in any decision making process.
Scheduling and Optimisation agent • scheduling and optimisation • deals with transport issues • logistic tasks
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
BRIEF FRAMEWORK DESCRIPTION II Learning agent
• updates the knowledge and data base of the SC
Dispatching agent
• order release and for the • execution of the schedule
Inventory agent
• manages the inventory
• certain storage economy capabilities.
Production agent
• assures minimum manufacturing cost • coordination/interaction of the SC partners Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
BRIEF FRAMEWORK DESCRIPTION III Inter-business communication agent • strategic role for gaining competitive advantage • offering the SC certain back-up solutions • keeps track of prospective SC partners
Risk / KPI monitor agent identifies potential risk situations through monitoring key performance indicators
•
The risk DSS module • Deals with the solution generation/risk mitigation
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
FRAMEWORK’S MAIN STRENGTHS • Highly modular KBDSS that allows efficient incorporation of patterns and risk avoidance solutions, complying in the same time with the business rules • Uses past experiences, incorporates learning capabilities, knowledge sharing, knowledge reuse and consolidation • Captures implicit knowledge which leads to explicit knowledge
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
FURTHER RESEARCH I • Investigation of potential risks and risk sources and the provision of specialized and optimized solutions for several types of those identified risks • Further investigation of knowledge extraction and management methodologies • Testing and refining the proposed model • Development of UML diagrams for the revised mode • Review of the best agent interaction models and their limitations Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
FURTHER RESEARCH II • Identification of the best technologies for real-time risk pattern detection based on manufacturing data • Identification of the best model implementation environments, model implementation • Research on the effects of emerging technologies on the transformation of SCRM
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM
QUESTIONS ?
Adrian Solomon, Panayiotis Ketikidis and Alok Choudhary 15th Panhellenic Logistics Conference & 1st SEE Congress on SCM