IT Basics for Supply Networks/2
Dr. Withalm 24-Mar-16
IT Basics for Supply Networks
Lectures at the University of Bratislava/Autumn 2014
30.09.2014
Lecture 1 Introduction in CNO’s & Basics of Supply Networks
07.10.2014
Lecture 2 Kanban & Essential Supply Chain Processes
21.10.2014
Lecture 3 Business Processes & Semantic Web
11.11.2014
Lecture 4 SOA and SOA basing on J2EE
18.11.2014
Lecture 5 B2B & Cloud Computing including SaaS
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Dr.Withalm
IT Basics for Supply Networks
Today’s Agenda
 ITA COIN Collaboration
 Kanban

SCPP (Supply Chain Process Platform)
 Challenges & Requirements on CDCP
 DCP (Demand Capacity Planning)
 CDCP (Collaborative Demand Capacity Planning
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IT Basics for Supply Networks
ITA COIN Collaboration/1
History and Motivation

COIN:
As an EU FP7 Project COIN leverages from the experience of it‘s members and the results of
other EU projects (ECOLEAD, ATHENA and others as well). One of the goals of COIN is to show
relevance of the COIN results in reality.

ITA:
ITA represents IT & Consulting companies and their experts giving service to the Automotive
Industry and is affiliated with VDA – the association of the German Automotive Industry with more
then 600 members.

Odette:
Odette International is an organization, formed by the Automotive Industry for the Automotive
Industry. It links the 4000 plus businesses in the European Automotive Industry and their global
trading partners. Odette released a „Demand Capacity Planning - DCP“ recommendation 2004
which is accepted by the European Automotive Industry as a standard.

ITA/VDA:
ITA/VDA started a project to add collaborative elements to DCP and enriched the processes with
interoperable and state of the art technologies and methods – „Collaborative Demand Capacity
Planning – CDCP“. First draft will be released first quarter of 2010. ITA/VDA could be viewed as
a „COIN Multiplier“ for COIN to leverage from the outcome of the CDCP project (Model and
Processes) to show the practical relevance of COIN results.
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ITA COIN Collaboration/2
Two sides of the COIN
Experiences in the past have proven that suppliers in the Automotive Industry are not really
mature to apply EI Services, which were selected in the CDCP sub project PoC and which
will be provided via a Generic Service Platform. These EI Services will be elicited, evaluated,
designed and partly implemented by the EU project COIN and adopted to the specific
requirements of the Automotive Industry by the CDCP sub project PoC.
The first sub project ECMM will assess the maturity level of suppliers concerning the ability
to apply EI Services in the context of CDCP.
To introduce CDCP within the Automotive Industry different accompanying actions are
taken. These accompanying measures will be performed in sub projects of the CDCP main
project. Especially the synergy with the EU project COIN will utilized in order to execute
these sub projects. The sub projects which are described later on in detail will deal on the
one hand with Enterprise Collaboration Maturity Model (ECMM) assessments and on the
other hand with Serious Gaming.
The second sub project Serious Gaming in turn will establish concrete SG’s to overcome
weaknesses which were revealed in the preceding ECMM assessment. ECMM has been
developed during the COIN project and is a derivate of the CMMI assessment methodology,
while SG was also applied in the course of the COIN project.
As both of the sub projects will be jointly headed by ITA and COIN members. It will be
suggested that in the case of the sub project ECMM ESI should be the leader of the COIN
part while BIBA should be heading SG.
Both sub projects are structured in WP’s where WP1 will always tackle project management
issues. The efforts of WP1 will be estimated by 10% of the effort of the whole sub project.
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ITA COIN Collaboration/3
CDCP Programme
CDCP
Validation &
Service Rollout
CDCP Supplier
Encouragement
Process Model
Verification
CDCP Processes - Collaborative Demand Capacity Planning Processes

Update of DCP with collaborative elements

Formal description of CDCP Model & CDCP Process

Executable processes and well defined messages

Executable Processes will be published on ITA Portal for the Automotive
community

Draft of update of recommendation and executable processes will be
released 2010 by ITA/VDA
Core Collaborative Processes
DCP/SCI/COIN
CDCP Processes
ITA/VDA
Portal
Elements
CDCP Rollout
COIN/ITA/VDA/
Technikum/BIBA






6
CDCP Business
Facilitation
BIBA is a Scientific Organization
COIN represents EU experts in Collaboration &
Interoperability
ITA represents Automotive IT & Consulting Companies
Odette represents European Automotive Industry
Logistics
Technikum is a Scientific Organization
VDA represents the German Automotive Industry
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Related Projects

DCP - Demand Capacity Planning

Verbal Description of DCP Model & DCP Process

Recommendation released 2004 by Odette

SCI - Supply Chain Interoperability

Recursive Modeling Principles for Supply Networks

Interoperable Messaging for Supply Networks

Interoperability Architecture

COIN – Enterprise Collaboration & Interoperability

The mission of the Coin IP is to study, design, develop and
prototype an open, self-adaptive, generic ICT integrated solution
in the field of Enterprise Interoperability and Enterprise
Collaboration.
Dr.Withalm
CDCP Rollout - Collaborative Demand Capacity Planning Validation & Service Rollout
A CDCP Service Rollout
A1 Process Model Verification
Proof of Concept for CDCP with a significant sub network of a
Supplier Network
A2 Portal Elements
Offer of elements for interoperable use of CDCP services in
federated portals
B CDCP Supplier Encouragement
B1 Supplier Assessment
Use of ECMM assessment method - a CMMI derivate - in order
to appraise their ability to take advantage of CDCP.
B2 Serious Gaming
Training and education of CDCP by use of state of the art elearning methods
C CDCP Business Facilitation
C1 Business Models
Evaluate business models to lower the barrier to bring CDCP to
the market
C2 Marketing Models
Evaluate marketing models to decrease the time to market of
CDCP
IT Basics for Supply Networks
ITA COIN Collaboration/4
CDCP Roll Out

ITA will support COIN in:


Collecting of EC/EI requirements of suppliers within the Automotive Industry

Recommended by VDA Member (OEM or 1. Tier)

Reviewing EC/EI Services, which have been collected in D6.1
Holding a workshop together with WP6.1 members in order to

Elicit, prioritize, and order requirements for EC/EI Services

What are the premises for suppliers to apply EC/EI Services from the GSP (Generic
Service Platform)


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Infrastructural, knowledge, training (i.e. serious gaming), consulting
Definition of real life demonstrators, take up in order to verify the requirements including:

Deployment of a specific server for accessing GSP

Real life scenarios (story book) of a take up

Providing a help desk/tutor by ITA in order to support suppliers

Establishing training programs i.e. serious gaming for specific EC/EI Services
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ITA COIN Collaboration/4
CDCP Process Model Verification (PoC): Structure of Work

WP1: Project Management

The project is headed by ITA and EsoCe and follows the usual tasks of project management as planning and
monitoring.

WP2: Collection of requirements for EC/EI Services.

VDA Member (OEM or 1. Tier) together with BIBA will held a workshop, where the most essential EC/EI Services for
Supply Networks focused on the Automotive Industry will be collected independently of the already collected within the
COIN project. Focus is on CDCP PProcesses.

Participants: ITA, VDA Member (OEM or 1. Tier), BIBA together with suppliers.

WP3: Reviewing of COIN requirements by ITA.

All COIN requirements concerning EC/EI Services for supply networks will be analyzed regarding:
 Are they characteristic respectively important for the Automotive Industry
 May they modified/updated to be usable within the Automotive Industry

Afterwards requirements will be modified/updated.

Participants: ITA (VDA Member (OEM or 1. Tier) together with selected suppliers), BIBA, EsoCe

WP4: Eliciting, Prioritizing, and ordering of requirements.

Both new requirements collected in WP2 and modified requirements of WP3 will be elicited, prioritized, and ordered to
be implemented within the COIN project.

Participants: ITA (VDA Member (OEM or 1. Tier) together with slelected suppliers), BIBA, EsoCe

WP5: Definition of minimal premises for supplier in order to apply EC/EI Services

Primarily the status quo of suppliers must be evaluated by means of corresponding questionnaires.
 Not only infrastructural (IT issues) premises must be defined
 but also which knowledge is expected
 which training issues must be provided
 which consulting tasks should be proposed

Participants: ITA (VDA Member (OEM or 1. Tier) together with selected suppliers), TxT, EsoCe

WP6: Definition of real life demonstrations, take ups.

Purpose of this work package is the final test, if requirements for EC/EI Services are effectively applicable by suppliers
of the automotive industry. With help of this WP the verification of usage of the implemented EC/EI Services should be
proven. Following tasks are expected:
 Establishing of story boards and real life scenarios
 Specific server for providing the GSP must be deployed
 Help desk/tutors for supporting the suppliers must be trained

Participants: ITA (VDA Member (OEM or 1. Tier) together with suppliers), BIBA,TxT, EsoCe
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ITA COIN Collaboration/5
CDCP Service Rollout: CDCP Portal Elements
 CDCP Portal Elements are a special offer for the
suppliers to use the CDCP processes portal
invariant based on international portal standards for
federated portals.
 The ITA Portal is designed to support collaboration
of ITA members as well as organizations affiliated
with ITA (VDA, Odette and others).
 Therefore the ITA Portal will leverage from this
collaborations because of the number of members
of the affiliated organizations.
 Key point is the ITA Portal offer for ITA members
and members of affiliated organizations.
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ITA COIN Collaboration/5
CDCP Supplier Assessment





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Structure of Work

The whole project consists of 4 work packages.
WP1: Project Management

The project is headed by ITA ESI and follows the usual tasks of project management as planning and
monitoring.
WP2: Preparation of ECMM Assessment

In this work package it must be clarified which suppliers will be assessed. Moreover the maturity level and the
corresponding process areas of the assessment must be selected.

Participants: ITA, ESI, Tier Leader.
WP3: Assessment.

The assessment will be performed according the following process:

1st day: management of tier leader and respective suppliers will be interviewed.

2nd day: according the outcome of the 1st day middle managers of tier leader and respective suppliers will be
asked to specific issues which remain unclear.

3rd day: to critical issues employees of suppliers will be asked and finally the outcome presented.

Participants: ITA , ESI, Tier Leader (manager, middle manager), suppliers (managers, middle managers,
employees)
WP4: Recommendation.

According the outcome of the assessment an improvement program will be established. Typical improvements
could be training and consulting issues i.e. Serious Gaming.

Participants: ITA , ESI, Tier Leader.
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IT Basics for Supply Networks
ITA COIN Collaboration/6
CDCP Serious Gaming
 In order to expand the use of Supply Network Processes (Focal
Point: CDCP Processes) Serious Gaming will be introduced by
COIN and ITA.
 This will help suppliers to understand the business value and the
use of the Supply Network Processes delivered by ITA/VDA.
 It will also lower the barriers in introducing a specific Supply
Network Process (Focal Point: CDCP Processes) not only for the
large suppliers (tier one to three) but also for the smaller one (tier
4 for 6 ff).
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ITA COIN Collaboration/7
CDCP Business Models
 This sub project should develop and value some
scenarios of business models
 One could be to deliver the CDCP processes for
suppliers for free and charge for additional services –
possibly sponsored by OEMs and 1 tiers
 An other business model could be to sell the CDCP
Process and the additional services as well
 Pro’s and con’s should be categorized and valued
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ITA COIN Collaboration/8
Innovative Aspects
 Combination of innovative approaches enables a
breakthrough innovation
 Following innovative approaches will be combined
 EC/EI- Services provided by a GSP and applying the
emerging SaaS-U paradigm
 Serious Gaming enabling both eliciting the
requirements concerning EC/EI Services as well as
training of them
 ECMM as derivate of CMMI (focused on SW
engineering) focuses on collaborative behavior
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IT Basics for Supply Networks
Kanban/1
 Kanban, also spelled kamban, and literally meaning “signboard"
or “billboard„
 is a concept related to lean and Just In Time (JIT) production.
 Invented by Taiichi Ohno working within Toyota
 Kanban is not an inventory control system but a scheduling
system deciding
 what to produce
 when to produce it
 how much to produce.
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Kanban/2
 The need to maintain a high rate of improvements led
Toyota devise the Kanban system.
 Kanban became an effective tool to support the running of
the production system as a whole.
 In addition, it proved to be an excellent way for promoting
improvements.
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IT Basics for Supply Networks
Kanban/3
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IT Basics for Supply Networks
Kanban/4
Origins/1
 In the late 1940s, Toyota began studying supermarkets with a view
to applying store and shelf-stocking techniques to the factory floor
 based on the idea that in a supermarket
 customers get what they need at the needed time and in the
needed amount
 Furthermore, the supermarket only stocks what it believes it will
sell, and customers only take what they need because future
supply is assured.
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Kanban/5
Origins/2
 This led Toyota to view a process
 a customer of preceding processes
 the preceding processes as a kind of store.
 The customer process goes to this store
 to get needed components
 and the store restocks.
 Originally, as in supermarkets, signboards were used to guide
"shopper" processes to specific restocking locations.
 "Kanban" uses the rate of demand
 to control the rate of production
 passing demand from the end customer up through the chain of
customer-store processes.
 In 1953, Toyota applied this logic in their main plant machine shop.
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Kanban/6
Operation/1
 An important determinant of the success of production
scheduling
 based on "pushing" the demand
 is the quality of the demand forecast
 that can receive such "push."
 Kanban, by contrast, is part of an approach of receiving
the “pull” from the demand.
 Therefore, the supply or production is determined
according to the actual demand of the customers.
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Kanban/7
Operation/2
 In contexts where supply time is lengthy and demand is
difficult to forecast,
 Respond quickly to observed demand:
 This is exactly what a Kanban system can help with:
 It is used as a demand signal that immediately
propagates through the supply chain.
 This can be used to ensure that intermediate stocks
held in the supply chain are better managed,
usually smaller.
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Kanban/8
Operation/3
 Where the supply response cannot be quick enough to
meet actual demand fluctuations
 causing significant lost sales
 then stock building may be deemed as appropriate
which can be achieved by issuing more Kanban.
 Taiichi Ohno states that to be effective Kanban must
follow strict rules of use
 monitoring of these rules is a never-ending task to
ensure that the Kanban does what is required.
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Kanban/9
Six Rules
1. Do not send defective products to the subsequent process
2. The subsequent process comes to withdraw only what is
needed
3. Produce only the exact quantity withdrawn by the
subsequent process
4. Level the production
5. Kanban is a means to fine tuning
6. Stabilize and rationalize the process
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Kanban/10
Kanban Cards/1
 Kanban cards are a key component of Kanban
 that utilizes cards to signal the need
 to move materials within a manufacturing or production facility
 or move materials from an outside supplier to the production
facility.
 The Kanban card is a message that signals depletion of product,
parts or inventory
 that when received will trigger the replenishment of that product,
part or inventory.
 Consumption drives demand for more.
 Demand for more is signaled by Kanban card.
 Kanban cards thus, in effect, help to create a demand-driven
system.
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IT Basics for Supply Networks
Kanban/11
Kanban Cards/2
 Kanban cards, in keeping with the principles of Kanban,
should simply convey the need for more materials.
 A red card lying in an empty parts cart means
 that more parts are needed.
 In the last few years, Electronic Kanban systems, which
send Kanban signals electronically, have become more
widespread.
 While this is leading to a reduction in the use of Kanban
cards in aggregate
 it is common in modern Lean production facilities to
still find widespread usage of Kanban cards.
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Kanban/12
Three - Bin System/1

A simple example of the Kanban system implementation
might be a "three-bin system" for the supplied parts
 where there is no in-house manufacturing
1. one bin on the factory floor (demand point)
2. one bin in the factory store
3. one bin at the suppliers' store.
 The bins usually have a removable card
 that contains the product details and other relevant
information — the Kanban Card.
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Kanban/13
Three - Bin System/2
 When the bin on the factory floor becomes empty
 i.e., there is demand for parts
 the empty bin and Kanban cards are returned to the
factory store.
 The factory store then replaces the bin on the factory floor
with a full bin
 which also contains a Kanban card.
 The factory store then contacts the supplier’s store and
returns the now-empty bin with its Kanban card.
 The supplier's inbound product bin with its Kanban card is
then delivered into the factory store completing the final
step to the system.
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Kanban/14
Three - Bin System/3
 Thus the process will never run out of product
 and could be described as a loop
 providing the exact amount required
 with only one spare so there will never be an oversupply.
 This 'spare' bin is used for the uncertainty that are inherent in the
system in
 Supply
 Use
 Transport.
 The secret to a good Kanban system is
 to calculate how many Kanban cards are required for each
product.
 Most factories using Kanban use the colored board system (Heijunka
Box).
 This consists of a board created especially for holding the Kanban
cards.
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KANBAN/15
Summary of Basic Information

The KANBAN principle is a consumption control mechanism

KANBAN manages the material flow in a complex supply chain

KANBAN enables the „Just in time“ principle – every arriving KANBAN triggers supply and production

KANBAN optimizes consumption by strictly implementing a pull process.

KANBAN is simple and efficient– by establishing automatic control loops.

A consumption notification signal flows back to the producer - by returning the KANBAN

The inventory between two control points is limited by the number of container maps.
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KANBAN/16
The Toyota Equation
 An equation developed at Toyota Motor Car Company for calculating
the initial number of KANBAN cards needed in a Just-in-Time
manufacturing network.
 In words, the number of KANBAN equals the number of production
units to be made during the transportation lead time (to the next stage).
 The equation is
n = (d*L* (1+b))/c





n
d
L
b
c
number of cards,
number of units made per hour,
transportation lead-time in hours,
safety factor, usually initially set at 0.1,
number of units in a parts container, if one is used.
 This number is a starting point – every effort must be made to decrease
the number in order to continuously reduce the stock levels
!
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KANBAN/17
Integration with SCPP
Information Flow
Barcode Reader
Producer
Material Flow
Consumer
Barcode Reader
per SCPP
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IT Basics for Supply Networks
SCPP/1
KANBAN
State
Max. No. of
KANBANs
9
Actual No. of
KANBANs
3
4
Upper Limit
of KANBANs
2
Lower Limit of
KANBANs
Signalization
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SCPP/2
States Inbound – Outbound - Transit
Shortfall
State
Normal
State
9
9
5
3
4
1
2
Empty
State
Transit
Inbound - Outbound
9
Overdelivery
State
4
4
2
2
Full
State
9
9
3
1
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SCPP/3
Process Model Exception States
Scan Points
at
System Boundaries
Organization A
Organization B
Transport
Full
State
9
SP A Full
SP B Full
3
Outbound
Inbound
Shortfall
State
Overdelivery
State
9
9
5
4
4
1
2
2
Empty
State
9
SP A Empty
1
SP B Empty
Transport
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SCPP/4
Normal States
Scan Points
at
System Boundaries
Organization A
Organization B
Transport
Full
State
9
SP A Full
SP B Full
3
Outbound
Inbound
Normal
State
Normal
State
9
9
2
3
4
4
2
2
Empty
State
9
SP A Empty
1
SP B Empty
Transport
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SCPP/5
Principles

SCPP is a set of interoperable Internet Technology Services (Webservices) for cross border Supply
Chain Processes

SCPP supports distributed Supply Chain Processes across system boundaries applying Internet
interoperability principles

SCPP especially supports "Ready to Use" interoperable processes and models for the Automotive
Industry
35

iKANBAN – interoperable KANBAN processes and control

iVMI – interoperable Vendor Managed Inventory

iDCP – interoperable Demand Capacity Planning

iSCMo – interoperable Supply Chain Monitoring
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IT Basics for Supply Networks
SCPP/6
Scope

Supply Chain Process examples in the Automotive Industry
 VMI – Vendor Managed Inventory (Odette Project)
 CMI – Collaborative Managed Inventory (AIAG/Odette/Jama Project)
 DCP – Demand Capacity Planning (based on Odette Specification)
 SCMo – Supply Chain Monitoring (based on Odette Specification)
 …..
 Just in Time or KANBAN in various characteristics

Supply Chain Processes in the Automotive Industry are by nature spanning across the Supply Chain
 Processes involve multiple parties
 Complexity influenced by material -, information - and process work-flow
 Existing Information systems are not designed for these processes
Open for custom Supply Chain Processes




36
Use of predefined Interoperable Process Components (IPCs)
Use of flexible predefined recursive sub models
Use of Webservice Templates
Communication via high level Internet Protocols (e. g. SOAP)
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IT Basics for Supply Networks
SCPP/7
Interoperability - Benefits

Interoperability - the implementation completely based on internet technologies

All Documents locally defined in XML (e. g. messages, states, exceptions etc.)

Webservices (using WSDL – Web-Service Definition Language)

Internet Protocol Stack (from TCP/IP to SOAP)
Scalability – there is no leading system across the Supply Chain


every node in the Supply Chain is loosely coupled with other nodes
Consistency – there is no central database, each database is bund able



Stateless design

No synchronization issues
Safe transactions


there are no batch processes across the supply chain – everything is “online” and “real-time”
Inherent security
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
Every party may implement a proprietary security policy due to the purely local data storage

Communication via Internet Protocols like SOAP
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IT Basics for Supply Networks
SCPP/8
Architecture Service Types and Interoperability Hub
Four types of services are available for each specific
Supply Chain Process acting on the iHub




Rendering Service

Specific view for actors in the process

Can be used in several applications, portals etc.
along the Supply Chains
Docking Services

Docking to other systems such as

ERP systems (SAP, Oracle, …)

MRP systems (Material requirements planning
(QAD, …)

Office Applications (MS Excel, OpenOffice, …)

Or simply keying in the data
Process Service

Standard-handling of spanning Supply Chain
Processes

Exception-handling of spanning Supply Chain
Processes
Model Service

Recursive Model for a specific spanning process in
Supply Chains
Rendering Service
Process Service
Process Service
Model Service
iHub
Model Service
Docking Services
iHub needs to be defined
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SCPP/9
Process Service
Model Service
Information Flow
Tier 1
Tier 3
Tier 2
Tier 1
OEM
Material Flow
Lean Implementation
85%
PHP
Apache http Server
MySQL
Virtual SOAP Server
Light Weight Implementation
Java
Apache http Server
MySQL
Tomcat, ESB
10%
Rich Implementation
5%
Java
Apache http Server, MS IIS, …
MySQL, DB2, Oracle, MS SQL
Tomcat, ESB, Weblogic, Websphere, .Net, …
Technology
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Docking Service Presentation Service
Docking Service Presentation Service
Interoperability Architecture: Information Flow - Material Flow - Technology
SCPP/10
Service Implementation Levels Dependent on Infrastructure
Customers IT-Infrastructure
Provider or
In house
Tier 3ff
Lean Implementation



Simple IT-infrastructure
Simple packaged installation
Manual data input or transfer of text files
Tier 2
Light Weight Implementation

Given IT-infrastructure

Scalable and simple installation

Data input through standard adapters
OEM
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Rich Implementation

Complex enterprise IT-infrastructure

Highly scalable installation

ERP Connectors secure online data transfer

Multiple presentation level requirements
IT Basics for Supply Networks
SCPP/11
Multi Stage KANBAN Process Model with Consolidation
Transport
Full
State
9
3
Normal
State
Normal
State
9
9
2
3
4
4
2
2
Empty
State
9
1
Transport
Consolidation
of
KANBAN States
Transport
Full
State
9
3
Normal
State
Normal
State
9
9
2
3
4
4
2
2
Empty
State
9
Transport
1
Full
State
9
Transport
3
Normal
State
Normal
State
9
9
2
3
4
4
2
2
Empty
State
9
1
Transport
Transport
Full
State
9
3
Normal
State
Normal
State
9
9
2
3
4
4
2
2
Empty
State
9
1
Transport
Transport
Full
State
9
3
Normal
State
Normal
State
9
9
2
3
4
4
2
2
Empty
State
9
1
Transport
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SCPP/12
Multi Stage KANBAN Process Model Loosely Coupled KANBAN Models
Coupling of KANBAN
Models
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SCPP/13
“Interoperable KANBAN” Predicting System Behavior through online Simulation



Collaborative setup of the iKANBAN “Game”
Supply Chain nodes at “Any time, any place, no matter”
Scan Points
at
System Boundaries
Organization A
Organization B
Transport
Number of actors is unlimited
Full
State
9
SP A Full
SP B Full
3
Outbound
Inbound
Normal
State

Normal
State
9
Multi stage, multi tier KANBAN
9
2
3
4
4
2
2
Empty
State
9
SP A Empty

Excellent training effect

With or without real data

Time-lapse function

Optimization of KANBANs

Predicting of KANBAN systems behavior

Simulation of change management and exception handling

Last but not least a lot of fun in playing iKANBAN
1
SP B Empty
Transport
Scan Points
at
System Boundaries
Organization A
Organization B
Transport
Full
State
9
SP A Full
SP B Full
3
Outbound
Inbound
Shortfall
State
Overdelivery
State
9
9
5
4
4
1
2
Empty
State
9
SP A Empty
1
Transport
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SP B Empty
2
Challenges in Automotive/1
Source: ITA & ILIPT Intelligent Logistics for Innovative Product Technologies
Customers’ demands – A shift from bigger to more energy efficient („green“) models


OEM’s react internally very fast on changes



Flexible internal manufacturing devices
OEM’s leeway for reaction strongly limited

20% of parts of a car are produced directly by the OEM

80% are delivered by suppliers in different tiers

Usually 6 to 10 tiers in a Supply Chain and

Approximately 3000 - 5000 partners in the Supply Network
Suppliers lagging behind in producing their sub parts

Lack of information and slow processes
Customers’ requirements – A shift from BTS (Build to Stock) to BTO (Built to Order)


Research in US indicates


Build-to-order (BTO) customers in Europe

44
74% of consumers would rather specify and order a customer built car and wait
Delivery time :48 days (European cars), 63 days (Japanese models)
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Challenges in Automotive/2
 Mastering logistical networks becomes increasingly difficult
 increasing dynamics (e.g. engineering changes)
 increasing number of involved partners due to increased
product complexity and outsourcing
 increasing number of variants
 In spite of introduction of optimized/new logistic concepts
 still high cost and efforts in terms of logistics all over the
supply network
 trouble shooting activities considered as normal
 slow communication due to numerous interfaces
(organizational, technical, cultural)
 no transparency / no optimization across enterprises
 Brief Description of a Typical SC Project follows
 CDCP (Collaborative Demand Capacity Planning)
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Challenges in Automotive/3
 At present times buyers demands radically changed from big cars to
more fuel efficient ones.
 A long term paradigm shift from Built to Stack (BtS) to Built to Order
(BtO) up to Just in Sequence (JIS) is increasing especially in the
lower levels.
 Supply Chain processes have to be more agile as in the past
because of fast changes of the demand planning and capacity
planning as well.
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Challenges& Requirements/1






47
Some enterprises have not implemented a collaborative
agreement among capacity and demand
 overcapacity and delivery shortage are at hand
 Only particulary problems are identified by enterprises
CDCP approaches are both within a single company as well as
cross organizational of big interest
Generally suppliers confirm more than 100% of their capacity to
their customers
 CDCP could visualize this contradiction but would weaken
substantially the position of suppliers
Actually the time frame of the cycles of planning are about 1
week taking into account 4 tiers an agreement will last at least 4
weeks
Generally customers demand’s are too high
 Therfore suppliers respond with capacity more than 100%
CDCP will not visualize this entrepreneurial risk
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IT Basics for Supply Networks
Challenges& Requirements/2
 DCP (Demand Capacity Planning) describes
methodologies and models among OEM and tier 1
respectively among tier (n) and tier (n+1)
 CDCP will provide an approach for the whole supply
network
 Basing on DCP and by means of collaborative services
 Such collaborative services should enable quasi
online planning
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Challenges& Requirements/3
 Internal business processes will not be considered
 Stochastic methods and risk analyses will also not be
taken into account
 Moreover the visibility of risk will be excluded
 Tier (n) is steering tier (n+1) and backwards covers the
demands of tier (n-1)
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Challenges& Requirements/4








50
Improve visibility for all stake holders within the supply network
Direct data exchange restricted to direct business partners
Definition of information which are forwarded from tier (n-1) via
tier (n) to tier (n+1)
CDCP must fulfill specific online requests
 Must be specified exactly
The visibility within the network will be accomplished
 By mutual exchange of demand/capacity information from
tier to tier
 Sufficient efficient planning activities are requested
Introduction/integration of collaborative services for planning
agreement
Communication within the supply network should be automated
DCP must be enlarged about vertical multitier abilities
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IT Basics for Supply Networks
Challenges& Requirements/5
 A process for DCDP will be developed
 Containing types for messages, protocols, milestones
 Access via service platforms
 Enabling the interface to internal business processes
(PP)
 Supporting the mid/long term agreement of capacity
and demand
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Challenges& Requirements/6
 Web Services, SaaS, Business Processes, Modeling of BP,
Standards as BPMN, xPDL,BPEL
 Actually respective processes will be analyzed and established
 definitions/recommendations seem very likely
 COIN results will be available in a further project
 DCP is a central approach but covers two tiers
 Generally SCMo comprehends multiple tiers
 SCMo’s primary goal is the whole demand of OEM’s along the
supply chain
 A target value for optimization should available
 Remark: SCMo was established when Daimler must stop the
producing process
 As carpeting material was not delivered
 Analyzes revealed that farmers in SA were the reason which were
in tier 7
 SCMo considered only service chains and is not regular
 Problems in the supply chain are encountered mostly in the higher
tiers
 Specifics of customers diminish along the chain
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Challenges& Requirements/7
 Seamless implementation of CDCP along the supply chain is an urgent
problem in the automotive industry
 which must be solved very fast especially in the case of the actual
situation.
 EC/EI Services will be provided on a GSP/Cloud following the ISU
principle combined with SG could substantially improve the acceleration
of the implementation and reaction of supply chains
 CDCP has many stakeholders in the automotive industry that could
benefit
 CDCP meets its goal.
 the most important stakeholders are OEM, their suppliers, and ICT
providers
 A Serious Game, which enables suppliers in the automotive industry to
learn how EI services work
 will support meeting the CDCP goals
 i.e. on the one hand supplier learn to apply EI services and on
the other hand it will help to reveal missing EI services.
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DCP/1
Actual Situation
Phone, Fax
EDI, Phone, Fax
Weeks
EDI
Weeks
cascading information flow
Days
OEM
Tier n
Supplier
Tier 2
Supplier
Tier 1
Supplier
10-30 Days 2-20 Days
1-10 Days
Dealership
Consumer
Dealership
Consumer
Dealership
Consumer
engineering
changes
Source: Goldman Sachs, Gentlemen Start Your Search Engines, 01/00;
Prudential Securities, E-Business and the Auto Industry, 01/31/00
inventory buffer
 slow information flow
 long lead times
 lack of transparency
 volatile forecasts
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 bull-whip effect,
 high effort and cost,
 limited reliability and flexibility
IT Basics for Supply Networks
DCP/2
Basic Idea
Program planning and demand forecast from customers
Capacity profile of supplier (planned capacity)
fcst/
calloff
[qty]
Alert
planned demand
Alert
Alert
planned capacity
weeks
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months
[time]
IT Basics for Supply Networks
DCP/3
Characteristics
 Objective:
 Identify potential capacity shortfalls in time;
 Structured, collaborative procedure to find proactively
solutions for capacity issues;
 Enable scenario simulation
 Benefits:
 Safeguard build plans
 Avoid non value adding activities and related cost
(customer and supplier side)
 Approach:
 Check if production capacity of suppliers is sufficient
to satisfy planned customer demand
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DCP/4
Basic Characterization of the SCM Building Blocks DCP
and SCMo
Criteria
SCMo
DCP
medium-term
planning
characteristics
execution
demand
information
updates
releases / forecast releases / forecast planning on
out of MRP runs
out of MRP runs
platform / feature
level
daily
monthly
2-4 times per year
time frame*
day 0 to 60
month 1 to 12
DCP
long-term
planning
year 1,5 to 4
* may vary by company and product family
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DCP/5
Basic Process Steps
 Suppliers update/declare maximum capacities by partnumber
 Suppliers create capacity families / hierarchies (e.g. based on the
actual/planned production structure) to show dependencies with
other part numbers within product group
 Analysis of planned demand versus most recently declared
supplier capacities
 System generates alerts in case of lack or excess capacity
 In case of potential lack of capacity, system delivers all relevant
information and standard template to systematically capture
supplier feedback or cross-company workflow
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DCP/6
Basic Process (Level 1) Demand Capacity Planning Static Model
Customer, regular update
Supplier, regular update
Capacity
Information 1
Additional inform.
(parameters, BOM info,
etc.) where appropriate
demand in
capacity tolerance?
Demand
Information 2
yes
no
Alert Generation (potential
shortfall or over capacity)
DCP System,
automated real-time
process
relevant associates from
supply network participants,
promptly
relevant associates from
supply network participants,
promptly
Workflow to solve the issue
carry out corrective action(s)
1
2
59
execute plan
Information from multiple suppliers in customer’s point of view and
Information from multiple customers in supplier’s point of view
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CDCP/1
Objectives

Improvement of the supply network processes (especially exception
management)
 To grant supply chain visibility and collaboration
 To align demand planning and capacity planning for all members of
the supply network

Interchange information on demand and capacity information based on
standardization of messages and communication
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CDCP/2
Enterprise Interoperability
 Enterprise Interoperability is the ability of two or more
systems or components to exchange information and to
use the information that has been exchanged.



Information Interoperability
Knowledge Interoperability
Business Interoperability
 Improvement of the whole DCP Process in order to reach
„Online Interoperability“ throughout the Supply Chain /
Network
 Prerequisites for EI Services


61
Availability through COIN Generic Service Platform (GSP)
Affordability through COIN Software as a Service Utility
(SaaS-U)
Sergio Gusmeroli, TXT
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CDCP/3
Availability of Enterprise Interoperabiltity Services by GSP



EI Services will primary enable the i/op among CBP (Cross-organizational
Business Processes) and PP (Private Process)
 Technically performed by Web Services
 Adhering to the SOA principle
 Complemented by Semantic Annotations
CBP calls Web Services from a subset of the whole PP which is called VP (View
Process)
 VP is an essential construct, as suppliers will not like to offer the whole PP to
the corresponding CBP
EI Services will be provided via a so called GSP (Generic Service Platform)
View Process
input state object
output state object
process start
process end
private operation
transformation
Action2
Action1
Action4
Action3
PrivateProcess
CBPM – bp-based modelling vs. b/ip-based modelling
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Transformation of a private process into a view process
IT Basics for Supply Networks
CDCP/4
Affordability through SaaS-U

SaaS-U – a new implementation of the SaaS vision

Supporting the various collaborative business forms, from supply chains to
business ecosystems

Delivery of IT as services, becoming for them like a utility, a commodity, the
so-called Interoperability Service Utility (ISU)

ISU will not just create a service platform, but mainly a new business concept –
the Software-as-a-Service Utility (SaaS-U) model

Interoperability will be a utility-like capability for enterprises

Available at (very) low cost

Accessible in principle by all enterprises
(universal or near-universal access)

“Guaranteed” to a certain extent &
at a certain level in accordance with
a set of common rules

Not controlled or owned by any
single private entity
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CDCP/5
University Project
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Copyright 2011
IT Basics for Supply Networks
CAPPER Innovations
64
CDCP/6
Use Case Example
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Copyright 2011
CAPPER Innovations
65
CDCP/7
University – Project Example
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Dr.Withalm
Copyright 2011
CAPPER Innovations
66
CDCP/8
Project Teams
Simulation of a Supply
Network
There will be 4 groups of
student with 4 team
members each,
simulating a supplier
network in the supply
network.
Market demand will be
simulated by the
university professor.
Porsche
Student
Group 3
Student
Group 1
Student
Group 4
Student
Group 2
Student
Group 5
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Copyright 2011
CAPPER Innovations
67
CDCP/9
Bill of Material - Definition
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Copyright 2011
CAPPER Innovations
68
CDCP/10
Project Phases
Phase I: Supply Chain Setup
Description of the student team company.
Company environment description
Definition of products and product attributes
Defintion of the supply network and the collaborative process
Presentation of the results from each project team
Phase II: CDCP Tool Setup
Setup of the companies in the CDCP Tool
Capacity planning and collaboration process expierence
Capacity optimization
Supply chain processes
Presentation of the results from each project team
First: Project Report
Phase III: Capacity Pitfall Simulation
Capacity Pitfalls and Risk Management
Example: Supplier Delivery Problems from Japan vs. Increase in Market Capacities
Alert Management and Problem solving
Presentation of the results from each project team
Final Project Report
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Copyright 2011
CAPPER Innovations
69
CDCP/11
Tool
http://uni.cdcp3.com/
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CAPPER Innovations
70
CDCP/12
Tool Registration
http://uni.cdcp3.com/
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CAPPER Innovations
71
CDCP/13
University Program
Courses/Lecture concerning Collaborative Networked Organizations
(CNO’s)
Setup of Exercises/Training for Students regarding CNO‘s
Use of the Collaborative Demand Capacity Platform (CDCP3) and
establish of a virtual collaborative student community/simulation
Enable Cross-Regional student projects, by contributing to the crossregional university projects or industry partner projects
Divulgating the CDCP3 University Program concepts and results to a
wider scientific and industrial community
Teaching CNO’s Business Strategies and Business Opportunities
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CAPPER Innovations
72
CDCP/14
Benefits/1



73
Following premises should be provided by leading partner:
 Establishment of definitions and regulations and foster
assessments (ECMM) and training (Serious Gaming)
Economic benefits are recognized as the EC/EI Services will be
provided as SaaS
 Supplier have only to pay per usage
 Services will be available via Web Browsers
 So all heavy installation procedures will be dropped
 Cload computing concepts might help
EC/EI Services will speed up the whole business chain among
tier leader and suppliers within a tier
 Saving money multiple
 Stack stay small
 Idle time is reduced
 Clear business processes also minimizes unclear decisions
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IT Basics for Supply Networks
CDCP/15
Benefits/2
 EC/EI Services will enable to stay in business
 Tier leader will find portfolio of potential suppliers
 By opening its PP (Private Processes) via a (VP)
View Process to the CBP (Cross organizational
Business Processes)
 ECMM assessments will explore weaknesses
 so that automatically new EI Services will be deployed
 or goal oriented improvement programmes will be
initialized
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IT Basics for Supply Networks
Thank you
for your attention!
IT Basics for Supply Networks
Farbpalette mit Farbcodes
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