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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


SOLOMON