Collaborative Information for
Supply Chain Management Enhancement
Hindriyanto Dwi Purnomo
1,2, Yugowati Praharsi
1,2, Hui-Ming Wee
21
Department of Information Technology, Satya Wacana Christian University, 50711, Indonesia
(hdp_fti@yahoo.com)
2
Department of Industrial and System Engineering, Chung Yuan Christian University, 32023, Taiwan
(
weehm@cycu.edu.tw)
ABSTRACT
This study discussed the model of collaboration information to enhanced supply chain management. Competition and information technology increase the complexity of business environment. It encourages companies to provide better value for customer by cooperate with all organization in their supply chain. The collaboration information system design should support the supply chain goal. Knowing the vision, understanding the current business, evaluating the current business and set the desired business are fundamental things that need to be considered. Implementation of 3 tiers architecture and service oriented architecture in the collaboration system offer advantages due to the characteristic of the architectures. The internet based collaborative network utilizes these architectures to support the centralized and decentralized network.
Keywords: collaborative information, enhance SCM, 3 tiers architecture, SOA
1. INTRODUCTION
Competition and information technology are two main factors that significantly change the development of supply chain. Highly competitive market has forced business organizations to increase their agility and effectiveness. These encourage cooperation between companies and lead the global market grows in terms of efficiency. Currently, the global market competitions are not only rivalry between two individual companies, but also involve the entire supply chain. Therefore, collaboration within companies will bring significant benefits for companies in the supply chain. On the other hand, collaboration increases the complexity of business environment and involves share of large investment, resources, risk pool and return on investment [1].
The rapid development of information and communication technology provides opportunities to enhance collaboration within companies in a supply chain. Using the technology, companies can increase their information sharing to create better planning, forecasting, replenishment and services. The technology also triggers the changes of companies’ orientation from demand oriented into customer service oriented because it offers lower cost to set high customer satisfaction.
Horvath [2] mentions that collaboration is the driving force of effective supply chain. Collaboration gains the understanding of customer and it helps companies to optimize their operation. According to Horvath, open and low-cost connectivity, flexible, system and channel integration, higher level self service capabilities, sophisticated security capabilities and e-commerce capabilities are fundamental factors in supply chain
networks. These factors are accommodated through the use of information and communication technology.
Collaboration information is an important issue in supply chain collaboration as the information technology centralizes information, reduces lead time and minimizes bullwhip effect [3]. The successful collaboration is not only driven by the technology but more on how the technology could address the collaboration problem to achieve its goal. There are many aspects that influence the positive attitude on collaboration, such as organizational culture, top management commitment and trust. Even though many researches prove that supply chain collaboration offer better performance, many companies feel reluctant and doubtful to use it.
Strong demand on flexible and low-cost of integrated system make service oriented architecture growing very fast. Service oriented architecture is an architecture that provides great emphasis on business solution, modularity and reusability. It also provides interconnectivity and collaboration platform between companies [4].
2. LITERATURE REVIEW
Collaboration supply chain has attracting many business organizations as it can significantly increase their efficiency and effectivity. It can increase competitiveness of supply chain element by reducing misuse of resources, increasing responsiveness and gaining customer service level. Several researches have been done to investigate the characteristics and properties of collaborative supply chain. Most of them mentioned information sharing as important factors. However, only few researches focus on the collaborative information framework.
Angerhofer and Angelides [5] proposed a model of collaborative supply chain that consists of 6 constituents as a system of inter-linkages and inter-relationships. The constituents are: stakeholders, business strategy, processes, technology, enabling technology and levels of collaborations. They also introduce a novel performance measurement based on resource, output and flexibility.
Based on the investigated of the Collaboration Planning Forecasting and Replenishment (CPFR) performance, Chen et al [3] mentioned that manufactures (supplier-driven) approach was more feasible than retailer (buyer-driven) collaboration.
Simatupang and Sridharan [6], proposed a framework for supply chain collaboration based on reciprocal approach. They proposed 5 features in their framework: a collaboration performance system, information sharing, decision synchronization, incentive alignment and integrated supply chain process.
Some researches that emphasize on the effect of information sharing on supply chain are mentioned in [7, 8]. Zhou et al [7] investigate the integration of information sharing and supply chain practice of 125 firms in North America. They confirm that information sharing and supply chain practices significantly affect the supply chain performance. Sarpola [8] investigates how companies develop and use information system to support collaboration system. He defined three profiles
– internal foci, external foci and supply chain foci- to describe how companies develop and use information system to maintain the collaboration.
Other researches that describe a model of information collaboration are given in [9, 10]. Briffaut and Lallement [9] proposed BDI agents (Belief, Desire, Intention) for centralized planning coordination of stakeholder in supply chain. They also introduced collaborative control parameters such as: capability indicators, master production schedule, projected available balance, available to promise and capable to promise. Zeng et al [10] proposed a framework of collaboration design based on service oriented
architecture. They build a prototype based on object oriented modelling for a logistic industry.
3. COLLABORATIVE INFORMATION IN SUPPLY CHAIN
It is realized that information and communication technology is not the solution it-self for gaining business competitiveness, but it is a tool to achieve the business goal. For this reason, the use of technology should be confirmed with the vision of the supply chain. In advance, business model must be known prior to the decision on what activities can be supported by the information and communication technology.
3.1 Prior the Collaborative information
Before building ICT infrastructure, there are necessary aspects that need to be considered. First, knowing the vision is a vital factor because it gives direction for the development of the business. In supply chain, the vision can be represented as the common goal of its members. Each member should realize and commit to their common goal; otherwise, it is difficult to establish cooperation. Understanding the current business model is another important aspect. It assists in pointing out the drawback of the current business. Business model ontology such as Osterwalder business model ontology [11] is helpful to determine and investigate the business circumstance. Measurement and evaluation are ready to do after the existing business circumstance is figured out. The supply chain members need to agree on the measurement procedure and measurement parameter. This will determine how the business is evaluated objectively and reduce conflicting between members of supply chain. The evaluation results are used to set the desired improvement in the business. The desired business model should support the business vision and also gain the competitive advantages.
The ICT design is created after the desired
business model is decided; otherwise, there will be
too many changes in the design. However, this
does not means that the desired improvement
cannot be changed overtime as small changes are
accepted. In designing the collaborative
information, the information sharing can be
grouped based on the common interaction
between supply chain members and the common
process that exists in the supply chain.
Common processes that can be collaborated are:
These processes are taken from the process that
generally exists in individual firm. In manufacture,
procurement is dealing with the process of
obtaining goods, from the preparation until the
approval of invoice for payment. This process is
the most common activity that clearly illustrating
the interaction between two stages in the supplies
chain. Operations connect the strategic goals to
the production. It controls various planning efforts
in business. With the same motivation, operation in
the supply chain controls the collaboration effort to
achieve the supply chain goal. This includes
collaborating demand forecasting and marketing
planning. In advanced collaboration, production
and distribution are available to be integrated.
Customer service is important issues that need to
be addresed by supply chain. Generally, customer
service level is associated with the end customer
satisfaction. In broader insight, the supply chain
member’s customers are its descendant. As the whole performance in the supply chain is
influenced by the performace of its individual
member, the issues of customer service is worthed
to be investigated. Moreover, establishing good
customer service within supply chain is expected
increasing the end customer’s satisfaction.
3.2 System architecture for collaborative information
The system architecture proposed for each supply chain member is based on the 3 tiers architecture. In terms of layer, it can be viewed from logical tier and physical tier. Logical layer is divided into data layer; application layer and presentation layer. Physical layer describes
technological availability for each layer. The data layer utilizes the database server; application layer uses the application for enterprises and the presentation layer uses web based presentation and B2B interface.
Data layer consists of database servers in which data is stored and retrieved. The data is neutral from the application and presentation tiers. The data comes from various departments in the business organization. Therefore, it is stored in various locations and likely use different software.
Application layer constructs from logical business processes and has responsibility to control the functionality of the system. It converts data into information. The layer is divided into 3 sub layers: data processing, business logic and service logic. Data processing has responsibility to control interaction between data layer and business logic. The processes done in data processing are: retrieval of data from database, preprocessing the retrieved data for business process and storing data to database. Data processing is needed because the stored data in each database may have different structure due to various databases server used in the system. Business logic is the key of the whole system because it has responsibility to manage the functionality of the system. Business logic is divided into 3 subsystems: procurement, operations and customer service. Each subsystem organizes functions to conduct the business processes. Service logic manages the communication between presentation layer and business logic. Service logic is divided into two types, B2B management platform and Portal system. B2B management platform handles B2B operation while portal system handles operation for user/client.
(HTTP)
Operation Customer service
Customer Service functions
(Method calls) (Method calls) (Method calls)
(Method calls)
Database 1 Database 2 Database 3 Database 4 Service
logic
Figure 1. The system architecture for collaborative information
The integration of supply chain system is based on the service oriented architecture (SOA). The SOA utilizes the service logic to offer services to other systems. Each system provides interface that enables to communicate with other system in the network. Internet based interface is used to support the collaboration including information exchange and communication between its members. Internet based is choosen as it offers high level of standard and lower cost of establishment and maintenance. The general model of collaboration network is described in Fig 2.
Figure 2. General model of collaboration network
The general model can be implemented for centralized collaboration system and decentralized collaboration system. Centralized collaboration system means that there is a central system that organizes the whole collaboration system. This type of system is appropriate when there is a company that has authority over its
upstream and downstream, such as a company that has many subsidiaries which form as supply chain. The central system is controlled by the parent company. This type of collaboration provides maximum use of information sharing between its members. The centralized model is shown in Fig 3.
Figure 3. Centralized model
The implementation of 3 tiers architecture and the
SOA in the collaboration systems offer great
benefit due to the characteristic of the
architectures. Well defined layer in the 3 tiers
architecture can reduce the complexity of the
system. The system can be divided into smaller
subsystem with specific character. This
significantly enhanced the effective usage of a
subsystem. In addition, it makes the maintenance
process easier. The SOA provides flexibility to
adapt the business changes. It affords the ability to
reuse the existing code and to deploy new
functionality. Therefore, new functionalities are
developed faster and in lower cost. It also
increases the agility of the system. The use of
internet for SOA also simplifies the communication
between members in the collaboration.
4. CONCLUSION
Information and communication technology provide opportunity to enhanced business collaboration. To maximize the use of these technologies, the implementation of ICT should support the collaboration goal. Knowing the vision, understanding the current business model, evaluating the current business model and deciding the desired business model are activities that should be considered before designing the collaboration system. Common processes and common interactions are two aspects that widely used establishing collaboration. Three common processes and interactions - procurement, operation and customer services - are used as the fundamental logic in the collaboration.
The 3 tiers architecture and SOA are proposed to build the collaboration system. The proposed three common processes and interactions are used to build the business logic in the system. Two types of services logic are presented - B2B platform and portal system - to support the interaction with other systems and users. Two kinds of collaboration network are introduced, centralized model and decentralized model. Centralized model can take full advantage of the use of information sharing in the whole system. However, the implementation of this model only feasible if there is a corporation that has enough authority to handle the whole supply chain. On the other hand, the information sharing in the decentralized model is limited only for two connected companies. As a result, it is difficult to maximize the
advantages of information sharing in the whole supply chain.
REFERENCES
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