A Model for Evaluating Lean, Agile, Resilient and Green Practices Interoperability in Supply Chains
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P. Espadinha-Cruz1, A. Grilo1, R. Puga-Leal1, V. Cruz-Machado1 UNIDEMI, Departamento de Engenharia Mecânica e Industrial, Faculdade de Ciências e Tecnologia da Universidade Nova de Lisboa, Portugal
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Abstract - Due to market pressures and increased competition, companies were led to adopt collaborative working practices by creating communication networks and integrated material and product flows. Supply Chain Management is one key to success in this sector, being one recent and powerful operations strategy tool that led to success in many enterprises all over the world. However, it is not affordable to conduct SCM’s newest methodologies like Lean, Agile, Resilient and Green being subject to problems of interoperability. This paper presents a model to evaluate the overall business interoperability and establish what measures can reduce interoperability problems in the SC.
II. LARG SUPPLY CHAIN MANAGEMENT Supply Chain Management (SCM) is based on the integration of all activities that add value to customers starting from product design to delivery. SCM is as a set of approaches utilized to effectively integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide cost while satisfying service level requirements[3]. Lean, Agile, Resilient and Green are now at the forefront in management methods for supply chain management. Lean argues that we should design products to minimize the waste increasing the added value for the customer[4], whereas, Agile advocates that, in a generic way, we should be more responsive to customer (Agile). Resilience and Green are two other paradigms, where instead of focusing directly on the customer and production issues, are more focused on the environment or external actors. Resilience refers to the impact of external agents in the SC and Green concerns with the effects of SC’s activity on environment[1]. However, in a SC’s system there can occur contradictions between the disparate approaches. For example, Resilience is not always desirable if an organization strategy is to be lean, where for reducing inventory cost, they must have a low inventory level, which makes it less resilient[5]. To accomplish an interoperable supply chain, it is necessary to develop a deep understanding of the tradeoffs between the Lean, Agile, Resilient and Green paradigms, exploring and researching their contribute for the sustainable competitiveness of the overall production systems in the supply chain, to help companies and supply chains to become more efficient, streamlined, and sustainable.Previous works have explored the influence of Lean, Agile, Resilient and Green on the performance of a SC, exploring contradictions and synergies[5-7]. The contribution of these papers in the present work focusesonproviding a set of SCM’s practices whereit islikely that there are interoperability issues.
Keywords - Supply Chain Management, Lean, Agile, Resilient, Green, Interoperability I. INTRODUCTION To gain competitiveness towards the demand ofglobal markets, operational management approacheslike Lean, Agile, Resilient and Green have emerged in response to enhanced global competition. The ability to integrate these four different management approaches on the same supply chain is of great importance, in the strategic point of view, but rather challenging [1]. However, complex networks are affected by problems of interoperability between companies belonging to the Supply Chain (SC) that magnifies disturbances. Indeed, every area of joint activity within the supply chain needs to be interoperable in order to work efficiently. However, according to[2], many companies lose their competitiveness due to lack of interoperability as a result of inefficient decision-making by managers. The complexity of a supply chain network demands the correct information at the right time to make the right decision. Whenever this principle is not achieved, unwanted consequences occur, usually reflected in the total cost to the client. This paper present a methodology for analyzing interoperability in Lean, Agile, Resilient and Green (LARG) approaches in SC industrial contexts, particularly in the automotive sector. The methodologyapplies the Analytical Hierarchical Process for assessing interoperability in the supply chain and identify what LARG practices are more interoperable in specific industrial SC.
III. INTEROPERABILITY AND THE SUPPLY CHAIN Interoperability has been firstly defined as an ability to exchange information homogeneously between different systems, understand the data a process it, in a
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s seamless mannner[8]. Interooperability deefinition has since evolved to coonsider aspectts emerged frrom a wider view, v covering diffferent busineess dimensioons. The conncept wasre-definedd to “the organizational o and operatiional ability of ann enterprise to t cooperate with its busiiness partners and to t efficiently establish, connduct and devvelop IT-supported business relaationships witth the objectivve to create value.””[9]. Interopeerability issuues within the automootive industry are crucial becauuse of the complexity c off the product, the design d process, and the ripppling effect along a the SC). Geneerally, compaanies need to interact i when they need to exchhange inform mation, currenccy, materials and products. Acccording to[110], these primary p functions inherent to any companiies’ activity require diffe ferent fferent compaanies levels of innteroperabilityy. When diff interact with each other, beyond techhnical issues, like information systems andd semantics, these activvities ment of exteernal require also an appropriiate managem mployees and their relationships, they have to deal with em culture values and also too define collabborative scenarios adequate to buusiness processes.
his work is too The contribbution of these BIP’s on th prov vide an approppriated structuure to study SC’s S activitiess, by analyzing thhe influence of SCM’s practices onn busiiness interopeerability. The criterria established to evalluate overalll interoperability, and a then, to ccross-link witth the interestts he LARG supply chain’s innteroperable prractices, are: of th S1-Clarity in Strategic S Goals C1-Businesss Strategy (BS and BS2-Impacts in Collaboratiion Breakdow wn); S Structures C2-Organizaational (OS1-Crosssorgaanizational Mapping and OS2-Contact po oints); WC1-Linguisticc C3-Employeees and Workk Culture (EW barrriers, EWC C2-Motivationn, EWC3-R Responsibilityy, EW WC4-Honesty and a EWC5-Effficiency); C4-Collaborrative Busiiness Process (CBP1Resp ponsibility sharing, CB BP2-Clarity in Business Proccesses and CB BP3-Visibility)); C5-Managem ment of Exteernal Relation nships (MER1Parttner selectionn, MER2-Parrtner Assessm ment, MER3Coo operation Conntracts, MER R4-Conflict Resolution R andd MER5-Communiccation); C6-IPR Management M (IPRM1-Back kground IPR R prottection, IPR RM2-Foregrounnd IPR prrotection andd IPR RM3-Conflicts)); C7-Businesss Semanntics (BS Se1-Conflictingg term minologies andd BSe2-Semanntic conversion n); C8-Informattion Systems (IS1-Data Ex xchange Toolss, IS2-Speed, IS3-A Application Interoperabiliity and IS4Secu urity).
A Interoperaability analysiis parameters A. In ordder to make an assessment a in ann interoperabiliity context, [11] proposes a fram mework to makke an assessmennt in business innteroperability (
Fig. 1)), refers tothhe different perspectivess as Business Inteeroperability Parameters, namely: n Busiiness Strategy, Orgganizational Sttructures, Empployees and Work W Culture, Collaborative Bussiness Processs, Managemennt of External Reelationships, IPR Managgement, Busiiness Semantics andd Informationn Systems. These eight e BIP’srefflect the consstant interoperrable aspects withinn and withouut companies’, governing every e business activvities. For eacch parameter it i were considdered sub-parameters for fine graanularity of the each topic. .
B. Interoperable I e practices in tthe SC G supply ch hain and itts In designinng a LARG info ormation systeem, as notedd above, the possibility of o interoperability problems is high. The methodologyy pressented in thiis paper proovides a way y to mitigatee interoperability issues i in a L LARG SCM context, c whenn ARG’s practicces to apply inn seleecting and impplementing LA the Supply Chainn From the Leean, Agile, Reesilient and Grreen practicess, prev viously identtified and reeviewed by[5 5-7], it weree seleected the practtices that requuire interoperaability betweenn busiiness partnerss in automotivve supply chaains. For eachh paraadigm, the selected praactices that require thee interaction betweeen supply chaain actors are as a follows. n Practices: Lean L1-Customer relationships, omers in reallL2-To capturre the demandd of the custo time, L3-Use EDI to share information, L4-Geographhical concentraation, L5-Procurement consolidattion, L6-Profit sharring, L7-Supplier certification, c L8-Supplier evaluation e andd rating, L9-Supplier involvement inn product development,
Fig. 1. Innteroperability Quotient Q Measuurement Model [11].
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relationships/long-term L10-Supplier relationship L11-Supplier training and development);
business
better in regarding to BIP’s. Thus, by pairwise comparison between criterion and sub-criterion, it will be possible to assign weights to each interoperability parameter. That permits to know how relevant each parameter is to achieve the interoperability goal. Secondly, making comparisons of LARGSC practices considering the criteria, it is possible to see how each practice will contribute to the overall goal, considering each criterion. For example,for the improvement of overall SC’s C8Interoperabilityconsidering the IS2-Speedof Information Systems, when we do compare the practice L3-To use EDI to share information with R2-Lead time reduction, the first practice is more important than the second, because it has a bigger influence on this interoperability dimension and depends directly on the information systems to perform.
Agile Practices: A1-Use of IT to coordinate/integrate activities in design and development, A2-Use of IT to coordinate/integrate activities in procurement, A3-Products with substantial added value for customers, A4-Retain and grow customer relationships, A5-To alter deliver schedules to meet customer requirement A6-Use of IT to coordinate/integrate activities in logistics and distribution); Resilient Practices: R1-Committing to contracts for material supply (Buying capacity whether it is used or not), R2-Lead time reduction, R3-Postponement R4-Supply chain risk management culture);
B. Defining the target The analysis can be done considering the basic unit of the supply chain as the first tier of the SC, and thus analyzing the interactions between focal firm and supplier and focal firm and distributors. The analysis of the first tier of the supply chain will provide informationabout how each agent evaluates its own interoperability and, what practices are best to optimize their network of relationships. It also in provides information about which of the LARG practices that can be applied with enhanced overall interoperability (or with less interoperability issues).
Green Practices G1-Reverse logistics G2-To reuse/recycle materials and packaging IV. INTEROPERABILITY ANALYSIS A. Model description
C. Application of the model The interoperability evaluation and selection model is based ona hierarchical structure, where it is applied Analytical Hierarchy Process[12] (Fig. 2).
This method is applied in the following 3 stages: Determining what LARG practicesare currently applied: In a preliminary approach for the evaluation, it is required to know what practices business partners consider relevant for their activities. The identified LARG SCM’s practices are presented in a form of questionnaire, where it is categorized in a fundamental scale, from 1 to 5, whether a particular practice is “no relevant” to “very relevant” to companies’ activity.This determines the most relevant practices. Evaluating interoperability parameters (criteria): In the second step, the weighting of criteria consists on pairwise comparison between criterion and subcriterion, in order to establish ranking amongst them. Like before, it is to be made in form of questionnaire, where it is exposed the scale for gauging the comparisons. The scale is the same as in AHP[12], “Fundamental Scale”, where we assign from 1 to 9 as we consider that one item is from equally to extremely more relevant than another.
Fig. 2. Interoperability evaluation and selection model for LARG’s practices
Evaluating LARG’s practices, interoperability parameter:
The overall goal of this model is to improve SC’s interoperability by analyzing which practices performed
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supplier relationship/long-term business relationship, A5to alter deliver schedules to meet customer requirement, lead-time reduction and reverse logistics. In the second step, an evaluation of the criteria of the simplified model was made, having established that the present criterions have the following order of relevance to enhance the interoperability:
The last step consists in the evaluation of LARG’s practices having in consideration each sub-criterion from the model. Once again, it is to be organized as a questionnaire using the same scale of comparison. This final step will provide us the last information that we need to assess SC partners. D. Group Decision-Making
TABLE I CRITERION SCORES AND RANKING
The Group Decision-making criteria used for this methodology is based on [13], were group judgments are combined by the geometric mean.
Criterion
E. Benefits of the Model on LARG SCM The benefits of this method on the LARG SCM is to help in the decision of which practices improve or optimize SC’s activities, considering the interoperability requirements and challenges. It becomes clear what practices are more interoperable, and can make an assessment of which criterion a particular practice has more influence. Also, mapping the SCM’s practices contribution to achieve interoperability will make possible to study this particular issue by analyzing the individual judgments of SC’s actors, whereas we can conclude how they evaluate their own interoperability, and, see the points of improvement to each interoperability parameter.
Rank
BS2-Impacts in Collaboration Breakdown
0,272
1st
OS2-Contact Points
0,176
3rd
0,239
2nd
CBP1-Responsibility Sharing MER4-Conflict Resolution
0,094
6th
BSe1-Conflicting Terminologies
0,114
4th
IS2-Speed
0,104
5th
By analyzing data, it can be observed that organizational issues (BS2 and OS2) have more influence in enhancing interoperability of SC. So, every management decision relative to this aspect will have a largereffect on overall interoperability. In the last stage of questionnaires, the selected SCM’s practices where evaluated considering the above criterions.The results obtained were:
V. CASE STUDY In order to demonstrate the use of this interoperability analysis model, it was made a validation of a reduced version of the model where twoautomotive sector companies (a first-tier supplier and a manufacturer (supplier to an automaker) were inquired to evaluate interoperability in the following version of the model:
Weighted priorities
TABLE II EVALUATION OF THE LARG’S PRACTICES (ALTERNATIVES), HAVING IN CONSIDERATION EACH CRITERION AND FINAL SCORE
Practices
BS2
BSe1
CBP1
IS2
MER4
OS2
Score
A5
0,034
0,005
0,006
0,013
0,004
0,013
0,074
G1
0,045
0,016
0,021
0,007
0,012
0,003
0,104
L3
0,121
0,086
0,041
0,043
0,042
0,037
0,371
L9
0,010
0,031
0,080
0,003
0,018
0,009
0,151
L10
0,053
0,032
0,080
0,023
0,031
0,028
0,247
R1
0,010
0,007
0,010
0,005
0,007
0,014
0,053
Sum
0,272
0,176
0,239
0,094
0,114
0,104
-
With this last assessment we can analyze what particular practices improve a particular interoperability dimension. For instance, considering the external CBP1Responsibility Sharing, two lean practices (L9 and L10) have more influence in this subject. It means that, by involving suppliers in product development (L9) and having long-term relationships/business relationships (L10) with suppliers will enhance interoperability in the responsibility sharing between SC’s actors. In a global perspective, we can see that the use of EDI to share information (L3) improves best the overall
Fig. 3. Simplified version of the interoperability evaluation model.
In a preliminary study, it was made a questionnaire to select the relevant practices for the actual organizations’ work. By applying Pareto’s Law, having chosen the most relevant practices for this practice, being selected the following: L3-To use EDI to share information, L9-supplier evaluation and rating, L10-
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interoperability. The structured data contributes to a better way to communicate all SC’s parameters, enhancing visibility in offering a clear view and perspective to this collaborate.
interchange and monitor information, SC actors to
[3]
D. Simchi-Levy, P. Kaminsky, and E. SimchiLevy, Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies [Electronic Version], McGraw-Hill/Irwin, 2008.
[4]
J.P. Womack, D.T. Jones, and D. Roos, The Machine That Changed the World: The Story of Lean Production, Harper Perennial, 1991.
[5]
F.A. Azevedo, Susana; Carvalho, Helena; CruzMachado, Vírgilio; Grilo, “The influence of agile and resilient practices on supply chain performance: an innovative conceptual model proposal,” Production, 2010, pp. 3-21.
[6]
V. Azevedo, Susana G; Carvalho, Helena; CruzMachado, “The Influence of LARG Supply Chain Management Practices on Manufacturing Supply Chain Performance,” International Conference on Economics, Business and Marketing Management - EBMM 2011, 2011, p. 6.
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S.G. Azevedo, H. Carvalho, and V.C. Machado, “The influence of green practices on supply chain performance: a case study approach,” 2010, p. 30.
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A.-jørgenBerre, B. Elvesæter, N. Figay, C. Guglielmina, G. Johnsen, D. Karlsen, T. Knothe, and S. Lippe, “The ATHENA Interoperability Framework,” Framework, pp. 1-12.
[9]
C. Legner and K. Wende, “Towards an Excellence Framework for Business Interoperability,” 2006, pp. 1-16.
ACKNOWLEDGMENTS
[10]
A. Consortium, ATHENA Interoperability Framework, 2006.
Authors would like to acknowledge Fundaçãopara a Ciência e Tecnologia for its support, namely for the project MIT-Pt/EDAM-IASC/0033/2008 and PTDC/EME-GIN/115617/2009.
[11]
A. Zutshi, “Framework for a Business Interoperability Quotient,” 2010, pp. 1-98.
[12]
T.L. Saaty, “The Analytical Hierarchy Process,” 1980, pp. 209-222.
[13]
T.L. Saaty and K. Peniwati, Group Decision Making: drawing out and reconciling differences, RWS Publications, 2008.
VI. CONCLUSION AND FUTURE WORK In this paper it was described the main interoperability issues to have in consideration when applying LARG practices to industrial context, particularly fordesigning and implementing an information system to support business processes on automotive industry SC activities. The importance of making an interoperability assessment when conceiving aLARG SCM information system is to identify beforehand the potential interoperability failures in order to decide what management and technical issuesneed to be to addressed, and to outline the implementation design of the information system. This paper provides a practical way to analyze interoperability across the supply chain, and aids when deciding what are the most interoperable LARG practices to apply to SC. Making use of decision-theory AHP model, it is possible to transform subject information in to scores, in order to evaluate the existing interoperability in each business partner, and to establish what are the more interoperable LARG’s practices to apply within the SC. Future research work should focus of the large-scale validation of the model, with a more extensive number of LARG practices and more detailed BIPs. The research work should also focus on evolving the AHP model to ANP, particularly considering that some of the BIPs may not be completely independent as required by AHP.
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M.N. Huhns, L.M. Stephens, and N. Ivezic, “Automating supply-chain management,” Proceedings of the first international joint conference on Autonomous agents and multiagent systems part 3 - AAMAS ’02, 2002, p. 1017.
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