An Information Model in Lean, Agile, Resilient and

An Information Model in Lean, Agile, Resilient and Green Supply Chains

Izunildo Cabral

R. Puga-Leal

UNIDEMI, Faculdade de Ciencias e Tecnologia Universidade Nova de Lisboa Caparica, Portugal e-mail: [email protected]

UNIDEMI, Faculdade de Ciencias e Tecnologia Universidade Nova de Lisboa Caparica, Portugal e-mail: [email protected]

Antonio Grilo

V. Cruz-Machado

UNIDEMI, Faculdade de Ciencias e Tecnologia Universidade Nova de Lisboa Caparica, Portugal e-mail: [email protected]

UNIDEMI, Faculdade de Ciencias e Tecnologia Universidade Nova de Lisboa Caparica, Portugal e-mail: [email protected]

currently the competition is between supply chains rather than between companies. The demands of customers in a market increasingly volatile and turbulent, in conjunction with environmental responsibilities, make supply chains develop strategies to be more flexible, agile, which eliminate processes that add no value and respond to environmental issues, making the supply chains more competitive. This paper presents and discusses an information model to support current integrated paradigms of supply chain management lean, agile, resilient and green. The information model will provide all the necessary information for decision-makers take the right decisions at the right time and thus optimizing the supply chain performance integrating lean, agile, resilient and green demands.

Abstract

view, any company should not work in isolation, but must collaborate with others entities in the chain to compete with other chains. There must be interoperability regarding the exchange of data/information. If there is a platform that supports that exchange, it will be easier for enterprises share data/information, allowing increasing the competitiveness of the supply chain and making timely decisions.

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Keywords: Modeling,

Lean,

Agile,

Supply

Chain

Resilient,

Green,

Management,

This paper is organized as follows: in Section II a brief review is conducted about the Lean, Agile, Resilient and Green (LARG) Supply Chain Management (SCM) paradigms. In the next section, follows a review of LARG SCM practices and performance measurement. In Section IV a conceptual model is proposed as a means for the development of the LARG platform, linking entities, practices and metrics. It is described the modeling of the system based on Business Process Diagrams (BPD), Use Case diagrams and Class Diagrams. Finally, some considerations are drawn about the results about the research work done so far.

Information Performance

Measurement, Indicators, Metrics, Interoperability

I.

INTRODUCTION

The global market is willing to improve competitiveness through collaborative work and partnerships, motivating the companies to look for enhanced interoperability between computer systems and applications [1]. Many companies lose their competitiveness due to supply chain interoperability problems. The problems range from lack of information exchange, resulting in excessive fmished goods, underutilized plant capacity, unnecessary warehousing costs, and inefficient transportation of suppliers and finished goods [2]. Collaboration between organizations, supported by flawless communication between their systems and applications, has been identified as key factors for enterprise success on a continuously changing global environment, enabling the companies to enforce their partnership and strengthen their business in the market [1]. Organizations are looking for new methods of work and business relationships, and the exchange of information and documents with partners is often incapable of being executed automatically and in an electronic format [1]. This is maiuly due to problems of incompatibility in the information representation and in the software application methods adopted [1]. From a Supply Chain Management point of

II.

THE NEW SUPPLY CHAIN MANAGEMENT PARADIGMS: A REVIEW

A Supply chain can be defmed as a chain that links various agents, from the customer to the supplier, through manufacturing and services so that the flow of materials, money and information can be effectively managed to meet the business requirements [3]. SCM is a strategic factor for increasing organizational effectiveness and for the better attainment of organizational goals such as enhanced competitiveness, better customer service and increased profitability [4]. The objective of a collaborative supply chain is to gain competitive advantage, by improving overall performance through taking a holistic perspective of the supply chain [5]. A brief description of the supply chains management paradigms is as follows: A.

Lean Paradigm

There are many definitions of lean philosophy in the literature, but all of them say often the same principles.

978-1-61284-486-2/111$26.00 ©2011 IEEE

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forcing the manufactures to effectively integrate environmental concerns into their management practices [7] . Green supply chain management can reduce the ecological impact of the industrial activity without sacrificing quality, cost, reliability, performance or energy utilization efficiency; meeting environmental regulations not only to minimize ecological damage, but also leading to overall economic profit [13].

According to Womack and Jones [6], the lean paradigm is an approach which provides a way to do more and more with less and less (less human effort, less equipment, less time and less space), while coming closer to customer requirements. The lean paradigm is a systematic approach to identify and eliminate all non-value-added activities through continuous improvement [7], in order to fulfill customers need and maintaining profits. According to Agarwal, Shankar, and Tiwari [8], the lean approach has essentially focused on the elimination of waste. B.

III.

To improve SCM performance it is needed to implement a set of practices in the SC's entities and measure the impacts of these practices which can occur at the different entities.

Agile Paradigm

Once the SC objective is to deliver the right product, in the right quantity, in the right condition, to the right place, at the right time, for the right cost and due continuously changing since customer requirements, SC's must be adaptable to future changes to respond appropriately to market requirements and changes [7]. The agile SC strategy paradigm aims to create the ability to respond rapidly and cost effectively to unpredictable changes in markets and increasing levels of environmental turbulence, both in terms of volume and variety [9]. According to Baramichai, Zimmers, and Marangos [10], an agile supply chain is an integration of business partners to enable new competencies in order to respond to rapidly changing, continually fragmenting markets. C.

A.

Entities and Collaborative Supply Chain

Collaboration is defined as a way by which companies in a supply chain are actively working together toward common objectives, and is characterized by sharing information, knowledge, risks and profits [14]. When competitiveness, responsiveness and customer satisfaction are keywords of a successful management in a business area, companies cannot work in an autonomous way anymore, but they have to get closer to their supply chain partners [14]. In this paper, it will be considered SC's entities at three levels: the focal furn (manufacturer), raw material supplier and finished goods distributor. To improve the performance of this chain, it is considered a super-entity that has access of all information in the chain, which will see the supply chain as a whole. In the Fig. 1 it is presented the supply chain considered.

Resilient Paradigm

Today's marketplace is characterized by higher levels of turbulence and volatility. As a result, SC's are vulnerable to disruption and, in consequence, the risk to business continuity has increased [11]. Resilience refers to the SC's ability to cope with unexpected disturbances [7]. Supply chain resilience is concerned with the system ability to return to its state or to a new one, more desirable, after experiencing a disturbance, and avoiding the occurrence of failures modes [12]. According to Susana, Helena, and Cruz, M. [7], in SC's system, the purpose is to react efficiently to the negative effects of disturbance (which could be more or less severe). The ability to recover from the disturbance occurrence is related to development of responsiveness capabilities through flexibility and redundancy [12]. It is important to note that resilience is not always desirable; for instance, systems states that reduce profitability can be highly resilient [12]. D.

LARG SCM PERFORMANCE: METRICS & PRACTICES

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• Businesssiralegy

• BUSiness strategy

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• Processes

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-Technology

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Figure I.

B.

SC" entities of study.

Supply chain performance

To develop an efficient and effective supply chain, it is necessary to assess its performance. Performance measures should provide the organization an overview of how they and their supply chain are sustainable and competitive [12]. Cost, service level (available in the right place at the right time), lead time and quality (of product) may be used as key performance indicators. According to Helena and Cruz, M. [15], to evaluate the contribution of the paradigms practices in supply chain performance, it is necessary to establish the relationships between the supply chain characteristics changed by the paradigms (designated by "management characteristics") and their relationships with key performance indicators. They considered the following management characteristics: capacity surplus, replenishment frequency, information

Green Paradigm

Srivastava [13] defined green SCM as "integrating environmental thinking into SCM, including product design, material sourcing and selection, manufacturing processes, delivery of the final product to the customers as well as end­ of-life management of the product after its useful life". The pressure from community and environmentally conscious consumers are increasing and environmentally sustainable green SCM has emerged as an organizational philosophy by which to achieve corporate profit and market-share objectives by reducing environmental risks and impacts while improving the ecological efficiency of such organizations and their partners [7]. The pressure referred,

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frequency, integration level, inventory level, production lead time and transportation lead time. These characteristics can be altered to adjust the supply chain performance [15]. Fig. 2 contains a diagram example with the perfonnance indicators and management characteristics relationships.

IV.

This study includes a theoretical development to build a platfonn the LARG SCM system. Based in the literature review [7, 20-22], it is identified a list of practices and metrics for each paradigm (Lean, Agile, Resilient and Green), along with an association with each practice and metric to the respective paradigm and entity . Afterwards the practices are linked to the metrics to evaluate the impacts of these practices on the supply chain perfonnance. A.

Figure 2.

C.

Performance indicators and management characteristics relationships [15].

LARG SCM Practices

A set of practices can be implemented in different level of the supply chain, contributing to improve the service level, lead time, cost and quality (of product). All practices contribute to a SC with less waste (non-value-added activities), more responsive to the customers' requirements, able to overcome disruption conditions and also to reduce environmental impacts [15]. Susana, Helena, and Cruz, M. [8] have identified a set of practices in the LARG SC context. D.

LARG PLATFORM MODELING

Performance Measurement and LARG SCM Metrics

The metrics and measures are discussed in the context of Lean, Agile, Resilient and Green SCM. Performance measurement is crucial to improve supply chain management [16]. It can make possible inter-understanding and integration among SC's partners while revealing the effects of strategies and potential opportunities in SCM [7]. With measuring the supply chain performance it can be is possible for the super-entity and the entities to understand how much the SC is LARG and the impact of the practices in each level. Several research studies address the design and implementation of performance measures in a SC's context [4, 17-19]. The objective is to separate the set of metrics used in each paradigm and by the different entities. Also, it is necessary to distinct the metrics to evaluate the cost, service level, lead time and quality (of product). Susana, Helena, and Cruz, M. [7] have identified a set of SC performance measures.

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LARG Business Process Diagram

A supply chain is the set of business processes and resources that transfonns a product from raw materials into finished goods and delivers those goods into the hands of the customers [23]. Supply chain excellence requires standardized business processes supported by a comprehensive data foundation, advanced infonnation technology support and highly capable personnel [23]. There are several languages and notations for modeling business process [24]. However, BPMN (Business Process Modeling Notation) and UML (Unified Modeling Language) are considered the main standards, and are used in this research. The Business Process Diagram (BPD) demonstrates how the supply chain operate, the materials flow, infonnation flow and financial flow. BPD provides a holistic view of the chain, and identify points where can exist interoperability problems, processes to be improved, and where the practices will influence the SC perfonnance. Fig. 3 shows a subset of the diagram created. The complete diagrams include the three entities referred (raw material supplier, focal finn and finished goods distributor). In each entity, it is considered the most important departments namely Sales, Design & Engineering, PurchasinglLogistics, Production, Quality Control and Financial. In the entity Distributor, we it is not considered the Production Department, since the process is not relevant in this entity as far as SCM is concerned. This subset of the BPD, contain some key processes of the Focal Finn, like sales process, purchasing and distribution process, production process and quality control process. For example, in order flow, we have important information of EOQ (Economic Order Quantity), lead time, order date, entity that has done the order. Other important information, in the purchasing department is about the inventory level, before and after shipment. In quality control, the information relevant is the number of nonconformities detected in raw materials and finished goods. All this information can be useful to evaluate the LARG perfonnance. For example, for inventory level, in lean paradigm, there should be a low inventory level to minimize the cost of stock; on the contrary, in resilient paradigm, the inventory level should be high, to respond to disturbance. Entities that have a lot of non-conformities are unlikely to be lean, since non­ conformities indicate waste.

and Green). The LARG Class Diagram is represented in the Fig. 5.

Figure 3.

B.

A subset of the BPD developed.

UML Use Case Diagram

The modeling of the platform will be addressed by the user of the system that can be the super entity, supplier, focal firm and distributor. It means that the platform will not work without interacting with those users. To represent this interaction between the users of a system, use case diagrams were created. The users (actors) will be the three entities considered for this study (raw material supplier, focal finn and finished goods distributor) and a user - a super entity that can manage the supply chain as a whole. In Fig. 4 it is represented an example of a use case diagram created in this study. The example repres�nts the case when the focal firm is interested in consultmg and comparing the supplier's inventory level to better create their order strategy. Other use case diagrams are for example, when the super user wants to know the state of all orders within the supply chain; the state of a product; evaluate and rating suppliers; calculate a weight for each paradigm; etc. Supplier and distributor can use the system to check information about other entities in the same level.

Figure 5.

To exemplify the LARG Class Diagram, consider the resilient paradigm, where there is an important class (disturbance) that allows saving relevant in�orm�tion about the disturbance that occurs in the supply cham. FI g. 6 shows the disturbance class with their attributes. This class will be related to the entity class, where an entity may have zero or more disturbance, and a disturbance can affect zero or more entities.

Figure 6.

CONCLUSIONS

This paper has presented four new SCM paradigms (Le�, Agile, Resilient and Green), the practices that are adopted m each paradigm and the metrics to measure SC perform�ce. Information sharing through the use of InformatIOn Technology (IT) is crucial for effective supply chain management, but the simply use of IT app�icati��s to . improve information sharing between supply chaI n entltle� IS . not itself enough to realize the benefits of mformatlon sharing. The practices must be well imple�ented �d monitored. The aim of this paper is to present an mformatIOn model to support the development of a LARG SCM platform.

Use case diagram to check the supplier's inventory level.

It is important to stress that the super entity can i�voke all the use cases of each entity, but the contrary IS not verified. C.

Disturbance class.

Disruption periodicity is the interval between the disruptions; disruption quantity loss is the difference between what an entity normally provides and which has been providing due to disruption; disruption location refers to where in the upstream supply chain the disruption ev�nt occurs (disruptions can occur at the first, second, or third tiers of the supply). V.

Figure 4.

LARG Class Diagram.

UML Class Diagram

The Class Diagram will represent the structural component of the LARG platform, and ident�fy the .�ost important classes of each paradigm (Lean, Agde, Resihent

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creating an agile enterprise," Supply Chain Management-an International Journal, vol. 12,no. 5, pp. 334-348,2007.

It was proposed a conceptual model to identify the relationships between the practices, metrics and associate them to the respective paradigm and entity-level. Futrne work will identify how the influence of these practices influence in the goals (cost, service level, lead time and quality of product) in different levels and separate on the different paradigms. Empirical research work is also being conducted to define the most important practices/metrics in each paradigm/entity, using Analytical Network Process (ANP) approach

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ACKNOWLEDGMENTS

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The authors of this paper would like to thank the Fundayao para a Ciencia e Tecnologia and the MIT project (MIT-PtiEDAM-IASC/0033/2008) for funding the research work.

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