Management Information

Systems for Supply Chain

Management:
Hi-Viz Supply Chain
April 24, 2012

Bruce C. Arntzen, PhD

Executive Director Supply Chain
Management Program

MIT E40-355, 77 Mass Ave

Cambridge, MA 02139
barntzen@mit.edu
W 617-252-6965, M 978-793-1411 1

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Focus on Visualization

Management Information Systems for Supply Chain Management

ERP systems (e.g. SAP, Oracle)

-- Order Management
-- Inventory Management
-- Supplier Management
-- Materials Management
-- Financial Management
-- Documentation Management
Transportation Management Systems Visualization
Warehouse Management Systems
Customer Relationship Mgt Systems
Network Modeling Tools
Routing & Scheduling Tools
2

2
 Where can you stand to get a
Business Need good view of the supply chain?

CUSTOMERS
AIR

PLANTS CAPACITIES

RISKS

Picture from Orgnet.com

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Oceans of detailed data, but no strategic view
Corporate
Data
Bases

ERP

WMS

TMS

CRM

4
Mans progression toward
^ SC Visualization

ERP

WMS
Reports Dashboards Maps Picture

TMS

CRM

5
Other fields have pictures, why not us?

Biology
Astronomy

Chemistry

6
Existing Automated Tools for SC Vizualization

- Too detailed, incomprehensible

- One BOM at a time, not strategic
- Duplication of parts
- Part-level, not entity-level
- Not made to create high-level strategic
displays for management

Hyperbolic tree model

Image from msdn.microsoft.com

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Existing Tools for SC Visualization

Many Tools

BLANK SCREEN Computer-aided

assist for hand
drawing a network
(if you have the
data!)
No Tools

Automatically
draw the
network
CORPORATE DATABASES
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What would you do with a SC picture?

Display / Highlight key information & metrics:

- Cost accumulation
- Inventory deployment
- Cycle time build up
- Capacity bottlenecks
- Money Flow
- Risks & Vulnerabilities We started here.
- Carbon Emissions
- Water Usage

9
There is a
HUGE NEED to
quickly know what your
supply chain looks like!
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Whenever there is a supply chain disruption

BP Oil spill

Iceland

Stock Market
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Japan

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 Where to my raw materials come from?

Li-Ion Batteries Apple iPad 2

Apple, Japan

(Polyvinylidene Fluoride)
Other Electronics Companies
PVDF Polymer Resin Apples Competitors
Kureha, Corp.
Iwaki, Japan
70% Global Supply So where is Iwaki ?
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 14
Who will capture the
other 30% of global
supply? 14
 We find these dependencies too late
Truck Engine GM/Chevy Truck
General Motors, NY US, SP, DE, UK

Lambda
Sensor
exhaust gas
oxygen sensor

Other Automobile Companies

HITACHI,
GMs Competitors
Japan
60%
Global
Supply

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 Can I see this weak link in advance?
HITACHI
60% of the
worlds supply of
Lambda Sensors

GM Shreveport Plant

Who will capture the

other 40% of global
supply? WAS CLOSED

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First day on the job as SC Risk Manager

Where do our raw matls come from?

What does our SC look like?

If there is a crisis, I need

to know this yesterday.
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 Value at Risk Over Recovery Time
(downstream nodes and links)

V18
V13 V7
V6 R2
R1
P3 V1
D1
V14 V11
D2 R3
V19 P1
CM1 W1
V2 R4
V8
P4 D3
V20 V9 R5
V15 V4
D4 R6
CM2 P2
V3 W2
V16 V12
V5 R7 R8
V17

V10
V21
Vendors Contract Manufacturer Plants Warehouses Distributors Retailers

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Geographic Display of Risk Pathways
Value At Risk Over Recovery Time

V9
V1 P2
P3
V3
V7
V5
V6 P4 V4
CM1
V8 V10 V21
P1

V2

CM2

V11
V12

0 0.2 $M
0.3 0.5 $M
0.6 1.0 $M
1.1 2.0 $M
19 2.1 3.0 $M
OVER 3.1 $M
HI-Viz Project: One Page Description

1. Automatically generate board-ready pictures of the

supply chain using automated data extracts from
corporate databases.

2. Automatically extract supply chain status and

performance data from corporate databases (cost, water,
capacity, inventory, lead time, revenue, carbon, etc.)

3. Visually display supply chain status and performance

information on these boardready pictures.

We have chosen SC Risk as our first status indicator to be

displayed. 20

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How can we do this?

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Two steps

1. Vanilla Network Diagram 2. Overlay Performance Metric

D2 R3
V18 V13 P1
V7
V6 R2 W1
R1
P3 V1 R4
D1
V14 V11
D2 R3 P4 D3
V19 P1 R5
CM1 W1
V15 V9 V4
V2 R4
V8
P4 D3
V20 V9 R5 D4 R6
V15 V4 P2
D4
CM2
R6
CM2 P2 V3 W2
V3 W2 V12
V16 V12
V5 R7 R8 V5
V17

V10
V21

Download Corp Data Files

- BOMs, Part Master Files Download Corp Data Files
- Supplier Master Files - Forecasts, Inventory, Costs
- Historical Shipments
Calculate Metrics
Combine, Aggregate, & Filter - Value At Risk
Rationalize & Simplify - Inventory Days of Supply

Create Network Diagram Overlay metric on Network Diagram

Create Supply Chain Map Overlay metric on SC Map

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Bills of Materials for 3 Products

BOM Level 0
(Finished
Good) BOM Level 1 BOM Level 2
A Carburetor GX
D Float GX
E Body Std
F Top Cover Std
G Float Chamber Std
H Needle Valve GX
B Carburetor LX
I Float LX
J Piston LX
E Body Std
F Top Cover Std
G Float Chamber Std
C Carburetor VX
K Air Valve Assy VX
L Diaphram VX
M Piston VX
N Float VX

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 Display as Tree Structure

A B C
parent Carburetor GX Carburetor LX Carburetor VX

D E H I E J N K
child child Float GX Body Std. Needle Float LX Body Std. Piston LX Float VX Air Valve Assy.
Valve GX

F G F G L M
Top Float Top Float Diaphragm Piston VX
Cover Chamber Cover Chamber VX
Std. Std. Std. Std.

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Display as Left to Right Material Flow Diagram

PARTS view of flows

D Float GX
F Top Cover Std.
E Body Std.
G Float Chamber Std.
A Carburetor GX
H Needle Valve GX

I Float LX
F Top Cover Std.
E Body Std. B Carburetor LX
G Float Chamber Std.
J Piston LX

N Float VX
L Diaphragm VX C Carburetor VX
K Air Valve Assy.
M Piston VX

Child travels to parent

Child travels to parent

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 Replace parts with sources

Part Part Name - Source-

Number Description Name CM1
A Carburetor GX PLANT1
D Float GX CM1
VEN1
E Body Std CM5
F Top Cover Std CM4
VEN2 PLANT1
G Float Chamber Std CM7
H Needle Valve GX VEN1
H Needle Valve GX VEN2 CM5
B2 Carburetor LX PLANT2
CM7
I Float LX CM2 CM2 PLANT2
J Piston LX CM6
E Body Std CM5
CM6
F Top Cover Std CM4 VEN6 CM4
G Float Chamber Std CM7 PLANT4
B3 Carburetor LX PLANT3 VEN8
I Float LX CM3
VEN7
J Piston LX CM8 PLANT3
CM3
E Body Std VEN3
VEN4
F Top Cover Std VEN4
G Float Chamber Std VEN5 VEN3
C Carburetor VX PLANT4
VEN5
K Air Valve Assy VX CM4 CM8
L Diaphram VX CM7
M Piston VX VEN6
M Piston VX VEN7 Diagram has been massaged to remove redundancies and
N Float VX VEN8
crossed paths.

VEN = vendor
CM = contract manufacturer
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Replace Sources with Locations

Where-
Source- Where- Made- Toronto CN
Name Made-City Country
PLANT1 Minneapolis USA Seattle US
CM1 Toronto CAN
CM5 Guadalajara MEX Edmonton CN Minneapolis US
CM4 Toluca MEX
CM7 Monterrey MEX
VEN1 Seattle USA
Guadalajara MX
VEN2 Edmonton CAN Monterrey MX
PLANT2 Cork IRE Oslo NO Cork IR
CM2 Oslo NOR
CM6 Reading ENG Reading UK
CM5 Guadalajara MEX Sao Paulo BR Toluca MX
CM4 Toluca MEX Bogota CO
CM7 Monterrey MEX Rio de Janeiro AR
PLANT3 Tokyo JAP Valparaiso CL
CM3 Seoul KOR
Seoul KO Tokyo JP
CM8 Singapore SNG
VEN3 Shenzhen CHI Guangzhou CH
VEN4 Guangzhou CHI Shenzhen CH
VEN5 Bengaluru IND
PLANT4 Bogota COL Bengaluru IN
Singapore SG
CM4 Toluca MEX
CM7 Monterrey MEX
VEN6 So Paulo BRZ
VEN7 Valparaiso CHL
VEN8 Rio de Janeiro ARG

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 Value At Risk Metric

Probability of a Disruption Event?

- Generally hard to get data (supplier failure)
- Some data on earthquakes, floods,
hurricanes

Value At Risk Metric: 3 Components Revenue

Enabled
1. How much revenue does a part-supplier
combination enable?
2. How long would it take to replace this part-
suppler combination? Value At
3. How much inventory is positioned between Risk
this suppliers and the customer? Metric
Recovery Inventory
Time Available

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 Value at Risk Example

Annual
Your Your Sales
Windings Your
Motor Pump Distributor Forecast:
Supplier DC
Plant Plant $50M
14 Days of
10 Days of 4 Days of Pump
Winding Motor Inventory
Windings Inventory Inventory
Backup
Supplier

Backup 1. Revenue Enabled: $50M / year

supplier can 2. Recovery Time: 10 weeks
be ready in
10 weeks 3. Inventory Available: 4 weeks

Value at Risk = $50M x (10 wks 4 wks) = $5.8M

yr 52 wks/yr
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Hi-Viz Diagram of End to End Network

CM1
CUST US EAST
VEN1
CUST US MID W
WH-CHIC
VEN2 PLANT1
PLANT1
CUST US WEST
CM5
CUST EUR NOR
CM7 CM2 PLANT2 WH-AMST
CUST EUR SOU
CM6
VEN6 CM4
CUST ASIA NOR
PLANT4 WH-TAIW
VEN7 VEN8
CUST ASIA SOU

CM3
PLANT3 CUST CEN AM
VEN4 WH-PANA
VEN3 CUST LATAM E

VEN5
CM8 CUST LATAM W

Value at Risk Over Recovery Value at Risk Per Week for

Time for Nodes Links
0 to $5M
0 to $0.5M
$5M+ to $10M
30 $10M+ to $20M
$0.5M+ to $1.0M
Over $1.0M
Over $20M
Hi-Viz Map End to End Network

CM2
PLANT2 CUST EUR NOR
VEN2
CM6
CM1 WH-AMST
VEN1

PLANT1 CUST
CUST US CUST EUR SOU ASIA NOR
CUST US
MID W VEN4 PLANT4
WEST WH-CHIC
CUST US
EAST
VEN3
CM5 CM7
CUST WH-TAIW
CEN AM CM3
CM4 VEN5

WH-PANA
CM8
PLANT3

CUST
LATAM E

VEN6 CUST
CUST ASIA SOU
LATAM W

VEN8 Value at Risk Over Recovery

Value at Risk Per Week for
Time for Upstream Sources
VEN7 Upstream Links
0 to $5M
$5M+ to $10M 0 to $0.5M
$10M+ to $20M $0.5M+ to $1.0M
Over $20M Over $1.0M

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Message to Board: Focus Here!

CM5

CM7

CM4

PLANT4

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Hi-Viz Supply Chain Project

To make this happen MIT CTL teamed up with Corporate Sponsors:

- Procter & Gamble

- Church & Dwight

And with Sourcemap.com

Dr. Leo Bonanni

Founder & CEO
Sourcemap.com

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Demo of Hi-Viz Software

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Hi-Viz Supply Chain Display - Example
Hi-Viz Supply Chain Display - Example
Discussion of Challenges

- Missing data (where made, recovery time)

- Suppliers Suppliers
- Next steps

Question and Answer Session

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