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MITCourse1 270 ESD 273 Fall2002MW4 00 5 30Rm1 246 Logistics SupplyChainManagementPROFESSORDAVIDSIMCHI LEVI UncertaintyinDemandPipelinesIgnitesSupplyNets9thOctober2002byShoumenDatta ResearchScientistEngineeringSystemsDivision SchoolofEngineeringExecutiveDirector ForumforSupplyChainInnovationhttp supplychain mit edu innovation Disclaimer Opinionsexpressedinthispresentationarethatoftheauthor ItdoesnotrepresenttheconsensusopinionofMITasaninstitutionorotherfacultythatmaybedirectlyorindirectlyassociatedwithMITSchoolofEngineeringorMITSloanSchool Today sdiscussion UNCERTAINTY URLforpowerpointpresentationhttp supplychain mit edu innovationEducation Course1 270 ESD 273 SCMismanaginguncertainty NobelPrizeinEconomics2002 announcedtoday 09Oct2002 forhavingintegratedinsightsfrompsychologicalresearchintoeconomicscience especiallyconcerninghumanjudgmentanddecision makingunderuncertainty forhavingestablishedlaboratoryexperimentsasatoolinempiricaleconomicanalysis especiallyinthestudyofalternativemarketmechanisms BODYSCANNERBYTC2 DisruptiveTechnology InvasionoftheBodyScanners Digitallyspeaking PartoftheProcess PERSONALDIGITALPROFILE Customer HowwillIlookinthisdress Retailer WhatshouldweorderforFall Manufacturer What sthenextdemand Datamining DataMart Retailers Accessories Jewelry Shoes Shiseido Coach Harrod s M S Gucci Bally s Guerlain Polo USD DEM EURO INR YEN YUAN TRAVEL HEALTH EDUCATION ARTS MUSIC Celebrity Gallery WorldHistoryof Fashion TheWayWeWore DataWarehouse BODYSCAN eFASHION EBC B2B AnneKlein Levis Bebe Talbots AX China India Siam FABRIC SUPPLIERS Data Warehouse FABRIC BROKER INDEPENDENT DESIGN BROKER GlobalDesign WAREHOUSE MEDIA POP Tailors ContractShops Amateur s DesignForum Manufacturing TailorBroker Order IndividualTailorsOn call PreferenceSurvey SHIPPING MALL a m JuliaRoberts Financial RETURN CRM DONATE SalvationArmy CARE Goodwill eBAY Boutiques JCPenney OutletStores Amateur Models SHIPPING ERP RETAILERS MACYS NORDSTROM BLOOMINGDALES PERSONAL PROFILE SOFTWARE PERSONAL PROFILE ANALYSIS Portal Manufacturer CustomerRelationshipManagementEXPECTATIONvsRESULT Source AMRResearch1999October UNCERTAINTY Uncertainty Lackofrule basedresolution expectationvsresultFinancialImpactCostofCorrectionSideEffects Uncertainty FinancialImpactOpportunitylost unabletorampupEconomicloss unabletorampdown Source ForresterResearch Source Forrester Uncertainty CostofCorrectionResourcesInventory Uncertainty SideEffects undesirable TackleonlysymptomsNegativefallout EBMinSCMofferslittleADAPTABILITYtoSENSEandRESPOND SupplyChainEventmis Management InsulationofPlanningfromExecutionIndividualoptimisationnotSCoptimisationSmart HubandDumb SpokeConfigurationIsolationofEnvironmentofOperation Source Forrester Traditional Adaptive Source Forrester Whattodo UnderstandcustomerneedMonitorsupplyavailabilityManagesupplychainpartnerperformanceDecentralizeproblemsolvingMonitorcorrectiveactionsandfeedbackIncludemacro economicindicators EvolvingAnalyticalToolsandEarlyUsers Source Forrester PortfolioofRealOptions Source HP Forrester Uncertainty FinancialImpactOpportunitylost unabletorampupEconomicloss unabletorampdown Uncertainty Push PullCaseStudybyDSL Howtoreaddiagrams Uncertainty LeadTime Performance Performance Forsameleadtime optimizedsupplychainofferslowercost SafetyStockCostvsLeadTimeManagingFinancialCostofUncertainty Uncertainty Procurement Push PullSupplyChains TheSupplyChainTimeLine Customers Suppliers PUSHSTRATEGY PULLSTRATEGY Push PullBoundary FromMake to StockModel Configuration Assembly Suppliers toAssemble to OrderModel Configuration Assembly Suppliers PLMacauseofUNCERTAINTYinSCM Source Forrester CPLM CPFR Source Forrester PLM Source Forrester What swrongwiththisillustration Imaginationisoutoffocus Source Forrester DistributedDatainConnectedEnvironments Evolution Canthisevolutionary vision succeed Source Forrester Real timeDataLayer D2B SemanticWebwww w3c org 802 11UWB dERP Internet0Internet1Internet2 AGENTS SECURITY RealTimeDistributedDataInfra de structurewithEmbeddedAgents www w3c org TheSemanticWebBus WebVan TimBerners Lee SemanticWeb www w3c org Observation199883millionaccesstheInternetinlanguagesotherthanEnglish Projection200570 of1billionusersmaynotspeakEnglish FACT46 USbusinessrefuseint lorderbecausetheylackmeanstoprocessthem Japanese Spanish German French Chinese Dutch Korean Swedish Italian 1771 1825 1886 1939 1977 1997 IndustrialRevolution 1800 InformationEvolution 1853 1913 1969 2005 2025 RapidAdoption IntroductionofTechnology 1853 1913 1969 2025 2061 2081 Conceptualadvancesoccurabouttwiceacenturyandleadtowealthofnations Textile Railway Auto Computer DistributedIntelligence Nanotech Source NormanPoire Economist AGENTS LocatingthePush PullBoundary PLANEXECUTESENSERESPOND DEMAND EXCEPTION SupplyChainEvolvesto Customer Customer sDC MANUFACTURER RawmaterialSUPPLIERS Store Store Store Store Store Store Store Store DC DC DC Paper Medical Cotton REALTIMEePCePCdatafromRFIDTag Replenishmentneeds Confirmation Loads StoreOrders Status ImmediateReplenishmentneeds Futureshippingneeds ReplenishmentneedsdeterminedfromRFIDTaginfo IntelligentSignal PORTALS Exchange Transport CustomerInfoCenter ManufacturerHQ realtimeRFIDdata PersonalCare ConsumerTissue HealthCare InformationAgent InventoryEarlyWarningAgent TLBAgent Cross DockingAgent AgentsbasedAdaptiveNetwork ConsumptionInventoryDataDCtoMfr SupplyChainsReal timeAdaptableDemandNetworks DC DC DC Paper Medical Cotton Plant DC Plant DC Customer Store Store Store Store Store Store Store Store Industrybestnowversuswhatcanbeachieved Needtoevolve Day7Received unloaded stockedonstoreshelves SCOTT Replenishedin7days DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store ConsumerBuysSCOTT2pmDay0 FutureSC ConsumerPurchase DC DC DC Paper Medical Cotton Plant DC Plant DC Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagRead DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagDataTransmittedinRealTime DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagDataReceivedinRealTime DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagDatahelpsDetectOOSDanger DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagDatacoupledwithSmartPlanner DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagDatacoupledwithSmartPlanner DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC RFID Smart TagDatacoupledwithSmartPlanner DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC SmartPlanningseguestoTLB DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC SCOTTPaperTissuereceivedatCDC DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store FutureSC CDCShipstoStore DC DC DC Paper Medical Cotton Plant DC Plant DC Day1 Day3 Day4 Day5 Day6 Day7 Day8 Day2 Day0 Transport CustomerCenter Manufacturer Customer Store Store Store Store Store Store Store Store Replenishedin13hoursroomforimprovementtounder10hrs FutureSC RFID Smart tagdataaidsReplenishmentin13hrs DC DC DC Paper Medical Cotton Plant DC Plant DC Customer Store Store Store Store Store Store Store Store Replenishedin7days FutureSC CanyouaffordtoexcludeRFID Smart tagdata 2008 P Gshortensreplenishmentcyclefrom120daysto1day 1 Source P G Forrester 2008 P Gshortensreplenishmentcyclefrom120daysto1day 2 Source P G Forrester 2008 P Gshortensreplenishmentcyclefrom120daysto1day 3 Source P G Forrester 2008 P Gshortensreplenishmentcyclefrom120daysto1day 4 Source P G Forrester 2008 P Gshortensreplenishmentcyclefrom120daysto1day 5 Source P G Forrester 2008 P Gshortensreplenishmentcyclefr

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