The term supply chain was coined to describe an enterprise-wide view of commercial activity. A company’s supply chain includes everything from design and production to transportation and warehousing to marketing and delivery. Indeed, the image of a “chain” of supply has become inadequate; today a manufacturer must manage a supply network that involves many interactions between its parts at all levels. Although the company owns only some portions of its supply network and outsources the rest, it must manage the entire network in order to maintain its competitiveness. The time scales of the decision-making in this management process range from multi-year analyses down to real-time pricing and reordering decisions. Issues to be addressed include the critical issues related to costs and profits as well as the challenges of maintaining resiliency in the face of supply and demand uncertainties and unpredictable disruptions.
In the past, firms took advantage of product architectures to gain competitive advantages in producing increased variety at lower costs, but today advances in supply-network management that improve time and responsiveness are yielding some of the greatest competitive advantages. The diverse challenges of supply-network management require diverse tools, however. Models drawing on statistical, simulation, and optimization techniques must communicate with each other, with varied data sources, and with human analysts at different levels and locations. This level of integration has been approached by costly and specialized proprietary systems, particularly at large, well-integrated companies such as Wal-Mart and Dell, but has remained out of the reach of most researchers and practitioners. A comprehensive Operations Cyberinfrastructure has great potential to bring the same benefits to enterprises at all levels, with widespread economic impacts..
The open nature of an OCI will permit much faster integration of research ideas into practice, making new supply-network management ideas available to a broader variety of companies, again with greatest benefit to relatively small ones. In addition, many enterprises, both existing and new, will take advantage of the advances through other mechanisms including the SBIR. In particular, the emerging web services standards that serve as the underpinning of an OCI will let people make quick and reliable connections between diverse analytical methods and data sources, freeing time for experimentation with new computational ideas and new software components. The most dramatic effects will be seen in the use of approaches that have previously posed the greatest challenges, such as optimization under uncertainty, distributed simulation and optimization, global optimization on noisy data, and optimization of simulations.
The steadily increasing demand for customization of products also creates challenges and opportunities for supply-network research in an OCI. While outsourcing remains profitable, it increases complexity of the supply network further; management of the interfaces between suppliers threatens to become expensive and inefficient. By dispersing engineering and production geographically, manufacturers increase the number of places their interfaces and multi-tier supply networks can break down, with consequences that include hidden logistical and inventory costs and increased lead times.
These trends have made the current product design and development process extremely iterative and communication-intensive. The manufacturers that perform a majority of the design function are reliant on suppliers while they prototype and move their products towards production. It takes significant time and cost to develop a stable, reliable supply network for a product, and heavy coordination is required between the different tiers. Once formed, these supply networks tend to be rigid and unresponsive to dynamically changing customer needs, leading to high inventory costs. The majority of these inventory costs are borne by the lower-tier suppliers who are already under pressure to cut costs. Tools developed and distributed in an OCI could enhance the flexibility, responsiveness, and efficiency of the supply network.
The increasing confluence of design, modeling, analysis, and implementation problems for complex enterprise systems creates a demand for theoretical investigations of system integration frameworks, which should form an important part of OCI research. Coordination models based on game theory, financial and econometric modeling, and control theory are having a large impact on supply chain management research, replacing earlier piecemeal studies. Another fast emerging issue, closely related to product design, is the development of design-time consumer driven supply networks. Because it incorporates a wide array of theoretical and analytical methodologies and tools, an OCI initiative will offer an ideal framework for such inter-disciplinary research.