U.S. patent application number 11/273542 was filed with the patent office on 2006-03-23 for supply chain architecture.
This patent application is currently assigned to iSuppli Inc.. Invention is credited to Derek Lidow.
Application Number | 20060064344 11/273542 |
Document ID | / |
Family ID | 26871646 |
Filed Date | 2006-03-23 |
United States Patent
Application |
20060064344 |
Kind Code |
A1 |
Lidow; Derek |
March 23, 2006 |
Supply chain architecture
Abstract
A supply chain network where customers, suppliers, logistics
providers, carriers, and financial institutions are all connected
to a centralized supply chain server. The server receives forecasts
from the customers detailing the orders that the customers desire.
These forecasts are analyzed by the supply chain server to ensure
that they conform to contractual agreements and do not contain
errors. The forecasts are also used to warn the suppliers of future
demands so that the suppliers can anticipate demands and plan
inventory accordingly. The supply chain server checks with the
suppliers to determine whether the forecasts can fulfilled by the
suppliers. If the forecasts cannot be fulfilled by the suppliers,
the supply chain server contacts customers and suppliers and
attempts to either redistribute the customers' demands to different
suppliers or request that customers alter their demands. Once
supplier demand issues are resolved, the forecasts are sent to the
suppliers in groups so that the suppliers need to prepare a smaller
number of large orders. The supply chain server also controls the
processes involved in distributing the product from the suppliers
to the customers including the generation and payment of invoices.
A form of financing the customers' purchases, made possible by the
novel supply chain architecture, is also disclosed.
Inventors: |
Lidow; Derek; (Santa Monica,
CA) |
Correspondence
Address: |
OSTROLENK FABER GERB & SOFFEN
1180 AVENUE OF THE AMERICAS
NEW YORK
NY
100368403
US
|
Assignee: |
iSuppli Inc.
|
Family ID: |
26871646 |
Appl. No.: |
11/273542 |
Filed: |
November 14, 2005 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10219612 |
Aug 15, 2002 |
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11273542 |
Nov 14, 2005 |
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09758509 |
Jan 11, 2001 |
6889197 |
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10219612 |
Aug 15, 2002 |
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60175868 |
Jan 12, 2000 |
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60213279 |
Jun 22, 2000 |
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Current U.S.
Class: |
705/7.31 |
Current CPC
Class: |
G06Q 10/06 20130101;
G06Q 10/06315 20130101; G06Q 10/0637 20130101; G06Q 30/02 20130101;
G06Q 10/06375 20130101; G06Q 30/0202 20130101; G06Q 10/02 20130101;
G06Q 10/087 20130101; G06Q 10/08 20130101 |
Class at
Publication: |
705/010 |
International
Class: |
G06F 17/30 20060101
G06F017/30 |
Claims
1. A method for processing customer demands received in a supply
chain network, the method comprising: electronically receiving
forecasted demands from a plurality of customers by a supply chain
server; electronically aggregating the forecasted demands into an
aggregated forecast; and sending the aggregated forecast from the
supply chain server to at least one supplier.
2. The method of claim 1, further comprising modifying the
aggregated forecast to take into account at least one of a previous
shortfall in capacity from at least one supplier and a product
return, wherein the step of sending comprises electronically
sending the modified aggregated forecast from the supply chain
server to at least one supplier.
3. A system for processing customer demands received in a supply
chain network, the supply chain network including a supply chain
server coupled to at least one customer and at least one supplier,
the supply chain server including a messaging services system and
an ERP system; wherein: the messaging system receives forecasted
demands from a plurality of the customers; the ERP system
aggregates the forecasted demands into an aggregated forecast; and
the messaging system sends the aggregated forecast to at least one
supplier.
4. The system of claim 3, wherein the ERP system modifies the
aggregated forecast to take into account at least one of a previous
shortfall in capacity from at least one supplier and a product
return, and wherein the messaging system sends the modified
aggregated forecast to at least one supplier.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] The present application is a division of U.S. patent
application Ser. No. 10/219,612, filed Aug. 15, 2002 in the name of
Derek Lidow and entitled SUPPLY CHAIN ARCHITECTURE, which is a
division of U.S. Pat. No. 6,889,197, issued May 3, 2005 in the name
of Derek Lidow and entitled SUPPLY CHAIN ARCHITECTURE, which claims
priority to U.S. Provisional Application Ser. Nos. 60/175,868,
filed Jan. 12, 2000 and 60/213,279 filed Jun. 22, 2000.
BACKGROUND OF THE INVENTION
[0002] 1. Field of the Invention
[0003] The invention relates to an improved supply chain network
and, more particularly, to a supply chain network which centralizes
many operations thereby yielding a supply chain that is more
efficient and less costly than prior art systems.
[0004] 2. Description of the Related Art
[0005] Manufacturers (hereinafter generally referred to as
"customers") and suppliers of products or services (hereinafter
collectively referred to as "products") are continuously interested
in reducing costs. Materials make up a large fraction of total
costs as do supply chain management costs. A supply chain is any
and all activities associated with defining, designing, producing,
receiving, monitoring, storing and using the components and
sub-components used in manufacturing a product.
Manufacturers/customers often find themselves paying higher prices,
being short of products in times of high demand, forecasting needs
inaccurately, and creating slow moving inventories because these
manufacturers do not have the expertise, resources or time to
manage their supply chain properly.
[0006] Direct materials account for between 35% to 70% of a
manufacturer's total costs and often constitute the largest expense
category. Lowering material costs significantly improves
profitability. For example, a company in the business of contract
electronics manufacturing could improve overall profitability by
20% to 30% from only a 1% drop in direct material prices.
[0007] Supply chain costs also constitute a significant fraction of
a manufacturer's total expenditures. For example, supply chain
costs include: planning, purchasing, inbound freight, receiving,
inventory management and carrying costs, supplier monitoring,
measurement, management, and the payment of invoices. These costs
can account for between 5% and 25% of corporate expenditures. That
estimate applies to both the manufacture and supply of the
manufacturer's components. For example a 20% reduction in supply
chain costs would significantly improve, and in many cases could
double, the profits of a given manufacturer.
[0008] A typical prior art supply chain is shown in FIG. 1.
Customers generally have two methods for procuring components and
sub-components using prior art supply chains. As shown in prior art
supply chain 50, large original equipment manufacturers ("OEMs"),
contract electronics manufacturers ("CEMs"--not shown) or customers
52 (of components) will typically buy directly from a component
manufacturer or supplier 56. This technique is known in the
industry as "buying direct". Large customer 52 places an order with
supplier 56 each time a part is needed. Supplier 56 gives the
products to a carrier 58 who, in turn, delivers the ordered
products to large customer 52.
[0009] Small customers 54 typically make purchases through a third
party distributor or agent 60. Distributor 60 purchases parts from
supplier 56 who gives the products to a carrier 62 who brings the
products to distributor 60. Distributor 60 then transfers the
products to another carrier 64 who delivers the products to small
customers 54. Other types of third party distributors use an
electronic means to hold auctions for components. However, as the
time involved in attending the electronic auction is lengthy, such
services are rarely used except for one-time, or spot component
requirements.
[0010] Many of the parties involved are not pleased with prior art
supply chains. Known supply chain networks commonly yield missed
shipments and discontinuity of component supply to a customer.
These deficiencies particularly frustrate customers in times of
"allocation" where there are shortages of key components. This
causes delays in end product shipments and corresponding loss of
revenues and profits.
[0011] Component suppliers 56 in particular are frustrated with
prior art supply chains. Changes in market conditions for these
entities' end products yield very volatile manufacturing schedules,
resulting in inefficient factory usage and higher costs. Component
suppliers 56 have also invested heavily in MRP (Materials Resource
Planning) and ERP (Enterprise Resource Planning) systems to try to
incrementally improve factory loading and inventory levels.
[0012] In these systems, component suppliers plan to provide parts
based upon production plans generated by a customer factory or
series of factories using the same system. However, these systems
often produce disappointing results because they operate only
within each individual component supplier and often only process
production plans on a weekly basis. As such, these systems
typically react slowly when compared with the rate of order
fluctuations and are unable to detect excess inventories located in
non-primary warehouses thereby resulting in excess parts being
ordered.
[0013] To solve some of these problems, some larger manufacturing
customers 52 require that suppliers 56 maintain dedicated on-site
or local consignment inventories of the products these
manufacturing customers 52 require. However, maintaining these
additional inventory locations is very costly and difficult to
control. The additional inventories also create further
inefficiencies in the use or production capacity and total
inventory.
[0014] Additionally, customers 54 are often serviced through
distributors 60 who require 7% to 35% gross margin points to manage
and cover inventory handling costs in addition to the supply chain
costs already borne by these customers 54. These distributor
margins reduce supplier's 56 profitability on small and medium
sized customers 54 and produce a tension between suppliers 56 and
distributors 60 on how or whether to limit distributor margins.
Furthermore, distribution orders cost more to administer with
special processes and systems required to manage "ship-and-debit"
pricing and stock rotations. Finally, selling and servicing
customers costs between 5% and 10% of sales--excluding marketing
and advertising costs. Suppliers 56 have difficulty finding a
pay-back for these investments.
[0015] There are payment problems in prior art supply chains as
well. In many prior art systems, products are sold to customers 52,
54 with payment terms that are ignored. For example, the customers
receive the products from suppliers 56 and then have 30 days from
delivery to provide payment to suppliers 56. Customers frequently
take advantage of this payment term and not pay until after the
term has expired, for example, 45 days from delivery. Customers
find this arrangement more desirable than taking a loan to cover
the costs of the products and paying the loan on time. By delaying
payment, the customers' balance sheets indicate a payable instead
of a loan; a more attractive view for investors. It is generally
not worthwhile for suppliers 56 to complain about a 15 day
discrepancy but the suppliers 56 lose money during those 15 days.
To solve this problem, suppliers 56 create a defacto interest for
money expected to be lost due to late payment by charging customers
more for parts. This defacto interest is clearly undesirable for
customers 52, 54.
[0016] Moreover, toward the end of accounting periods, suppliers 56
are frequently desirous to ship products ahead of schedule to
improve the appearance of respective balance sheets. Distributors
60 for the suppliers 56 are aware of this desire and consequently
require suppliers 56 to offer discounts to receive goods before
scheduled shipments. These extra discounts required by distributors
60 present yet another disadvantage of known supply chains
networks.
[0017] Thus, there exists a need in the art for a supply chain
architecture which can remove the inefficiencies referenced above
and thereby reduce the losses incurred by both customers and
suppliers in the sale and distribution of products.
SUMMARY OF THE INVENTION
[0018] A supply chain network where customers, suppliers, logistics
providers, carriers, and financial institutions are all connected
to a centralized supply chain server. The server receives forecasts
from the customers detailing the orders that the customers desire.
These forecasts are analyzed by the supply chain server to ensure
that they conform to contractual agreements and do not contain
errors. The forecasts are also used to warn the suppliers of future
demands so that the suppliers can anticipate demands and plan
inventory accordingly.
[0019] The supply chain server checks with the suppliers to
determine whether the forecasts can be fulfilled by the suppliers.
If the forecasts cannot be fulfilled by the suppliers, the supply
chain server contacts customers and suppliers and attempts to
either redistribute the customers' demands to different suppliers
or request that customers alter their demands. When supply issues
have been resolved, the customers' demands are sent to the
suppliers in groups so that the suppliers need to prepare a smaller
number of large orders.
[0020] The supply chain server oversees and controls the processes
involved in distributing the product from the suppliers to the
customers including the generation of purchase orders and invoices.
Customers pay the supply chain server and that payment is then
forwarded to the appropriate suppliers and logistics providers. If
a customer wishes to return a product, the return process is also
overseen and controlled by the supply chain server. As customers,
suppliers, and logistics providers all communicate with the supply
chain server, the novel architecture yields useful information not
available in the prior art. This information includes, for example,
customer demand propensities, supplier performance, etc.
[0021] Since the supply chain server receives customer forecasts,
an operator of the supply chain server can more confidently receive
suppliers' products ahead of a designated schedule--thereby
allowing a supplier to ship early to improve the supplier's
accounting books. Additionally, the operator of the supply chain
server can more confidently provide a customer with financing
arrangements associated with the demanded products. This
arrangement is because if the customer does not pay for the
products as contracted, the operator can withhold shipment of
future products to the customer.
BRIEF DESCRIPTION OF THE DRAWINGS
[0022] For the purpose of illustrating the invention, there is
shown in the drawings a form which is presently preferred, it being
understood, however, that the invention is not limited to the
precise arrangements and instrumentalities shown.
[0023] FIG. 1 is a block diagram of a prior art supply chain
architecture.
[0024] FIG. 2 is a block diagram of a supply chain network in
accordance with the invention.
[0025] FIG. 3 is a block diagram illustrating the modules
effectuating the supply chain network of FIG. 2.
[0026] FIG. 4 is a diagram illustrating a Demand Capture and
Validation process performed by an Order Management Module during a
regular demand request in accordance with the invention.
[0027] FIG. 5 is a diagram illustrating a Demand Capture and
Validation process performed by the Order Management Module during
an ad hoc demand request.
[0028] FIG. 6 is a diagram illustrating the processes performed by
the Planning Module in accordance with the invention.
[0029] FIG. 7 is a diagram illustrating an example of the flow of
information during the Planning Module of FIG. 6.
[0030] FIG. 8 is a diagram illustrating the processes performed
during the Planning Module of FIG. 6 when customer demand exceeds
supplier capacity.
[0031] FIG. 9 is a diagram illustrating an example of the flow of
information during the Planning Module of FIG. 6 upon receipt of an
ad hoc customer request.
[0032] FIG. 10A is a diagram illustrating the processes of the
Procurement Module in accordance with the invention.
[0033] FIG. 10B is a diagram illustrating an error routine
performed in the Procurement Module of FIG. 10A.
[0034] FIG. 11 is a diagram showing a continuation of the processes
performed in the Procurement Module of FIG. 10A.
[0035] FIG. 12 is a diagram showing a continuation of the processes
performed in the Procurement Module of FIGS. 10A and 11.
[0036] FIG. 13 is a diagram showing a continuation of the processes
performed in the Procurement Module of FIGS. 10A, 11 and 12.
[0037] FIG. 14 is a diagram illustrating the processes performed by
the Procurement Module when a customer desires to return an item
procured through the supply chain network.
[0038] FIG. 15 is diagram showing a continuation of the processes
depicted in FIG. 14.
[0039] FIG. 16 is a diagram illustrating the flow of information
and products during a Fulfillment Module in accordance with the
invention.
[0040] FIG. 17 is a diagram illustrating the production of invoices
performed by a Billing and Payment Module in accordance with the
invention.
[0041] FIG. 18 is a diagram showing the payment of invoices during
the Billing and Payment Module.
[0042] FIG. 19 is a diagram illustrating types of information and
corresponding time intervals provided by the supply chain network
in accordance with the invention.
[0043] FIG. 20 is a diagram illustrating the flow of title and
payment for products in accordance with an embodiment of the
invention.
[0044] FIG. 21 is a diagram illustrating an alternative flow of
title and payment for products in accordance with another
embodiment of the invention.
[0045] FIG. 22 is a diagram illustrating an embodiment of the
architectural set up for the supply chain architecture in
accordance with the invention.
[0046] FIG. 23 is a diagram illustrating an embodiment of a supply
chain server in accordance with the invention.
[0047] FIG. 24 is a more detailed diagram illustrating the supply
chain server environment for the supply chain server shown in FIG.
23.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
000I. General Overview
[0048] In the following description, terms describing processes and
hardware are used interchangeably as it should be clear that the
functions described could be implemented using many different forms
of hardware, software or even manually.
[0049] The invention creates a network which supports customers
requesting the same or similar products. The customers using a
supply chain network in accordance with the invention realize lower
costs and increased flexibility even in changing supply demands. In
one embodiment, the products received by customers are initially
qualified by the customers first--in that the products can be
extensively tested by a customer before the product is "qualified"
or permitted in the customer's manufacturing process. Once the
product is qualified, a defined set of interactions occur in a
particular sequence and at designated times that permit the supply
chain to be managed and well synchronized between customer and
supplier. Such a well synchronized supply chain has minimal
inventories and short reaction supply times.
[0050] Referring to FIG. 2, there is shown a general overview of a
supply chain network in accordance with the invention. Supply chain
network 70 includes customers 72 of any size. Customers 72 each
place orders with a supply chain server 74. Supply chain server 74
accumulates demand forecasts from customers 72 who are using the
same or similar products. These demands are then aggregated and
supply chain server 74 determines the best method for distributing
all the products requested from any approved suppliers 76 to any
requesting customers 72.
[0051] Although supply chain server 74 will typically be comprised
of a computer, it will be referred to throughout the description as
an entity capable of entering into a contractual relationship. It
should be understood that in such descriptions, the operator of the
server will be the real party in the contract. It should also be
understood that supply chain server 74 need not be implemented as a
computer.
[0052] Since the customer orders are aggregated by supply chain
server 74, suppliers 76 need to assemble a relatively smaller
number of orders compared with the number of customers and shipment
for the entire network of customers. In one embodiment the products
are then picked up by a freight company as designated by a
logistics provider 78 (hereinafter "3PL"--third party logistic
provider) and taken to a location (which can be the same location
as where the shipment was picked up) where instructions are
provided by supply chain server 74 for the distribution of the
products. These instructions indicate how the order is to be broken
down and re-assembled in the exact quantities required by the
specific customers. Breaking down the order is called a cross-dock
operation and is performed at a cross-dock point. Supply chain
network 70 can work with any number of customers, suppliers and
logistics providers. In another embodiment, the customer or the
supplier point performs the activities ascribed to the Logistics
Provider.
[0053] By deciding later in the distribution process to whom and
where products will be shipped yields maximum flexibility, minimum
overall cycle time, and eliminates the costly need to manage a
customer's order within the supplier's order management system.
This is advantageous because order management costs can be quite
substantial for suppliers managing large numbers of customers and
large numbers of different part types and numbers. The present
invention provides economic advantages, as the cost of managing one
order for one part is generally much higher than disassembling a
larger order of many parts into specific quantities.
[0054] After the products are disassembled, the orders of each
individual customer may be shipped to their final destinations
using conventional means and carriers. For large quantities of
products coming from many different suppliers and going to many
different customer locations, the cross dock may be strategically
located so as to minimize the overall shipping and handling
costs.
[0055] Referring to FIG. 3, the operations of supply chain network
70 can be broken up into five main modules:
1) Order Management 40--collecting customer forecasts and
determining if the requests are valid;
2) Planning 42--determining if customer demands exceed supply--and
providing solutions if demand does exceed supply;
3) Procurement 44--execution of the purchasing process;
4) Fulfillment 46--transporting the products from suppliers to
customers;
5) Billing and payment 48--generation and payment of invoices.
[0056] Although a typical customer demand will typically follow the
order of the modules shown in FIG. 3, the Modules operate
independently and sometimes concurrently as will be explained more
fully below. For example, the Order Management for one day's
demands may take place at the same time as the Fulfillment of a
previous day's demands. Prior art supply chain systems handled many
of these functions as completely independent events without
communication between each functional module. For example,
fulfillment was handled independently of supplier payments or even
order management. In addition, information management refers to
incorporated into each of these modules as would benefit its users.
Information management refers to the accumulation of useful supply
chain management information that is beneficial to customers and
suppliers.
[0057] The invention manages all these activities for many
customers and many suppliers simultaneously. This enables the
invention to perform these tasks more efficiently for all parties.
To illustrate this point, consider a customer X who receives a
large rush order requiring certain parts from suppliers A and B but
neither supplier A nor B have the inventories to meet the needs of
the customer. By handling many customer and supplier supply and
demand requirements simultaneously, a supply chain architecture in
accordance with the invention can determine that a supplier C has
extra parts of the same type demanded and that another customer Y
plans to use either supplier B or C for his needs. The supply chain
server can then arrange for supplier C to ship extra parts required
by customer Y so that supplier B can ship extra parts required by
customer X.
[0058] In one embodiment, supply chain network 70 is implemented
using a cadence where all transactions are linked to one another
and performed on a regular basis. For example, all customers using
supply chain network 70 could order all parts within a certain
commodity family on a given day of the week. This creates a large
economy of scale in the fulfillment activities that is passed to
users of the network. Frequently, production requirements are
planned over the weekend thereby causing Monday to be a desirable
day to start the Order Management cycle. As such, in one embodiment
of the invention, Planning takes place on Monday night, Fulfillment
of all parts on Tuesday, and Billing on Tuesday night. Some parts
are used in very high volumes or are perishable. In accordance with
the invention, these parts could be planned, ordered, and fulfilled
on a daily cadence even marked off in hours. In prior art
techniques, many dates needed to be entered, tracked and changed
according to the expected delivery status of the product ordered.
This is a very costly and time consuming task as the sequence of
information, products, and currency can change depending upon the
needs of the specific customers, suppliers and logistics providers
that are using the network.
[0059] Product usage by customers is often determined by an of ERP
computer system on a weekly basis, the supply chain network in
accordance with the invention realizes order, planning, and
delivery times that cumulatively considerably less than one week.
This system enables customers to significantly vary production
plans at the end of the work and still be able to receive the
necessary parts without using a large quantity and assortment of
parts in a costly inventory. This also eliminates the need to
manage a multitude of dates in the ERP system.
[0060] The individual modules will now be explained in detail with
continuing reference to FIG. 3. Note again that portions of these
modules operate concurrently.
00II. Order Management
[0061] The Order Management Module provides an environment where
supply chain server 74 directly interacts with customers 72. This
Module includes the processes required to capture customer demand
and the validation and approval required to process that customer
demand.
[0062] Customers 72 submit their demand for desired products to
supply chain server 74 in multiple ways. For example, in a
preferred embodiment, customers 72 submit their requests using a
thirteen week forecast, week 0 daily callouts, and ad hoc requests.
Each week, customers 72 submit a thirteen week forecast for each of
the Planning/Ship-to locations specified in their contract with
supply chain server 74. For high volume and volatile commodities
such as DRAMs (dynamic random access memories), customers 72 also
communicate their week 0 (i.e. current week) demand by sending
daily callouts. In addition, customers 72 also have the ability to
submit any unforecasted demand to supply chain server 74 by sending
an ad hoc request. Such an ad hoc request is an order that no
supplier has been prepared to receive as it was not forecasted or
was not within forecasting tolerances defined in contractual
arrangements between suppliers and customers or defined by
contracts for the network. An ad hoc order is therefore more likely
to be unfulfilled within a standard cadence without intervention
from human Planners--discussed below.
[0063] Once customer demand is received, it is validated by the
Order Management Module against contract terms and details outlined
during an initial customer set-up process. This validation may
include verifying that the forecast is complete, ensuring that
every part number exists in the supply chain server system, and/or
that all required information is complete and accurate. If a
customer demand is invalid, abnormal, or incomplete, supply chain
server 74 notifies the customer on a exception basis that something
is wrong with their request and a resolution process is initiated.
Examples of the analysis that the Order Management Module may
perform and thereby improve the validity of the forecasts received
include, but are not limited to:
[0064] identifying major shifts relative to previous weeks'
forecasts;
[0065] identifying major cumulative shifts in buying patterns;
and
[0066] identifying requests outside agreed upon capacities.
[0067] Supply chain server 74 or Planners can also check supply and
demand requirements relative to known customer events such as
start-up, end-of-run, and plant shutdowns. Planners are employees
of the operator supply chain server 74 who intervene when supply
chain server 74 is unable to fulfill all the unconstrained demand
with available supply as is described below. Planners contact
customers, using for example, e-mail, and suppliers and suggest
adjustments to their respective production plans to create a better
supply and demand balance for all parties. Server 74 notifies
Planners of these conditions using exception reporting. Planners
can use a Planner Supply Tool (discussed below) which provides
valuable and unique information produced by supply chain server 74.
Planners can thus make better suggestions on how supply and demand
can be balanced than that which could be performed by a customer or
supplier on their own.
[0068] In response to an invalid demand, supply chain server 74
sends e-mail or other message alerts to all potentially impacted
parties, including the employees of the supply chain server (i.e.
Planners). Such message alerts can include, but are not limited to,
issuing "Red light" or "Yellow light" alerts to depict relative
importance and immediacy of attention required. Examples of such
alerts are shown below. Clearly other criteria could be used to
produce an alert message.
Nomenclature
N.sup.a.sub.b=Forecast made on week `a` for quantity to be
delivered on week `b` where
b.gtoreq.a
K.sub.c=Capacity available on week c
Weeks 0-13 Abnormalities:
Yellow Lights
For all: a, a-1, a-2, . . . , a-13
0.8<.SIGMA. N.sup.a.sub.b/.SIGMA. N.sup.a-1.sub.b-1<1.2,
summed for 0.ltoreq.b-a.ltoreq.13
(no more than 20% change in total requirements from week to week)
and
0.75<.SIGMA. N.sup.a.sub.b/max(.SIGMA. N.sup.a.sub.b), summed
for 0.ltoreq.b-a.ltoreq.13
(no more than 25% upside volatility over the past 13 weeks)
.SIGMA. N.sup.a+1.sub.b+1/min(.SIGMA. N.sup.a.sub.b)<1.25,
summed for 0.ltoreq.b-a.ltoreq.13
(no more than 25% downside volatility over the past 13 weeks)
Weeks 9-13 Abnormalities:
Yellow Lights
For b=a+9, 10A, 11, 12, 13
0.8<N.sup.a.sub.b/N.sup.a-1.sub.b-1<1.2
(no more than 20% change in requirements from week to week)
Weeks 7, 8, 9 Abnormalities:
Yellow Lights
For b=a+7, 8, 9
0.8<N.sup.a.sub.b/N.sup.a-1.sub.b-1<1.2
(no more than 20% change in requirements from week to week)
Red Light
N.sup.a.sub.b>K.sub.b
(no week's requirement exceed capacity)
Weeks 0-6 Abnormalities:
Yellow Lights
0.8<.SIGMA. N.sup.a.sub.b/.SIGMA. N.sup.a-1.sub.b-1<1.2,
summed for 0.ltoreq.b-a.ltoreq.6
(no more than 20% change in total requirements from week to week)
and
For b=a+0, 1, 2, . . . , 6
0.9<N.sup.a.sub.b/N.sup.a-1.sub.b-1<1.1
(no more than 10% change in requirements from week to week)
Red Lights
N.sup.a.sub.b.ltoreq.K.sub.b
(no week's requirement exceed capacity)
or
0.7<.SIGMA. N.sup.a.sub.b/.SIGMA. N.sup.a-6.sub.b<1.05,
summed for 0.ltoreq.b-a.ltoreq.6
(no more than 30% unused requirement compared to what was started
in production 6 weeks ago, and no more than 5% over)
Weeks 0, 1, 2 Abnormalities:
Red Lights
For b=a+0, 1, 2
0.95<N.sup.a.sub.b/N.sup.a-1.sub.b-1<1.05
(no more than 5% change in requirements from week to week)
[0069] Customer credit history and approval may also be integrated
as part of the Order Management Module. After demand has been
validated and the credit of the customer has been checked, the
demand is sent to the Planning Module. Demand for customers on
credit hold can be sent to a suspend file for action by an Account
Manager.
[0070] An exemplary embodiment of the Order Management module will
now be explained. Referring to FIG. 4, there is shown a demand
capture and validation process performed by the Order Management
module during a regular demand schedule. During a regular demand
schedule, supply chain server 74 receives 204 a thirteen week
customer forecast 200 and week 0 daily callouts 202 from customers
72. The forecasts may be from a plurality of customers or even from
a plurality of sources within a single customer. Receiving circuit
204 may capture customer demands through, for example, an EDI
(Electronic Data Interchange) forecast, an e-mail (e.g. with an
EXCEL spreadsheet), an EDI purchase order ("PO") or through XML
(extensive markup language) communication. Receiving circuit 204
may also capture specific services which may not be specified in
the customer contract. For example, expedited delivery, special
labeling, packaging, etc., all may be captured.
[0071] Supply chain server 74 converts 206 the customer demands
200, 202 into a standard format used by supply chain server 74 to
analyze the customer demands. If there are problems with conversion
206, an error routine 208 is performed to cure all technical
difficulties. In a preferred embodiment, all such technical
difficulties should be resolved by the end of the business day.
Thereafter, a delay circuit 210 ensures all the converted demands
are stored and the required functional validations are performed by
the end of the business day. Such a delay allows server 74 to
accumulate demands (200, 202) for all customers.
[0072] A collect customer information circuit 212 compares the
converted customer's demands with the corresponding customer
contract 214 and with current customer product information 213
regarding the customer's products. Information 213 includes, for
example, approved suppliers, specification revisions levels,
etc.
[0073] A validation circuit 216 determines whether the converted
demands are valid. Validation circuit 216 detects, for example,
whether the demanding customer is actually a customer of supply
chain network 70. Validation circuit 216 also detects whether
customer forecast 200 is complete in that there is one forecast for
every planning/ship-to location and part number combination, and
that every part number has a specified quantity. Finally,
validation circuit 216 may verify that the requested part number
relates to a valid part contracted between customer 72 and the
entity running supply chain server 74.
[0074] If validation circuit 216 determines that a particular
customer demand is not valid, an error routine 218 is performed
where a notification is sent to an Account Manager to resolve the
outstanding issues. The Account manager is used to maintain a
current standing for all customers by evaluating their payment
history. Supply chain server 74 then sends the customer 72 an
exception notification to inform the customer that the demand was
incomplete in some way. The exception notification itself is stored
in a suspend file until it is acted upon. If the customer demand is
valid, supply chain server 74 checks 220 the credit status of the
customer by referring to the customer's credit history 222. If the
customer's credit standing is approved at 224, supply chain server
74 branches to the Planning Module (shown in FIG. 8). If the credit
standing is not approved at 224, an error routine 226 is initiated
where the Planner, the Account Manager and the Credit Manager
attempt to form a resolution of the problem. Late payments or
delinquent accounts are monitored by the Credit Manager. All
customer demands with denied credit are stored in a credit suspend
file. If a customer demand is denied because of bad credit, a
notification is sent to the Account Manager, the Credit Manager,
and the Planner informing them of the customer's intent to buy. In
such a situation, the Planner can view the customer's demand but is
not obligated to actually implement the planning until the credit
issue is resolved.
[0075] For an ad hoc demand, the process flow of the Order
Management Module is as shown in FIG. 5. Referring to FIG. 5, as
with a regular customer forecast of FIG. 4, supply chain server 74
receives 230 an ad hoc demand 232 and converts 234 ad hoc demand
232 into a standard format as explained above. Again ad hoc demand
232 can be captured via e-mail with, for example, an EXCEL
spreadsheet or an EDI PO. Additional services, which were not
specified in the customer contract, are also captured--such as
expedited delivery, special labeling or packaging. Unlike with a
regular customer forecast, a field is established (not shown) to
identify the ad hoc demand to track order billing information. This
field may optionally be used to generate an additional charge for
ad hoc orders. If there are problems in converting the customer
demand to a standard format, an error routine 236 is performed to
cure all technical difficulties. In a preferred embodiment, all
such technical difficulties should be resolved by the end of the
business day.
[0076] Thereafter, a delay circuit 238 ensures all the converted
demands are stored and the required functional validations are
performed by the end of the business day. A collect customer
information circuit 240 performs the validation by compiling the
converted customer's demands and comparing them with customer
contract 214 and customer product information 213.
[0077] A validation circuit 244 determines whether the converted
demands are valid. Validation circuit 244 detects, for example,
whether the demanding customer is actually a customer of supply
chain server 70. Validation circuit 244 also detects whether the
requested part number is a valid part contracted for between
customer 72 and supply chain server 74. Unlike with a normal
forecasted demand, no validation is necessary to determine if ad
hoc demand 232 is complete as it is an unforecasted demand and can
include either one or more customer part numbers.
[0078] If validation circuit 244 determines that the customer
demand is not valid, an error routine 246 is performed where a
notification is sent to the Account Manager to resolve the
outstanding issues. Supply chain server 74 then sends customer 72
an exception notification to inform the customer that the demand
was incomplete in some way. The exception notification itself is
stored in a suspend file. If the customer demand is valid, supply
chain server 74 checks 248 the credit status of the customer by
referring to the customer's credit history 250. If the customer's
credit standing is approved at 252, supply chain server 74 branches
to the Planning Module. If the credit standing is not approved at
252, an error routine 254 is initiated where the Planner, the
Account Manager and the Credit Manager attempt to form a resolution
of the problem. All customer demands with denied credit are stored
in a credit suspend file. If a customer demand is denied because of
bad credit, a notification is sent to the Account Manager, the
Credit Manager, and the Planner informing them of the customer's
intent to buy.
[0079] In this way, the Order Management Module of supply chain
server 74 uses a forecast system to replace the purchase order
system that was used in the prior art. In prior art supply systems,
suppliers did not see forecasts and could not determine whether a
forecast was contrary to a contractual agreement or whether there
was an undesired error in the forecast. The supplier only saw what
a particular customer gave the supplier. Even if the supplier used
an MRP system, MRP demands frequently vary significantly and
suppliers did not have the ability to review these demands to
ascertain unusual or unexpected requests. Suppliers thus often used
replenishment algorithms to replenish their stock as they were
never certain as to the expected amount of depletion of the
stock.
[0080] The invention overcomes these problems by reviewing the
customer forecasts for consistency with contractual agreements and
with prior forecasts. The invention thereby produces continued
delivery and performance thus reducing the amount of undesired
scrap material produced when suppliers have excess inventory.
Suppliers benefit from the supply chain architecture because demand
volatility is minimized. This is due to the accumulation of the
demand forecasts and filtration systems reviewing the demands.
Suppliers can also replenish their inventories with more certainty
as they are now given a forecast of customer demands from many
customers a few weeks in advance. In high volatility demand
industries such as demands for electronic components, prior art
supply chains could not work based upon customer forecasts because
a 50% change in demand from one week to the next was possible. As
prior art supply chains took too long to deliver a product to a
customer, they could not keep up with these highly volatile
demands. However, the supply chain architecture of the invention
enables much quicker delivery (e.g. within one week) so that
forecasted based customer demands are possible.
[0081] The Order Management Module also provides customers with the
ability to check the status of an order. A typical customer may be
interested in knowing exactly what product he is getting and when
that product is on its way. Listed below are some typical events
that may be tracked by supply chain server 74. In each of these
notifications, information may be sent to supply chain server 74 so
that an extranet of supply chain server 74 (the hardware of supply
chain server 74 is discussed more completely below) can be updated
accordingly.
Order Release Notification
[0082] An order release notification provided by the Planning
Module may be generated after a specific order is released to the
supplier 76 or suppliers (one customer order may be fulfilled by
several suppliers). This event may be used to inform customer 72
that their order has been reviewed and passed on to the suppliers
who are responsible for fulfilling the order. The Planning Module
then updates the Extranet at the time of forecast release to the
Suppliers.
Shipment Pick Up Notification
[0083] A shipment pick up notification may be sent to supply chain
server 74 by 3PL 78, indicating that a carrier has picked up a
product from a given set of suppliers 76. This event provides
supply chain server 74 with information used to monitor supplier 76
and 3PL 78 performance. This event also captures information that
can be compared against the supply plan to identify discrepancies
between expected and actual supplier shipments.
Cross-Dock Arrival Notification
[0084] A cross-dock arrival notification may be sent to supply
chain server 74 by 3PL 78, indicating that a product has arrived at
the cross-dock. This event also provides supply chain server 74
with information to continuously 3PL performance.
Shipment Notification
[0085] A shipment notification may be sent to supply chain server
74 by 3PL 78, indicating that the order is on its way to customer
72.
Customs-In Notification
[0086] When applicable, a customs-in notification may be sent to
supply chain server 74 by 3PL 78, indicating that a product is in
customs.
Customs-Out Notification
[0087] When applicable, a customs-out notification can be sent to
supply chain server 74 by 3PL 78, indicating that a product is out
of customs.
Proof of Delivery (POD) Notification
[0088] A POD and final notification can be sent to supply chain
server 74 by 3PL 78, indicating that a customer shipment has been
delivered to the specified locations.
Flow Monitoring
[0089] Server 74 can monitor the flow of products through a
bottleneck or pinch point in the supply chain. For example, it may
be difficult to book a flight to a particular destination or to
make it through customs at a particular city. A notification may be
sent any time parts are bumped from a flight or when the parts make
a crowded flight. A notification can be sent to a supplier's
production line as well.
0III. Planning
[0090] The supply chain network Planning Module is responsible for
matching a source of suppliers 76 to meet customer demand and for
initiating the Fulfillment Module. This capability also serves as a
vehicle to capture vital, real-time data on: industry trends,
commodity/product trends, customer forecast accuracy, and supplier
performance. This data constitutes the basis for many of the daily
management reports and additional expert services that supply chain
network 70 offers to its suppliers 76 and customers 72.
[0091] The long term planning function of the supply chain network
70 may be performed manually since it does not need to be performed
on short notice or with high frequency. Short term planning, within
manufacturing and materials procurement lead times, however, should
be automated as it is performed very frequently. The results of the
short term planning should then be executable within a matter of
hours or minutes, with great accuracy. Otherwise, the plans may no
longer apply to the fast paced change characteristic of many
markets today.
[0092] The Planning Module may be triggered by any of a multiple
number of events. An exemplary embodiment of these events includes
the receipt of a customer's planning period (e.g., quarterly or
thirteen week) forecast, the receipt of a daily forecast for a week
0 demand, the receipt of an ad hoc order (unforecasted demand) from
a customer, a supplier's de-commit at the time of shipment (short
shipment), or the delayed replacement of returned parts. All of
these possibilities will be discussed below. In all of these
circumstances, the process depends on multiple inputs such as:
demand information from the customer, customer preferences for
suppliers (if any), current capacity information from the supplier,
tables cross-referencing customer parts to other similar parts used
within supply chain network 70, and tables cross-referencing part
numbers used in supply chain network 70 to supplier part numbers.
An example of such tables can be found in co-pending application
Ser. No. 09/704,643 filed on Nov. 2, 2000 for a SYSTEM AND METHOD
FOR GENERATING A CROSS REFERENCE GUIDE, the entirety of which is
hereby incorporated by reference.
[0093] As discussed above, in a preferred embodiment, each week,
customers 72 submit a thirteen week demand forecast for each of the
parts customers 72 will need over that time period. In the Planning
Module, supply chain server 74 manages these forecasts and the
demands are consolidated, translated into supplier part numbers,
and transformed into specific supplier requirements. Supply chain
server 74 achieves this transformation via demand aggregation,
rough cut capacity matching and supply plan optimization. Server 74
may also extrapolate forecasts based on expected demand and
historical data from customers 72.
[0094] Supply chain server 74 performs aggregation by accumulating
demand for products made using the same or similar supplier
manufacturing processes. Since customers, and often suppliers, like
to assign different part numbers to the same or similar products,
aggregation by trying to match identical part numbers is generally
ineffective. However, as suppliers aggregate customer orders into
MPUs, or Master Planning Units (sometimes also referred to as
Master Planning Families), to schedule their internal production
facilities, supply chain server 74 uses these same supplier defined
MPUs to perform its aggregation.
[0095] Supply chain server 74 performs rough cut capacity matching,
by first assigning aggregated demand to particular suppliers that
customers 72 have determined as their preferred suppliers. Each
customer 72 will have its own definition of a preferred supplier
and supply chain server 74 retains this information in its data
banks for each customer part number. Supply chain server 74 tests
to see if this default assignment of demand to each preferred
supplier falls within the supply capacity constraints given by
suppliers 76. Any demand on a given supplier in excess of the
supplier's capacity constraints is re-assigned by supply chain
server 74 to another supplier, based on customer second-choice
preferences or other algorithms the network uses. Supply chain
server 74 uses this iterative approach to determine a rough cut
allocation of demand to the available supply.
[0096] Supply chain Planners may be used to review the rough cut
capacity match to determine if any intervention is required to
perform supply chain optimization. Since supply and demand of many
types of components are very volatile and change on very short
notice, Planners may wish to intervene to make manual adjustments
to the rough cut capacity match. As an example of such an
intervention, often suppliers of leading edge components suffer
from periodic yield problems where they cannot produce their stated
capacity for some period of time. In such an instance, supply chain
server 74 will be informed by a supplier, through an electronic
message, telephone call, or an ASN (advanced ship notice), that
fewer parts than expected had actually been shipped. Supply chain
Planners then, using extensive information available to them on the
Supply chain network 70, decide how best to re-allocate demand
products, either by manually over-riding the system, or by entering
new parameters into the system. This results in some demand
reduction at the impacted supplier and increased demand at other
suppliers. Thus, supply chain network 70 can be controlled so the
Planner can feel more secure that all the supply chain network's
customers will receive their parts as expected. Similarly, it
sometimes may be in the customer's best interest to allocate some
demand to a non-preferred supplier in order to foster a more
competitive market-place, and the supply chain Planners may shift
some demand to optimize supply chain network 70 in this way.
[0097] The result of supply chain optimization is a supply plan
that effectively meets all customer demand within the suppliers'
capacity constraints. The demand/supply matching process may be
executed on a daily basis during week 0 for certain volatile
commodities (i.e., DRAM). After confirming their ability to support
this plan, suppliers are ready to execute the week 0 demand and
initiate the fulfillment process in the Fulfillment Module.
Suppliers may also be required to follow defined production or
inventory management protocols relating to demanded products.
[0098] On occasion, a customer may place an ad hoc order with
supply chain server 74 for quantities or material not originally
included in the customer's weekly forecast. In such an event,
capacity availability to support the new demand is investigated by
Planners. The Planner identifies, when possible, source(s) for the
new request and initiates the fulfillment process in the
Fulfillment Module.
[0099] If a supplier 76 is unable to meet its commitment (short
shipment), the Planner may act as an intermediary between the
customer and supplier to resolve the situation. If necessary, the
Planner will identify alternate sources of supply and restart the
Fulfillment Module. If material is returned to the supplier and
replacement parts are needed at a later date, the Planner adjusts
future demand to reflect the need for the replacement parts.
[0100] The transactional nature of these processes provides supply
chain network 74 with information critical to some of the value
added services it may offer. This information includes:
customer/industry buying patterns, customer forecast accuracy,
supplier performance, and product transitions. Such information may
be made available as is discussed in the Information Management
section below.
[0101] Referring to FIG. 6, there is shown the flow of information
during operation of the Planning Module. A plurality of customers
72 (two are shown in the figure), a plurality of suppliers 76 (two
are also shown), a 3PL 78 and a carrier 96 are connected to supply
chain server 74. The Planning Module begins with suppliers 76
sending previous weeks' capacity exceptions 98 regarding supply
shortfalls and customers 72 sending forecasts 100 to supply chain
server 74. Forecasts 100 are adjusted to take into account previous
weeks' returns which were not immediately replaced and not yet
reflected in the forecast. (See the discussion in the Procurement
Module below). Supply chain server 74 receives these inputs 98, 100
and performs a validation 102 of the demands made by customers 72
in forecasts 100.
[0102] As discussed above in the description of the Order
Management Module, supply chain server 74 performs an evaluation
104 of the variability of forecasts 100 and issues exception
notifications 106 when the variability of the forecasts do not
conform to defined parameters. The part numbers requested by
customers 72 are converted 108 to corresponding supply chain
network part numbers. Supply chain server 74 evaluates 110 the
demand variability of supply chain network part numbers. As with
customer evaluation 104, supply chain server 74 determines the
overall demand variability. This calculation is useful in that,
even though each individual customer may avoid exceeding allowed
tolerances, the aggregation of all customer requests may exceed
total supply especially if many customers order close to their
allowed limits. Such ordering may cause overall depletion of
suppliers' products which may take some time to restore. The supply
chain network part numbers are then converted 112 to corresponding
supplier part numbers.
[0103] The capacity of suppliers 76 is validated 114 to determine
if there are any capacity issues involved with the forecasts 100 of
customers 72. As is indicated at 115, this process starts with the
current week 0 demand and iterates through the week 12 demand. Any
capacity issues are resolved 116 by sending a notification 118 to
suppliers 76 and a notification 120 to customers 72. Customers 72
also receive an abort code 122 which enables customers 72 to send
an optional abort 124 of part or all of forecast 100. Supply chain
server 74 then resolves all demand issues 126 with suppliers 76 and
control branches to Procurement Module 44 of FIG. 10A. Such an
abort would then be displayed if the customer accesses its account
through supply chain server 74 so that the customer knows that the
order for the particular parts was aborted. These processes will
now be explained in detail by way of an example.
[0104] Referring now to FIG. 7, there is shown the processes
performed by supply chain server 74 during a normal planning
scenario. In the Planning Module, supply chain server 74 receives
information from the Order Management Module (discussed above)
regarding customer forecasts. Supply chain server 74 then
consolidates 130 all validated customer requests. This
consolidation includes grouping all customer forecasts into one
large demand file (not shown) based on customer part and number.
The validation itself was described in the Order Management module.
Briefly, the validation includes determining whether the customer
demand is invalid under contract terms, incomplete, or abnormal. If
there are problems with the validation, an error process 132 is
performed. Error process 132 is also explained more fully above. In
brief, supply chain server 74 communicates with the customer having
the validation problem to understand and resolve demand changes.
This may include adjusting the demand quantities for a specific
part number. Any changes are then reflected in an adjusted
forecast.
[0105] The consolidated demand file is then analyzed 134 to
identify corresponding supply chain network part numbers and
suggested suppliers to provide the parts corresponding to the
supply chain network part numbers. The supplier identification is
based upon contracts negotiated with the customer as discussed
above. In analyzation 134, a unique identifier is assigned to
represent the demand for each part from each customer during each
week. These identifiers are used to create an audit trail for each
demand. Analyzation 134 also evaluates forecasts 100 from the
previous week's demand to determine exception conditions--as was
discussed more fully above in the description of the Order
Management Module.
[0106] Supply chain server 74 then converts 136 the supply chain
network part number of the consolidated demand file into
corresponding supplier part numbers. This conversion can be done
using the customer part number as well. The consolidated demand
file is then aggregated 138 to produce supplier MPUs based upon
contractual factors between supply chain server 74 and suppliers
76. The consolidated demand file is then validated 142 based upon
the capacity of suppliers 76 and contractual provisions between
supply chain network 74 and suppliers 76. These contractual
provisions relate to any contractual capacity or supplier freeze
horizons which may be enabled based upon the consolidated demand
file. Finally, supply chain server 74 queries 144 whether the
aggregated customer demand is greater than the supplier capacity.
Supplier capacity may be determined from data supplied by suppliers
to server 74 or by suppliers 76 allowing access to their respective
databases by server 74. If the demand is not greater than the
capacity, then supply chain server 74 branches to step 330
explained with reference to FIG. 10A. If the demand is greater than
the capacity, then supply chain server 74 branches to a constrained
supply planning routine 148 as is shown in FIG. 8.
[0107] Referring to FIG. 8, constrained supply planning routine 148
first redistributes 150 the customer demand in an attempt to ensure
that there is no resultant imbalance between demand and supply.
This redistributing is performed using an iterative process and a
Planner using the Planner Tool (explained below with reference to
FIG. 24) to determine alternate sources of supply in light of the
suppliers' capacity and contractual frozen horizons. Supply chain
server 74 then queries 152 whether the new resultant demand is
greater than the suppliers' capacity. Again, if the demand is not
greater than the capacity, supply chain server 74 branches to 330
in the Procurement Module. Otherwise, supply chain server 74
branches to supplier intervention 154. At supplier intervention
154, supply chain server 74 communicates with suppliers 76 to
ascertain the situation causing the supplier's capacity to not
equal the demand (e.g. raw material constraints or burst capacity
issues) and evaluates possible alternatives (e.g. the potential to
build ahead or store for future capacity increases). This may
produce a new supplier capacity.
[0108] After contacting the supplier in supplier intervention 154,
supply chain server 74 queries 156 whether the new capacity is less
than the customers' demand. Again, if the demand is not greater
than the capacity, supply chain server 74 branches to 330 in the
Procurement Module. Otherwise, supply chain server 74 branches to
customer intervention 158. In customer intervention 158, supply
chain server 74 communicates with customers 72 to ascertain any
possible customer flexibility (e.g. part substitutions, early or
postponed delivery) to thereby produce a new customer demand. After
contacting the customer at customer intervention 158, supply chain
server 74 queries 160 whether the new customer demand is greater
than the suppliers' capacity. Again, if the demand is not greater
than the capacity, supply chain server 74 branches to 330 in the
Procurement Module. Otherwise, supply chain server 74 branches to
an allocate supply routine 162.
[0109] In allocate supply routine 162, the parts which actually are
available from suppliers ("constrained parts") are allocated
equally among the demanding customers and the forecasts of the
customers are altered accordingly. In such an event, all demanding
customers may receive an equal amount of the constrained parts, or
the demanding customers may receive a pro rata share of the
constrained parts based upon how many parts a particular customer
requested in relation to how many parts other customers requested.
Thereafter, supply chain server 70 branches to 330 in the
Procurement Module.
[0110] Aside from the normal planning scenario performed by supply
chain server 74 in response to customer forecasts, as was detailed
in FIGS. 7 and 8, the Planning Module can also process ad hoc
customer demands. Referring to FIG. 9, there is shown the processes
performed by supply chain server 74 in response to an ad hoc demand
from customers. As with a typical order, supply chain server 74
receives a customer demand file from the Order Management Module.
The demand file is then analyzed 166 to identify corresponding
supply chain server supply numbers and suggested suppliers to
provide the parts corresponding to the supply chain server supply
numbers. The supplier identification is based upon contracts
negotiated with the customer regarding preferred suppliers as was
explained above. In analyzation 166, a unique identifier is
assigned to represent the demand for each part from each customer
during each week.
[0111] Supply chain server 74 then converts 168 the supply chain
server supply number of the demand file into corresponding supplier
part numbers. This conversion can be done using the customer part
number as well. Thereafter, in an identification circuit 170,
supply chain server 74 communicates with suppliers 76 and
identifies various suppliers who may be able to provide an
alternate supply for the ad hoc demand.
[0112] Thereafter, supply chain server 74 modifies 172 week 0
supply forecasts to produce a modified forecast 178 that reflects
new quantities for both suppliers and customers. The modified week
0 forecast is also sent to the Procurement Module discussed below.
Supply chain server 74 sends 174 modified forecasts 178 to
suppliers along with a unique identifier assigned to represent a
specific week's demand for each supplier--similar to a purchase
order number. Finally, supply chain server 74 sends 176 documents
180 to 3PL 78 including pickup and delivery instructions for the ad
hoc demand. The ad hoc demand orders will be sent directly to the
customer and will generally not be sent through the cross dock
described below.
[0113] Thus, by receiving and processing customer forecasts from a
plurality of customers, and evaluating these forecasts with respect
to an aggregation of suppliers' capacities, the Planning Module can
produce a more effective and useful supply plan than that available
in the prior art. Moreover, as the network is in contact with a
plurality of suppliers, the Planning Module can shift allocation of
customers' demands among suppliers to ensure that these demands are
satisfied.
00IV. Procurement
[0114] The Procurement Module executes the purchasing process. The
focus of this function is on the purchase-to-pay cycle, including
validation of the accuracy and timeliness of the order fulfillment
process (the Fulfillment Module will be discussed more completely
below). Additional areas covered by Procurement include
communicating the supply order to suppliers (data interface) and
reverse logistics.
[0115] Reverse Logistics is the process of moving products from
their typical final destination to another point, for the purpose
of capturing value otherwise unavailable, or for the proper
disposal of the products. The following is a description of a
preferred embodiment of the Procurement Process.
[0116] Supply chain server 74, at the completion of the Planning
Module, transmits a supply plan (including the week 0 demand) to
supplier 76 via EDI, Web, email or other means. After supplier 76
executes the supply plan and 3PL 78 picks up the shipments,
supplier 76 transmits an ASN (Advanced Ship Notice) to supply chain
server 74. Each ASN typically includes one line item and is
received electronically, containing all the necessary data agreed
upon during the contract negotiation process. The ASNs are
validated against the supply plan, and exceptions are resolved by
the planner. Valid ASNs are used to generate purchase orders (there
is generally a one-to-one relationship between ASNs and purchase
orders; all line items are identified using the supplier part
number) and cross dock instructions (which will be transmitted to
the 3PL). In parallel, a receipt is created in an ERP system.
Unlike prior art supply chains, the invention uses a supplier ASN
to trigger the generation of a purchase order and a receipt notice
indicating possession of the demanded part. This reduces a large
number of steps performed in prior art systems because demand is
conveyed to suppliers which is more likely to be fulfilled as it is
based upon a forecast and not a purchase order.
[0117] All payments received from customers during each day are
listed and consolidated by supply chain server 74 for each supplier
76. If payment for a specific order has been received from customer
72 via EFT (Electronic Funds Transfer), supply chain server 74
uploads the payment files to a bank and supplier 76 is paid (e.g.,
once per day). The release of payment information automatically
updates the ERP. Additionally, the bank sends a confirmation to
supply chain server 74 showing the payment information. If the
payment is to be made via check, a remittance advice notice and the
check are printed and sent to the supplier.
[0118] If a customer decides they would like to return materials
procured through supply chain network 70, the customer contacts
supply chain server 74 to obtain a return authorization. Supply
chain server 74 includes pre-authorized return authorizations from
suppliers 76, and agreed upon terms for accepting returns. The
supply chain server sends customer 72 the authorization, and sends
a copy to supplier 76. If supplier 76 has an established returns
process, supply chain server 74 will send customer 72 return
instructions. Once the supply chain server has the POD (Proof of
Delivery) from the supplier's carrier 96, supply chain server 74
will debit the supplier's account and issue a credit to the
customer. Any credits or debits are first applied to any open
invoices from the supplier.
[0119] If the Supplier does not have an established returns
process, once the authorizations are in place, supply chain server
74 sends pick-up instructions to 3PL 78 if necessary. A
determination must be made (1) whether the supplier has replacement
parts in inventory and (2) whether the customer needs the
replacements immediately or if the replacement parts demand can be
added to the existing forecast. If the customer needs replacement
parts immediately, the supplier's available inventory is the
preferred source. If no inventory is available, the replacement
parts should be built and delivered to the customer on an expedited
basis. If the replacement parts are to be added to the existing
forecast, the planning process continues with the additional demand
incorporated into the next thirteen week forecast (see Planning
Module description). Again, once supply chain server 74 has
received the POD from 3PL 78, supply chain server 74 will debit the
supplier's account and issue a credit to the customer. Any credits
or debits are first applied to any open invoices form the supplier,
and then to the supplier account (to any open invoices). These
processes will now be explained by way of example.
[0120] Referring to FIG. 10A, there is shown the flow of
information during the Procurement Module in accordance with the
invention. After supply chain server 74 completes the operations
involved in the Planning Module, the week 0 (or current week)
supply demand is sent to the appropriate supplier 76. Supplier 76
executes 330 the week 0 demand, issues a supplier ASN 332 and sends
ASN 332 to supply chain server 74. Supply chain server 74 receives
supplier ASN 332 at 334. In general only one line item is included
in each ASN 332. The ASN information itself is in the supplier's
part number. If the supplier's ASN accuracy percentage is poor, or
the supplier cannot send ASNs, a packing slip is used instead.
[0121] Supply chain server 74 validates 336 ASN 332 against a
supply plan 338 generated by supply chain server 74 in response to
customer forecasts. If the ASNs do not match supply plan 338 at
340, indicating that what was delivered by the supplier did not
match what was ordered from the supplier, an error routine 342 is
implemented and suppliers 76 are notified. In such an event, supply
chain server 74 will have contractual options to, e.g., cancel the
balance of the partial shipment immediately, return shipment, etc.
Otherwise, supply chain server 74 branches to step 344 shown in
FIG. 11.
[0122] Referring to FIG. 10B, there is shown an example of error
routine 342 in accordance with the invention. Supply chain server
74 sends 460 an exception notification 462 to supplier 76 alerting
supplier 76 of the nonconforming shipment. Thereafter, supply chain
server 74 determines whether the comparison of ASN 332 and supply
plan 338 results in an over-shipment or a short-shipment--outside
of predetermined tolerances.
[0123] If the comparison yields an over-shipment, control branches
to step 466 where supply chain server 74 determines the disposition
of the excess materials involved in the over-shipment. This is
performed by having the Planner discuss the situation with supplier
76 and relevant customers 72 to determine the appropriate
disposition of the excess materials. Thereafter, supply chain
server 74 executes 470 the resultant disposition plan and then
branches to step 344 shown in FIG. 11. Examples of the dispositions
include returning excess material to the supplier, shipping the
additional material to the customer (and adjusting any forecast as
needed) or storing excess material at 3PL 78. Supplier 76 will be
billed for any additional freight if the materials are returned to
the supplier. Supplier 76 will also be billed any additional costs
incurred in storing excess materials with 3PL 78.
[0124] If the comparison yields a short-shipment, supply chain
server 74 evaluates 468 the situation by having the Planner
communicate with supplier 76 and customer 72. This communication
helps determine whether the short-shipment is merely a late
shipment of whether the Planner must allocate further supply. The
Planner may also discuss the situation with affected customers.
Thereafter, supply chain server 74 allocates 472 to each customer a
percentage of the available supply and control branches to step 344
shown in FIG. 11.
[0125] Referring now to FIG. 11, in step 344, supply chain server
74 creates a purchase order based upon ASN 332. The purchase order
is created for each part for each supplier. Supply chain server 74
then creates 350 a receipt and generates 346 cross-dock
instructions 348 based upon the purchase order 344. The receipt,
like the purchase order, is organized by part and by supplier.
Cross-dock instructions 348 may include pickup instructions for
returns by customers. In situations of short shipment, cross-dock
instructions 348 should reflect the Planner's allocations as
discussed above. Upon receipt of a non-conforming shipment, 3PL 78
will notify supply chain server 74. A complete explanation of
cross-dock instructions 348 is provided below in the discussion of
the Fulfillment Module.
[0126] After an inherent delay 352 which insures that all week 0
demands are received and processed, supply chain server 74 matches
receipts created in step 350 with supply plan 338 created earlier
(See FIG. 10A) and sales order 290 discussed below in FIG. 17. The
matching is done to verify that no material has been lost in
transit. All sales orders that comprise one purchase order should
be created before the matching is performed. If the documents do
not match at 356, an error routine 358 is initiated. If receipts
created at 350 are greater in number or price than sales order 290,
possible causes of the problem could be a delay in the generation
of the sales order. If the receipts are less than the sales order
290 in either number or price, possible causes of the problem
include a data integrity issue or that material was lost at the 3PL
or in transit. In any event, the Planner should intervene. If the
receipts created in step 350 match 356 supply plan 338 and sales
order 290 at 356 then supply chain server 74 moves to steps 360 and
362 where a voucher and a payable, respectively, are created.
[0127] Supply chain server then branches, in FIG. 12, to query 364
and determines whether any debits (or credits) for the particular
supplier are outstanding. If no debits are outstanding, control
branches to step 376 (shown in FIG. 13). Otherwise, control
branches to step 366 where supply chain server 74 determines 366
whether there are any open invoices for the particular supplier. If
there are any open invoices, supply chain server 74 applies 368 the
debit determined in step 364 to that open invoice and branches to
step 372. Otherwise, supply chain server 74 applies the debit to
future balances with the particular supplier and branches to step
372. At 372, supply chain server 74 issues 372 a customer credit
374 to customer 72. Thereafter, control of supply chain server 74
also branches to step 376.
[0128] Referring now to FIG. 13, at step 376 supply chain server 74
queries whether payment from customer 72 has been received. If
payment has not been received, supply chain server 74 waits a delay
period 378 and then continues to query 376 whether customer payment
has been received. The supplier payment is thus delayed until
payment is received from the customer. The customer payments
themselves are aggregated throughout the day. When payment is
received, control branches to query 380 which determines whether
the payment is through an EFT. If the payment is not through an
EFT, supply chain server 74 prints check and remittance advice
notices at 382 and then branches to step 386. Otherwise, supply
chain server 74 generates 384 an EFT file and then branches to step
386. The EFT information for a specific supplier is part of a
master data file. An EFT payment is sent to each supplier at the
end of each day (based on the aggregation of payments from received
from customers throughout the day).
[0129] At step 386, supply chain server 74 pays suppliers 76 and
3PL 78 with a check and remittance advice note 388. If the
financing option discussed below with reference to FIG. 21 is
implemented, supply chain server 74 also sends an EFT file 390 to a
bank 392. EFT file 390 is sent to suppliers 76 once a day and to
3PLs 78 once a month--based on freight tables. Some time
thereafter, an account statement 394 is sent to supply chain server
74. Supply chain server 74 receives account statement 394 and
compares 396 it with the EFT File 390 which was transmitted to bank
392. Then, supply chain server 74 generates 398 reports including
month-end, quarter-end, etc. reports.
[0130] The Procurement Module is also used in situations where
customer 72 desires to return materials obtained through supply
chain network 70. Referring to FIG. 14, to initiate the return
process, customer 72 makes a request 410 for authorization to
return a part to supply chain server 74. Each supplier 76 provides
supply chain server 74 with a pre-issued return authorization 412
for parts supplied by supplier 76. Supply chain server 74 receives
request 410 and return authorization 412 and authorizes 414 the
return of the materials using predetermined supplier-specific
standards. Supply chain server 74 also uses a master supply record
(not shown) to determine the source of the items to be returned.
This master record shows which customers received products from
corresponding suppliers and dates. In this way, supply chain server
74 can ascertain the origin of the product which the customer
desires to return.
[0131] At step 416, supply chain server 74 sends 416 a return
authorization 418 to both customer 72 and supplier 78. Supply chain
server 74 then queries 420 whether the supplier, whose materials
are to be returned, has an established return process. If the
supplier does have such a process, that process will be used and
supply chain server 74 sends 422 corresponding return instructions
424 to the customer 72. Control then branches to step 426 shown in
FIG. 12. Otherwise, if the supplier does not have an established
returns process, control branches to step 440 in FIG. 15.
[0132] Referring again to FIG. 12, at step 426, supply chain server
74 queries whether a returned product Proof of Delivery 430 has
been received from the supplier's carrier 96 indicating that the
product was returned to the customer. If not, supply chain server
74 waits a delay period 428 and then continues to look for receipt
of returned product POD 430. Clearly, if the returned product POD
is never received, then no credit will be issued. When supply chain
server 74 receives returned product POD 430, it issues 432 a debit
to supplier 76 which is applied when the appropriate payables are
processed. Control then branches to step 364 as was explained in
detail above.
[0133] Referring to FIG. 15, if the supplier does not have an
established returns process, at step 440, supply chain server 74
determines 440 whether a replacement part is needed for customer
72. If no replacement part is needed, control branches to step 426
as was explained above with reference to FIG. 12. Otherwise,
control branches to step 442 where supply chain server 74
determines whether replacement parts are available from any
suppliers' inventory who has been listed as a customer's preference
or which can provide immediate shipment. If parts are not available
from inventory, control branches to step 444 where supply chain
server 74 determines whether the replacement parts are required
within the current week. If the parts are required within the
current week, control branches to the Order Management module for
an ad hoc demand as was described with reference to FIG. 5. If the
parts are not required within the current week, control branches to
the Planning Module and the demand is absorbed into future weeks
forecasts as, for example, described in FIG. 6.
[0134] Returning to step 442, if replacement parts are available
from inventory, supply chain server 74 sends 446 instructions 448
to supplier 76. Instructions 448 direct supplier 76 to ship the
available replacement parts from its inventory immediately. In such
an event, supplier 76 is responsible for shipping costs and uses
3PL 78. Supply chain server 74 also produces 450 pick-up/delivery
instructions 452 which are sent to 3PL 78. Control then branches
again to step 426 described above with reference to FIG. 12.
[0135] Thus, by centralizing processes which were performed
separately by suppliers, 3PLs, carriers and customers in the prior
art, the Procurement Module enables transfer of products between
suppliers and customers more efficiently than prior art supply
chains. Moreover, problems in shipment and returns by customers are
also handled more expediently and efficiently.
000V. Fulfillment
[0136] The Fulfillment Module is involved in ensuring the
transportation of products from suppliers 76 to customers 72.
Referring to FIG. 16, there is shown a time-phased Fulfillment
Module flow diagram in accordance with the invention. Much of the
flow of information has already been described in detail with
reference to the Planning, Order Management, and Procurement
modules and so a detailed discussion of such information is omitted
for the sake of brevity.
[0137] In the Fulfillment Module, supply chain server 74 sends
customer forecasts 200 and week 0 callouts 202 (FIG. 4) to
suppliers 76. Suppliers 76 send pick-up instructions 500 to 3PL 78
regarding the demanded products. Suppliers 76 then prepare 502 the
products and send ASNs 332 (FIG. 10A) to supply chain server 74.
Soon thereafter, 3PL 78 sends a dispatch notice 504 to carrier 96.
Supply chain server 74 resolves delivery issues 336, 340, 342
(FIGS. 10A, 10B) while carrier 96 sends 506 dispatch vehicles to
suppliers 76 to pick up the appropriate products. When the dispatch
vehicles have obtained the products, a shipment pickup notification
524 is sent to supply chain server 74.
[0138] The dispatch vehicles travel to a designated cross-dock
location (in this case, the 3PL is used as the cross-dock location
though it should be clear that other locations could be used as is
explained in more detail below) and await arrival of cross-dock
instructions. Supply chain server 74 generates and sends 346 (FIG.
11) cross-dock instructions 348 to 3PL 78. When the dispatch
vehicles arrive at the cross-dock location, they send an arrival
notification 508 to supply chain server 74. At this point, a
cross-dock 510 is performed.
[0139] Unlike prior art supply chains, in supply chain network 70,
the orders of a plurality of customers 72, who order the same or
similar parts, are grouped together into larger orders to be
procured from suppliers 76. Suppliers 76 then ship, through 3PL 78,
a much smaller number of larger orders of these parts. In the prior
art, suppliers 76 handled each order individually and shipped each
order in an individual box. This was very costly because it
required significant management of all the orders and parts for
many customers.
[0140] In the present invention, supply chain server 74 instructs
3PL 78 to pick up the larger orders from suppliers 76, take the
orders to the cross-dock point, and then un-pack and sub-ship the
products to customers 72. The cross-dock point may be strategically
located to maximize the efficiency of the shipment to the
customers. At the cross-dock point itself, there is an automated
inspection, acceptance, etc. of the arriving products. Errors in
the shipment are typically fixed at the cross-dock 510.
[0141] With respect to the products themselves, the operator of
supply chain server 74 takes title for customers 72 when the
product leaves suppliers' 76 dock. Title is transferred to customer
72 when the product arrives with the customer. The operator of
supply chain server 74 also acts as the importer of record.
[0142] Focusing again on FIG. 16, after cross-dock 510 has been
performed at the cross-dock point (in this case at 3PL 78), a
dispatch notice 512 is sent to carrier 96 requesting a pick up of
the products and a shipment notification 262 (discussed below with
reference to FIG. 17) is sent to supply chain server 74. The
products are then picked up by carrier 96 and transported to the
appropriate customers 72. Customers 72 may request a desired pickup
or delivery location. While the products are being transported,
supply chain server 74 sends ASN 332 (FIG. 10A) to customers 72.
3PL 78 may also send a customs in notification 514 and a customs
out notification 516 to supply chain server 74 as appropriate. Such
information would then be available to customers 72. After the
products are dropped off with customers 72, carrier 96 sends a
proof of delivery notification POD 518 to 3PL 78. 3PL 78 forwards
POD 518 to supply chain server 74.
[0143] Thereafter, customers 72 send payment 298 (FIG. 24) to
supply chain server 74 and supply chain server 74 forwards payment
298 (minus management fees) to suppliers 76, 3PL 78 and carrier 96.
3PL 78 then sends a payment reconciliation notification 520 to
supply chain server 74. If any refund is necessary, 3PL 78 sends
such a refund 522 to supply chain server 74. Supply chain server 74
then forwards refund 522 to customers 72.
[0144] Customers 72 using supply chain server 74 also have the
ability to track the status of an order throughout the Fulfillment
process. This order tracking capability may be offered to all the
customers 72 using supply chain server 74 via an Extranet discussed
below.
[0145] Thus, by providing suppliers with a smaller number of larger
orders, and breaking down the larger orders at a cross-dock point,
a less costly and more efficient Fulfillment process is available
than in the prior art. Additionally, by having customers,
suppliers, 3PLs, and carriers all report to a centralized supply
chain server, all parties can receive current information
concerning shipment processes. In one embodiment, such information
is easily made available on a web site with information populated
by the supply chain server.
00VI. Billing and Payment
[0146] Once customer demand is fulfilled, the Billing and Payment
Module is responsible for defining the rules and activities used in
performing financial transactions such as billing and processing of
customer payments. An additional offering of the Billing and
Payment Module is to enable the supply chain network's customers to
view the status of pending orders and track the status of an order
up until the time the customers receive their product.
[0147] In general, after customer demand is fulfilled and a
shipment notification from 3PL 78 is received, supply chain server
74 triggers the generation of a sales order. At the same time, the
shipment notifications are reviewed to determine any deviations
between expected and actual customer shipments. This process helps
to identify any short shipments or damage done to products either
in transit or at the 3PL facility.
[0148] A customer may receive several shipments from suppliers via
supply chain network 70 on a given day. However, the customers
preferably receive one invoice per day that consolidates those
shipments into a single bill. All financial transactions between
supply chain server 74 and customers 72 can be, in a preferred
embodiment, performed by using EFT (Electronic Funds Transfer),
thereby further reducing overall cycle time.
[0149] Referring now to FIGS. 17 and 18, the Billing and Payment
Module, begins with supply chain server 74 receiving 260 a shipment
notification 262 from 3PL 78 indicating that the products have been
delivered to customer 72. The receipt 260 may be through an EDI.
Supply chain server 74 validates 264 shipment notification 262 and
calculates 266 the order pricing of the shipment. In validation
264, supply chain server 74 compares the total quantity in shipment
notification 262 with a quantity specified in supply plan 338 (see
FIG. 11). The comparison could include more than one shipment
notification per customer part number, and should take into
consideration pre-defined tolerances. If supply chain server 74
determines 270, that the shipment notification is valid, validation
264 ends. Otherwise, an error routine 272 is performed as was
explained above with reference to FIG. 10B for error routine 342.
If an error did occur, this is indicative of a data integrity issue
(shipment notification accuracy) or a 3PL performance issue
(material lost or damaged at 3PL facility or in transit). In any
event, Planner intervention is used to implement both short and
over shipment resolutions in error routine 272.
[0150] In calculate order pricing circuit 266, the price of the
order associated with shipment notification 262 is calculated based
upon cross-dock instructions 346 (FIG. 16), a contract 276 between
the supplier 76 and customer 72, and the actual product 278 that
was shipped. This cost is based on the number of components
purchased and prices negotiated with supplier 76. Additional costs
are added for services not included in the basic management fee.
These could include, for example, expedited delivery, special
labeling or packaging, etc. Finally, an ad hoc order may be given
an additional charge.
[0151] In addition to the charges for the products themselves,
supply chain server 74 also calculates 280 the freight charges
associated with shipping the products based upon a freight table
282 having standard freight charges. In general, freight charge is
based upon weight, number of pieces in the shipment, and the
freight type (e.g., a pallet, package, etc.). A reconciliation may
be used periodically to make adjustments to the customer's accounts
based upon reconciliation by 3PL 78. Some prior art techniques
generated sales orders too soon and so freight charges needed to be
applied after the sales order. As can be discerned, such a problem
is not present in the architecture of the present invention.
[0152] Then supply chain server 74 calculates 284 the sales order
total using applicable rate tables 286. These tables are used to
calculate custom duties and exchange rates. Insurance charges are
added, as well as value added taxes and sales taxes. Supply chain
server 74 then generates 288 a sales order 290. In a preferred
embodiment, a single sales order is generated per customer part
number and the charges are itemized--for example, freight, taxes,
additional services, etc.
[0153] Referring now also to FIG. 18, supply chain server 74 then
proceeds to steps 292 and 294 where it generates 292 and sends 294
an invoice 296 for sales order 290 to customer 72. The generation
292 of invoices will be performed automatically for each order
using electronic invoice outlining terms for each sales order. The
payment terms are based on the shipment date and will include
itemized charges as referenced above. With respect to the sending
292 of invoice 296, all invoices going to the same customer should
be consolidated every day and so the customer will receive one
invoice per day. Sending 292 thus creates a receivable.
[0154] At some point thereafter, customer 72 sends a customer
payment 298 to supply chain server 74 preferably through an
electronic funds transfer (EFT). Supply chain server 74 attempts to
receive payment 298 at 300. If payment 298 is not received within a
contractually defined period of time, an error routine 304 is
performed where supply chain server 74 contacts either the customer
or the corresponding bank. If payment 298 is received within the
defined period of time, payment 298 is processed 302 so that
incoming payments are matched with open invoices. The account of
the customer who sent in payment 298 is reviewed for any other
outstanding invoices (credit or debit balances) and payment 298 is
applied to that customer's account. Finally, at 306, supply chain
server 74 determines whether customer 72 made a full payment or
overpaid for a given invoice 296. If there was no problem with
payment 298, the invoice routine ends. Otherwise, error routine 308
is implemented where either a collection process is initiated based
on the customer's past history or a credit is applied to the
customer's account in the event of an overpayment. As a plurality
of suppliers 76 may have provided parts for customer 72, payment
298 may relate to a plurality of suppliers 76 and may need to be
broken up and distributed to suppliers 76 accordingly.
[0155] Thus, the centralization of control of supply chain network
70 in supply chain server 74 allows suppliers to avoid the costs
incurred in managing billing processes with customers.
0VII. Information Management
[0156] Supply chain server 74 accumulates valuable data that can be
provided to the supply chain network participants. In a preferred
embodiment, the information delivery capability is implemented
primarily by a secure Extranet site. Information delivery is very
useful to a supply chain network's business model, as an efficient
supply chain network incorporates both accessibility to, and
visibility of, real-time information.
[0157] Information delivery, rather than being a discrete process
that happens periodically, is a capability that enables an
essentially continuous communication of information between supply
chain server 74 and its business partners, (e.g., 24 hours-a-day, 7
days-a-week). In addition, the information delivery capability
provides the means for customers (and potentially suppliers and
3PLs) to initiate workflow processes. For example, although the
process for the customer's ability to abort an order is located in
the Planning Module, information delivery will handle the
communication of the abort code (e.g. a button on the Extranet that
triggers an email or EDI message to initiate the work flow). FIG.
19 shows some information which can be provided to users of supply
chain network 70. The information delivery process allows
information to be delivered in a very timely manner, according to
the needs of the supply chain network participants.
[0158] As can be discerned, the type of information available to
Customers, Suppliers and the 3PL includes but is not limited to:
order-specific information/statistics and customer-specific
statistics (e.g. Week-to-date, Month-to-date, Year-to-date,
etc.).
VIII. Financing
[0159] The structure of supply chain network 70 also enables (but
does not require) the possibility of providing new forms of
financing for customers procuring products. As stated above, in
prior art forms of financing, a supplier gave a customer a payment
term which was frequently ignored by the customer. Suppliers would
therefore increase the prices of products (de facto interest) to
compensate for prospective losses due to buyers not paying on time.
Sellers were also at the mercy of unreasonable prices from
distributors when sellers wished to sell products early to improve
their balance sheets.
[0160] The invention, in providing a three party architecture
(instead of just the supplier and customer of the prior art)
removes the de facto interest and the prior art distributor.
Referring first to FIG. 20, there is shown one example of the flow
of title and payment in supply chain network 70. As stated above in
the description of the Fulfillment Module, the operator of supply
chain server 74 takes title of products 278 once products 278 leave
supplier 76. Products 278 travel to cross-dock 510 and then to
customer 72. Customer 72 uses 536 the products and sends payment
538 to supply chain server 74 (e.g., at the cross-dock point).
Supply chain server 74 receives 540 payment 538 and sends it to
supplier 76. Supplier 76 receives payment 538 and deposits 542 the
payment in the supplier's bank.
[0161] An alternative form of financing is shown in FIG. 21. As
with the flow shown in FIG. 20, products 278 are sent to cross-dock
510. At that time, a copy of the customer invoice 532 is sent to a
financier or bank 392 as collateral for payment of the customer's
invoice. Bank 392 procures the necessary financing 534 for customer
invoice 532 and sends it back to supply chain server 74 at 540.
Supply chain server 74 then forwards financing 534 to supplier 76
who then deposits 542 financing 534 in the supplier's bank.
Supplier 76, therefore, gets paid soon after products 278 are
shipped. Bank 392 effectively loans customer 72 the financing
needed to pay supplier 76 and supply chain server 74 secures this
obligation of customer 72. Customer 72 continues to use 536
products 278 and then produces payment 538 which is now sent
directly to bank 392. Bank 392 deposits 544 payment 538, sends 546
invoice 532 back to customer 72 marked as paid and sends a
notification 548 to supply chain server 74 indicating that invoice
532 was paid.
[0162] In this way, once product 278 is delivered, customer 72
still has a payable on its records, even though supply chain server
74 is securing an obligation on the customer's behalf. The payable
itself is actually to supply chain server 74 or bank 342 and not to
supplier 76. Such a payment schedule is extended to customers with
exemplary credit. Further, if the customer does not pay on time,
supply chain server 74 has the option to hold back on the flow of
parts to customer 72 thereby causing customer 72 great expenses.
Supplier 76 benefits in that it receives an earlier and regular
payment. As supply chain server 74 pays suppliers 76 on time,
suppliers 76 no longer need to charge de facto interest. This cost
savings is passed to customer 72 and realized as profit for the
operator of supply chain server 74.
[0163] When suppliers 76 desire to ship products 278 before a time
necessary to satisfy customers 72, supply chain server 74 can
safely retain some of these products based upon customer forecasts
200 and charge a lower interest rate to suppliers 76 than that
charged by distributors of the prior art.
[0164] Using the above described techniques, supply chain server 74
can arrange payment term financing in order to leverage more
favorable pricing or to create a more appealing balance sheet for
the parties involved. For example, as suppliers can be paid sooner
than in prior art supply chains, suppliers are more willing to
allow for price concessions and lower financing costs. Supply chain
server 74 can arrange financing that permits inventory to be taken
off balance sheets and off premises.
[0165] Supply chain server 74 can also shift the risks in changes
in commodity pricing to more risk inclined parties. For example, in
volatile commodities (e.g., Dynamic Random Access Memories--DRAMs),
by controlling the flow of products and cash, server 74 can also
provide risk shifting products such as hedges, calls, puts, etc.
Prior art supply chains could not provide such products because
there was not a single party who controlled products and cash.
[0166] Server 74 can also provide insurance that was not available
in the prior art. As server 74 is connected with multiple customers
and suppliers, server 74 can plan for volatile swings in demand or
supply of products. For example, server 74 can receive extra
products from suppliers and retain these products in case customers
experience an unforeseen increase in demand. The extra products
received by server 74 are determined by actuarial calculations
based upon prior forecasts. These extra products are updated
periodically so that they remain fresh and not outdated. In this
way, server 74 insures for demand spikes and supply shortages.
[0167] Thus, the provision of supply chain server 74 enables the
parties of the supply chain network to use financing options not
available in the prior art. Additionally, suppliers can provide
products more cheaply because defacto interest is no longer
necessary.
00IX. Architecture
[0168] Supply chain network 70 can be set up in many ways. A
general architectural set up is shown in FIG. 22. Supply chain
server 74 is shown coupled to all of customers 72, suppliers 74,
3PL 78, banks 392 and carriers 76. This connection could be
through, for example, a network 560 such as the Internet.
[0169] If network 560 is used, the, communication among the parties
shown in FIG. 22 could be through any know arrangement for
accessing a communication server, such as dial-up serial line
interface protocol/point to point protocol ("SLIP/PPP"), an
Integrated Services Digital Server ("ISDN"), a dedicated
leased-line service, broad band (cable) access, a Digital
Subscriber Line ("DSL"), asynchronous transfer mode ("ATM") or
other access techniques. If supply chain server 74 is used to host
a web page that is accessed by one of the parties of FIG. 22,
supply chain server 74 should be able to provide web page HTML
and/or Java data. Supply chain server 74 is not limited to such
hardware requirements.
[0170] Supply chain server 74 itself can be implemented using many
known hardware structures. In its most general sense, supply chain
server 74 can be implemented using a structure like that shown in
FIG. 23. A CPU 562 is coupled to a ROM 564, a RAM 566, a storage
device 568, a server device 570 and an input device 572 through a
bus 574. Again, supply chain server 74 is not limited to these
structures.
[0171] Referring to FIG. 24, there is shown a more detailed
architecture of supply chain server 74. Supply chain server 74
includes an extranet manager 580, an ERP system 584, a planner
support tool 586, and a messaging services section 588 all coupled
to a system monitor 582. System monitor 582 monitors the operation
of all the components of server 74 and facilitates the flow of
information among these components. As shown in FIG. 24, customers
72 and suppliers 74 can communicate with extranet manager 580
through a firewall 590. Customers 72, suppliers 74, 3PLs 78 and
banks 392 all communicate with messaging services section 588 of
supply chain server 74 also through firewall 590.
[0172] Extranet manager 580 provides customers 72 and suppliers 74
with access to order and forecast information, access to any
premium information services contracted with supply chain server
74, and access to Customer Master Data which is bibliographic
information (e.g. name, address, account number, etc.) of
customers. Extranet manager 580 performs this function by
displaying web pages and generating new web pages with information
received from ERP system 584 discussed below. Finally, Extranet
manager 580 manages site membership and security and provides
secure communication of data to and from server 74.
[0173] ERP (enterprise resources planning) system 584 provides
server 74 with applications and systems support for financial,
order management, demand management, procurement, and other
enterprise processing capabilities. ERP system 584 allows for
incorporation of data from suppliers 74, customers 72, logistics
providers 78 and financial institutions 392 ("partners") and stores
and manages the data from these partners in a standard format. ERP
system 584 also provides employees of server 74 with real time
access to enterprise information and provides workflow capabilities
to ensure completion of business processes. Finally, ERP system 584
keeps track of the Customer Master Data.
[0174] Messaging services section 588 streamlines communications
between supply chain server 74 and all of its partners. Messaging
services section 588 translates all received information into a
standardized format which is input into ERP system 584. Conversely,
messaging services section 588 also receives information from ERP
system 584 and generates outgoing messages in the format expected
by a particular partner. Messaging services section 588 manages
secure data transmission between server 74 and its partners, allows
use of the Internet for all transmissions, and provides logging and
serialization of all transmissions for audit purposes.
[0175] Planner support tool 586 allows Planners working for server
74 to manipulate forecast, demand and supply data. Planner support
tool 586 aggregates data extracted from ERP system 584 thereby
facilitating flexible, configurable analysis methods, providing a
wide range of reporting capabilities, providing a definition of
exception conditions in the analysis process, providing courses of
action (workflow) should an exception occur, providing secure
access to data, and allowing for multiple user access to this data
while preserving the integrity of the data. By providing a Planner
Support Tool that is external to Extranet 580, which works with ERP
system 584, and which is coupled to messaging services station 588,
a desirable supply-demand balance can be achieved.
000X. Summary
[0176] Thus, by providing a supply chain server to handle many of
the processes previously performed by individual entities of the
prior art, a more efficient and cost minimizing architecture is
realized. By consolidating purchases and supply chain management,
supply chain server eliminates many of the steps and costs expended
by customers and suppliers of prior art supply chains. Customers
appreciate: lower prices, lower expenses for freight, buying, and
planning systems, etc., faster and more reliable deliveries,
shorter lead times and lower inventories, supply chain management
savings, lower duties and taxes, product expertise, complete supply
chain visibility, improved data integrity, improved profits,
improved service to their customers, improved suppliers, and
improved decision making. Suppliers benefit in: lower selling
expenses, lower planning costs, lower inventories, improved
delivery, lower product costs, visibility of demand, lower
operating expenses, and reduced manufacturing costs from smoother
production flows. This all leads to improved profitability while
selling at lower prices which, in turn, will increase demand. Both
customers and suppliers may have access to a secure web site hosted
by supply chain server which will provide valuable information that
was not available in the prior art. This information includes
customer buying habits, and the size and growth rates of markets
served. As the historical data detailing customer's buying patterns
grows, it will become more expensive to switch to another supply
chain network.
[0177] The costs of supply chain server will be borne by customers
based upon the number of part numbers and the cumulative value of
purchases. Suppliers need not be charged a fee so that the lowest
possible price may be provided by suppliers. As the supply chain
network is procuring products in bulk, it will receive a lower cost
for the items and will realize this lower cost in profits.
[0178] Although demand and supply of products have been discussed,
it should be clear that demand and supply of any resource,
including services, is also within the scope of the invention. The
term "product" throughout the specification thus refers to any such
resource or service. For example, customers could be individuals
desiring bandwidth on a trunk line in a network. Suppliers would
then be sources of network bandwidth. Customers could also be, for
example, individuals desiring airplane tickets or theater seats
from corresponding suppliers.
[0179] While preferred embodiments of the invention have been
disclosed, various modes of carrying out the principles disclosed
herein are contemplated as being Within the scope of the following
claims. Therefore, it is understood that the scope of the invention
is not to be limited except as otherwise set forth in the
claims.
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