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Assigned Article Reading 5 Event - Driven Optimization a New Model for

Supply Chain
The article proposes a new supply chain model called event-driven optimization
(EDO) time that accurately represents the current instance state of the execution
space upon automatic notification of an adverse event, then re-optimizing those
parts of the supply chain affected by the event. The benefits from this model of
supply chain can be listed as below:

Exception-based reporting from multiple suppliers coordinated with specific


purchase orders to determine if shipments will meet target delivery times and
dates
Visibility of the supply chain in real time
Reduction/elimination of human processes and associated reduction of costs
and errors
Increased speed of complex decision- process making
Improved communications between stores and distribution centers about
shipment of goods
Consolidation of multiple shipments from multiple suppliers in a geographic
proximity to reduce shipping costs

According to a recent IDC survey of U.S. retailers, almost two-thirds of retailers


currently use inventory management applications and out of remaining, 21% are
either planning to implement or currently evaluating this type of application.
However when it comes to supply chain management applications only around 21%
use these. This is because most of the small retailers rely on UPS, FedEx and other
third party logistics to manage the shipment of the goods to stores.
After conducting a series of in depth phone interviews with the supply chain
executives at retailers and consumer packaged goods companies, IDC came up with
the below list of challenges being faced:

End-to-end visibility of the supply chain to create better predictability around


the movement and arrival of products
Creation of a global supply chain network map to determine optimal
warehouse locations and distribution channels and partnerships
Ability to get the right products to the right customers in the least amount of
time and with the least amount of cost
Difficulty of forecasting sales and inventory requirements of a new product or
those based on a new marketing promotion
Establishment of trust and reliability with suppliers

Below are IT specific supply chain challenges:

Simplifying the complexity of the supply chains various applications and


disparate systems to eliminate duplication and manual reconciliation of data

Getting information across disparate systems to a large number of decision


makers as soon as possible
Smaller suppliers lack of tools or technology to facilitate integrated
communication and product tracking

The below are the strategies adopted by some of the companies to overcome the
unforeseen circumstances:
The Bear Creek Company adopts a strategy to look for an alternative available
substitution. Cooking.com asked its suppliers who themselves might have been
waiting for goods on stranded containers to ship all of their current orders and not
to wait for the purchase orders.
To implement EDO, Catalyst International a leading provider of warehouse
management systems, and Symbol Technologies, a global leader in secure mobile
information systems have partnered. A combination of technologies like XML, GPS,
barcodes, mobile devices and communications, Web services and RFID are being
used to implement EDO. Below is the process flow:

At the distribution center as pallets are received, their tags are scanned and
information is directly input into the warehouse management system.
The warehouse management system tracks the pallets movements
throughout the warehouse using barcodes, mobile scanners, and/or RFID
antennae placed throughout the structure.
The pallet is located in the warehouse using the warehouse management
system and tags and picked for shipment.
The pallet of goods is scanned again as it is loaded onto a truck. This
information is then used to automatically create the advanced shipping
notice to ensure accuracy for the retailer receiving the shipment.
In conjunction with GPS technology embedded on vehicles, retail supply chain
participants can identify both the location and the contents of a particular
vehicle.

As the supply chains have become more and more complex, in case of any problem
the pre-defined rules might not be able to exactly replicate the current problem
scenario- hence Catalyst International has collaborated with AdaptiveTrade (world
leader in object-oriented optimization and constraint database design) to make an
Adaptive Enterprise Optimization Server containing a library of supply chain
execution classes, such as trucks, SKUs, warehouses, people, trading partners,
stores, and loading docks. In case of a problem, the required object is then
instantiated and initialized through Web services powered by RFID and GPS
technology. Once the supply chain instant state has been created by the AEO
server, the program will optimize the execution space according to business model
goals and then passes on the action plan, financial and operational impact to each
affected trading partner through standard XML collaborative process. AEO also

provides security with the partner financial and other crucial data by encrypting
them to a binary format.
Thus the development of object-oriented optimization modeling along with secure
collaborative communication and high-performance constraint database technology
has solved the modern day need for real time automated optimization.