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A blackboard-based negotiation for collaborative supply chain system
Teruaki Ito*, Mohd Rizal SallehDepartment of Mechanical Engineering, University of Tokushima, 2-1 Minami-Josanjima, Tokushima, 770 8506 Japan
Abstract
Supply chain management system (SCM) is an integrated network of suppliers, factories, warehouses, distribution centers and retailers,
through which the whole chain of logistic processes is managed so that it should aim at a faster and more flexible co-ordination between a
company and its customers and suppliers within the chain. Collaboration among the members of SCM plays a critical role to implement an
effective SCM, but its implementation would not be easy only with the conventional information sharing mechanism. This study employs
the idea of open tender concept with blackboard-based negotiation to develop a collaborative supply chain system. The open tender concept
is designed to provide an open and free opportunity to all participants, which make a sound competition to obtain the tender. Blackboard-
based negotiation is derived from the mechanism of negotiation among intelligent agents using a blackboard as a media where each agent
exchange information. The study applies the idea to a parts/material supply system, which is designed to function as a part of SCM. For
replenishment of parts/materials, a company issues a tender and publishes it to a public blackboard for information exchange via the
Internet using electronic tender submission form to find appropriate suppliers. Candidate suppliers to the tender are invited to issue their
quotations, which compete one another under an open environment and the most appropriate candidate is selected as a result of open
competition. # 2000 Elsevier Science B.V. All rights reserved.
Keywords: Supply chain system; Intelligent agents; Negotiation techniques; Collaborative supply chain system; Blackboard; Internet; Open tender
1. Introduction
Rapid development of new products today increases the
difficulty of production for manufacturing companies.
Dynamic markets may sometimes require the companies
to restructure their function and position in industry. Under
these circumstances, the companies need to take appropriate
actions so that they could remain competitive in the global
market situation [1]. Concurrent engineering (CE) is one of
the approaches to be competitive in the global market. CE
can be realized by simultaneous work of experts from
various functions in an enterprise, concerned with the
production of specific products, in order to achieve high
quality, functionality and manufacturability of products in
the shortest time with the minimum cost. The idea of supply
chain management system (SCM) also attracts their atten-
tion as an effective approach to comply with these difficult
situations. SCM is an integrated network of suppliers,
factories, warehouses, distribution centers and retailers,
through which the whole chain of logistic processes is
managed so that it should aim at a faster and more flexible
co-ordination between a company and its customers and
suppliers within the chain. Collaboration among the mem-
bers of SCM plays a critical role to implement an effective
SCM, but its implementation would not be easy only with
the conventional information sharing mechanism.
This study employs the idea of open tender concept with
blackboard-based negotiation to develop a collaborative
supply chain system (CSCS). Fig. 1 shows an illustrative
view of open tender concept with blackboard-based nego-
tiation. The open tender concept is designed to provide an
open and free opportunity to all participants, which make a
sound competition to obtain a tender. Blackboard-based
negotiation is based on the mechanism of negotiation among
intelligent agents (IAs) using a blackboard as a media where
each agent exchange information for collaboration. CSCS is
designed to enhance the supply speed and certainty through
all relevant key members of SCS. The key members com-
municate and interact each other in order to generate the
solution for efficient material supply process. Although the
paper mainly focuses on a parts/materials supply system in
SCM, ultimate objective of the study is to integrate all of
these techniques and systems including agents, negotiation
techniques and CSCS so that realization of CE should be
achieved (Fig. 2).
This paper describes the roles of IAs in CSCS, and their
interaction which works for the success of communication
and negotiation process between the manufacturers and the
Journal of Materials Processing Technology 107 (2000) 398403
* Corresponding author.
E-mail addresses: [email protected],
[email protected] (T. Ito).
0924-0136/00/$ see front matter # 2000 Elsevier Science B.V. All rights reserved.PII: S 0 9 2 4 - 0 1 3 6 ( 0 0 ) 0 0 7 3 0 - 5
suppliers. Then, the paper addresses IAs negotiation life
cycle, describes the collaboration and negotiation process in
CSCS and presents an example of open trading for parts/
materials replenishment through prototype system.
2. Roles of agents in CSCS
Agent technologies are increasingly used in a wide range
of industrial and commercial domains. This is because of the
reason that IAs have a high degree of self-determination
capabilities, and they can decide for themselves when,
where and under what condition their action should be
performed. Interactions among IAs may even make them
work towards a particular course of action, modify a planned
course of action and come to an agreement on a common
course of action. Furthermore, collaboration among agents
is used for streamlining and integrating the entire process of
CSCS.
Several kinds of IAs play an important role in CSCS for
smooth communication and collaboration within the key
members of SCS. IA identifies the critical information from
incoming resources, monitors the information and trigger
actions based on the contents of information. According to
the contents, IA executes collective tasks on behalf of users
as an autonomous process. The application of IA in CSCS
strongly promotes co-operation among the members of
supply chain. Interactions among IAs, however, may some-
times lead to conflicts and coalitions among them. Negotia-
tion techniques are used to overcome these conflicts and
coalitions, and to come to an agreement among agents,
instead of persuading them to accept a ready solution. In
the negotiation techniques, operation for negotiation is
viewed as actual interactions among participants that lead
to mutual commitment [2]. IAs bring their goals to a
bargaining table, share the information, and seek for the
goals alternatives. IAs assist manufacturers to speed up
their product flows along the supply route, and to ensure that
the products should be available in the markets at the
required time. The function of IAs in CSCS is to simulate
members of supply team and to perform the chores accord-
ing to users requirements.
As shown in Fig. 3, each agent interacts and shares
information through a blackboard (BB). BB regulates and
provides the information to each agent, which works for the
key members of CSCS. For inventory control application, an
inventory control agent works to control the inventory levels
and negotiates with the other agents for the smooth materials
flow through information exchange. For internal information
exchange, the Intranet can be used to provide internal
communication services to achieve better results than the
conventional means of data access and transfer. Its applica-
tion also allows the users to simply access for day to day
information, and the company can easily screen the critical
information from external users.
In the mean time, the Internet allows the users to reach
each other on a global basis for the information exchanges.
The Internet is becoming used in the various industrial fields
for improving manufacturing processes [4]. For example,
Fig. 1. Open tender process between manufacturers and suppliers.
Fig. 2. Contributors to realize CE. Fig. 3. Agents interaction in CSCS.
T. Ito, M.R. Salleh / Journal of Materials Processing Technology 107 (2000) 398403 399
the Internet can be used to offer such an opportunity to
compare a number of suppliers, to choose a suitable supplier
and to ensure the selected supplier should satisfy require-
ments.
The roles of IAs are essential for the success of commu-
nication and negotiation processes between a company and
its suppliers so as to gain the information required for their
desired goals. IAs support the open tender procedure for the
group problem solving through the negotiation and colla-
boration techniques, increase the network communication
for the users satisfactions and enable both the manufactures
and the suppliers to communicate effectively.
3. IAs negotiation life cycle
Negotiation is essential to reach an agreement about the
provision of service by one agent to another, and this
approach has been used for managing the conflict which
arises among the IAs. IAs start negotiation when they begin
communicating their goals, and finish when all of them
agree to a specified decision. IAs employ a range of stra-
tegies and tactics to generate initial offers, evaluate propo-
sals and offer counter proposals. Negotiation uses the
specific set of techniques for the problem solving to derive
agreements among IAs, instead of persuading them to accept
a ready solution. Negotiation techniques assist group pro-
blem solving in various domains [5].
As shown in Fig. 4, the negotiation life cycle participants
are composed of (1) analyst and owner: to describe and
formalize the goals, (2) designer: plan for achieving the
goals through interactions among the agents, and (3) imple-
mentor: to implement the designed strategy using the
appropriate protocols and tools for the goals [3]. In the
first step of negotiation life cycle, negotiation analysis
needs to procure and model individual preferences for
the negotiation protocols and strategies. In the second
step, negotiation design seeks to define interaction protocols
and strategies for the goals requirements. In the final step,
negotiation implementation seeks to reach group com-
mitment through communication exchanges. IAs work
on behalf of participants, and they are equipped with a
special skill to manipulate the other members according
to their tasks function. IAs use the plan and particular
negotiation protocol by which they intend to interact
with the other agents. When IAs seek for negotiation,
they disclose their goals to the other members, identify
the conflicts and search the conflict resolution, and select
the ideal resolution for their goals. Negotiation techniques
assist CSCS for the realization of effective materials
flow.
4. Collaboration and negotiation in CSCS
Companies are required to comply with customer orders
even if they may be hard to do so. Companies have to
respond to the orders quickly and efficiently in the limited
time available to fulfill the customers requirements. Unex-
pected rush orders, however, may come sometimes, which
causes the delay of delivery and decreases efficiency in all of
the supporting members. The collaboration of CSCS mem-
bers and the introduction of negotiation techniques provide a
solution to those problems [6].
Collaboration and negotiation works to find an appro-
priate supplying company in open tender trading. For parts/
materials replenishment, a company publishes a tender to
BB, which can be reviewed by the entire aviation commu-
nity of suppliers. This is the start of open tender competition.
Supplier agents (SAs) for each supplying company scour the
Internet to find any appropriate tenders. When an agent find
one, it will urge its host company to submit a quotation. BB
publishes quotations submitted by candidate supplying com-
panies, which may urge revision of quotations, or negotia-
tion among these companies. BB closes the tender when the
most appropriate quotation is selected based on selection
criteria. IAs work for communication and negotiation pro-
cesses between a company and its supplier to achieve their
mutual goal.
Collaboration and negotiation in CSCS also works to find
a solution for supplier replacement processes. For example,
when a delivery problem happens in one of the suppliers, IAs
work as a catalyst of collaboration and negotiation for
effective supply chain, and find an alternative suppliers to
replace the supplier in problem. IAs select the alternative
supplier according to the selection criteria prepared by the
manufacturer. Fig. 5 shows how this kind of activities take
place when the selected supplier fails to deliver the materials
at the right time. In this activity, the supplier in problem, the
manufacturer and the alternative supplier are controlled by
supplier agent 1 (SA1), manufacturer agent (MA) and
supplier agent 2 (SA2), respectively. When the problemFig. 4. The negotiation life cycle phase and negotiation participants.
400 T. Ito, M.R. Salleh / Journal of Materials Processing Technology 107 (2000) 398403
happens, SA1 sends a delay message to MA. After receiving
the delay message, MA refers to BB to find an alternative
supplier for the replacement. If the supplier 2 is regarded as
the alternative one, MA makes an inquiry to SA2 and asks
for the delivery situation. Then SA2 quotes the cost of
materials and time for the delivery and sends them back
to MA. If SA2 does not accept the offer, MA takes the same
procedure to find another alternative supplier. The collabora-
tion and negotiation activities among these agents assist the
manufacturer and the suppliers to solve the problems during
the delivery process.
5. An example of open trading for parts replanishmentin CSCS
This section presents an example of open trading for parts
replenishment in CSCS.
Toyo Manufacturing Industries is a car stereo company,
and is looking for a supplier of screw for car stereo top plate.
The company has some business relations with several
supplying companies because of business transactions in
the past. The company, however, wants to find the most
appropriate supplier in each occasion in a dynamic manner
using collaboration of agents, which include inventory stock
control agent (ISCA), MA, SA, supplier stock control agent
(SSCA), and blackboard control agent (BBCA), as shown in
Fig. 6. The company sets up the minimum inventory level so
that the agent can control the inventory. When the inventory
stock reaches to the level, an ISCA sends a signal to
Purchasing Department so that they can take an appropriate
action to place an order to suppliers. When it happens, an
MA urges Purchasing Department to fill out an order request
form (ORF) including several key items, such as part name,
part number, selection criteria, delivery point, order record,
etc. as shown in Fig. 7(1). MA verifies ORF and submits it to
BB as a tender. When a new tender is published, supplying
companies are notified by each SAworking for each supplier
so that they can consider their supply positions. Details of
the tender are available on BB, so that not only the issuer of
tender but also supplying companies can refer to the details
if necessary.
If a supplying company wants to obtain the tender, Sales
Department of the company checks availability of the parts
through SSCA. If it is available, then an SA urges the
department to fill out a quotation form (QF) as shown in
Fig. 7(3). SA verifies the QF and submits it to BB, which
means that the company shows an intention to join a
competition for the tender. In this way, list of supplying
companies to the tender and details of each quotation are
open through BB so that every participant can understand
what is going on regarding the tender until the final stage of
open competition and, of course, which company obtains the
tender in the end. Updated information is fed back to each
company either by MA or SA. BB in Fig. 7(2) shows that
Kurosawa Manufacturing, Bersekutu Light Industries, Inter-
national Materials Supply, etc. are among the supplier list.
At the end of open competition, BBCA ranks up these
quotations based on the selection criteria, and recommends
Kurosawa Manufacturing Industries as the most appropriate
supplier to the tender. Even though the other companies may
have lost the competition this time, they know which
company is the winner and what kind of quotation the
winner has submitted. They also know why they have lost
the competition, so that they may obtain some hints for an
effective counter measure to be more competitive in the next
opportunity.
6. Concluding remarks
The paper presented the idea of open tender concept with
BB-based negotiation to implement a CSCS in order to
achieve an efficient material flow and to shorten the produc-
tion lead-time. IAs carry the tasks through the support of
collaboration and negotiation techniques for co-ordinating
interactions, generating resolutions, and deriving agree-
ments to fulfill the users requirements. Through the support
of IAs and negotiation, CSCS enables a company and its
Fig. 5. Supplier replacement process by collaboration and negotiation.
Fig. 6. IAs interaction in open tender process.
T. Ito, M.R. Salleh / Journal of Materials Processing Technology 107 (2000) 398403 401
supplier to utilize the full framework of potential commu-
nications.
There are various kinds of data that may be exchanged to
improve the integration of trading partners operations and
to reduce supply uncertainty, inventory and cost [7]. BB
plays an important role to maximize the function of all the
partners in the joint management of CSCS by providing the
information for open competition. IAs can exchange mes-
sages and co-ordinate their activities such as conflicts reso-
lution, effective planning, execution control, negotiation
strategies, etc. The benefits of CSCS can be summarized
as follows: (1) to increase the chance to find the most
appropriate supplier by open competition among the sup-
pliers, (2) to increase the efficiency of transaction in the
supply chain, and (3) to increase the productivity and
customer satisfaction.
The future work includes the development of knowledge
based subsystem that works on decision making process to
find the appropriate supplier based on the selection criteria.
For the realization of this subsystem, application of decision
analysis tools such as MAUT or ISMAUT is under con-
sideration.
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Fig. 7. Sample of electronic forms for manufacturer and supplier usage in the prototype system.
402 T. Ito, M.R. Salleh / Journal of Materials Processing Technology 107 (2000) 398403
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