An estimation model for business benefits in horizontal

An estimation model for businessbenefits in horizontal collaborativenetworks

Gregory Piot, Michel Pouly,Naoufel Cheikhrouhou, Remy Glardon

Laboratory for Production Management and ProcessesEcole Polytechnique Fédérale de Lausanne

Piot G., Pouly M., Cheikhrouhou N. and Glardon R., An estimation model for business benefits 2

Outline

Problem context and motivation Proposed model

Product realisation graph Achievement cost estimation

Case study within ‘Virtuelle Fabrik’in Switzerland

Conclusion and future research


Virtual organisations typology

Supply chain: Based on a information flow drivenstructure where each partner has supplier andcustomer

Hub and spoke: Based on the interaction of thepartners with the dominant one

Peer to Peer: Based on structures withouthierarchical links


Problem context

Horizontal collaborativeenterprise network

Business opportunity: A product Pi to be

realized within thenetwork

Quantity asked Qi Delivery Due date

Objective: Estimation ofthe potential turnoverfor each enterpriseparticipating to theachievement of thebusiness opportunity

Network of entreprises and entreprisenetworks (GLOBMEN 2003)


Considered criteria for the solution

Technical ability Resource availability (personnel,

machines…) Production performance Trust/ confidence Transportation costs


Proposed approach

Simplified product achievement graph

Estimation of activity costs and enterprise competences

Selection of the best alternativeGlobal cost estimation


Simplified product achievementgraph

Represents asimplification of theproduct sequence Key activities Non-key activities

Evaluation ofprecedence links None Weak Medium Strong Absolute

Sim

plifi

catio

n


Activity grouping process

Key activityNon-key activity

Simplified product achievement graph


Global cost estimation process

Degrouping of a group

of activities

Selection oftechnically

capableentreprises

Verification of availabilities

Activity sharingamong available

entreprises

Evaluation of allpossible alternatives

Totally dissociated ?

No

Empty ?

No

Empty ? No

Global cost estimation for every alternative


No

Compare alternative costs

Grouping all the activities

Yes

Yes

Yes

Degrouping of unsuccessful

Group of activities



of activities


capableentreprises



entreprises



No

Empty ?

No

Empty ? No



No


Simplified Product graph Grouping all the activities

Yes

Yes

Yes


Group of activities

Technical selection

ØØR2(En)R1(En)Ressource

0011Possession

C4C3C2C1Compétence

EnEntreprise

……………

R2(E2)ØØØRessource

1000Possession

C4C3C2C1Compétence

E2Entreprise

R3(E1)R1(E1)ØR1(E1)Ressource

1101Possession

C4C3C2C1Compétence

E1Entreprise

Mesure < µmC9A7,8

Norme IsoC6Contrôlequalité

A6

Matériau fragileC5

Machine fraisage 5axes

C2FraisageA4,5

Matériau fragileC5

Tournage pièceØ>100mm

C4

Rectification <50µmC1TournageA1,2,3

DescriptifNomDescriptifNom

Compétences requisesActivités

Required CompetencesAcquired competences



of activities


capableentreprises



entreprises

Evaluation of allpossible

alternatives


No

Empty ?

No

Empty ? No



No


Simplified Product graph Grouping all the activities

Yes

Yes

Yes


Group of activities

Alternative 1 2 3 4 … y

A1,2,3 E1 1 0 0 1 0

E2 0 1 0 0 0 E5 0 0 1 0 1

A4,5, E3 1 1 1 0 0

E6 0 0 0 1 0 E9 0 0 0 0 1

A6 E1 1 1 1 1 0

E4 0 0 0 0 1

A7,8 E2 1 1 1 1 1


Cost estimation

Global cost for an alternative alty = Product achievement cost Transportation costs between enterprises Administrative and managerial costs Knowledge acquisition costs

( ) ( ) ( ) ( )

( )1 2 1 1 1 1 2 1

1 2 1 2 2

cos ( ) Pr ( ) ( ) ( )

0 ... ...

. 0 ... ...Pr ( )

. . ... ...

. . . 0

y T y T y T

y coûts gest

y y y

E E TpE En E E E E E En

y y

TpE Eny T E E E E

Global t alt tr A tr CTp T CTf t tr Conf T

CTp C T T T

Sym C T T Ttr A tr

Sym Sym

Sym Sym Sym

!= " + " + " + " "

# $% &% &= " + "% &% &' (

uuuur ur

( ) ( )( )

2

1 2

1 2 2 3 1 1 2 2 3 1

1 2 1

2

... ... ... ...

...

( ); ( );...; ( ) ( ); ( );...; ( )

0 ...

. 0 ...

. . ... ...

T

y

E En

y y y

EnE EnE EnEn

T

a a a a

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E En

coûts gest

T T T

CTf A A CTf A A CTf A A t A A t A A t A A

Conf Conf

Sym Conftr

Sym Sym

Sy

!

) )

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+ "

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1 1 1 2 1

2 1 2 2 2

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... ... ... ...

. . . 0 ...

Ty y y

E E E E E En

y y y

E E E E E En

y y y

EnE EnE EnEn

T T T

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m Sym Sym T T T

* +# $# $, -% &% &, -% &% & ", -% &% &, -% &% &, -% &' ( ' (. /


Case study within ‘VirtuelleFabrik’: The ‘Abfallhai’ opportunity

‘Virtuelle Fabrik’ Horizontal network 15 companies of

the metal-mechanics industry

Study conducted inSwitzerland

Basic costsestimated byentreprise expertsfor a fixed quantity


Product achievement graph of the‘Abfallhai’

Grouped activities: A1 fashion design A2 product development A3 work on metallic sheets A4 painting A5 assembly


Alternative cost estimation of the‘Abfallhai’

.

.

.


of activities


capableentreprises



entreprises



No

Empty?

No

Empty ? No



No


Grouping all the activities

Yes

Yes

Yes


Group of activities


Comparison of alternative’s costs

(10+25 +40) +(1.5+1.5)+(0.1+0.2)

78.3 kCHFAlt5

(10+20 +40) +(1.5+1.5)+(0.5+0.5)

74 kCHFAlt4

(10+15 +40)+(1.5+1.5)+(0.4+0.4)

68.8 kCHFAlt2

(10+60)+1.5+0.271.7 kCHFAlt1 =Alt3

Details (kCHF)global costAlternative

•Theorical optimal cost: Brüco Swiss AG +Quadesign Partner AG

•Real solution=Alt 1 :Quadesign Partner AG (A1)Admec AG (A2)Brüco Swiss AG (A3, A4, A5)

•deviation causes (~5%) Under-estimation of A2 costs for theentreprise Amdec AG


Conclusion

Criteria to be considered in partner selection: Technical capabilities Availabilities Activity Prices Trust

The model is simple, practical and integrateexpert knowledge

The model gives quantitative results withoutestimation of cost reduction induced by thesynergy inside the network

Potential improvement in informationmanagement and retrieval (knowledge orautomatic calculation ?)

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An estimation model for business benefits in horizontal