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YDemand Activated Manufacturing Architecture (DAMA) ~ r~

Model for Supply Chain Collaboration e 500~HJ

Dr. Leon Chapman and Marge Petersen 4~4

Sandia National Laboratories-~m

PO BOX 5800, MS 0746 @$

Albuquerque, NM 87185 USAldchapmkj-)sm-dia.gov and mbpeter@sandia.gov

KEYWORDS

Collaboration, Business Model, Architecture, SupplyChain, E-commerce

ABSTRACT

The Demand Activated Manufacturing Architecture(DAMA) project during the last five years of work withthe U.S. Integrated Textile Complex (retail, apparel,textile, and fiber sectors) has developed an inter-enterprisearchitecture and collaborative model for supply chains.This model will enable improved collaborative businessacross any supply chain. The DAMA Model for SupplyChain Collaboration is a high-level model forcollaboration to achieve Demand ActivatedManufacturing.

The five major elements of the architecture to supportcollaboration are 1) activity or process, 2) information, 3)application, 4) data, and 5) infrastructure. These fiveelements are tied to the application of the DAMAarchitecture to three phases of collaboration – prepare,pilot, and scale. There are six collaborative activities thatmay be employed in this model: 1) Develop BusinessPlanning Agreements, 2) Define Products, 3) Forecast andPlan Capacity Commitments, 4) Schedule Product andProduct Delivery, 5) Expedite Production and DeliveryExceptions, and 6) Populate Supply Chain Utility. TheSupply Chain Utility is a set of applications implementedto support collaborative product definition, forecastvisibility, planning, scheduling, and execution. TheDAMA architecture and model will be presented alongwith the process for implementing this DAMA model.

INTRODUCTION

A collaborative environment is one in which people canwork together, sharing information, and knowledge. Ourresearch has been dedicated to developing streamlinedmanufacturing supply chains in the textile industry, andenabling that supply chain with collaborative softwareenvironments.

INFORMATION ARCHITECTURE

Architecture is an overloaded term, and can have manyinterpretations. An architecture, which is a style and

method of design and construction, can be applied to anysystem, or group of interrelated, interacting,interdependent constituents that are fictionally related.These I%nctionally related constituents can best beanalyzed and understood by evaluating the process, andletting that process drive the development of technicalsolutions to support the process.

We have defined a supply chain information architecturethat includes five elements.

. Activity The activity(s) or processes involved in theaccomplishment of a goal.

. Information: The derived knowledge from theapplication of data that supports the process.

. Application The transformation of data intoinformation.

. Data The detailed facts required providinginformation to support .&e activity.

. Infrastructure: The underlying technical, business,and social foundations that support the process.

In developing this architecture for a collaborative supplychain enviromnent, we addressed these elements from thetop-down. Lessons learned from many softwaredevelopment efforts have proven time and again thattechnology driven solutions are difficult to implement dueto a lack of user buy-in, often resulting in sofhvare thatdoes not get used.

APPLICATION OF THE DAMA ARCHITECTURE TO ABUSINESS DRIVEN SOLUTION

The technology-driven approach was the main thrust ofDAMA through 1997. However, it met with limitedsuccess. In 1997 in conjunction with DAMA leadership,the focus changed to pursuing a top down or business-tilven approach (see Figure 1).

.This approach focused on four areas, or businessrequirements, necessary for the move to a collaborativeapproach

. the knowledge of industry culture and businesspractices,

● the development of maps of industry process modelsof information flow,

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DISCLAIMER

This report was prepared as an account of work sponsoredby an agency of the United States Government. Neitherthe United States Government nor any agency thereof, norany of their employees, make any warranty, express orimplied, or assumes any legal liability or responsibility forthe accuracy, completeness, or usefulness of anYinformation, apparatus, product, or process disclosed, orrepresents that its use would not infringe privately ownedrights. Reference herein to any specific commercialproduct, process, or service by trade name, trademark,manufacturer, or otherwise does not necessarily constituteor imply its endorsement, recommendation, or favoring bythe United States Government or any agency thereof. Theviews and opinions of authors expressed herein do notnecessarily state or reflect those of the United StatesGovernment or any agency thereof.

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● the construction of collaboration frameworks forbusiness practices, and I

● the deployment of architecture-based information. .systems to support this collaboration

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I Figure 1 Business Driven Five Level Architecture

There were three key findings from our research on thetextile industry that support these requirements. First is theconclusion that the one necessary piece for the movementto collaboration is culture change, that is, changes in thevalues and attitudes that motivate behavior. Once thedecision is made to modi~ corporate value structures andassociated activities to support collaborative relationships,maps of information flows within the supply chain,collaborative business frameworks, and architecture-basedinformation systems will facilitate the change. Thesecond finding is that the primary target for an agilecompany is the consumer or end user of the product -nomatter where that compa~ is in the supply chain. Thethird is that there is an evolutionary path that companiesfollow as they move toward a true collaborativeenvironment. This path takes them from a focus oninternal processes and systems to a global view of thesupply chain.

MODEL FOR SUPPLY CHAIN COLLABORATION

Understand As-is Model Before Proceeding To A To-Be Model

In order for DAMA to understand the complete supplychain, it was necessary to understand the “As-Is”information model of the textile industry today.Typically, a textile supply chain consists of severalmanufacturers, each representing a sector of the indushyi.e. fiber, textile, apparel (sewn products) and retail.Inforrnat{on is passed between sectors in” the form of

Electronic Data Interchange (EDI) transactions, andtypically each sector is customer focused (fiber focuses onthe textile customer), rather than consumer focused (allsectors focus on consumer demand). A model of theindustry was documented that shows the flow ofinformation between these sectors, and is represented inFigure 2.

TO-BE Model for Supply Chain Collaboration

In order for all members of the supply chain to respond toconsumer demand, a new collaborative paradigm isrequired. This new paradigm will provide supply chainvisibility to critical information for all members of thesupply chain. The DAM.A Model for Supply ChainCollaboration has been developed to show how all sectorsof the supply chain would participate collaboratively inthe major business. This model suggests that retail,apparel, textile and fiber companies within “a particularsupply chain share information and collaboratively makedecisions about forecasting, planning, scheduling, productdelivery and expediting orders. This model isdocumented in the Integration Definition FunctionModeling (IDEFO) format, designed to model thedecisions, actions, and activities of an organization orsystem. The number in parenthesis identifies EDItransactions.

The DAMA Model for Supply Chain Collaboration is ahigh-level model for collaboration to achieve DemandActivated Manufacturing as shown in Figure 3. There aresix collaborative activities that may be employed in thismodek

1. Develop Business Planning Agreements

2. Define Products

3. Forecast and Plan Capacity Commitments

4. Schedule Product and Product Delive~

5. Expedite Production and Delivery Exceptions.

6. Populate Supply Chain Utility .

For each of the first five collaborative activities, thetrading partners must populate the Supply Chain Utility,the sixth activity in this model. The Supply Chain Utilityis a set of applications implemented to supportcollaborative product definition, forecast visibility,planning, scheduling, and execution.

This model assumes a collaborative supply chain, withmultiple trading partners, working collaboratively to meetconsumer demand. Trust must exist between all tradingpartners, and technical data security must be implemented.Working together, the trading partners share informationabout their products, manufacturing capabilities,allocations of capacity to the partnership, and day-to-dayoperational status.

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PROCESS FOR EXECUTING THE DAMA MODEL

The business process for executing the DAMA Model forSupply Chain Collaboration is consumer focused andincorporates all members of the supply chain. Thisbusiness process involves ten major activities, illustratedin Figure 4,

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Develop Business Planning Agreements

Populate Supply Chain Utility ‘

Define producti

Collaborate on Exceptions for Product Definition

Forecast and plan Capacity Commitments

Collaborate On Forecast Or Capacity To MeetForecast Exceptions

Schedule Production and Product Delivery

Collaborate Product Ship Date Exceptions

Expedite Production and Delivery

Execute Delivery.

Partners Prepare to Collaborate and Define Products

1. Develop Business Planning Agreements

Successfidly implementing this model requires the tradingpartners first complete the process of CollaborativelyDevelop Business Planning Agreements. The VoluntaryInterindustry Commerce Standards (WCS) CollaborativePlanning, Forecasting and Replenishment (CPFR)guidelines thoroughly describe what is required in thebusiness planning agreements. (WCS, 1998) Where theDAMA collaborative supply chain diverges from currentCPFR is in the addition of trading partners from allmanufacturing sectors of the supply chain.

It is important that each company accesses their ownstrategy, and goals to ensure that these are incorporated inthe partnership agreements. The goal is to arrive at a win-win situation for all players. This requires sharing ofsome risk and rewards, in addition to sharing commongoals.

2. Populate Supply Chain Utility

The DAMA Model for Supply Chain Collaborationincludes a process where the trading partners populate aSupply Chain Utility. This Supply Chain Utility isenvisioned to be a collaborative software system thatshould support product definition, supply chain planning,supply chain visibility, and select, secure data sharing.The initial population of the utility would require eachtrading partner provide initial information in the followingareas:

● manufacturing (lead times, process times, andtransport times),

● capacity allocation to the partnership,

● manufacturing capability (product lines, bill ofmaterial for products, product specifications andboundary constraints), and

● exception criteria.

In order for the Supply Chain Utility to be successfid, anontology, or common vocabulary, must be established.The ontology is a set of formal definitions of theinformation being shared. (www.ontology.org, 2000) Inthe textile industry, much of the ontology information canbe provided by organizations such as American TextileManufacturers’ Institute (ATMI) Voluntary Standards.

Populating the supply chain utility is an on-going process.Weekly or daily updates of data might include goodsavailable to promise, reduction in capacity or capabilities,or changes in lead times in a process.

3. Define products

The concept of collaboratively definiig products in asupply chain requires increased supply chain visibility ofall partners to the product lines in each sector. Theprocess begins with customer (consumer) demand. Thepartnership collaborates to develop products to meetdemand. Once the product is developed, a productdefinition is provided to each member in the chain.

Products for orders are defined using the data that isloaded in the supply chain utility. The utility candetermine if the product is available; otherwise, the utilitywill determine the lead-time required to produce theproduct. From this information, the product definitionorder is generated.

4. Collaborate on Exceptions for Product Definition

If a particular product attribute is not available, anexception is generated. Resolution and/or collaboration ofthe exception may involve phone calls, email, or on-lineinteraction. Resolution may require adding a product ormanufacturing capability by changing the product mix oroutsourcing to a third party supplier who is not a memberof this collaborative partnership.

Partners Collaborate on Forecast, Production Planand Schedule

5. Forecast and Plan Capacity Commitments

The collaborative forecast was first defined by CPFR. InDAMA’s model, one or several partners in the supplychain may develop the forecast. Once the forecast isdeveloped, it is made visible to all members through theSupply Chain Utility. Each forecast must be reflective ofthe portion of the order that will be filled by each memberin the partnership. The initial loading of the Supply ChainUtility will ensure that the correct proportions for an orderare maintained. Based on the forecast received, eachmanufacturing member of the partnership should thenprovide a capacity commitment ‘to the forecast for thatspecific product line.

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As consumer demand and forecasts are generated, allmembers of the supply chain will have visibility to thkinformation. The supply chain utility must haveinformation about the allocation of a product (forexample, the partnership agreement guarantees 50% of aproduct line to a manufacturer, who in turn guarantees75% of that same line to their supplier). According to theestimated forecast, each supply chain member will commita certain capacity to the product line in this collaborativeagreement.

6. Collaborate on forecast or Capacity to Meet ForecastExceptions

A forecast may exceed original capacity commitments orfall short of the commitmen~. When this exception

occtn-s; the affected partners must collaborate and eitherseek third party sources for an increase in demand orshare associated risk with a reduction in forecasts. Thepartnership agreements should provide guidelines forhandling these exceptions to facilitate resolution.

7. Schedule Production and Product Delive~

The Supply Chain Utility will balance a final ordercommitment against initial capacity commitments. Usingthat information, in addition to manufacturing capabilitydata, the utility will generate work orders for eachmanufacturer in the supply chain. Each manufacturer thenprocesses these work orders individually.

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The supply chain utility, populated with basemanufacturing capabilities and capacity commitments andupdated with exception updates and fw orders, willgenerate work orders for each of the manufacturers and ashipment forecast for the carrier(s). Each company willthen process the work order into their internal EnterpriseResource Planning (ERP) system generating a ship datefor the product order. Ship dates that vary within aspecified tolerance of the initial work orders and retailcancel date will generate exceptions.

8. Collaborate on Product Ship Date Exceptions

Resolving and/or collaborating on product ship dateexceptions leads directly into the expedite production anddelivery step. A late ship date on fiber would impact allcustomers along the supply chain. But the textilemanufacturer might have yam in inventory that was notpreviously entered into the supply chain utility (it mayhave been reserved for a customer outside of this tradingpartner agreement). The supply chain utility processes theupdated data for exceptions.

Partners Collaborate to Expedite Production andExecute Delivery

9. Expedite Production and Delivety

Manufacturers’ ship dates generated from the process ofcollaboratively scheduling production will be compared todelivery status provided by each manufacturer on aregular basis. If ship dates and delivery status for productare not meeting the agreed upon product ship dates, anexception will occur.

Most exceptions will only be made available to the tradingpartner who is initially impacted by the exception. Forexample, late shipment of greige goods would trigger anexception for the finishing plant. Resolution of thatexception would either be expedited *or negotiated withthe appropriate trading partners.

Visibility to the supply chain product ship dates allowseach member of the supply chain to expedite productionand delivery as it relates to their position in the chain.Each member of the supply chain will be providing statusupdates for the delivery and production status of theproduct.

10. Execute Delivery

The carrier, who provides delivery status information,handles the execution of delivery. The supply chainutility determines if target ship-dates are being met.

SUMMARY

There are a number of initiatives that the DAMA projectbelieves can provide the foundation to fi,trtherdevelop andcomplete the DAMA model for collaboration

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VICS CPFR (Collaborative Planning Forecasting andReplenishment),VICS CTM (Collaborative TransportationManagement),SCC (Supply Chain Council) SCOR (Supply ChainOperations Reference model),ATMI (American Textile manufacturers’ Institute)Voluntary Standards (i.e. Quality Characteristics,Codelists), andA4MA (American Apparel Manufacturers’Association) Guidelines. --

The value of this model must be determined by industry.The DAMA model for collaboration needs both processand product information in an ontology that will supportit. Such product information specific to the textileindustry can be found in many of the voluntary standardsand guidelines published by ATMI and AAMA.

Collaborative supply chains will not be successfidlyimplemented overnight. It will require changes inbusiness practices, and small-scale proof of concept pilotsbefore they can be implemented successfidly in a kuge-scale manner. The phases for collaboration provide arecommendation for progressing to a place of readiness toscale collaboration across the industry. The model forcollaboration provides a recommended set of processesthat could be implemented in a collaborative way and theindustry standards groups such as ATMI, AAMA, andVICS provide a basic set of information that should beused to develop the industry ontology to support inter-enterprise collaboration.

ACKNOWLEDGMENTS

We thank the following individuals for assisting indeveloping and documenting this methodology:

DAMA Proiect

Jessica Glicken, Ruby Lathon, John H. Linebarger,John Mitchiner, Elaine Raybourn

REFERENCES

VICS (voluntary Interindustry Commerce Standards).1998, “Collaborative Planning Forecasting andReplenishment Voluntary Guidelines”.

www.ontology.org, 2000. “Enabling Virtual Business”Available at http:fhvww.ontonogy.org

Smdia is a mukipro~am laboratoryoperated by Sandia Corporation,aLmkheed Martin Company,for theUnited States Departmentof Energyunder contraq- I)E-ACO.I-94AL850W.