Example 1 – The simplest transaction: You walk into your local bookstore and purchase a book. (1) The Bill-To is You. (2) The Bill-From Is the bookstore. (3) There is no “commercial transportation” involved, however, you can think of the transportation as being you taking the book in your car from the bookstore to your house, which means that the Ship-From is You. (4) The Ship-To is you. So note that in this example, the Bill-To, the Ship-From, and The Ship-To are all the same entity = You.

Example 2 – A more complex commercial-goods transaction: You purchase a book through the internet from Amazon.com, to give as a gift to a friend, and choose for it to be shipped via FedEx. (1) The Bill-To is You. (2) The Bill-From is Amazon.com. (3) The Ship-From is FedEx. (4) The Ship-to is your friend.

Each one of the above four parties in a commercial transaction is identified in an invoice through two data entities: (1) A code that identifies the entity, and (2) A free form entity name.

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n  Transaction Set Identifier Code: This is the X12 code for the type of business document. In the case of an invoice, this code is 810.

n  Transaction Set Control Number: This is a number that identifies all the records of a particular invoice that is transmitted electronically. For example, if two invoices are sent within the same transmission, the control number for all the records on the first invoice will be “0001” and the control number on the second invoice will be “0002”.

n  Invoice Date

n  Invoice Number

n  Purchase Order Date

n  Purchase Order Number

n  Purchase Order Receipt/Release Number

n  Currency Code: As per ISO code of currencies. For example “USD” for US Dollar, “CAD” for Canadian Dollar, etc.

n  Exchange Rate

n  Currency Market Exchange Code: Code identifying the market upon which the currency exchange rate is based. For example New York Foreign Exchange.

n  Currency Exchange Rate Date: Date to be used as the basis of the currency exchange rate.

n  Currency Exchange Rate Time: Time to be used as the basis of the currency exchange rate.

n  More to come: Additional fields in my next blog.

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According to Johnson (2010) stumbling blocks in the supply chain have been related to high transaction cost between partners, poor information availability, and challenges of managing complex interfaces.  Complex networks that can be challenging and expensive to implement or support. Managers may believe they are overwhelmed taking on multiple online environments causing potential bottlenecks in business operations.  Other limitations such as slow response times and incorrect processing of data could cost an organization to lose business or suffer significant penalties. The ever excepting customers who demands fast, rapid, correct, and on-time functionality from these systems that if not implemented correctly the first time could hurt the business supply chain or worst cause a lost in profits

Simulation can have various meanings depending on its application, according to my post on simulation; it generally refers to using computer software to perform experiments on a model of a real system. These simulation experiments maybe undertaken before a real system is operational, to aid in its design, to see how the system might react to changes in its operating rules, or to evaluate the system’s response to changes in its structure.

In relation to problems experienced by online supply chain it is important to consider simulation which can be used to carry out analysis where mathematical techniques cannot because it provides realistic replications of a system than mathematical analysis. Experiments, tests can be used as a form of analysis in other to balance demand with resources which eventually results to good capacity planning, reduce inventory levels, maintain procedures, analyze waiting lines and schedule operations.

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Crude Oil Data Exchange (CODE) is an electronic business standard sanctioned by the American Petroleum Institute (API). CODE was initially implemented as the standard in 1978. It provides field formats and record layouts to facilitate the transmission of crude oil run tickets between producers and transporters. Run tickets from Oildex use American Petroleum Institute’s (API) industry CODE standards.

API is the primary trade association representing all phases of the oil and gas industry. PIDX (Petroleum Industry Data Exchange) is the Electronic Commerce Committee of the API

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Developed countries like Japan, Germany, South Korea, which have export oriented economy, account for substantial exports of important goods globally. The flow of goods in the global supply chain will be impacted if such natural disasters occur in these countries. The recent turmoil and anti-government protest in oil producing nations has already stretched the price of crude oil resulting in pressure in higher costs affecting many areas including supply chain. The uncertainty towards crude supply has not dwindled down yet when this disaster occurred giving more sleepless time to economic experts.

The last week earthquake that struck northeast Japan is a small economic zone (compared to Tokyo, Osaka etc.) account for about 2 to 5% of Japan’s GDP. It has forced to shutdown a broad spectrum of industries. The assessment is not completed yet and the bigger disruptions are not ruled out in the weeks ahead. The quake has crippled important infrastructure like power supply, water, surface & air transports in the affected areas which will have adverse impact on goods manufacturing and movement. The areas affected are critical supplier of parts for consumer electronics, automobiles, auto parts, steel manufacturing and other goods. Japan’s Toshiba and SanDisk are important suppliers of semiconductor chips and flash memory used in electronic gadgets, smart phones, tablet PCs. Not all but some manufacturing units are likely to be affected by disruptions in transportation and power supply resulting in raising fears of shortages or price increases. Past year has witnessed strong demand for gadgets and the quake can cause further stress to already overstretched supply chain. Some of the plants of automobile industries have also halted their operation which will impact auto industry. The overall impact could be substantial for the next quarter on the whole supply chain and price swings are expected because of near term shortages.

The other noticeable impact could be many as the reconstruction and rehabilitation will kick off by the government & private agencies. The repatriation of Yen and the expected need to raise cash to pay for the damages might result in the appreciation of Yen against major currencies. This will also result in export form Japan becoming costly in the short term stretching supply chain and higher costs. The damages done will have to be paid by insurance companies and that will also drive up the future insurance premiums resulting in higher costs for industries, again an important parameter (cost) of supply chain getting affected. The tremors of quake are being felt in the financial sectors also as some bonds covering the insurance cost will loose its value and shining. New fresh capital expenditure will be required to rebuild and start operation in the affected areas which might affect the cost of capital locally.

The long term impact and assessment of the earthquake and tsunami devastation is still to be estimated but it appears that such catastrophic disruptions will have a big impact on global supply chain of goods movement. It might create shortages and price increase of important goods and the ripple affect on other areas will be yet to known. The future design & flow of supply chain might take some clue from such natural devastation and be better prepared with a contingency, that’s our hope. In this time of distress and grief, the whole world and all the nations on the planet are with Japan and its people.

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Cloud computing has penetrated many areas from real-time entertainment services in the automobile sector to a complex computing for health care research. It has many more possibilities to change the way organizations make use of technology to supply goods and service customers. It has the potential to limit the limitation of current complex constraints like time, speed, space power, scalability and cost. It has immense usage and can completely change the traditional technological landscape including hardware infrastructure, network, servers, storage, interfaces and applications. In fact, small to medium sized organizations have already started adopting cloud services to boost their businesses to reach customers globally and reduce the cost of running the services.

Supply chain management applications largely comprise of backend hardware infrastructure, network, storage etc., and most importantly in-house developed customized supply chain applications. Excluding the custom developed supply chain applications, all other components are very much already included in cloud based services. The cost of managing those services in-house is far more than that of getting services by cloud providers. The companies face tremendous pressure and challenges to scale up the hardware infrastructure at the time of need and it comes at pretty hefty cost and time and ongoing operation adds more cost. In case of cloud services, company can just pay for the increased usage of computational resources and that can be provided on-demand. That’s the one reason, small and mid size companies are embracing the cloud based services and the rate of growth is expected to reach double digit this year, according to one of the technology research companies.

But the most important component, custom developed supply chain application, is the biggest obstruction in adopting a cloud based services because to use a cloud the prerequisite is to use an internet based application which is very general and standard and does not require frequent changes. This is more a problem for the big sized businesses which have their own in-house setup to develop and maintain application and use own data center. But slowly and gradually cloud providers would develop a service and solution which will be attractive enough in terms of cost and service so that even big organizations can embrace. The other important aspect is security of proprietary data which will be vulnerable for the internet based services. Most of the supply chain applications are also integrated with other transactional systems like financial, inventory management and order management and it will be difficult to manage one application in cloud and other on the company infrastructure. That might break the basic integration between different business processes, a benefit, provided by any ERP system.

If an organization has to decide which application in supply chain management can be the best candidate for cloud services, supply chain planning & demand forecasting business function has the potential to use cloud services. The other like distribution, production and sourcing are more close to execution process and hence tightly integrated with other applications like finance and order management. The decision about which environment in the system landscape could use cloud services may be rather easy to take. Normally there are many environments companies keep and maintain to support productive environment and new project landscape. Sandbox environment, application development and configuration environment, quality assurance and productive environment are typically part of any productive landscape. At the same time environments like learning and training, regression testing, volume and stress testing are also common for big size companies. Some of them can be a good candidate to use cloud services than in-house infrastructure as those environments are not constantly in use but needs all kind of operational support and consumes energy. Regression testing, learning & training, volume test and sandbox environment for supply chain applications can be potential candidates to use cloud based services.

In the past companies started embracing outsourcing of labor to level the uneven demand resulting in contract labor. Similarly, today if companies need huge computing resources just for few days, they can think of using cloud services as the cost of one computer for a thousand hours will be as much to use thousand computers for one hour. But it might take months to add, buy and install thousands computer in the company existing infrastructure. The wait time is almost negligible in case of cloud services. The scale up and down is easy to manage in less costly manner providing flexibility to the organizations and bringing more innovation friendly environment. The other important benefit of using cloud computing is platform independent for the user community as access will be based on internet. This allows users to access information by any device like smart phone, laptop, desktop etc. The benefit of cloud computing also brings the agility to the organization to tap any untapped geographical areas by quickly rolling out systems and application required to enable businesses. This makes even small size company to do business globally.

The most important concern is security as the cloud services are based on internet and we all know how vulnerable the internet is today. Many government websites have been hacked in the past resulting in the loss of proprietary data. Knowing this concern, many organizations, and specifically big organizations, may not take risk of loss of private data. The regulatory requirement may also prevent companies to use internet based computing services for proprietary data. The data which are in the public domain are already getting hosted and used on cloud resources. The big companies which provide cloud services like Microsoft, Amazon, Google, AT&T will certainly look into the concern and try to alleviate or reduce the risk level so that companies can think of using services. The future of cloud based supply chain systems looks bright and it will be fun to watch how companies decide about which part of supply chain applications goes first and becomes part of cloud.

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The freshness of goods has become one of the important requirements for regulators as well. In today’s global supply chain, products and goods are moving across the countries and the receiving countries specify the degree of freshness of the products acceptable to them. Any stock of less than the acceptable specification may not get the clearance from the local regulators. The complexity is manifold because the same item might have different acceptable specifications by different receiving countries. At the same time different items exported by a company to the same country might have different specifications. This requires a unique rule for each SKU depending on the destination bringing more complexity in supply chain management

If we further look upstream in the supply chain where value addition takes place during the manufacturing of the products, the freshness of the finished item depends largely on the component items used during the manufacturing process. The freshness of the components, to be used in the finished item, is translated to the finished items’ freshness available for distribution or sale. This is crucial to have enough cushions so that companies get more time to distribute and sell and meet the freshness specification. This can be met by having sourcing team dealing with the suppliers who provide components. Sourcing team must ensure and specify to the suppliers the degree of freshness of the component when it lands in the company premises.

When the global recession hit the world two years back consumers slowed down the purchase in anticipation and that resulted in more inventory lying in the companies’ warehouses and distribution centers. When inventory does not move and turn over is decreased, the products loose their freshness resulting in more obsolescence. Inventories are written off because of aging leading to loss of revenue and profit. Its double blow to the organizations as the current asset (inventory) is lost because of the write off as well as the earning of the company gets impacted because of the missed sale opportunities.

As discussed above there are many segments in the supply chain where companies can focus to secure the products’ freshness. It is desirable and of extreme business value to address the issue of freshness. It is useful to improve the speed with which the products move in the supply chain. At the same time it’s important to enable the supply chain planning & execution system which can automatically plan and replenish as per the customers’ (both internal and external customers) requirements of freshness. Its not that companies are not striving to achieve this but either they are doing it manually or may be trying to achieve one layer at a time. Few organizations tackle this during execution process which comes later but miss the opportunity while planning flow of goods. There should be an integrated planning system which can consider the issue of freshness starting from the planning to the replenishment and from the sourcing to the manufacturing. It can be achieved by designing an inclusive supply chain system which considers all the parameters needed to define and maintain freshness requirements in the system. How organization can focus on planning the freshness of the products and the parameters needed to be defined in the system would be discussed in the next post.

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1. Know the team members, customers, suppliers, stakeholders that will be involved in the process.  Study the process, inputs into the process and areas where improvement is needed.
2. Develop a good relationship with suppliers, customers, stakeholders and team members
3. Update team members, sponsors or those responsible on the progress of your work to allow their contribution towards the process improvement. Always document the update of every meeting in other to remind team members about your last discussion and to give them a clue on the next discussion.
4. Try as much as possible to give enough notice ahead before the next meeting and create different method of meeting notifications such as e-mail, text messages, phone calls, letters or fax.
5. Learn how to use the word “WE” among your team members because this gives them confidence and encouragement. It shows that their contribution towards the process improvement is recognized and taken into consideration. It will also enable the analyst to get more information/ data needed for the process improvement.
6. Attach more importance to the voice of the customer/ expectations because this is the result that will be expected at the end of your analysis. Encourage every team members, customers, stakeholders to make their contributions because all information is helpful.
7. Study the lean six sigma quality tools in other to know the appropriate tools for each stage of the six sigma process such as define, measure, analyze, improve and control.
8. Create alternatives such as questionnaires, one to one discussion, interviews, brainstorming, group discussions, SQL, historical data, intuition, customer orders, sales etc,  that can be used to collect your data/ information with equal flexibility
9. Let your data collection plan be simple enough for your team members, customers, stakeholders to understand, as well as the questionnaires that will be used for data collection 
10.  Always maintain positive attitude towards team members, customers, stakeholders, so that all efforts contributed towards the process improvement can be crowned and to achieve maximum/positive results.

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