Know Your Supply Chain

As goods move from raw material processors through to manufacturers, distributors and retailers, extensive coordination is required throughout the supply chain. Ordering, demand forecasting and inventory decisions at each link in the chain all depend not only an organizations immediate trading partners, but on every link in the supply chain. In the past, there was little coordination among all the participants in a supply chain — each participant communicated with their suppliers (upstream) and buyers (downstream). Recently, however, organizations have focused more attention on the supply chain as a strategic asset, and communication is no longer between pairs of participants, but instead among all the members of a given supply chain. The rise of electronic commerce has further heightened the importance of supply chain management as companies reengineer processes as they are moved online. Little work has been done however, on how agents that represent members of a supply chain can communicate with one another as their human counterparts do now. We believe that successful supply chain integration demands knowledge-intensive agents. Such agents must have more than transactional knowledge that enables them to agree on prices and quantities. They must possess detailed knowledge of the domain in which they trade. In this paper we describe the knowledge needed, and suggest ways in which XML can be used to represent the needed knowledge. The Importance of the Supply Chain DaimlerChrysler, Ford and General Motors recently announced a joint venture to create an automotive parts exchange to buy and sell parts needed throughout the automobile supply chain. The anticipated exchange represents a significant transaction volume — the three manufacturers purchase $240,000,000,000 in parts annually, and their suppliers purchase an additional $500,000,000,000 in turn. The sheer size of the exchange represents a significant technical challenge, with literally thousands of suppliers bidding and offering for hundreds of billions of dollars in business. Visions of savvy agents buying and selling on behalf of companies dance in the heads of electronic commerce advocates everywhere. There is another problem that has been largely ignored: the knowledge needed to conduct business. In the past, purchasing representatives for auto manufacturers invited a small set of suppliers to visit their Detroit headquarters to bid on business. As the New York Times reported, “Preliminary engineering specifications are exchanged, and suppliers are given a deadline for sending in bids and detailed blueprints. Further meetings are then held to work out the details of the contract.” Much more information would likely be exchanged as well: demand forecasts, supply factors and logistical arrangements, for example. The envisioned auto exchange would offer an open marketplace for buyers and sellers to transact business. The manufacturers argue even greater benefits for exchange users. Because the exchange will be tailored to automotive manufacturing, the exchange can offer industry-specific tools and features: demand forecasting, collaborative design and order pooling for volume purchasing, among others. The planned automotive exchange would be fertile ground for agents to conduct business on behalf of parts suppliers and purchasers. However, to be successful, such agents must exchange the same information that people do, and they must have the same domain knowledge as their human counterparts. Although electronic commerce often leads to radical changes in the conduct of business, the logistical challenges are the same ones that face offline businesses. In fact, supply chain issues are often the Achilles heel of online businesses. At the end of well-implemented, streamlined search and ordering process, a physical good must often be shipped to the customer. To design intelligent agents that address these challenges, it is important to understand what the specific problems are, and how they are being addressed by people. Much of the current work in agents and electronic commerce focuses on transactional knowledge — the knowledge needed to agree on a price, quantity, delivery date and other factors surrounding the immediate sale of goods or services. However, agents’ knowledge must reach beyond transactional knowledge to incorporate knowledge of the supply chain. We begin by discussing transactional knowledge and then describe the need for knowledge beyond transactions. Transactional Challenges of Supply Chain