US20060064344A1 - Supply chain architecture - Google Patents

Abstract

A supply chain network where customers, suppliers, logistics providers, carriers, and financial institutions are all connected to a centralized supply chain server. The server receives forecasts from the customers detailing the orders that the customers desire. These forecasts are analyzed by the supply chain server to ensure that they conform to contractual agreements and do not contain errors. The forecasts are also used to warn the suppliers of future demands so that the suppliers can anticipate demands and plan inventory accordingly. The supply chain server checks with the suppliers to determine whether the forecasts can fulfilled by the suppliers. If the forecasts cannot be fulfilled by the suppliers, the supply chain server contacts customers and suppliers and attempts to either redistribute the customers' demands to different suppliers or request that customers alter their demands. Once supplier demand issues are resolved, the forecasts are sent to the suppliers in groups so that the suppliers need to prepare a smaller number of large orders. The supply chain server also controls the processes involved in distributing the product from the suppliers to the customers including the generation and payment of invoices. A form of financing the customers' purchases, made possible by the novel supply chain architecture, is also disclosed.

Description

CROSS-REFERENCE TO RELATED APPLICATIONS
• The present application is a division of U.S. patent application Ser. No. 10/219,612, filed Aug. 15, 2002 in the name of Derek Lidow and entitled SUPPLY CHAIN ARCHITECTURE, which is a division of U.S. Pat. No. 6,889,197, issued May 3, 2005 in the name of Derek Lidow and entitled SUPPLY CHAIN ARCHITECTURE, which claims priority to U.S. Provisional Application Ser. Nos. 60/175,868, filed Jan. 12, 2000 and 60/213,279 filed Jun. 22, 2000.
BACKGROUND OF THE INVENTION
• 1. Field of the Invention
• The invention relates to an improved supply chain network and, more particularly, to a supply chain network which centralizes many operations thereby yielding a supply chain that is more efficient and less costly than prior art systems.
• 2. Description of the Related Art
• Manufacturers (hereinafter generally referred to as “customers”) and suppliers of products or services (hereinafter collectively referred to as “products”) are continuously interested in reducing costs. Materials make up a large fraction of total costs as do supply chain management costs. A supply chain is any and all activities associated with defining, designing, producing, receiving, monitoring, storing and using the components and sub-components used in manufacturing a product. Manufacturers/customers often find themselves paying higher prices, being short of products in times of high demand, forecasting needs inaccurately, and creating slow moving inventories because these manufacturers do not have the expertise, resources or time to manage their supply chain properly.
• Direct materials account for between 35% to 70% of a manufacturer's total costs and often constitute the largest expense category. Lowering material costs significantly improves profitability. For example, a company in the business of contract electronics manufacturing could improve overall profitability by 20% to 30% from only a 1% drop in direct material prices.
• Supply chain costs also constitute a significant fraction of a manufacturer's total expenditures. For example, supply chain costs include: planning, purchasing, inbound freight, receiving, inventory management and carrying costs, supplier monitoring, measurement, management, and the payment of invoices. These costs can account for between 5% and 25% of corporate expenditures. That estimate applies to both the manufacture and supply of the manufacturer's components. For example a 20% reduction in supply chain costs would significantly improve, and in many cases could double, the profits of a given manufacturer.
• A typical prior art supply chain is shown inFIG. 1. Customers generally have two methods for procuring components and sub-components using prior art supply chains. As shown in priorart supply chain50, large original equipment manufacturers (“OEMs”), contract electronics manufacturers (“CEMs”—not shown) or customers52 (of components) will typically buy directly from a component manufacturer orsupplier56. This technique is known in the industry as “buying direct”.Large customer52 places an order withsupplier56 each time a part is needed.Supplier56 gives the products to acarrier58 who, in turn, delivers the ordered products tolarge customer52.
• Small customers54 typically make purchases through a third party distributor oragent60.Distributor60 purchases parts fromsupplier56 who gives the products to acarrier62 who brings the products todistributor60.Distributor60 then transfers the products to anothercarrier64 who delivers the products tosmall customers54. Other types of third party distributors use an electronic means to hold auctions for components. However, as the time involved in attending the electronic auction is lengthy, such services are rarely used except for one-time, or spot component requirements.
• Many of the parties involved are not pleased with prior art supply chains. Known supply chain networks commonly yield missed shipments and discontinuity of component supply to a customer. These deficiencies particularly frustrate customers in times of “allocation” where there are shortages of key components. This causes delays in end product shipments and corresponding loss of revenues and profits.
• Component suppliers56 in particular are frustrated with prior art supply chains. Changes in market conditions for these entities' end products yield very volatile manufacturing schedules, resulting in inefficient factory usage and higher costs.Component suppliers56 have also invested heavily in MRP (Materials Resource Planning) and ERP (Enterprise Resource Planning) systems to try to incrementally improve factory loading and inventory levels.
• In these systems, component suppliers plan to provide parts based upon production plans generated by a customer factory or series of factories using the same system. However, these systems often produce disappointing results because they operate only within each individual component supplier and often only process production plans on a weekly basis. As such, these systems typically react slowly when compared with the rate of order fluctuations and are unable to detect excess inventories located in non-primary warehouses thereby resulting in excess parts being ordered.
• To solve some of these problems, some larger manufacturingcustomers52 require thatsuppliers56 maintain dedicated on-site or local consignment inventories of the products these manufacturingcustomers52 require. However, maintaining these additional inventory locations is very costly and difficult to control. The additional inventories also create further inefficiencies in the use or production capacity and total inventory.
• Additionally,customers54 are often serviced throughdistributors60 who require 7% to 35% gross margin points to manage and cover inventory handling costs in addition to the supply chain costs already borne by thesecustomers54. These distributor margins reduce supplier's56 profitability on small and mediumsized customers54 and produce a tension betweensuppliers56 anddistributors60 on how or whether to limit distributor margins. Furthermore, distribution orders cost more to administer with special processes and systems required to manage “ship-and-debit” pricing and stock rotations. Finally, selling and servicing customers costs between 5% and 10% of sales—excluding marketing and advertising costs.Suppliers56 have difficulty finding a pay-back for these investments.
• There are payment problems in prior art supply chains as well. In many prior art systems, products are sold tocustomers52,54 with payment terms that are ignored. For example, the customers receive the products fromsuppliers56 and then have30 days from delivery to provide payment tosuppliers56. Customers frequently take advantage of this payment term and not pay until after the term has expired, for example, 45 days from delivery. Customers find this arrangement more desirable than taking a loan to cover the costs of the products and paying the loan on time. By delaying payment, the customers' balance sheets indicate a payable instead of a loan; a more attractive view for investors. It is generally not worthwhile forsuppliers56 to complain about a 15 day discrepancy but thesuppliers56 lose money during those 15 days. To solve this problem,suppliers56 create a defacto interest for money expected to be lost due to late payment by charging customers more for parts. This defacto interest is clearly undesirable forcustomers52,54.
• Moreover, toward the end of accounting periods,suppliers56 are frequently desirous to ship products ahead of schedule to improve the appearance of respective balance sheets.Distributors60 for thesuppliers56 are aware of this desire and consequently requiresuppliers56 to offer discounts to receive goods before scheduled shipments. These extra discounts required bydistributors60 present yet another disadvantage of known supply chains networks.
• Thus, there exists a need in the art for a supply chain architecture which can remove the inefficiencies referenced above and thereby reduce the losses incurred by both customers and suppliers in the sale and distribution of products.
SUMMARY OF THE INVENTION
• A supply chain network where customers, suppliers, logistics providers, carriers, and financial institutions are all connected to a centralized supply chain server. The server receives forecasts from the customers detailing the orders that the customers desire. These forecasts are analyzed by the supply chain server to ensure that they conform to contractual agreements and do not contain errors. The forecasts are also used to warn the suppliers of future demands so that the suppliers can anticipate demands and plan inventory accordingly.
• The supply chain server checks with the suppliers to determine whether the forecasts can be fulfilled by the suppliers. If the forecasts cannot be fulfilled by the suppliers, the supply chain server contacts customers and suppliers and attempts to either redistribute the customers' demands to different suppliers or request that customers alter their demands. When supply issues have been resolved, the customers' demands are sent to the suppliers in groups so that the suppliers need to prepare a smaller number of large orders.
• The supply chain server oversees and controls the processes involved in distributing the product from the suppliers to the customers including the generation of purchase orders and invoices. Customers pay the supply chain server and that payment is then forwarded to the appropriate suppliers and logistics providers. If a customer wishes to return a product, the return process is also overseen and controlled by the supply chain server. As customers, suppliers, and logistics providers all communicate with the supply chain server, the novel architecture yields useful information not available in the prior art. This information includes, for example, customer demand propensities, supplier performance, etc.
• Since the supply chain server receives customer forecasts, an operator of the supply chain server can more confidently receive suppliers' products ahead of a designated schedule—thereby allowing a supplier to ship early to improve the supplier's accounting books. Additionally, the operator of the supply chain server can more confidently provide a customer with financing arrangements associated with the demanded products. This arrangement is because if the customer does not pay for the products as contracted, the operator can withhold shipment of future products to the customer.
BRIEF DESCRIPTION OF THE DRAWINGS
• For the purpose of illustrating the invention, there is shown in the drawings a form which is presently preferred, it being understood, however, that the invention is not limited to the precise arrangements and instrumentalities shown.
• FIG. 1 is a block diagram of a prior art supply chain architecture.
• FIG. 2 is a block diagram of a supply chain network in accordance with the invention.
• FIG. 3 is a block diagram illustrating the modules effectuating the supply chain network ofFIG. 2.
• FIG. 4 is a diagram illustrating a Demand Capture and Validation process performed by an Order Management Module during a regular demand request in accordance with the invention.
• FIG. 5 is a diagram illustrating a Demand Capture and Validation process performed by the Order Management Module during an ad hoc demand request.
• FIG. 6 is a diagram illustrating the processes performed by the Planning Module in accordance with the invention.
• FIG. 7 is a diagram illustrating an example of the flow of information during the Planning Module ofFIG. 6.
• FIG. 8 is a diagram illustrating the processes performed during the Planning Module ofFIG. 6 when customer demand exceeds supplier capacity.
• FIG. 9 is a diagram illustrating an example of the flow of information during the Planning Module ofFIG. 6 upon receipt of an ad hoc customer request.
• FIG. 10A is a diagram illustrating the processes of the Procurement Module in accordance with the invention.
• FIG. 10B is a diagram illustrating an error routine performed in the Procurement Module ofFIG. 10A.
• FIG. 11 is a diagram showing a continuation of the processes performed in the Procurement Module ofFIG. 10A.
• FIG. 12 is a diagram showing a continuation of the processes performed in the Procurement Module ofFIGS. 10A and 11.
• FIG. 13 is a diagram showing a continuation of the processes performed in the Procurement Module ofFIGS. 10A, 11 and12.
• FIG. 14 is a diagram illustrating the processes performed by the Procurement Module when a customer desires to return an item procured through the supply chain network.
• FIG. 15 is diagram showing a continuation of the processes depicted inFIG. 14.
• FIG. 16 is a diagram illustrating the flow of information and products during a Fulfillment Module in accordance with the invention.
• FIG. 17 is a diagram illustrating the production of invoices performed by a Billing and Payment Module in accordance with the invention.
• FIG. 18 is a diagram showing the payment of invoices during the Billing and Payment Module.
• FIG. 19 is a diagram illustrating types of information and corresponding time intervals provided by the supply chain network in accordance with the invention.
• FIG. 20 is a diagram illustrating the flow of title and payment for products in accordance with an embodiment of the invention.
• FIG. 21 is a diagram illustrating an alternative flow of title and payment for products in accordance with another embodiment of the invention.
• FIG. 22 is a diagram illustrating an embodiment of the architectural set up for the supply chain architecture in accordance with the invention.
• FIG. 23 is a diagram illustrating an embodiment of a supply chain server in accordance with the invention.
• FIG. 24 is a more detailed diagram illustrating the supply chain server environment for the supply chain server shown inFIG. 23.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
• 000I. General Overview
• In the following description, terms describing processes and hardware are used interchangeably as it should be clear that the functions described could be implemented using many different forms of hardware, software or even manually.
• The invention creates a network which supports customers requesting the same or similar products. The customers using a supply chain network in accordance with the invention realize lower costs and increased flexibility even in changing supply demands. In one embodiment, the products received by customers are initially qualified by the customers first—in that the products can be extensively tested by a customer before the product is “qualified” or permitted in the customer's manufacturing process. Once the product is qualified, a defined set of interactions occur in a particular sequence and at designated times that permit the supply chain to be managed and well synchronized between customer and supplier. Such a well synchronized supply chain has minimal inventories and short reaction supply times.
• Referring toFIG. 2, there is shown a general overview of a supply chain network in accordance with the invention.Supply chain network70 includescustomers72 of any size.Customers72 each place orders with asupply chain server74.Supply chain server74 accumulates demand forecasts fromcustomers72 who are using the same or similar products. These demands are then aggregated andsupply chain server74 determines the best method for distributing all the products requested from any approvedsuppliers76 to any requestingcustomers72.
• Althoughsupply chain server74 will typically be comprised of a computer, it will be referred to throughout the description as an entity capable of entering into a contractual relationship. It should be understood that in such descriptions, the operator of the server will be the real party in the contract. It should also be understood thatsupply chain server74 need not be implemented as a computer.
• Since the customer orders are aggregated bysupply chain server74,suppliers76 need to assemble a relatively smaller number of orders compared with the number of customers and shipment for the entire network of customers. In one embodiment the products are then picked up by a freight company as designated by a logistics provider78 (hereinafter “3PL”—third party logistic provider) and taken to a location (which can be the same location as where the shipment was picked up) where instructions are provided bysupply chain server74 for the distribution of the products. These instructions indicate how the order is to be broken down and re-assembled in the exact quantities required by the specific customers. Breaking down the order is called a cross-dock operation and is performed at a cross-dock point.Supply chain network70 can work with any number of customers, suppliers and logistics providers. In another embodiment, the customer or the supplier point performs the activities ascribed to the Logistics Provider.
• By deciding later in the distribution process to whom and where products will be shipped yields maximum flexibility, minimum overall cycle time, and eliminates the costly need to manage a customer's order within the supplier's order management system. This is advantageous because order management costs can be quite substantial for suppliers managing large numbers of customers and large numbers of different part types and numbers. The present invention provides economic advantages, as the cost of managing one order for one part is generally much higher than disassembling a larger order of many parts into specific quantities.
• After the products are disassembled, the orders of each individual customer may be shipped to their final destinations using conventional means and carriers. For large quantities of products coming from many different suppliers and going to many different customer locations, the cross dock may be strategically located so as to minimize the overall shipping and handling costs.
• Referring toFIG. 3, the operations ofsupply chain network70 can be broken up into five main modules:
• 1)Order Management40—collecting customer forecasts and determining if the requests are valid;
• 2)Planning42—determining if customer demands exceed supply—and providing solutions if demand does exceed supply;
• 3)Procurement44—execution of the purchasing process;
• 4)Fulfillment46—transporting the products from suppliers to customers;
• 5) Billing andpayment48—generation and payment of invoices.
• Although a typical customer demand will typically follow the order of the modules shown inFIG. 3, the Modules operate independently and sometimes concurrently as will be explained more fully below. For example, the Order Management for one day's demands may take place at the same time as the Fulfillment of a previous day's demands. Prior art supply chain systems handled many of these functions as completely independent events without communication between each functional module. For example, fulfillment was handled independently of supplier payments or even order management. In addition, information management refers to incorporated into each of these modules as would benefit its users. Information management refers to the accumulation of useful supply chain management information that is beneficial to customers and suppliers.
• The invention manages all these activities for many customers and many suppliers simultaneously. This enables the invention to perform these tasks more efficiently for all parties. To illustrate this point, consider a customer X who receives a large rush order requiring certain parts from suppliers A and B but neither supplier A nor B have the inventories to meet the needs of the customer. By handling many customer and supplier supply and demand requirements simultaneously, a supply chain architecture in accordance with the invention can determine that a supplier C has extra parts of the same type demanded and that another customer Y plans to use either supplier B or C for his needs. The supply chain server can then arrange for supplier C to ship extra parts required by customer Y so that supplier B can ship extra parts required by customer X.
• In one embodiment,supply chain network70 is implemented using a cadence where all transactions are linked to one another and performed on a regular basis. For example, all customers usingsupply chain network70 could order all parts within a certain commodity family on a given day of the week. This creates a large economy of scale in the fulfillment activities that is passed to users of the network. Frequently, production requirements are planned over the weekend thereby causing Monday to be a desirable day to start the Order Management cycle. As such, in one embodiment of the invention, Planning takes place on Monday night, Fulfillment of all parts on Tuesday, and Billing on Tuesday night. Some parts are used in very high volumes or are perishable. In accordance with the invention, these parts could be planned, ordered, and fulfilled on a daily cadence even marked off in hours. In prior art techniques, many dates needed to be entered, tracked and changed according to the expected delivery status of the product ordered. This is a very costly and time consuming task as the sequence of information, products, and currency can change depending upon the needs of the specific customers, suppliers and logistics providers that are using the network.
• Product usage by customers is often determined by an of ERP computer system on a weekly basis, the supply chain network in accordance with the invention realizes order, planning, and delivery times that cumulatively considerably less than one week. This system enables customers to significantly vary production plans at the end of the work and still be able to receive the necessary parts without using a large quantity and assortment of parts in a costly inventory. This also eliminates the need to manage a multitude of dates in the ERP system.
• The individual modules will now be explained in detail with continuing reference toFIG. 3. Note again that portions of these modules operate concurrently.
• 00II. Order Management
• The Order Management Module provides an environment wheresupply chain server74 directly interacts withcustomers72. This Module includes the processes required to capture customer demand and the validation and approval required to process that customer demand.
• Customers72 submit their demand for desired products tosupply chain server74 in multiple ways. For example, in a preferred embodiment,customers72 submit their requests using a thirteen week forecast,week 0 daily callouts, and ad hoc requests. Each week,customers72 submit a thirteen week forecast for each of the Planning/Ship-to locations specified in their contract withsupply chain server74. For high volume and volatile commodities such as DRAMs (dynamic random access memories),customers72 also communicate their week 0 (i.e. current week) demand by sending daily callouts. In addition,customers72 also have the ability to submit any unforecasted demand tosupply chain server74 by sending an ad hoc request. Such an ad hoc request is an order that no supplier has been prepared to receive as it was not forecasted or was not within forecasting tolerances defined in contractual arrangements between suppliers and customers or defined by contracts for the network. An ad hoc order is therefore more likely to be unfulfilled within a standard cadence without intervention from human Planners—discussed below.
• Once customer demand is received, it is validated by the Order Management Module against contract terms and details outlined during an initial customer set-up process. This validation may include verifying that the forecast is complete, ensuring that every part number exists in the supply chain server system, and/or that all required information is complete and accurate. If a customer demand is invalid, abnormal, or incomplete,supply chain server74 notifies the customer on a exception basis that something is wrong with their request and a resolution process is initiated. Examples of the analysis that the Order Management Module may perform and thereby improve the validity of the forecasts received include, but are not limited to:
• identifying major shifts relative to previous weeks' forecasts;
• identifying major cumulative shifts in buying patterns; and
• identifying requests outside agreed upon capacities.
• Supply chain server74 or Planners can also check supply and demand requirements relative to known customer events such as start-up, end-of-run, and plant shutdowns. Planners are employees of the operatorsupply chain server74 who intervene whensupply chain server74 is unable to fulfill all the unconstrained demand with available supply as is described below. Planners contact customers, using for example, e-mail, and suppliers and suggest adjustments to their respective production plans to create a better supply and demand balance for all parties.Server74 notifies Planners of these conditions using exception reporting. Planners can use a Planner Supply Tool (discussed below) which provides valuable and unique information produced bysupply chain server74. Planners can thus make better suggestions on how supply and demand can be balanced than that which could be performed by a customer or supplier on their own.
• In response to an invalid demand,supply chain server74 sends e-mail or other message alerts to all potentially impacted parties, including the employees of the supply chain server (i.e. Planners). Such message alerts can include, but are not limited to, issuing “Red light” or “Yellow light” alerts to depict relative importance and immediacy of attention required. Examples of such alerts are shown below. Clearly other criteria could be used to produce an alert message.
• Nomenclature
• N^a_b=Forecast made on week ‘a’ for quantity to be delivered on week ‘b’ where
• b≧a
• K_c=Capacity available on week c
• Weeks 0-13 Abnormalities:
• Yellow Lights
• For all: a, a−1, a−2, . . . , a−13
• 0.8<Σ N^a_b/Σ N^a−1_b−1<1.2, summed for 0≦b−a≦13
• (no more than 20% change in total requirements from week to week) and
• 0.75<Σ N^a_b/max(Σ N^a_b), summed for 0≦b−a≦13
• (no more than 25% upside volatility over the past 13 weeks)
• Σ N^a+1_b+1/min(Σ N^a_b)<1.25, summed for 0≦b−a≦13
• (no more than 25% downside volatility over the past 13 weeks)
• Weeks 9-13 Abnormalities:
• Yellow Lights
• For b=a+9, 10A, 11, 12, 13
• 0.8<N^a_b/N^a−1_b−1<1.2
• (no more than 20% change in requirements from week to week)
• Weeks 7, 8, 9 Abnormalities:
• Yellow Lights
• For b=a+7, 8, 9
• 0.8<N^a_b/N^a−1_b−1<1.2
• (no more than 20% change in requirements from week to week)
• Red Light
• N^a_b>K_b
• (no week's requirement exceed capacity)
• Weeks 0-6 Abnormalities:
• Yellow Lights
• 0.8<Σ N^a_b/Σ N^a−1_b−1<1.2, summed for 0≦b−a≦6
• (no more than 20% change in total requirements from week to week) and
• For b=a+0, 1, 2, . . . , 6
• 0.9<N^a_b/N^a−1_b−1<1.1
• (no more than 10% change in requirements from week to week)
• Red Lights
• N^a_b≦K_b
• (no week's requirement exceed capacity)
• or
• 0.7<Σ N^a_b/Σ N^a−6_b<1.05, summed for 0≦b−a≦6
• (no more than 30% unused requirement compared to what was started in production 6 weeks ago, and no more than 5% over)
• Weeks 0, 1, 2 Abnormalities:
• Red Lights
• For b=a+0, 1, 2
• 0.95<N^a_b/N^a−1_b−1<1.05
• (no more than 5% change in requirements from week to week)
• Customer credit history and approval may also be integrated as part of the Order Management Module. After demand has been validated and the credit of the customer has been checked, the demand is sent to the Planning Module. Demand for customers on credit hold can be sent to a suspend file for action by an Account Manager.
• An exemplary embodiment of the Order Management module will now be explained. Referring toFIG. 4, there is shown a demand capture and validation process performed by the Order Management module during a regular demand schedule. During a regular demand schedule,supply chain server74 receives204 a thirteenweek customer forecast200 andweek 0daily callouts202 fromcustomers72. The forecasts may be from a plurality of customers or even from a plurality of sources within a single customer. Receivingcircuit204 may capture customer demands through, for example, an EDI (Electronic Data Interchange) forecast, an e-mail (e.g. with an EXCEL spreadsheet), an EDI purchase order (“PO”) or through XML (extensive markup language) communication. Receivingcircuit204 may also capture specific services which may not be specified in the customer contract. For example, expedited delivery, special labeling, packaging, etc., all may be captured.
• Supply chain server74converts206 the customer demands200,202 into a standard format used bysupply chain server74 to analyze the customer demands. If there are problems withconversion206, anerror routine208 is performed to cure all technical difficulties. In a preferred embodiment, all such technical difficulties should be resolved by the end of the business day. Thereafter, adelay circuit210 ensures all the converted demands are stored and the required functional validations are performed by the end of the business day. Such a delay allowsserver74 to accumulate demands (200,202) for all customers.
• A collectcustomer information circuit212 compares the converted customer's demands with thecorresponding customer contract214 and with currentcustomer product information213 regarding the customer's products.Information213 includes, for example, approved suppliers, specification revisions levels, etc.
• Avalidation circuit216 determines whether the converted demands are valid.Validation circuit216 detects, for example, whether the demanding customer is actually a customer ofsupply chain network70.Validation circuit216 also detects whether customer forecast200 is complete in that there is one forecast for every planning/ship-to location and part number combination, and that every part number has a specified quantity. Finally,validation circuit216 may verify that the requested part number relates to a valid part contracted betweencustomer72 and the entity runningsupply chain server74.
• Ifvalidation circuit216 determines that a particular customer demand is not valid, anerror routine218 is performed where a notification is sent to an Account Manager to resolve the outstanding issues. The Account manager is used to maintain a current standing for all customers by evaluating their payment history.Supply chain server74 then sends thecustomer72 an exception notification to inform the customer that the demand was incomplete in some way. The exception notification itself is stored in a suspend file until it is acted upon. If the customer demand is valid,supply chain server74checks220 the credit status of the customer by referring to the customer'scredit history222. If the customer's credit standing is approved at224,supply chain server74 branches to the Planning Module (shown inFIG. 8). If the credit standing is not approved at224, anerror routine226 is initiated where the Planner, the Account Manager and the Credit Manager attempt to form a resolution of the problem. Late payments or delinquent accounts are monitored by the Credit Manager. All customer demands with denied credit are stored in a credit suspend file. If a customer demand is denied because of bad credit, a notification is sent to the Account Manager, the Credit Manager, and the Planner informing them of the customer's intent to buy. In such a situation, the Planner can view the customer's demand but is not obligated to actually implement the planning until the credit issue is resolved.
• For an ad hoc demand, the process flow of the Order Management Module is as shown inFIG. 5. Referring toFIG. 5, as with a regular customer forecast ofFIG. 4,supply chain server74 receives230 anad hoc demand232 and converts234 ad hocdemand232 into a standard format as explained above. Again ad hocdemand232 can be captured via e-mail with, for example, an EXCEL spreadsheet or an EDI PO. Additional services, which were not specified in the customer contract, are also captured—such as expedited delivery, special labeling or packaging. Unlike with a regular customer forecast, a field is established (not shown) to identify the ad hoc demand to track order billing information. This field may optionally be used to generate an additional charge for ad hoc orders. If there are problems in converting the customer demand to a standard format, anerror routine236 is performed to cure all technical difficulties. In a preferred embodiment, all such technical difficulties should be resolved by the end of the business day.
• Thereafter, adelay circuit238 ensures all the converted demands are stored and the required functional validations are performed by the end of the business day. A collectcustomer information circuit240 performs the validation by compiling the converted customer's demands and comparing them withcustomer contract214 andcustomer product information213.
• Avalidation circuit244 determines whether the converted demands are valid.Validation circuit244 detects, for example, whether the demanding customer is actually a customer ofsupply chain server70.Validation circuit244 also detects whether the requested part number is a valid part contracted for betweencustomer72 andsupply chain server74. Unlike with a normal forecasted demand, no validation is necessary to determine if ad hocdemand232 is complete as it is an unforecasted demand and can include either one or more customer part numbers.
• Ifvalidation circuit244 determines that the customer demand is not valid, anerror routine246 is performed where a notification is sent to the Account Manager to resolve the outstanding issues.Supply chain server74 then sendscustomer72 an exception notification to inform the customer that the demand was incomplete in some way. The exception notification itself is stored in a suspend file. If the customer demand is valid,supply chain server74checks248 the credit status of the customer by referring to the customer'scredit history250. If the customer's credit standing is approved at252,supply chain server74 branches to the Planning Module. If the credit standing is not approved at252, anerror routine254 is initiated where the Planner, the Account Manager and the Credit Manager attempt to form a resolution of the problem. All customer demands with denied credit are stored in a credit suspend file. If a customer demand is denied because of bad credit, a notification is sent to the Account Manager, the Credit Manager, and the Planner informing them of the customer's intent to buy.
• In this way, the Order Management Module ofsupply chain server74 uses a forecast system to replace the purchase order system that was used in the prior art. In prior art supply systems, suppliers did not see forecasts and could not determine whether a forecast was contrary to a contractual agreement or whether there was an undesired error in the forecast. The supplier only saw what a particular customer gave the supplier. Even if the supplier used an MRP system, MRP demands frequently vary significantly and suppliers did not have the ability to review these demands to ascertain unusual or unexpected requests. Suppliers thus often used replenishment algorithms to replenish their stock as they were never certain as to the expected amount of depletion of the stock.
• The invention overcomes these problems by reviewing the customer forecasts for consistency with contractual agreements and with prior forecasts. The invention thereby produces continued delivery and performance thus reducing the amount of undesired scrap material produced when suppliers have excess inventory. Suppliers benefit from the supply chain architecture because demand volatility is minimized. This is due to the accumulation of the demand forecasts and filtration systems reviewing the demands. Suppliers can also replenish their inventories with more certainty as they are now given a forecast of customer demands from many customers a few weeks in advance. In high volatility demand industries such as demands for electronic components, prior art supply chains could not work based upon customer forecasts because a 50% change in demand from one week to the next was possible. As prior art supply chains took too long to deliver a product to a customer, they could not keep up with these highly volatile demands. However, the supply chain architecture of the invention enables much quicker delivery (e.g. within one week) so that forecasted based customer demands are possible.
• The Order Management Module also provides customers with the ability to check the status of an order. A typical customer may be interested in knowing exactly what product he is getting and when that product is on its way. Listed below are some typical events that may be tracked bysupply chain server74. In each of these notifications, information may be sent tosupply chain server74 so that an extranet of supply chain server74 (the hardware ofsupply chain server74 is discussed more completely below) can be updated accordingly.
• Order Release Notification
• An order release notification provided by the Planning Module may be generated after a specific order is released to thesupplier76 or suppliers (one customer order may be fulfilled by several suppliers). This event may be used to informcustomer72 that their order has been reviewed and passed on to the suppliers who are responsible for fulfilling the order. The Planning Module then updates the Extranet at the time of forecast release to the Suppliers.
• Shipment Pick Up Notification
• A shipment pick up notification may be sent tosupply chain server74 by3PL78, indicating that a carrier has picked up a product from a given set ofsuppliers76. This event providessupply chain server74 with information used to monitorsupplier76 and3PL78 performance. This event also captures information that can be compared against the supply plan to identify discrepancies between expected and actual supplier shipments.
• Cross-Dock Arrival Notification
• A cross-dock arrival notification may be sent tosupply chain server74 by3PL78, indicating that a product has arrived at the cross-dock. This event also providessupply chain server74 with information to continuously 3PL performance.
• Shipment Notification
• A shipment notification may be sent tosupply chain server74 by3PL78, indicating that the order is on its way tocustomer72.
• Customs-In Notification
• When applicable, a customs-in notification may be sent tosupply chain server74 by3PL78, indicating that a product is in customs.
• Customs-Out Notification
• When applicable, a customs-out notification can be sent tosupply chain server74 by3PL78, indicating that a product is out of customs.
• Proof of Delivery (POD) Notification
• A POD and final notification can be sent tosupply chain server74 by3PL78, indicating that a customer shipment has been delivered to the specified locations.
• Flow Monitoring
• Server74 can monitor the flow of products through a bottleneck or pinch point in the supply chain. For example, it may be difficult to book a flight to a particular destination or to make it through customs at a particular city. A notification may be sent any time parts are bumped from a flight or when the parts make a crowded flight. A notification can be sent to a supplier's production line as well.
• 0III. Planning
• The supply chain network Planning Module is responsible for matching a source ofsuppliers76 to meet customer demand and for initiating the Fulfillment Module. This capability also serves as a vehicle to capture vital, real-time data on: industry trends, commodity/product trends, customer forecast accuracy, and supplier performance. This data constitutes the basis for many of the daily management reports and additional expert services thatsupply chain network70 offers to itssuppliers76 andcustomers72.
• The long term planning function of thesupply chain network70 may be performed manually since it does not need to be performed on short notice or with high frequency. Short term planning, within manufacturing and materials procurement lead times, however, should be automated as it is performed very frequently. The results of the short term planning should then be executable within a matter of hours or minutes, with great accuracy. Otherwise, the plans may no longer apply to the fast paced change characteristic of many markets today.
• The Planning Module may be triggered by any of a multiple number of events. An exemplary embodiment of these events includes the receipt of a customer's planning period (e.g., quarterly or thirteen week) forecast, the receipt of a daily forecast for aweek 0 demand, the receipt of an ad hoc order (unforecasted demand) from a customer, a supplier's de-commit at the time of shipment (short shipment), or the delayed replacement of returned parts. All of these possibilities will be discussed below. In all of these circumstances, the process depends on multiple inputs such as: demand information from the customer, customer preferences for suppliers (if any), current capacity information from the supplier, tables cross-referencing customer parts to other similar parts used withinsupply chain network70, and tables cross-referencing part numbers used insupply chain network70 to supplier part numbers. An example of such tables can be found in co-pending application Ser. No. 09/704,643 filed on Nov. 2, 2000 for a SYSTEM AND METHOD FOR GENERATING A CROSS REFERENCE GUIDE, the entirety of which is hereby incorporated by reference.
• As discussed above, in a preferred embodiment, each week,customers72 submit a thirteen week demand forecast for each of theparts customers72 will need over that time period. In the Planning Module,supply chain server74 manages these forecasts and the demands are consolidated, translated into supplier part numbers, and transformed into specific supplier requirements.Supply chain server74 achieves this transformation via demand aggregation, rough cut capacity matching and supply plan optimization.Server74 may also extrapolate forecasts based on expected demand and historical data fromcustomers72.
• Supply chain server74 performs aggregation by accumulating demand for products made using the same or similar supplier manufacturing processes. Since customers, and often suppliers, like to assign different part numbers to the same or similar products, aggregation by trying to match identical part numbers is generally ineffective. However, as suppliers aggregate customer orders into MPUs, or Master Planning Units (sometimes also referred to as Master Planning Families), to schedule their internal production facilities,supply chain server74 uses these same supplier defined MPUs to perform its aggregation.
• Supply chain server74 performs rough cut capacity matching, by first assigning aggregated demand to particular suppliers thatcustomers72 have determined as their preferred suppliers. Eachcustomer72 will have its own definition of a preferred supplier andsupply chain server74 retains this information in its data banks for each customer part number.Supply chain server74 tests to see if this default assignment of demand to each preferred supplier falls within the supply capacity constraints given bysuppliers76. Any demand on a given supplier in excess of the supplier's capacity constraints is re-assigned bysupply chain server74 to another supplier, based on customer second-choice preferences or other algorithms the network uses.Supply chain server74 uses this iterative approach to determine a rough cut allocation of demand to the available supply.
• Supply chain Planners may be used to review the rough cut capacity match to determine if any intervention is required to perform supply chain optimization. Since supply and demand of many types of components are very volatile and change on very short notice, Planners may wish to intervene to make manual adjustments to the rough cut capacity match. As an example of such an intervention, often suppliers of leading edge components suffer from periodic yield problems where they cannot produce their stated capacity for some period of time. In such an instance,supply chain server74 will be informed by a supplier, through an electronic message, telephone call, or an ASN (advanced ship notice), that fewer parts than expected had actually been shipped. Supply chain Planners then, using extensive information available to them on theSupply chain network70, decide how best to re-allocate demand products, either by manually over-riding the system, or by entering new parameters into the system. This results in some demand reduction at the impacted supplier and increased demand at other suppliers. Thus,supply chain network70 can be controlled so the Planner can feel more secure that all the supply chain network's customers will receive their parts as expected. Similarly, it sometimes may be in the customer's best interest to allocate some demand to a non-preferred supplier in order to foster a more competitive market-place, and the supply chain Planners may shift some demand to optimizesupply chain network70 in this way.
• The result of supply chain optimization is a supply plan that effectively meets all customer demand within the suppliers' capacity constraints. The demand/supply matching process may be executed on a daily basis duringweek 0 for certain volatile commodities (i.e., DRAM). After confirming their ability to support this plan, suppliers are ready to execute theweek 0 demand and initiate the fulfillment process in the Fulfillment Module. Suppliers may also be required to follow defined production or inventory management protocols relating to demanded products.
• On occasion, a customer may place an ad hoc order withsupply chain server74 for quantities or material not originally included in the customer's weekly forecast. In such an event, capacity availability to support the new demand is investigated by Planners. The Planner identifies, when possible, source(s) for the new request and initiates the fulfillment process in the Fulfillment Module.
• If asupplier76 is unable to meet its commitment (short shipment), the Planner may act as an intermediary between the customer and supplier to resolve the situation. If necessary, the Planner will identify alternate sources of supply and restart the Fulfillment Module. If material is returned to the supplier and replacement parts are needed at a later date, the Planner adjusts future demand to reflect the need for the replacement parts.
• The transactional nature of these processes providessupply chain network74 with information critical to some of the value added services it may offer. This information includes: customer/industry buying patterns, customer forecast accuracy, supplier performance, and product transitions. Such information may be made available as is discussed in the Information Management section below.
• Referring toFIG. 6, there is shown the flow of information during operation of the Planning Module. A plurality of customers72 (two are shown in the figure), a plurality of suppliers76 (two are also shown), a3PL78 and acarrier96 are connected tosupply chain server74. The Planning Module begins withsuppliers76 sending previous weeks' capacity exceptions98 regarding supply shortfalls andcustomers72 sendingforecasts100 tosupply chain server74.Forecasts100 are adjusted to take into account previous weeks' returns which were not immediately replaced and not yet reflected in the forecast. (See the discussion in the Procurement Module below).Supply chain server74 receives theseinputs98,100 and performs avalidation102 of the demands made bycustomers72 inforecasts100.
• As discussed above in the description of the Order Management Module,supply chain server74 performs anevaluation104 of the variability offorecasts100 andissues exception notifications106 when the variability of the forecasts do not conform to defined parameters. The part numbers requested bycustomers72 are converted108 to corresponding supply chain network part numbers.Supply chain server74 evaluates110 the demand variability of supply chain network part numbers. As withcustomer evaluation104,supply chain server74 determines the overall demand variability. This calculation is useful in that, even though each individual customer may avoid exceeding allowed tolerances, the aggregation of all customer requests may exceed total supply especially if many customers order close to their allowed limits. Such ordering may cause overall depletion of suppliers' products which may take some time to restore. The supply chain network part numbers are then converted112 to corresponding supplier part numbers.
• The capacity ofsuppliers76 is validated114 to determine if there are any capacity issues involved with theforecasts100 ofcustomers72. As is indicated at115, this process starts with thecurrent week 0 demand and iterates through the week 12 demand. Any capacity issues are resolved116 by sending anotification118 tosuppliers76 and anotification120 tocustomers72.Customers72 also receive anabort code122 which enablescustomers72 to send anoptional abort124 of part or all offorecast100.Supply chain server74 then resolves alldemand issues126 withsuppliers76 and control branches toProcurement Module44 ofFIG. 10A. Such an abort would then be displayed if the customer accesses its account throughsupply chain server74 so that the customer knows that the order for the particular parts was aborted. These processes will now be explained in detail by way of an example.
• Referring now toFIG. 7, there is shown the processes performed bysupply chain server74 during a normal planning scenario. In the Planning Module,supply chain server74 receives information from the Order Management Module (discussed above) regarding customer forecasts.Supply chain server74 then consolidates130 all validated customer requests. This consolidation includes grouping all customer forecasts into one large demand file (not shown) based on customer part and number. The validation itself was described in the Order Management module. Briefly, the validation includes determining whether the customer demand is invalid under contract terms, incomplete, or abnormal. If there are problems with the validation, anerror process132 is performed.Error process132 is also explained more fully above. In brief,supply chain server74 communicates with the customer having the validation problem to understand and resolve demand changes. This may include adjusting the demand quantities for a specific part number. Any changes are then reflected in an adjusted forecast.
• The consolidated demand file is then analyzed134 to identify corresponding supply chain network part numbers and suggested suppliers to provide the parts corresponding to the supply chain network part numbers. The supplier identification is based upon contracts negotiated with the customer as discussed above. Inanalyzation134, a unique identifier is assigned to represent the demand for each part from each customer during each week. These identifiers are used to create an audit trail for each demand.Analyzation134 also evaluatesforecasts100 from the previous week's demand to determine exception conditions—as was discussed more fully above in the description of the Order Management Module.
• Supply chain server74 then converts136 the supply chain network part number of the consolidated demand file into corresponding supplier part numbers. This conversion can be done using the customer part number as well. The consolidated demand file is then aggregated138 to produce supplier MPUs based upon contractual factors betweensupply chain server74 andsuppliers76. The consolidated demand file is then validated142 based upon the capacity ofsuppliers76 and contractual provisions betweensupply chain network74 andsuppliers76. These contractual provisions relate to any contractual capacity or supplier freeze horizons which may be enabled based upon the consolidated demand file. Finally,supply chain server74queries144 whether the aggregated customer demand is greater than the supplier capacity. Supplier capacity may be determined from data supplied by suppliers toserver74 or bysuppliers76 allowing access to their respective databases byserver74. If the demand is not greater than the capacity, thensupply chain server74 branches to step330 explained with reference toFIG. 10A. If the demand is greater than the capacity, thensupply chain server74 branches to a constrainedsupply planning routine148 as is shown inFIG. 8.
• Referring toFIG. 8, constrainedsupply planning routine148first redistributes150 the customer demand in an attempt to ensure that there is no resultant imbalance between demand and supply. This redistributing is performed using an iterative process and a Planner using the Planner Tool (explained below with reference toFIG. 24) to determine alternate sources of supply in light of the suppliers' capacity and contractual frozen horizons.Supply chain server74 then queries152 whether the new resultant demand is greater than the suppliers' capacity. Again, if the demand is not greater than the capacity,supply chain server74 branches to330 in the Procurement Module. Otherwise,supply chain server74 branches tosupplier intervention154. Atsupplier intervention154,supply chain server74 communicates withsuppliers76 to ascertain the situation causing the supplier's capacity to not equal the demand (e.g. raw material constraints or burst capacity issues) and evaluates possible alternatives (e.g. the potential to build ahead or store for future capacity increases). This may produce a new supplier capacity.
• After contacting the supplier insupplier intervention154,supply chain server74queries156 whether the new capacity is less than the customers' demand. Again, if the demand is not greater than the capacity,supply chain server74 branches to330 in the Procurement Module. Otherwise,supply chain server74 branches tocustomer intervention158. Incustomer intervention158,supply chain server74 communicates withcustomers72 to ascertain any possible customer flexibility (e.g. part substitutions, early or postponed delivery) to thereby produce a new customer demand. After contacting the customer atcustomer intervention158,supply chain server74queries160 whether the new customer demand is greater than the suppliers' capacity. Again, if the demand is not greater than the capacity,supply chain server74 branches to330 in the Procurement Module. Otherwise,supply chain server74 branches to an allocatesupply routine162.
• In allocatesupply routine162, the parts which actually are available from suppliers (“constrained parts”) are allocated equally among the demanding customers and the forecasts of the customers are altered accordingly. In such an event, all demanding customers may receive an equal amount of the constrained parts, or the demanding customers may receive a pro rata share of the constrained parts based upon how many parts a particular customer requested in relation to how many parts other customers requested. Thereafter,supply chain server70 branches to330 in the Procurement Module.
• Aside from the normal planning scenario performed bysupply chain server74 in response to customer forecasts, as was detailed inFIGS. 7 and 8, the Planning Module can also process ad hoc customer demands. Referring toFIG. 9, there is shown the processes performed bysupply chain server74 in response to an ad hoc demand from customers. As with a typical order,supply chain server74 receives a customer demand file from the Order Management Module. The demand file is then analyzed166 to identify corresponding supply chain server supply numbers and suggested suppliers to provide the parts corresponding to the supply chain server supply numbers. The supplier identification is based upon contracts negotiated with the customer regarding preferred suppliers as was explained above. Inanalyzation166, a unique identifier is assigned to represent the demand for each part from each customer during each week.
• Supply chain server74 then converts168 the supply chain server supply number of the demand file into corresponding supplier part numbers. This conversion can be done using the customer part number as well. Thereafter, in anidentification circuit170,supply chain server74 communicates withsuppliers76 and identifies various suppliers who may be able to provide an alternate supply for the ad hoc demand.
• Thereafter,supply chain server74 modifies172week 0 supply forecasts to produce a modifiedforecast178 that reflects new quantities for both suppliers and customers. The modifiedweek 0 forecast is also sent to the Procurement Module discussed below.Supply chain server74 sends174 modifiedforecasts178 to suppliers along with a unique identifier assigned to represent a specific week's demand for each supplier—similar to a purchase order number. Finally,supply chain server74 sends176documents180 to3PL78 including pickup and delivery instructions for the ad hoc demand. The ad hoc demand orders will be sent directly to the customer and will generally not be sent through the cross dock described below.
• Thus, by receiving and processing customer forecasts from a plurality of customers, and evaluating these forecasts with respect to an aggregation of suppliers' capacities, the Planning Module can produce a more effective and useful supply plan than that available in the prior art. Moreover, as the network is in contact with a plurality of suppliers, the Planning Module can shift allocation of customers' demands among suppliers to ensure that these demands are satisfied.
• 00IV. Procurement
• The Procurement Module executes the purchasing process. The focus of this function is on the purchase-to-pay cycle, including validation of the accuracy and timeliness of the order fulfillment process (the Fulfillment Module will be discussed more completely below). Additional areas covered by Procurement include communicating the supply order to suppliers (data interface) and reverse logistics.
• Reverse Logistics is the process of moving products from their typical final destination to another point, for the purpose of capturing value otherwise unavailable, or for the proper disposal of the products. The following is a description of a preferred embodiment of the Procurement Process.
• Supply chain server74, at the completion of the Planning Module, transmits a supply plan (including theweek 0 demand) tosupplier76 via EDI, Web, email or other means. Aftersupplier76 executes the supply plan and3PL78 picks up the shipments,supplier76 transmits an ASN (Advanced Ship Notice) tosupply chain server74. Each ASN typically includes one line item and is received electronically, containing all the necessary data agreed upon during the contract negotiation process. The ASNs are validated against the supply plan, and exceptions are resolved by the planner. Valid ASNs are used to generate purchase orders (there is generally a one-to-one relationship between ASNs and purchase orders; all line items are identified using the supplier part number) and cross dock instructions (which will be transmitted to the 3PL). In parallel, a receipt is created in an ERP system. Unlike prior art supply chains, the invention uses a supplier ASN to trigger the generation of a purchase order and a receipt notice indicating possession of the demanded part. This reduces a large number of steps performed in prior art systems because demand is conveyed to suppliers which is more likely to be fulfilled as it is based upon a forecast and not a purchase order.
• All payments received from customers during each day are listed and consolidated bysupply chain server74 for eachsupplier76. If payment for a specific order has been received fromcustomer72 via EFT (Electronic Funds Transfer),supply chain server74 uploads the payment files to a bank andsupplier76 is paid (e.g., once per day). The release of payment information automatically updates the ERP. Additionally, the bank sends a confirmation tosupply chain server74 showing the payment information. If the payment is to be made via check, a remittance advice notice and the check are printed and sent to the supplier.
• If a customer decides they would like to return materials procured throughsupply chain network70, the customer contactssupply chain server74 to obtain a return authorization.Supply chain server74 includes pre-authorized return authorizations fromsuppliers76, and agreed upon terms for accepting returns. The supply chain server sendscustomer72 the authorization, and sends a copy tosupplier76. Ifsupplier76 has an established returns process,supply chain server74 will sendcustomer72 return instructions. Once the supply chain server has the POD (Proof of Delivery) from the supplier'scarrier96,supply chain server74 will debit the supplier's account and issue a credit to the customer. Any credits or debits are first applied to any open invoices from the supplier.
• If the Supplier does not have an established returns process, once the authorizations are in place,supply chain server74 sends pick-up instructions to3PL78 if necessary. A determination must be made (1) whether the supplier has replacement parts in inventory and (2) whether the customer needs the replacements immediately or if the replacement parts demand can be added to the existing forecast. If the customer needs replacement parts immediately, the supplier's available inventory is the preferred source. If no inventory is available, the replacement parts should be built and delivered to the customer on an expedited basis. If the replacement parts are to be added to the existing forecast, the planning process continues with the additional demand incorporated into the next thirteen week forecast (see Planning Module description). Again, oncesupply chain server74 has received the POD from3PL78,supply chain server74 will debit the supplier's account and issue a credit to the customer. Any credits or debits are first applied to any open invoices form the supplier, and then to the supplier account (to any open invoices). These processes will now be explained by way of example.
• Referring toFIG. 10A, there is shown the flow of information during the Procurement Module in accordance with the invention. Aftersupply chain server74 completes the operations involved in the Planning Module, the week 0 (or current week) supply demand is sent to theappropriate supplier76.Supplier76 executes330 theweek 0 demand, issues asupplier ASN332 and sendsASN332 tosupply chain server74.Supply chain server74 receivessupplier ASN332 at334. In general only one line item is included in eachASN332. The ASN information itself is in the supplier's part number. If the supplier's ASN accuracy percentage is poor, or the supplier cannot send ASNs, a packing slip is used instead.
• Supply chain server74 validates336ASN332 against asupply plan338 generated bysupply chain server74 in response to customer forecasts. If the ASNs do not matchsupply plan338 at340, indicating that what was delivered by the supplier did not match what was ordered from the supplier, anerror routine342 is implemented andsuppliers76 are notified. In such an event,supply chain server74 will have contractual options to, e.g., cancel the balance of the partial shipment immediately, return shipment, etc. Otherwise,supply chain server74 branches to step344 shown inFIG. 11.
• Referring toFIG. 10B, there is shown an example oferror routine342 in accordance with the invention.Supply chain server74 sends460 anexception notification462 tosupplier76 alertingsupplier76 of the nonconforming shipment. Thereafter,supply chain server74 determines whether the comparison ofASN332 andsupply plan338 results in an over-shipment or a short-shipment—outside of predetermined tolerances.
• If the comparison yields an over-shipment, control branches to step466 wheresupply chain server74 determines the disposition of the excess materials involved in the over-shipment. This is performed by having the Planner discuss the situation withsupplier76 andrelevant customers72 to determine the appropriate disposition of the excess materials. Thereafter,supply chain server74 executes470 the resultant disposition plan and then branches to step344 shown inFIG. 11. Examples of the dispositions include returning excess material to the supplier, shipping the additional material to the customer (and adjusting any forecast as needed) or storing excess material at3PL78.Supplier76 will be billed for any additional freight if the materials are returned to the supplier.Supplier76 will also be billed any additional costs incurred in storing excess materials with3PL78.
• If the comparison yields a short-shipment,supply chain server74 evaluates468 the situation by having the Planner communicate withsupplier76 andcustomer72. This communication helps determine whether the short-shipment is merely a late shipment of whether the Planner must allocate further supply. The Planner may also discuss the situation with affected customers. Thereafter,supply chain server74 allocates472 to each customer a percentage of the available supply and control branches to step344 shown inFIG. 11.
• Referring now toFIG. 11, instep344,supply chain server74 creates a purchase order based uponASN332. The purchase order is created for each part for each supplier.Supply chain server74 then creates350 a receipt and generates346cross-dock instructions348 based upon thepurchase order344. The receipt, like the purchase order, is organized by part and by supplier.Cross-dock instructions348 may include pickup instructions for returns by customers. In situations of short shipment,cross-dock instructions348 should reflect the Planner's allocations as discussed above. Upon receipt of a non-conforming shipment,3PL78 will notifysupply chain server74. A complete explanation ofcross-dock instructions348 is provided below in the discussion of the Fulfillment Module.
• After aninherent delay352 which insures that allweek 0 demands are received and processed,supply chain server74 matches receipts created instep350 withsupply plan338 created earlier (SeeFIG. 10A) andsales order290 discussed below inFIG. 17. The matching is done to verify that no material has been lost in transit. All sales orders that comprise one purchase order should be created before the matching is performed. If the documents do not match at356, anerror routine358 is initiated. If receipts created at350 are greater in number or price thansales order290, possible causes of the problem could be a delay in the generation of the sales order. If the receipts are less than thesales order290 in either number or price, possible causes of the problem include a data integrity issue or that material was lost at the 3PL or in transit. In any event, the Planner should intervene. If the receipts created instep350match356supply plan338 andsales order290 at356 thensupply chain server74 moves tosteps360 and362 where a voucher and a payable, respectively, are created.
• Supply chain server then branches, inFIG. 12, to query364 and determines whether any debits (or credits) for the particular supplier are outstanding. If no debits are outstanding, control branches to step376 (shown inFIG. 13). Otherwise, control branches to step366 wheresupply chain server74 determines366 whether there are any open invoices for the particular supplier. If there are any open invoices,supply chain server74 applies368 the debit determined instep364 to that open invoice and branches to step372. Otherwise,supply chain server74 applies the debit to future balances with the particular supplier and branches to step372. At372,supply chain server74 issues372 acustomer credit374 tocustomer72. Thereafter, control ofsupply chain server74 also branches to step376.
• Referring now toFIG. 13, atstep376supply chain server74 queries whether payment fromcustomer72 has been received. If payment has not been received,supply chain server74 waits adelay period378 and then continues to query376 whether customer payment has been received. The supplier payment is thus delayed until payment is received from the customer. The customer payments themselves are aggregated throughout the day. When payment is received, control branches to query380 which determines whether the payment is through an EFT. If the payment is not through an EFT,supply chain server74 prints check and remittance advice notices at382 and then branches to step386. Otherwise,supply chain server74 generates384 an EFT file and then branches to step386. The EFT information for a specific supplier is part of a master data file. An EFT payment is sent to each supplier at the end of each day (based on the aggregation of payments from received from customers throughout the day).
• Atstep386,supply chain server74 payssuppliers76 and3PL78 with a check andremittance advice note388. If the financing option discussed below with reference toFIG. 21 is implemented,supply chain server74 also sends anEFT file390 to abank392.EFT file390 is sent tosuppliers76 once a day and to3PLs78 once a month—based on freight tables. Some time thereafter, anaccount statement394 is sent tosupply chain server74.Supply chain server74 receivesaccount statement394 and compares396 it with theEFT File390 which was transmitted tobank392. Then,supply chain server74 generates398 reports including month-end, quarter-end, etc. reports.
• The Procurement Module is also used in situations wherecustomer72 desires to return materials obtained throughsupply chain network70. Referring toFIG. 14, to initiate the return process,customer72 makes arequest410 for authorization to return a part tosupply chain server74. Eachsupplier76 providessupply chain server74 with apre-issued return authorization412 for parts supplied bysupplier76.Supply chain server74 receivesrequest410 and returnauthorization412 and authorizes414 the return of the materials using predetermined supplier-specific standards.Supply chain server74 also uses a master supply record (not shown) to determine the source of the items to be returned. This master record shows which customers received products from corresponding suppliers and dates. In this way,supply chain server74 can ascertain the origin of the product which the customer desires to return.
• Atstep416,supply chain server74 sends416 areturn authorization418 to bothcustomer72 andsupplier78.Supply chain server74 then queries420 whether the supplier, whose materials are to be returned, has an established return process. If the supplier does have such a process, that process will be used andsupply chain server74 sends422corresponding return instructions424 to thecustomer72. Control then branches to step426 shown inFIG. 12. Otherwise, if the supplier does not have an established returns process, control branches to step440 inFIG. 15.
• Referring again toFIG. 12, atstep426,supply chain server74 queries whether a returned product Proof ofDelivery430 has been received from the supplier'scarrier96 indicating that the product was returned to the customer. If not,supply chain server74 waits adelay period428 and then continues to look for receipt of returnedproduct POD430. Clearly, if the returned product POD is never received, then no credit will be issued. Whensupply chain server74 receives returnedproduct POD430, it issues432 a debit tosupplier76 which is applied when the appropriate payables are processed. Control then branches to step364 as was explained in detail above.
• Referring toFIG. 15, if the supplier does not have an established returns process, atstep440,supply chain server74 determines440 whether a replacement part is needed forcustomer72. If no replacement part is needed, control branches to step426 as was explained above with reference toFIG. 12. Otherwise, control branches to step442 wheresupply chain server74 determines whether replacement parts are available from any suppliers' inventory who has been listed as a customer's preference or which can provide immediate shipment. If parts are not available from inventory, control branches to step444 wheresupply chain server74 determines whether the replacement parts are required within the current week. If the parts are required within the current week, control branches to the Order Management module for an ad hoc demand as was described with reference toFIG. 5. If the parts are not required within the current week, control branches to the Planning Module and the demand is absorbed into future weeks forecasts as, for example, described inFIG. 6.
• Returning to step442, if replacement parts are available from inventory,supply chain server74 sends446instructions448 tosupplier76.Instructions448direct supplier76 to ship the available replacement parts from its inventory immediately. In such an event,supplier76 is responsible for shipping costs and uses3PL78.Supply chain server74 also produces 450 pick-up/delivery instructions452 which are sent to3PL78. Control then branches again to step426 described above with reference toFIG. 12.
• Thus, by centralizing processes which were performed separately by suppliers, 3PLs, carriers and customers in the prior art, the Procurement Module enables transfer of products between suppliers and customers more efficiently than prior art supply chains. Moreover, problems in shipment and returns by customers are also handled more expediently and efficiently.
• 000V. Fulfillment
• The Fulfillment Module is involved in ensuring the transportation of products fromsuppliers76 tocustomers72. Referring toFIG. 16, there is shown a time-phased Fulfillment Module flow diagram in accordance with the invention. Much of the flow of information has already been described in detail with reference to the Planning, Order Management, and Procurement modules and so a detailed discussion of such information is omitted for the sake of brevity.
• In the Fulfillment Module,supply chain server74 sendscustomer forecasts200 andweek 0 callouts202 (FIG. 4) tosuppliers76.Suppliers76 send pick-upinstructions500 to3PL78 regarding the demanded products.Suppliers76 then prepare502 the products and send ASNs332 (FIG. 10A) tosupply chain server74. Soon thereafter,3PL78 sends adispatch notice504 tocarrier96.Supply chain server74 resolvesdelivery issues336,340,342 (FIGS. 10A, 10B) whilecarrier96 sends506 dispatch vehicles tosuppliers76 to pick up the appropriate products. When the dispatch vehicles have obtained the products, ashipment pickup notification524 is sent tosupply chain server74.
• The dispatch vehicles travel to a designated cross-dock location (in this case, the 3PL is used as the cross-dock location though it should be clear that other locations could be used as is explained in more detail below) and await arrival of cross-dock instructions.Supply chain server74 generates and sends346 (FIG. 11)cross-dock instructions348 to3PL78. When the dispatch vehicles arrive at the cross-dock location, they send anarrival notification508 tosupply chain server74. At this point, a cross-dock510 is performed.
• Unlike prior art supply chains, insupply chain network70, the orders of a plurality ofcustomers72, who order the same or similar parts, are grouped together into larger orders to be procured fromsuppliers76.Suppliers76 then ship, through3PL78, a much smaller number of larger orders of these parts. In the prior art,suppliers76 handled each order individually and shipped each order in an individual box. This was very costly because it required significant management of all the orders and parts for many customers.
• In the present invention,supply chain server74 instructs3PL78 to pick up the larger orders fromsuppliers76, take the orders to the cross-dock point, and then un-pack and sub-ship the products tocustomers72. The cross-dock point may be strategically located to maximize the efficiency of the shipment to the customers. At the cross-dock point itself, there is an automated inspection, acceptance, etc. of the arriving products. Errors in the shipment are typically fixed at the cross-dock510.
• With respect to the products themselves, the operator ofsupply chain server74 takes title forcustomers72 when the product leaves suppliers'76 dock. Title is transferred tocustomer72 when the product arrives with the customer. The operator ofsupply chain server74 also acts as the importer of record.
• Focusing again onFIG. 16, after cross-dock510 has been performed at the cross-dock point (in this case at 3PL78), adispatch notice512 is sent tocarrier96 requesting a pick up of the products and a shipment notification262 (discussed below with reference toFIG. 17) is sent tosupply chain server74. The products are then picked up bycarrier96 and transported to theappropriate customers72.Customers72 may request a desired pickup or delivery location. While the products are being transported,supply chain server74 sends ASN332 (FIG. 10A) tocustomers72.3PL78 may also send a customs innotification514 and a customs outnotification516 tosupply chain server74 as appropriate. Such information would then be available tocustomers72. After the products are dropped off withcustomers72,carrier96 sends a proof ofdelivery notification POD518 to3PL78.3PL78forwards POD518 tosupply chain server74.
• Thereafter,customers72 send payment298 (FIG. 24) tosupply chain server74 andsupply chain server74 forwards payment298 (minus management fees) tosuppliers76,3PL78 andcarrier96.3PL78 then sends apayment reconciliation notification520 tosupply chain server74. If any refund is necessary,3PL78 sends such arefund522 tosupply chain server74.Supply chain server74 then forwards refund522 tocustomers72.
• Customers72 usingsupply chain server74 also have the ability to track the status of an order throughout the Fulfillment process. This order tracking capability may be offered to all thecustomers72 usingsupply chain server74 via an Extranet discussed below.
• Thus, by providing suppliers with a smaller number of larger orders, and breaking down the larger orders at a cross-dock point, a less costly and more efficient Fulfillment process is available than in the prior art. Additionally, by having customers, suppliers, 3PLs, and carriers all report to a centralized supply chain server, all parties can receive current information concerning shipment processes. In one embodiment, such information is easily made available on a web site with information populated by the supply chain server.
• 00VI. Billing and Payment
• Once customer demand is fulfilled, the Billing and Payment Module is responsible for defining the rules and activities used in performing financial transactions such as billing and processing of customer payments. An additional offering of the Billing and Payment Module is to enable the supply chain network's customers to view the status of pending orders and track the status of an order up until the time the customers receive their product.
• In general, after customer demand is fulfilled and a shipment notification from3PL78 is received,supply chain server74 triggers the generation of a sales order. At the same time, the shipment notifications are reviewed to determine any deviations between expected and actual customer shipments. This process helps to identify any short shipments or damage done to products either in transit or at the 3PL facility.
• A customer may receive several shipments from suppliers viasupply chain network70 on a given day. However, the customers preferably receive one invoice per day that consolidates those shipments into a single bill. All financial transactions betweensupply chain server74 andcustomers72 can be, in a preferred embodiment, performed by using EFT (Electronic Funds Transfer), thereby further reducing overall cycle time.
• Referring now toFIGS. 17 and 18, the Billing and Payment Module, begins withsupply chain server74 receiving260 ashipment notification262 from3PL78 indicating that the products have been delivered tocustomer72. Thereceipt260 may be through an EDI.Supply chain server74 validates264shipment notification262 and calculates266 the order pricing of the shipment. Invalidation264,supply chain server74 compares the total quantity inshipment notification262 with a quantity specified in supply plan338 (seeFIG. 11). The comparison could include more than one shipment notification per customer part number, and should take into consideration pre-defined tolerances. Ifsupply chain server74 determines270, that the shipment notification is valid,validation264 ends. Otherwise, anerror routine272 is performed as was explained above with reference toFIG. 10B forerror routine342. If an error did occur, this is indicative of a data integrity issue (shipment notification accuracy) or a 3PL performance issue (material lost or damaged at 3PL facility or in transit). In any event, Planner intervention is used to implement both short and over shipment resolutions inerror routine272.
• In calculateorder pricing circuit266, the price of the order associated withshipment notification262 is calculated based upon cross-dock instructions346 (FIG. 16), acontract276 between thesupplier76 andcustomer72, and theactual product278 that was shipped. This cost is based on the number of components purchased and prices negotiated withsupplier76. Additional costs are added for services not included in the basic management fee. These could include, for example, expedited delivery, special labeling or packaging, etc. Finally, an ad hoc order may be given an additional charge.
• In addition to the charges for the products themselves,supply chain server74 also calculates280 the freight charges associated with shipping the products based upon a freight table282 having standard freight charges. In general, freight charge is based upon weight, number of pieces in the shipment, and the freight type (e.g., a pallet, package, etc.). A reconciliation may be used periodically to make adjustments to the customer's accounts based upon reconciliation by3PL78. Some prior art techniques generated sales orders too soon and so freight charges needed to be applied after the sales order. As can be discerned, such a problem is not present in the architecture of the present invention.
• Thensupply chain server74 calculates284 the sales order total using applicable rate tables286. These tables are used to calculate custom duties and exchange rates. Insurance charges are added, as well as value added taxes and sales taxes.Supply chain server74 then generates288 asales order290. In a preferred embodiment, a single sales order is generated per customer part number and the charges are itemized—for example, freight, taxes, additional services, etc.
• Referring now also toFIG. 18,supply chain server74 then proceeds tosteps292 and294 where it generates292 and sends294 aninvoice296 forsales order290 tocustomer72. Thegeneration292 of invoices will be performed automatically for each order using electronic invoice outlining terms for each sales order. The payment terms are based on the shipment date and will include itemized charges as referenced above. With respect to the sending292 ofinvoice296, all invoices going to the same customer should be consolidated every day and so the customer will receive one invoice per day. Sending292 thus creates a receivable.
• At some point thereafter,customer72 sends acustomer payment298 tosupply chain server74 preferably through an electronic funds transfer (EFT).Supply chain server74 attempts to receivepayment298 at300. Ifpayment298 is not received within a contractually defined period of time, anerror routine304 is performed wheresupply chain server74 contacts either the customer or the corresponding bank. Ifpayment298 is received within the defined period of time,payment298 is processed302 so that incoming payments are matched with open invoices. The account of the customer who sent inpayment298 is reviewed for any other outstanding invoices (credit or debit balances) andpayment298 is applied to that customer's account. Finally, at306,supply chain server74 determines whethercustomer72 made a full payment or overpaid for a giveninvoice296. If there was no problem withpayment298, the invoice routine ends. Otherwise,error routine308 is implemented where either a collection process is initiated based on the customer's past history or a credit is applied to the customer's account in the event of an overpayment. As a plurality ofsuppliers76 may have provided parts forcustomer72,payment298 may relate to a plurality ofsuppliers76 and may need to be broken up and distributed tosuppliers76 accordingly.
• Thus, the centralization of control ofsupply chain network70 insupply chain server74 allows suppliers to avoid the costs incurred in managing billing processes with customers.
• 0VII. Information Management
• Supply chain server74 accumulates valuable data that can be provided to the supply chain network participants. In a preferred embodiment, the information delivery capability is implemented primarily by a secure Extranet site. Information delivery is very useful to a supply chain network's business model, as an efficient supply chain network incorporates both accessibility to, and visibility of, real-time information.
• Information delivery, rather than being a discrete process that happens periodically, is a capability that enables an essentially continuous communication of information betweensupply chain server74 and its business partners, (e.g., 24 hours-a-day, 7 days-a-week). In addition, the information delivery capability provides the means for customers (and potentially suppliers and 3PLs) to initiate workflow processes. For example, although the process for the customer's ability to abort an order is located in the Planning Module, information delivery will handle the communication of the abort code (e.g. a button on the Extranet that triggers an email or EDI message to initiate the work flow).FIG. 19 shows some information which can be provided to users ofsupply chain network70. The information delivery process allows information to be delivered in a very timely manner, according to the needs of the supply chain network participants.
• As can be discerned, the type of information available to Customers, Suppliers and the 3PL includes but is not limited to: order-specific information/statistics and customer-specific statistics (e.g. Week-to-date, Month-to-date, Year-to-date, etc.).
• VIII. Financing
• The structure ofsupply chain network70 also enables (but does not require) the possibility of providing new forms of financing for customers procuring products. As stated above, in prior art forms of financing, a supplier gave a customer a payment term which was frequently ignored by the customer. Suppliers would therefore increase the prices of products (de facto interest) to compensate for prospective losses due to buyers not paying on time. Sellers were also at the mercy of unreasonable prices from distributors when sellers wished to sell products early to improve their balance sheets.
• The invention, in providing a three party architecture (instead of just the supplier and customer of the prior art) removes the de facto interest and the prior art distributor. Referring first toFIG. 20, there is shown one example of the flow of title and payment insupply chain network70. As stated above in the description of the Fulfillment Module, the operator ofsupply chain server74 takes title ofproducts278 onceproducts278leave supplier76.Products278 travel to cross-dock510 and then tocustomer72.Customer72 uses536 the products and sendspayment538 to supply chain server74 (e.g., at the cross-dock point).Supply chain server74 receives540payment538 and sends it tosupplier76.Supplier76 receivespayment538 anddeposits542 the payment in the supplier's bank.
• An alternative form of financing is shown inFIG. 21. As with the flow shown inFIG. 20,products278 are sent to cross-dock510. At that time, a copy of thecustomer invoice532 is sent to a financier orbank392 as collateral for payment of the customer's invoice.Bank392 procures thenecessary financing534 forcustomer invoice532 and sends it back tosupply chain server74 at540.Supply chain server74 then forwards financing534 tosupplier76 who thendeposits542financing534 in the supplier's bank.Supplier76, therefore, gets paid soon afterproducts278 are shipped.Bank392 effectively loanscustomer72 the financing needed to paysupplier76 andsupply chain server74 secures this obligation ofcustomer72.Customer72 continues to use536products278 and then producespayment538 which is now sent directly tobank392.Bank392deposits544payment538, sends546invoice532 back tocustomer72 marked as paid and sends anotification548 tosupply chain server74 indicating thatinvoice532 was paid.
• In this way, onceproduct278 is delivered,customer72 still has a payable on its records, even thoughsupply chain server74 is securing an obligation on the customer's behalf. The payable itself is actually tosupply chain server74 orbank342 and not tosupplier76. Such a payment schedule is extended to customers with exemplary credit. Further, if the customer does not pay on time,supply chain server74 has the option to hold back on the flow of parts tocustomer72 thereby causingcustomer72 great expenses.Supplier76 benefits in that it receives an earlier and regular payment. Assupply chain server74 payssuppliers76 on time,suppliers76 no longer need to charge de facto interest. This cost savings is passed tocustomer72 and realized as profit for the operator ofsupply chain server74.
• Whensuppliers76 desire to shipproducts278 before a time necessary to satisfycustomers72,supply chain server74 can safely retain some of these products based uponcustomer forecasts200 and charge a lower interest rate tosuppliers76 than that charged by distributors of the prior art.
• Using the above described techniques,supply chain server74 can arrange payment term financing in order to leverage more favorable pricing or to create a more appealing balance sheet for the parties involved. For example, as suppliers can be paid sooner than in prior art supply chains, suppliers are more willing to allow for price concessions and lower financing costs.Supply chain server74 can arrange financing that permits inventory to be taken off balance sheets and off premises.
• Supply chain server74 can also shift the risks in changes in commodity pricing to more risk inclined parties. For example, in volatile commodities (e.g., Dynamic Random Access Memories—DRAMs), by controlling the flow of products and cash,server74 can also provide risk shifting products such as hedges, calls, puts, etc. Prior art supply chains could not provide such products because there was not a single party who controlled products and cash.
• Server74 can also provide insurance that was not available in the prior art. Asserver74 is connected with multiple customers and suppliers,server74 can plan for volatile swings in demand or supply of products. For example,server74 can receive extra products from suppliers and retain these products in case customers experience an unforeseen increase in demand. The extra products received byserver74 are determined by actuarial calculations based upon prior forecasts. These extra products are updated periodically so that they remain fresh and not outdated. In this way,server74 insures for demand spikes and supply shortages.
• Thus, the provision ofsupply chain server74 enables the parties of the supply chain network to use financing options not available in the prior art. Additionally, suppliers can provide products more cheaply because defacto interest is no longer necessary.
• 00IX. Architecture
• Supply chain network70 can be set up in many ways. A general architectural set up is shown inFIG. 22.Supply chain server74 is shown coupled to all ofcustomers72,suppliers74,3PL78,banks392 andcarriers76. This connection could be through, for example, anetwork560 such as the Internet.
• Ifnetwork560 is used, the, communication among the parties shown inFIG. 22 could be through any know arrangement for accessing a communication server, such as dial-up serial line interface protocol/point to point protocol (“SLIP/PPP”), an Integrated Services Digital Server (“ISDN”), a dedicated leased-line service, broad band (cable) access, a Digital Subscriber Line (“DSL”), asynchronous transfer mode (“ATM”) or other access techniques. Ifsupply chain server74 is used to host a web page that is accessed by one of the parties ofFIG. 22,supply chain server74 should be able to provide web page HTML and/or Java data.Supply chain server74 is not limited to such hardware requirements.
• Supply chain server74 itself can be implemented using many known hardware structures. In its most general sense,supply chain server74 can be implemented using a structure like that shown inFIG. 23. ACPU562 is coupled to aROM564, aRAM566, astorage device568, aserver device570 and aninput device572 through abus574. Again,supply chain server74 is not limited to these structures.
• Referring toFIG. 24, there is shown a more detailed architecture ofsupply chain server74.Supply chain server74 includes anextranet manager580, anERP system584, aplanner support tool586, and amessaging services section588 all coupled to asystem monitor582. System monitor582 monitors the operation of all the components ofserver74 and facilitates the flow of information among these components. As shown inFIG. 24,customers72 andsuppliers74 can communicate withextranet manager580 through afirewall590.Customers72,suppliers74,3PLs78 andbanks392 all communicate withmessaging services section588 ofsupply chain server74 also throughfirewall590.
• Extranet manager580 providescustomers72 andsuppliers74 with access to order and forecast information, access to any premium information services contracted withsupply chain server74, and access to Customer Master Data which is bibliographic information (e.g. name, address, account number, etc.) of customers.Extranet manager580 performs this function by displaying web pages and generating new web pages with information received fromERP system584 discussed below. Finally,Extranet manager580 manages site membership and security and provides secure communication of data to and fromserver74.
• ERP (enterprise resources planning)system584 providesserver74 with applications and systems support for financial, order management, demand management, procurement, and other enterprise processing capabilities.ERP system584 allows for incorporation of data fromsuppliers74,customers72,logistics providers78 and financial institutions392 (“partners”) and stores and manages the data from these partners in a standard format.ERP system584 also provides employees ofserver74 with real time access to enterprise information and provides workflow capabilities to ensure completion of business processes. Finally,ERP system584 keeps track of the Customer Master Data.
• Messaging services section588 streamlines communications betweensupply chain server74 and all of its partners.Messaging services section588 translates all received information into a standardized format which is input intoERP system584. Conversely,messaging services section588 also receives information fromERP system584 and generates outgoing messages in the format expected by a particular partner.Messaging services section588 manages secure data transmission betweenserver74 and its partners, allows use of the Internet for all transmissions, and provides logging and serialization of all transmissions for audit purposes.
• Planner support tool586 allows Planners working forserver74 to manipulate forecast, demand and supply data.Planner support tool586 aggregates data extracted fromERP system584 thereby facilitating flexible, configurable analysis methods, providing a wide range of reporting capabilities, providing a definition of exception conditions in the analysis process, providing courses of action (workflow) should an exception occur, providing secure access to data, and allowing for multiple user access to this data while preserving the integrity of the data. By providing a Planner Support Tool that is external toExtranet580, which works withERP system584, and which is coupled tomessaging services station588, a desirable supply-demand balance can be achieved.
• 000X. Summary
• Thus, by providing a supply chain server to handle many of the processes previously performed by individual entities of the prior art, a more efficient and cost minimizing architecture is realized. By consolidating purchases and supply chain management, supply chain server eliminates many of the steps and costs expended by customers and suppliers of prior art supply chains. Customers appreciate: lower prices, lower expenses for freight, buying, and planning systems, etc., faster and more reliable deliveries, shorter lead times and lower inventories, supply chain management savings, lower duties and taxes, product expertise, complete supply chain visibility, improved data integrity, improved profits, improved service to their customers, improved suppliers, and improved decision making. Suppliers benefit in: lower selling expenses, lower planning costs, lower inventories, improved delivery, lower product costs, visibility of demand, lower operating expenses, and reduced manufacturing costs from smoother production flows. This all leads to improved profitability while selling at lower prices which, in turn, will increase demand. Both customers and suppliers may have access to a secure web site hosted by supply chain server which will provide valuable information that was not available in the prior art. This information includes customer buying habits, and the size and growth rates of markets served. As the historical data detailing customer's buying patterns grows, it will become more expensive to switch to another supply chain network.
• The costs of supply chain server will be borne by customers based upon the number of part numbers and the cumulative value of purchases. Suppliers need not be charged a fee so that the lowest possible price may be provided by suppliers. As the supply chain network is procuring products in bulk, it will receive a lower cost for the items and will realize this lower cost in profits.
• Although demand and supply of products have been discussed, it should be clear that demand and supply of any resource, including services, is also within the scope of the invention. The term “product” throughout the specification thus refers to any such resource or service. For example, customers could be individuals desiring bandwidth on a trunk line in a network. Suppliers would then be sources of network bandwidth. Customers could also be, for example, individuals desiring airplane tickets or theater seats from corresponding suppliers.
• While preferred embodiments of the invention have been disclosed, various modes of carrying out the principles disclosed herein are contemplated as being Within the scope of the following claims. Therefore, it is understood that the scope of the invention is not to be limited except as otherwise set forth in the claims.

Claims (4)

1. A method for processing customer demands received in a supply chain network, the method comprising:

electronically receiving forecasted demands from a plurality of customers by a supply chain server;

electronically aggregating the forecasted demands into an aggregated forecast; and

sending the aggregated forecast from the supply chain server to at least one supplier.

2. The method ofclaim 1, further comprising modifying the aggregated forecast to take into account at least one of a previous shortfall in capacity from at least one supplier and a product return, wherein the step of sending comprises electronically sending the modified aggregated forecast from the supply chain server to at least one supplier.

3. A system for processing customer demands received in a supply chain network, the supply chain network including a supply chain server coupled to at least one customer and at least one supplier, the supply chain server including a messaging services system and an ERP system; wherein:

the messaging system receives forecasted demands from a plurality of the customers;

the ERP system aggregates the forecasted demands into an aggregated forecast; and

the messaging system sends the aggregated forecast to at least one supplier.

4. The system ofclaim 3, wherein the ERP system modifies the aggregated forecast to take into account at least one of a previous shortfall in capacity from at least one supplier and a product return, and wherein the messaging system sends the modified aggregated forecast to at least one supplier.

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