An intelligent supplier management system for outsource manufacturing

xii, 224 leaves : ill. ; 30 cm.PolyU Library Call No.: [THS] LG51 .H577P ISE 2003 ChoyVery few manufacturers now own all the activities along the supply chain but outsource most of its operations to its business partners. The ability to make fast and accurate decisions and to form strategic partnership with suitable suppliers often constitutes a competitive advantage. Outsourcing allows companies to re-focus their resources on their core business. For outsourcing to be successful the decision needs to be an informed one and effective management of the outsourcing relationships is an organizational imperative. Suppliers are considered as the most important part of manufacturing activities and the obstacles and barriers among the various players along the value chain should be removed as if they were under one single company. Supplier management contributes to supply chain integration by deploying the necessary intelligence, which is the art of collecting, analyzing and storing supplier information to collect, analyze and retain the knowledge of suppliers. Decision in outsourcing such as the supplier selection mechanism, and the tracking of suppliers' performance often depend on the tacit knowledge of purchasing staff. The building of a scientific framework of technological tools to implement an appropriate decision support system becomes a much sought research area. In this thesis, a literature survey is conducted to study the change of manufacturing paradigm, competitive intelligence and the need for supplier intelligence in supply chain management in the operations of outsourcing manufacturing. Different approaches to supplier selection from mathematical, analytical to heuristic are reviewed, and the major feature and merits of case-based reasoning (CBR) are introduced. The system approach to design an intelligent supplier management framework is addressed. Based on supplier past performance record, a case based reasoning engine is build to select appropriate suppliers during the existing and new product development (NPD) process. The system, referred as intelligent supplier management system (ISMS), is constructed by integrating a company's supplier ratings and product codes, and suppliers' performance records in the outsourced activities. The aim is to transfer customer requirements directly to supplier bases in order to shorten the total time for getting the product to the market. A workflow for matching customer demand to supplier's capabilities during the outsourcing process is explained. The design methodology and architecture of the supplier selection and evaluation module, which represents one of the main works of ISMS, is also described. A generic 5- tier design principle for the integration of supplier ratings and product codes is explained while the methodology of building cases into the system and the way to retrieve cases from it are addressed. When implementing the supplier management system, the taxonomy of a generic 5-tier CBR supplier selection module is built. The construction of a decision tree with the linkage of supplier performance report as well as the setting of a specific indexing method is equally important in linking the supplier ratings and product codes during system implementation. The process of ensuring the information is operational, the type of hardware and IT infrastructure requirement for the system, and the training program required for allowing users to take over its operations for use and evaluation are discussed.Two industrial case studies in Honeywell Consumer Products (Hong Kong) Limited and Motorola Semiconductors (Hong Kong) Limited for testing and benchmarking ISMS were carried out. In both cases, the building of an essential knowledge domain into ISMS is essential. The steps are demonstrated through the configuration of cases by the Case Authoring module (CA), the retrieval of results by the Problem Resolution module (PR), and the coordination of the whole system by the Domain Manager module (DA). In doing so, important supplier information, such as past practices and performances in the form of supplier intelligence is developed. The results of adopting ISMS in Honeywell Consumer Product (Hong Kong) Limited are compared with the existing supplier selection system in Honeywell and used as a benchmark in Motorola Semiconductor (Hong Kong) Limited. It is found that the outsource cycle time from seeking for right suppliers to the allocation of orders, and consequently the delay in delivery of goods by suppliers has been greatly reduced. In addition, ISMS is capable of monitoring the performance of suppliers continuously. The design and application of a CBR engine embedded in a supplier management system for outsourcing manufacturing is a new concept as there are no similar systems reported in literatures or current business practices. Most importantly, by using the system, both the speed and the chance of sourcing capable and preferred or potential suppliers in outsourcing operations are increased. The proposed system is a good example of applying business intelligence in the context of supplier management for outsource manufacturing.Department of Industrial and Systems EngineeringPh.D., Dept. of Industrial & Systems Engineering, The Hong Kong Polytechnic University, 2003.Author name used in this publication: Choy King-lun, Tomm