Smoothing the supply chain

Software that manages inventory and tracks production is crucial to modern manufacturing. But many small and medium-sized enterprises find the efficiency gains from supply chain management solutions are outweighed by the implementation costs and the disruption to existing business models. The Spider-Win project partners came up with an alternative.

The IST-funded Spider-Win initiative, which ended in August 2006, has taken an innovative approach to developing a next-generation supply chain management platform. Instead of focusing on the product being produced, the platform is built around the communications model employed by the various parties in the supply chain.

The platform takes into account organisations from the suppliers of raw materials, to parts manufacturers, to the operators of the final assembly line. Considerably more adaptable, cheaper and simpler to use than most existing systems, it is suited to the SMEs that make up the bulk of the manufacturing sector.

"There are several major points that set this project apart from other efforts to develop supply chain management solutions. The first is that we are clearly focused on SMEs and dealing with the specific constraints they face in terms of IT skills and resources," explains project manager Markus Rabe of Fraunhofer IPK in Germany. "Small companies need to be supported, therefore it is necessary to have software systems that can be installed and run without major effort and disruption."

The second point that sets Spider-Win's platform apart is the way the project partners have designed the software to make it suitable for SMEs. "We have used the application service provision (ASP) model, in which a third party manages the whole system. The various parties in the supply chain then access it via the internet," Rabe says.

"The bulk of the information is stored and processed on third-party servers, meaning that very little has to be installed on company computers," he continues. "This not only reduces the problems of integration, interoperability and implementation, but also increases trust and security as the companies are not storing each other's data."

At the heart of the Spider-Win system is a web platform - 'the number cruncher' that monitors supply chain processes and the relevant inventory of all parties. The software is capable of identifying shortages at a supplier that would cause problems further down the line, forecasting how a change made by one actor will affect others, and issuing warnings automatically to all the companies concerned. It is accessed by users through a user-friendly web interface.

"It can predict potential problems well before they occur, such as foreseeing one supplier running short of a material that it knows a manufacturer is going to need, or how a change in the design of one component will affect the maker of another component. All parties will be alerted of the impending problem, so they can solve it in the most efficient way possible with the minimum waste in terms of both time and money," Rabe notes.

"Many companies, including SMEs, currently have people who do nothing but chase their suppliers all day. What we are doing is ensuring that production processes become much smoother and more efficient, so the company and its employees can be more productive," he adds.

Rabe foresees the system being particularly well suited to companies operating supply chains for the production of complex mechanical components, where the risk of disruption from stock shortages or design changes is high. In industries where profit margins are tight, the system can also return added benefits because it allows manufacturers to respond more quickly to unexpected increases in demand, thereby allowing them to keep fewer finished products in stock.

The Spider-Win partners launched a second project, Fluid-Win, in January 2006, which focuses on services for supply chain processes such as logistics or financial services. By autumn next year, the partners expect to have a commercial product based on the Spider-Win prototype on the market.