OR Defining the Future

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ORDefiningthe Future
By Prof. dr. ir. Jo van Nunen Erasmus University
Rotterdam Deloitte Touche Bakkenist The
Netherlands
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The Role ofICT and ORin theOrganisation of
Business Processes
By Prof. dr. ir. Jo van Nunen Erasmus
Universiteit Rotterdam Deloitte Touche
Bakkenist The Netherlands
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Contents

• Developments in BP
• Supply Chains
• e-Business
• ICT change
• OR Modeling
• Examples

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MOTTO

• There are
• 3 types
• of
• Organisations

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AND

• There are
• 3 types
• of
• Mathematicians

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Business Processes

• Customer Orientation
• Mass Individualization
• Internationalization
• Efficiency of Processes
• Quality of Processes
• etc.

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And the PossibilitiesofICTand Networks
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Electronic Business EB Electronic Data
Interchange EB Electronic Ordering EB
Electronic Paying EB Electronic Auctioning EB
Electronic Intermediation EB Electronic
Quality Control
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Electronic Business EB Online Routing EB
Online Quality Control EB Online Selection EB
Customer Analysis EB Online Optimization EB
Online Simulation EB Etc.
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Business Process
E-Business organisation
Customer
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A business process is a collection of related
activities with a well defined result for a
customer

• different from business functions
• crosses organisational boundaries

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Business Process 1
Product Development
Distribution
After sales service
Customer
Production
Marketing Sales
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Example
Philips Lighting
Production of lamps
Central depot
Decentral depot
Customer
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The Customer

• retailer
• project
• maintenance
• special orders
• etc.

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The Customer

• specific
• quality
• international
• information
• after sales service
• etc.

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Classical Multichanneling How To Handle
Different Types Of Customers
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Logistic chain
production
assembling
delivering out of stock
assembling on order
production on order
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Classical Approaches

• OR methods
• Value chain analyses
• Business Process Redesign
• ERP
• Etc.

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EB-Organisation Chain Management
Auction Wholesaler
Retailer
Producer
Transport
Transport
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EB-organisation

• Where does the customer enter?
• Retailer
• Wholesaler
• Agent
• Producer
• Etc.

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Channels

• Shop
• Internet
• Call centre
• CRM-agent
• Etc.

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Modern Multichanneling How to Handle same customer
that uses all channels
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Examples Auctions

• Nike
• cargo on ship
• bonds
• flowers

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Revenue Management
NOT Optimize Revenue from Single System
BUT Optimize Revenue from Multiple
Interactive Systems
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Intelligent Transport Systems interact
online with External Realtime Systems
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Escudero Pereira
DSS for Electricity Open Market

• Short Term Auctions Spot Market
• Mid Long Term Bidding Contracts

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ICT developments and Business Processes

• Tracking and tracing
• Communication on
• wip
• resource availability
• etc.
• OL-Optimization
• Etc.

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ICT developments and Business Processes

• Satellite communication
• Multi media technology
• Chip card technology
• Voice recognition
• Mobile communication
• THINKING PRODUCT
• Etc.

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ICT OR and Strategy
Competitive pull new services shorter delivery
Information Technology OR as strategic weapon
Technology push cost efficiency optimisation integ
ration
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COMPETING ONBUSINESS PROCESS
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Redesigning Business Processes
redesign core business
level of trans- formation
redesign business network
redesign business process
internal integration
local exploitation IT
value added
Venkatraman 1991
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RESEARCH QUESTIONS THE ENGINEERING
APPROACH GIVEN ALL THE TECHNOLOGICAL
POSSIBILITIES HOW TO DESIGN HOW TO CONTROL? THE
NEW BUSINESS PROCESS
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CHALLENGE
Can we develop theory and models that help
in design and control problems ?
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Subjects

• Modeling interorganisational trade
  procedures
• ERP and IOS
• FMS and WFMS
• Intelligent agents
• etc.

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Subjects

• Analyzing Customer Behaviour
• Designing Modular Networks
• Role of Auctioning in Networks
• etc.

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Managerial Problems
Our New Integrated Designs are Controlled by Whom?
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Managing business processes
Goods flow control
Department control
Department control
Department control
Departmt. A
Departmt. B
Departmt. C
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Business Network

Producers
Wholesalers
Retailers
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Version 1 Producers are organized
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Business Network

Producers
Wholesalers
Retailers
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Version 2 Wholesalers know the market
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Business Network

Producers
Wholesalers
Retailers
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Version 3 Retailers are a chain
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Business Network

Producers
Wholesalers
Retailers
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Version 4 Logistic service provider offers
service
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Business Network

Producers
Wholesalers
Retailers
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Success if power relation is clear
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Power Relations ClearthenOR-Models OK
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Practice is often a mixture
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Ways have to be found to "create" cooperation Th
e Governance structure
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Shifts in control structure do they influence the
models ?
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Who will be the chainmaster?
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The Lord of the Process

• Producer
• Wholesaler
• Retailer
• LSP
• Bank
• Microsoft
• etc.

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How do we mobilize cooperation
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OR-Models

• Simulation
• Scenario Analysis
• Sensitivity Analysis
• etc.

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Redefinition ofCustomized Product

• Old customized product
• Barcode Chip
• Website
• Helpdesk call center
• Tracking and Tracing
• Delivery Time
• Remote Repair
• Community

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The Producers

• Where and when to produce each part?
• What is distribution?
• What is stock?
• With whom to collaborate?
• How to serve?
• Etc.

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LSP

• Am I producer?
• Am I warehouse?
• Am I intermediary?
• Am I information system?
• Am I in charge?
• Etc.

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COMPLEXITY
How do we Handle Mixture of Product and Services
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WHICH INFO SYSTEMS and WHICH OR
MODELS FOR Customers and Processes
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Simulation Software

• IBM Supply Chain Simulation
• analysis
• optimization
• etc.

• Simple
• Planning
• Scheduling
• Forecasting
• etc.

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Simulation Software
AIMMS 3.0 Allround Development Environment for
Modeling Experts to create Fully Functional
Decision Support Systems for End Users
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Examples analyzed

• SHIP IT SMARTER.COM
• PROCUREMENT HEINEKEN
• OMRON ELECTRONICS
• PHILIPS MOBILES
• ETC.

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Examples

• CISCO
• DELL
• CARGOWEB.com
• E-marketplaces
• ETC.

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Organizational Research

• ICT induced Organizational Redesign
• Trusted THIRD Parties
• 4 PL
• New organizational forms
• Organizational boundaries
• etc.

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Operational Research

• Network Design
• Workflow Optimization
• Neural Networks
• SCM Optimization
• APS
• ASP Software
• etc.

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Operational Research

• NUMETRIX gt JDE
• PLANNING gt O.L.
• FORECAST gt Reallife

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CUSTOMERCOMPOSES PRODUCTandSELECTS PROCESSES
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HOW CANCUSTOMER DO IT IN AN OPTIMAL WAY?
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OPTIMIZINGTHEVIRTUALORGANIZATIONUSINGE-BUSINE
SS
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The virtual organisation
agent
customer
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E xcellent use of OR-models B y defining the
future