HCLT Whitepaper: Event Driven Supply Chain

2 © 2009, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

Event Driven Supply Chains | September, 2009

TABLE OF CONTENTS

Abstract 3

Background 4

Business Need 4

Complex Event Processing: The Concept 5

The Solution: Advanced Control Tower (ACT) 7

Components of ACT 8

Benefi ts 9

About HCL 11



ABSTRACT

Until just a few years ago, decision–making relied on paper-based processes, the human mind and a basic medium of communication. Today the decisions we make are based on what our systems reveal to us and how best they provide us the data and information in the right views. But with greater information come greater responsibilities. The larger the volume of information captured, the longer the list of parameters for our managers to correlate and manage, resulting in a greater risk of making mistakes. Imagine we had a system that automatically correlated mind-boggling volumes of data and information, enabled managers to instantly understand underlying operational and business cause and effects, prompted timely responses from supply chain participants, triggered automated sequences of actions and was an intelligent system that learnt over time just like we did, and scaled up to the requirements of the supply chain operations and activities. Imagine the possibilities of the effi ciencies in decision making that could be achieved using such an intelligent system. No, this is not science fi ction but a peek into the possible transformations that technology is enabling for the next generation of supply chains.

This paper seeks to explore applications of the Complex Event Processing technology in monitoring, managing and enhancing future Supply Chains, through real-time correlation of events, timely reaction and response to business scenarios, incidents and exceptions, and real-time routing of alerts and incidents to people within organizational hierarchies. The idea is to reduce latency in decision making through a proactive intelligent system that works like the human mind, captures the situational snapshot of the enterprise at any moment in time and maximizes business benefi t through the ability to respond to a business situation in the shortest possible time.



BACKGROUND

The supply chain domain has seen signifi cant transformational change over the last few years. Starting from the way in which businesses are transacted and data and information are managed to the manner customers and partners collaborate, share and respond to supply chain situations. Technology has been the single strongest enabler with offerings such as enterprise applications, sensor edge technologies, middleware and integration adapters, visibility and tracking solutions, and now with concepts such as the web 2.0, the IT enabled transformational direction is only becoming steeper and more advanced. Since supply chains require strong collaboration and pervasiveness of information among the various participants, systems have been on-boarded and integrated inconsistently and the supply chain IT landscape has become a hotchpotch of multiple vendor applications and legacy systems. As a result, visibility and the lack of a single source of truth continue to challenge the effi cient operations of supply chains. The siloed nature of organizations and partner collaboration issues have also contributed to this problem and resulted in distributed control of the supply chain. If a supply chain is to behave as an individual unit, respond to market demand in the most agile manner, and keep effi ciencies high and costs low, the one way to do it is to have a system enabling this centralized control. So, here we are talking about a mechanism, enabled by an IT tool, where the different members of the supply chain, act as different departments of ‘One’ organization, and enhance the operations of the ‘One’ supply chain.

BUSINESS NEED

Players in supply chains operate on wafer-thin margins, and look to develop effi ciencies through collaboration with other partners in the supply chain. A Supply Chain member’s performance is as much dependent on the other participants within the chain, as on the internal operations of the member. The supply chain system leans heavily on Visibility, Predictability and Optimization in order to stay viable and compete as a powerful force in the market place. Precision, accuracy of information, and a single source of truth is of utmost importance in making impactful decisions for all players of the chain. The effi ciency of a supply chain is dependent upon how quickly each individual participant can respond to disparate events, and take timely action that is local to that individual’s enterprise.

Some of the key drivers for an Event Driven Supply Chain include:

Situational Visibility across operational and transactional landscapes

There is a need for each member of the supply chain to obtain a real-time snapshot of the high-level critical operations and transactions that occur upstream and downstream. Often, metrics shared and made available across the participants of the chain, provide a delayed snapshot of the system. This retrospect nature of the picture diminishes the value that



can correspondingly be derived from the information, thus negating the impact of collaboration and sharing of information. Information has a lifetime, and its value declines at an increasing steep rate, against time.

Centralized control of supply chain operations

With services spanning multiple regions of the globe, it becomes a challenge of immense magnitude for the organizations of the supply chain to centrally control operations and activities. The tracking of statistical parameters that impact the overall supply chain performance also become diffi cult to detect. Often, the strategic decision making process is hindered or fl awed due to the lack of accurate numbers or even the presence of incorrect parameters of measure. Centralization of the supply chain is a mighty task, considering that centralization of operations even within an organization is still a major challenge.

Correlation of data and information in near real-time, to reveal decision enhancing business insights to managers

Correlating and making relevant business sense of the massive volumes of operational, transactional and fi nancial data and information that is captured by the systems across a supply chain is by all means an impossible task for logistics managers. Often, information is overseen or not taken into account due to lack of co-relational insight by business managers, resulting in exceptions, business threats and critical incidents, that later become mountains of challenges to conquer.

Proactive response to impending business situations

In current business situations, any exception or threat requires and deserves an instant response. Delays in responding to critical situations are the major causes for customer dissatisfaction and operational ineffi ciencies. A responsive and alerting mechanism tracking the occurrence of an event, prompting an action, triggering processes, and broadcasting a record of the incident across the supply chain to other players, helps in another player benefi ting from making a corresponding timely adjustment, thus, mitigating a devastating impact on downstream operations.

COMPLEX EVENT PROCESSING: THE CONCEPT

Let’s take a look at what Complex Event Processing has to offer us. As the term suggests, it is the processing of complex events. In business parlance, an Event is an occurrence of signifi cance that one would want to track within the enterprise. There is a start and a defi nite end to every event. As much as “it is raining” is an event, a shipment delivery confi rmation receipt is also an event. Associated with an event are attributes that characterize and defi ne the event. In the case of the ‘raining’ event, the intensity of rain, the period of rain, the region of rainfall and the quantity of rain are



all important attributes that defi ne the event. So then, what is a complex event? A complex event is a situation where two or more events occur in different slices of time, and originate from different sources, but are logically related to each other and impact each other in a manner that is not easily comprehensible. An examination of an individual event in a complex event may reveal little or not at all, but when seen in light of another event, makes amazing business sense. Let’s us look at an example of a complex event that we may comes across in our daily life. Consider this:

You are driving on a freeway and it starts to rain (Event 1)

You then notice a ‘Slippery When Wet’ road sign, look at the Speedometer, and notice that your speed is 75 Mph (Event 2)

Just then you recollect the fact that the speed limit on this road is 60 Mph – information captured from the event of you viewing the ‘speed limit’ signboard a few miles earlier (Event 3)

You reduce speed to 60 Mph to comply with the speed limit (Event 4)

You also remember the fact that the car’s tyres are quite worn out and simple human procrastination prevented you from replacing them earlier ( Event 5)

As you take the turn into an exit, you suddenly feel the back tyres losing grip and the car skidding towards the kerb (Event 6)

Fear immediately grips you as the car lurches uncontrollably towards the kerb, and just as suddenly as it happened, you gain back control over the car. How many times hasn’t this happened to all of us? Immediately, the correlation of the sequence of events has resulted in fear that prompts you to slow down to 40 Mph or lower. The events of the rain, bad tyres, speed limits, and vehicle skidding, prompted an action from you to of slow down far below the speed limit and drive more carefully (Action 1)

So the complex event consists of 6 events which are co-related in an intricate manner, reveal important insights when viewed together in correlation, but were individual events of not much signifi cance when viewed in singular terms. In a Supply Chain Management scenario, the application of Complex Event Processing technology to operations and activities of the supply chain, provides a similar type of business insight and operational visibility into activities, through correlation of multiple events across time, across systems, across participant’s enterprise systems, thus enabling the working of a centralized, ‘One’ supply chain.

Some applications of CEP across industries:

Manufacturing: Procurement, distribution and for use-cases involving lean operations and processes in manufacturing plants



Logistics: Vendor Managed Inventory (VMI), dynamic re-scheduling in distribution, Carrier performance monitoring and optimized tendering, warehousing/ DC operations

Airlines and Airports: Allocation of gates and air/ land side resources based on delays in fl ight arrival and departure timings

Hospitality: Monitoring demand based on website traffi c rates and other channels of enquiries

Finance: Fraud detection and stock market trading algorithms

THE SOLUTION: ADVANCED CONTROL TOWER (ACT)

The Advanced Control Tower is a product agnostic framework based on the Complex Event Processing (CEP) technology. It processes large volumes of seemingly independent captured events occurring across multiple systems in multiple slices of times, correlates and identifi es patterns based on the business rules and previous experience, and triggers alerts or initiates processes in IT applications through actions, thus enhancing decision making, value of information and response time. Value is delivered through reducing the latency at each point in the decision making cycle.

The ACT Framework is based on the following principles

The ability to capture information from different data-sources across the supply chain operational landscape

Correlate and put together the jig-saw puzzle of data and information to reveal a precise and accurate situational business picture

Respond to the current business situation using inputs from ACT and make business critical decisions

Action Time

Low Business Value & High Action Time High Business Value & Low Action Time

Action Time

Business Event

Data Captured

Insight Delivery

Decision Mode

Action Taken

Data Latency

Insight Latency

Decision Latency

Action Latency

Val

ue

Business Event

Data Captured

Insight Delivery

Decision Mode

Action Taken

Data Latency

Insight Latency

Decision Latency

Action Latency

Val

ue

Time Time



Execute the decisions with speed, accuracy and perfection

Value is maximized only when the above four aspects are synthesized with minimal time latency. As information is captured, it has to be understood and utilized. The delay in capturing, understanding and responding to an activity or an incident is the challenge and the price that businesses pay in our times.

COMPONENTS OF ACT

Scenario: A process all inclusive of events, business rules and resulting actions and alerts

Event: An occurrence of signifi cance (operational or transactional)

Attributes: Elements of the event

Business Rules: The Logic that ties together the events and includes policies, requirements, and conditional statements that are used to determine the tactical actions that take place in applications and systems

Actions: The resulting processes or transactions that need to be triggered within applications across the enterprise/supply chain or evoked from personnel across the organization/supply chain

Alerts: Real-time ‘Notifi cations’ to management and operational personnel regarding events and actions

Data is fed into the system in the form of ‘Events’ from across the supply chain landscape -IT systems, transactions and physical movements on the ground. These ‘Events’ are correlated using the business logic and upon the occurrence of a pattern of events, an insight is revealed that in turn provokes an action from a user (manually) or from a system (automatically). A set of seemingly disparate events when occurring together may signify something entirely different than from their individual occurrence. There are two types of users who can utilize the framework - Operational Users and Business Users.

Partner Networks Enterprise Applications Financial Transactions

Supply Chains Sensor Networks

Advanced Control Tower

Confi gurable Dashboards Confi gurable Dashboards



Operational users

Confi gure Events and the associated attributes to be captured

Confi gure business rules that vary with business need

Select Events to monitor, Business Rules to be applied, and Actions to be executed

Confi gure alerts suitable for different levels of people and route them appropriately using the chosen medium

Confi gure and view real-time dashboard elements providing insight into real-time operational parameters

Business Users

Confi gure and select reports that provide situational visibility for the multiple participants into the state of operations and transactions within the supply chain

Automate the generation of reports periodically or upon the occurrence of a pattern of events

Confi gure alerts and their severity levels and choose which ones to be notifi ed against

Respond to alerts by triggering or initiating actions

BENEFITS

Enhanced situational visibility into supply chain operations both at a strategic level and at a tactical operational level

Faster and more accurate prediction of operational irregularities and exceptional occurrences

Better utilization of information while it is still alive to deliver high impact

Increased process automation for better customer satisfaction and optimized business activities

© 2009, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

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Website: www.hcltech.com

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ABOUT HCL

About HCL Technologies

HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefi ne the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on ‘transformational outsourcing’, underlined by innovation and value creation, and offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offi ces in 20 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Aerospace & Defense, Telecom, Retail & CPG, Life Sciences & Healthcare, Media & Entertainment, Travel, Transportation & Logistics, Automotive, Government, Energy & Utilities. HCL takes pride in its philosophy of ‘Employee First’ which empowers our 54,216 transformers to create a real value for the customers. HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 2.2 billion (Rs. 10,591 crores), as on 30th June 2009. For more information, please visit www.hcltech.com

About HCL Enterprise

HCL is a $5 billion leading global Technology and IT Enterprise that comprises two companies listed in India - HCL Technologies & HCL Infosystems. Founded in 1976, HCL is one of India’s original IT garage start-ups, a pioneer of modern computing, and a global transformational enterprise today. Its range of offerings spans Product Engineering, Custom & Package Applications, BPO, IT Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products across a wide range of focused industry verticals. The HCL team comprises over 60,000 professionals of diverse nationalities, who operate from 26 countries including over 500 points of presence in India. HCL has global partnerships with several leading Fortune 1000 fi rms, including leading IT and Technology fi rms. For more information, please visit www.hcl.in

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