Sense and Respond Business Scenarios

Scenario 1: A Day in the Business of ABC Corporation.
Wednesday, Aug.28, 2002

9:43 a.m. sense: An alert is received from an order tracking sensor indicating that orders for ABC's products at Fobec Inc. were 40 percent lower than the original plan in the last two weeks.

9:45 a.m. analysis: The system generates an automatic inquiry to Fobec and confirms an unexpected reduction in demand. An analysis of other major customers is triggered. ABC's Web sensor report is examined. Five minutes later, the trend in decreasing demand is identified. A quick system analysis indicates that Fobec may reduce orders in the next four weeks by 50 percent and other customers may reduce orders by 20 percent. The sales manager and supply chain manager are alerted.

9:55 a.m. respond: An emergency run of ABC's supply chain adjustment process is initiated and $3.5 million in excess inventory is identified. New production schedules, procurement changes and promotion schedules are determined. The managers approve the new plans and the excessive inventory is made available in ABC's marketplaces. The affected suppliers are notified. A risk-sharing plan with the suppliers is invoked.

10:30 a.m. execute: $2.5 million in excess inventory is sold off through special promotions in ABC's marketplaces.

Businesses that have static supply and demand planning cycles of fixed frequency cannot respond quickly to customer demand changes because supplier updates happen only at specific times during the cycle. Information inaccuracy and latency is another major problem for businesses that depends on periodic information pulls. Such a business is exposed to unnecessary risk during the planning cycle. A SAR Blue Enterprise overcomes this by:

- deploying business processes and enabling technologies to "listen" to multiple streams of business information and enable rapid adjustment of business operations;
- filtering business information and identifying context dependent opportunities and alerts;
- utilizing intelligent response mechanisms to respond quickly to identified alerts combined with role based notification; and
- updating planning systems as needed rather than periodically. Scenario 2: A Day in the Business of ABC Corporation.
Wednesday, Oct. 16, 2002

10:39 a.m. sense: A news article reveals that there is a change in the political climate in Daboga. The challenging party supports a 50 percent increase in import tariffs. This potential increase would impact ABC's supply network, as one of its contract manufacturers has 25 percent of its capacity in Daboga. The supply chain director is alerted.

One week later: The supply chain director speaks with account executives at the top five customers to discuss whether ABC should reduce its costs for these customers by looking for cheaper suppliers. Quality might be risked in doing this. A decision is reached to maintain the current arrangement for two strategic customers, but to look for cheaper suppliers for the other three customers should the challenging partycontrol of Daboga.

Two weeks later: The supply chain director identifies alternate sourcing plans for the three non-strategic customers in Daboga. The new sources are spot markets that were identified in a UDDI directory. Based on the past history of these spot markets, the supply chain director expects that this change in sourcing will result in a 20 percent cost reduction.

Two months later: The challenging party wins control of Daboga. ABC immediately switches to the alternative-sourcing plan that was devised for this eventuality.

Today's businesses do keep track of their suppliers and customers. However, in many cases, they react to events without proactive planning. Since ABC was proactive, it had a business plan in place for the political takeover in Daboga. This type of proactive approach is enabled by technologies such as:

- intelligent sensing of the business environment using technologies such as data mining, data warehouse and the Internet;
- a dependency model of the business environment;
- an operational model of the business;
- a causal model linking changes in the business environment to business impact; and
- intelligent response mechanisms to respond quickly to identified alerts combined with role based notification.