BUSINESS CASE

University of Wollongong IACT422 Case Studies in I.T.

Name Joseph Baez Nurhazman Abdul Aziz Tee Young Chew Hoh Whay Loh Cong Xue

Student 2387256 2666182 2524272 2400431 2809217

Email jsb16@uow.edu.au naa925@uow.edu.au tyc95@uow.edu.au hwl97@uow.edu.au cx850@uow.edu.au

Course Coordinator: Dr. Aditya K. Ghose Tutorial: Document: Date Submitted: Wed 9:30am to 11:30am Group Case Study 19th August 2005

Table of Contents
Executive Summary......................................................................................................................... 2 1. Introduction .................................................................................................................................. 3 2. Situational Assessment ............................................................................................................... 5 2.1 Critical Analysis .................................................................................................................................. 5 2.2 Problem description ........................................................................................................................... 11 3. Project Description .................................................................................................................... 12 3.1 The Business Needs........................................................................................................................... 12 4. Business Requirements............................................................................................................. 16 5. Solution Description................................................................................................................... 19 5.1 Solution Overview ............................................................................................................................. 19 5.2 Concept Overview ............................................................................................................................. 19 5.2.1 Identifying the domestics suppliers and service providers......................................................... 20 5.2.2 Current IT architecture, tools & technology platform................................................................ 21 5.3 Detail Solutions ................................................................................................................................. 22 5.3.1 Solution 1 (Toyota Australia Suppliers Website)....................................................................... 22 5.3.2 Solution 2 (Agent-Oriented Domestic e-Marketplace) ............................................................. 24 5.3.2.1 General overview ............................................................................................................... 24 5.3.2.2 Integration with existing systems ....................................................................................... 25 5.3.2.3 Agent-Oriented e-Marketplace........................................................................................... 26 5.3.2.4 Solution description / Scenario of the purpose e-Marketplace ........................................... 28 5.3.3 Solution 3 (Real Time Inventory Tracking Module).................................................................. 29 5.3.3.1 General Overview .............................................................................................................. 29 5.3.3.2 Solution Description........................................................................................................... 31 5.3.3.3 Scenario of proposed module ............................................................................................. 32 5.3.4 Solution 4 (An agent-based transport and logistics coordination system) ................................. 33 5.3.4.1 General Overview .............................................................................................................. 33 5.3.4.2 System Architecture ........................................................................................................... 34 5.3.4.3 Solution Description........................................................................................................... 35 5.3.4.3.1 Logistic optimisation within Australia ............................................................................ 35 5.3.4.3.2 Global Optimisation ........................................................................................................ 36 5.3.4.4 Scenario of proposed system.............................................................................................. 38 5.3.5 Integrating the Solutions ............................................................................................................ 39 5.4 Tools and Technology ....................................................................................................................... 40 5.4.1 Java Agent Development Environment (JADE) ........................................................................ 40 5.4.2 Components of the an Agent...................................................................................................... 41 6. The Challenges.......................................................................................................................... 44 6.1 Financial Analysis ............................................................................................................................. 44 6. 2 Development Cost ............................................................................................................................ 44 6. 3 NPV & ROI ...................................................................................................................................... 47 7. Challenges................................................................................................................................. 47 7.1 Financial Challenge ........................................................................................................................... 47 7.2 Organizational Challenge .................................................................................................................. 48 8. Feasibility................................................................................................................................... 49 8.1 Financial Feasibility........................................................................................................................... 49 8.2 Organizational Feasibility.................................................................................................................. 50 9. The Implementation Timeline .................................................................................................... 51 10. Recommendations................................................................................................................... 52 11. Conclusion ............................................................................................................................... 52 References .................................................................................................................................... 54 Appendix........................................................................................................................................ 56

Toyota Business Case

Executive Summary
The purpose of this business case is to identify initiatives, which aims to achieve optimal supply chain processes of Toyota Motor Corporation Australia (TMCA) by solving the current weaknesses which were covered in details. This also includes various missed opportunities that TMCA could have capitalised on during the initial implementation of the supply chain management. In order to bridge the current gap based on TMCA’s aim of achieving an efficient supply chain, goals have been identified and initiated.

Subsequently, solutions are derived from the goals, which aim to solve the inherent weaknesses of the current supply chain setups. Importantly, solutions put forward in this business case have focused on the flexibility of accommodating “plug-in” to the existing supply chain process, to allow for gradual system changes. Solutions have been suggested in terms of efficiency and cost effectiveness to allow coordination and optimization by applying agent technology. With each solution well illustrated with the aid of scenario, it provides a better understanding on how these solutions can be applied. On the other hand, with the understanding that exposing functionality and data as services across the enterprise enables TMCA to reduce overhead by eliminating the need for infrastructure duplication, an integrated solution which incorporates all the suggested solutions proves feasible.

With solutions provided to face the challenge on solving the current weaknesses, these however do not justify the closing stage of an efficient supply chain. Financial and organizational challenges are the hurdles in the list to be solved. Thorough coverage of inherent cost estimates of these solutions are shown that will allow the management to conclude whether solutions presented herein will allow TMCA to obtain maximum financial benefits in the shortest term. In summation, by demonstrating how these costs can be converted into equivalent present day values which allows TMCA to achieve the optimal Return On Investment (ROI), this business case ends with a conclusion of proving the feasibility of the continuation of these solutions to achieve the business need; an efficient supply chain.

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Toyota Business Case

1. Introduction
Supply chain management (SCM) aims to produce and distribute merchandise to customers in the right quantities, to the right locations, and at the right time, with minimized system-wide costs, while fulfilling service level requirements. Nevertheless, the complexities of supply chain make it hard to accomplish the objective. Coordination of the activities among supply chain partners is one of the critical challenges in the management of supply chain network that is composed of organizations with different and even conflicting organizational objectives.

It is useless to optimize the operations within a single party involved where the overall system performance will still be poor. The coordination must be efficient and effective such that the finest combination of decisions is made. These decisions include selecting the right partners, transporter and supplier, purchasing the right amounts of material, and producing the right finished goods. The task in establishing domestic and global optimized solution involves a tremendous amount of decision making, and in numerous cases decisions have to be made based on inadequate and dynamic information. This causes the coordination and decision-making processes to be difficult, iterative and time consuming.

Agents act autonomously on behalf of their users across open and distributed environments. In recent years, many researchers have used multi-agent technology in supply chain modelling and management. In agent-based modelling, organization units and processes are designed as agents that have their particular objectives, behaviours and interfaces. Agents exchange messages for communication and coordination purposes. Intelligent decision and learning rules are defined in agents. Supply chain performance is supposed to be improved by the coordination and collaboration between agents.

Due to the complexities in supply chain, the representation of the coordination of activities, inter-organization interdependency, and the synergy of supply chain are challenging issues. The application of agent technology in SCM is appropriate, especially 3

Toyota Business Case for the complex and dynamic supply chain environment. It is not enough to just use the agent concept to model the entities and processes in a supply chain. There is a need to provide method to describe complexities of supply chain interdependencies and coordination mechanism, and also implement and test the concepts and design. The combination of coordination technology and optimization technology is a way to improve performance in an agent-based supply chain coordination system.

In this Business proposal, coordination theory, optimization technology and agent technology is employed to model and automate the coordination process and to converge at a “global best solution”. A framework and a set of techniques for agent-based supply chain coordination and optimization in distributed environment are proposed to improve the overall performance of the supply chain.

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Toyota Business Case

2. Situational Assessment
2.1 Critical Analysis
Toyota Motor Corporation (TMC) has taken the initiative to develop many innovative systems from the current Toyota Production System to compete against other companies. With the rapid increase of globalization and rapid technology, Toyota Motor Corporation of Australia (TMCA) has to be up to date with its competitors, from the raw materials suppliers, right across to the sales of its end products. Within each of the subcategories of the supply chain, each of them has been provided with some form of IT to support and improve legacy supply chain operations. Nevertheless, as previously identified, some current systems, processes and the overall supply chain operation have their inherent weaknesses.1

In assessing the situation that TMCA from the supply chain perspective, the following weaknesses that the team have analysed are as follows:

Lack of alternatives in the domestic supplier base and risk of currency exposure A challenge that TMCA faces is the option of having one-hundred per-cent of its prospective suppliers located as close as possible to its supply chain, as currently only 79% of TMCA suppliers are localised. Many components have to be imported causing the application of the “right part at the right place at the right time” concept, or the JIT principle to fluctuate throughout the TMCA supply chain.

Given that all of TMCA’s supplier agreements have to be obtained with the approval of the TMC this lengthy approval process can cause a further decrease in productivity in the supply chain. Without a relevant, reliable and constantly updated list of approved alternative suppliers that TMCA can recruit in case of
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Based on case study

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Toyota Business Case unforseen events this lack of local suppliers can cause a complete halt of operations for TMCA, leading to dissatisfied B2B as well as B2C customers.

Given this case scenario while also considering the small number of Toyota vehicles currently produced in Australia, other similar supply chain interruptions could be detrimental to the long term viability of Toyota’s continuation of its manufacturing operations in Australia. TMCA’s lack of an e-business method to recruit and integrate more suppliers and achieve its target of a 100% local supply chain is undoubtedly causing unnecessary difficulties. The fact that TMCA lacks a collaborative supplier-oriented system such as the one described on the Toyota Motor Corporation Kentucky (TMCK) web site, it is clear that TMCA is being held back from reaching its full competitive potential in the Australian marketplace.

Additionally, without the full localisation of suppliers, currency exposure will cause too great a financial risk for TMCA in the near future. Import costs and extended time taken for components to arrive in Australia hinder TMCA’s JIT system. A halt in the production of transmission axles at Toyota Motor Manufacturing North America (TMMNA) in the United States (US) for example has a direct impact on TMCA assembly lines. Most of TMC’s other subsidiaries worldwide already have sound examples of the JIT process in place, and this is due to their localised production process.

At present, most of Toyota Australia’s imported parts are from the US, Europe and Japan. This means the combined cost to produce one vehicle is needlessly greater than it would cost to produce entirely from the TMCA Melbourne plant. The fact that those components also take longer to arrive the plant, excluding schedule delays, causes too great an affect on the overall production costs and time taken to produce a “locally produced” Toyota cars.

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Toyota Business Case Problems arising in linear supply chain The JIT manufacturing process currently used by TMCA runs nowhere near as efficiently as those of TMCs other worldwide subsidiaries, namely due to the geographical expanse of the TMCA supply chain infrastructure. Each member of TMCA’s existing supply chain link cannot currently communicate and interact with other members further downstream. If TMCA continues running its supply chain linearly, it will not keep functioning to a competitive schedule. In terms of transport and logistics Toyota does not currently have a common e-market place for all suppliers where they can collaborate in spite of TMCA’s involvement with the AANX network. AANX currently only caters to non-key component suppliers, that is to say components can be shared among other automotive manufacturers.2 Key components suppliers on the other hand, those involved in black-box components manufacturing, are not involved in e-commerce transactions via the AANX network, as they have very close-knit relationships with TMCA.

Domestically, with the existing linear supply chain, logistical requirements oblige suppliers to have to wait until a vehicle is full before the required batch of components can be dispatched. The lack of greater implementation of the “milk run” procurement system as is used by the Isuzu3 truck company among various others of TMCA’s competitors, are causing unnecessary supply delivery delays.

2 3

Based on case study Isuzu Environmental Report 2004: Creating Environmental Sound Plants (Online)

[http://www.isuzu.co.jp/world/environment/report/pdf/2004e_11.pdf, Last Accessed: 02 August 2005].

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Toyota Business Case

Figure 1. Example of “milk run” If this more efficient method of delivering parts as shown above is not implemented in the near future, these unnecessary delays will escalate problems with ongoing redundant supplier delivery expenses.

Over-reliance on forecast planning for production The goal of JIT production is to translate each order to a finished quality vehicle quickly and efficiently – in essence JIT is a pull system of operating. To do this only small quantities of material are kept on production lines with the re-supply of those items used occurring in the right amount at the right time. Additionally, the Electronic Data Interchange (EDI) standard currently in place for the materials requirements forecasting i.e. ANSI X12 830, is quickly becoming phased out to encourage overall EDI standardisation. This means that an over reliance on the current electronic “Kanban” systems could provide incorrect forecasting information for required production.

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Toyota Business Case

Figure 2. Electronic Kanban EDI standard

More emphasis needs to be placed on a runtime system that will provide up-tothe-minute information on what demands are required on all stages on the supply chain. Nevertheless, it should be able to easily integrate into the existing BEA WebLogic system being used by TMCA. If this runtime system is not put into place and relying purely on forecast planning, the JIT system will face inefficiency problems, leading to disruptions in the overall JIT production.

Lack of Vertical industrial relations environment TMCA currently only has vertical industrial relationships with automotive manufacturers in terms of sharing suppliers. However in regards to transport and logistics, no collaboration has been achieved between automotive manufacturers. The current situation now is all automotive manufacturers are utilising AANX to arrange for shipment of their product by sending their information to the freight companies.

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Toyota Business Case

Figure 3. Collaboration between vertical industries

The current system though does not allow optimisation as it is relying on the freight company to do all the logistics planning. There is no common place for collaboration. Nevertheless, it is common knowledge that most of the manufacturers’ distributors reside in the same area. Only the automotive manufacturer themselves will know the quantity required by the distributors. To allow economic feasibility, manufacturers will wait till enough cars to fit onto a truck before sending to the distributors (maybe from Altona all the way to Darwin). If collaboration can be made even in terms of such logistic issues, it will not only reduce cost of transport, but also reduce waiting time, maybe from a month to two weeks for a car to reach the consumer.

Automotive shipments require specialised vehicle transport ships known as Rollon-Roll-off (RORO) ships4. Similar cost saving logistics benefits can be derived from coordinating these specialised shipments of Completely Build-Up (CBU) vehicles via a collaboration of vertical automotive industries. It will be economically feasible for TMCA to collaborate with other automotive manufacturers in Australia in terms of transport and logistics, meaning sharing exclusive product demand data from overseas. Lack of such an industrial relations
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K Line Australia: Car Carrier Services. (Online)

[http://www.kline.com.au/Service/CarCarrier.aspx, Last Accessed: 01 August 2005].

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Toyota Business Case environment is currently making forecasting difficult as well as preventing TMCA to capitalise on the resources of other automotive manufacturers who would be willing to share their resources to cut down on their own expenses as well as allow shorter shipment timeframes.

2.2 Problem description
From the above, it can be seem that the team have placed focus on analysing the current discrepancy based on the weaknesses previously identified. Nevertheless, supply chain management is being recognized as the management of key business processes across the network of organizations that comprise the supply chain. While many have recognized the benefits of a process approach to managing the business and the supply chain, most are vague about what processes are to be considered, what sub-processes and activities are contained in each process, and how the processes interact with each other and with the traditional functional silos. Within TMCA, supply chain processes are supported by modular software applications that integrate activities across organizations, from demand forecasting, product planning, parts purchasing, inventory control, manufacturing and product assembly to product distribution.5 Nevertheless, weaknesses were still being discovered which prohibit the efficient supply chain processes. This therefore justify this business case to provide solutions, which aims to improve the overall efficiency of TMCA’s supply chain process.

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Based on case study

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Toyota Business Case

3. Project Description
3.1 The Business Needs
Every enterprise needs an efficient supply chain to produce and distribute merchandise to customers in the right quantities, to the right locations, and at the right time, with minimized system-wide costs. This also must be accomplished while satisfying service level requirements. The supply chain can be viewed as an order chain in which its partners propagate demand information by placing orders to upstream partners. The effectiveness of meeting end demand of the whole supply chain depends on how well the order chain is coordinated. After a detailed analysis of the current supply chain processes, four weaknesses in regards to the overall process of the supply chain were found to be impeding its efficiency. Nevertheless, it has been recognized that collaboration is one of the key success factors of supply chain management. The life cycle of an order describes different phases through which an order goes through. Basically these phases are initialization, planning, execution and disposition. In order to reduce the occurrence of the bullwhip effect, and improve the supply chain performance, it has been suggested that supply chain partners share order information and collaborate in order planning.

To allow for an efficient supply chain process, the team has put forward a list of goals that TMCA should achieve in order to improve on the current weaknesses identified. Additionally, with the goals suggested by the team, specific solution is provided for each of them, which the team agrees on these solutions to be of best interest for TMCA. The goals suggested, together with solutions needed to be achieved are as follows:

Goal 1: Provide a comprehensive domestic supplier base Due to the lack of domestic suppliers, many of TMCA’s car components have to be imported causing the application of the “right part at the right place at the right time” concept or JIT to lack the optimal efficiency throughout the TMCA supply chain. For this reason, the implementation of a comprehensive domestic supplier base is essential. This can be done by means of providing a website or a link to 12

Toyota Business Case the current TMCA website which present similar content like the Toyota supplier’s website in North America. This will allow TMCA to have a comprehensive overview of their current suppliers. Additionally, it will also reduce the red-tap involved to be part of the TMCA supplier. Most importantly, it provides TMCA with a channel to disseminate important supplier related information to its upstream entities.

Goal 2: Provide initiatives for a non-linear, hub-based supply chain system

TMCA acquires parts, materials and supplies from over 100 suppliers, who themselves acquire materials from many other suppliers. The acquisition process though can be slow, expensive and ineffective. Additionally, situation arises when suppliers are located near each other, where ‘milk run’ could be possible within these groups of suppliers. This allow transports to follow looped routes, made quick, frequent stops, and picked up small batches of parts at several suppliers within a region, before delivering orders to the Toyota plant which could be a distance. These opportunities however have not been realised with the fact that no coordination among suppliers have been established. Instead, only the current electronic Kanban card system is currently the mechanism for ordering supplies between TMCA and its suppliers. A linear supply chain is not able to efficiently support the JIT productions as significant collaboration among entities within the supply chain. For these reasons, an agent-based e-marketplace initiative will be suitable. TMCA will be able to eliminate its existing linear supply chain system to permit supplier collaboration and integration. .

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Toyota Business Case Goal 3: Provide real-time updates on demand and supply allocation

With the current forecast planning strategy wholly determined by Toyota, it will only allow suppliers to align their demand and supply in the mid-to-long term planning horizon. Although it allows the overall supply chain to arrive at a consensus of forecast or plan, nevertheless the common bullwhip effect which causes erratic shifts in orders up and down supply chain will still be present. Significantly, if each distinct entity makes ordering and inventory decisions with an eye to its own interest above those of the chain, stockpiling may be occurring simultaneously at as many as seven or eight places across the supply chain. Such stockpiling can lead to as many as 100 days of inventory waiting “just in case”. To resolve such situation, a real-time inventory tracking function should be incorporated into the current electronic BEA system which enables suppliers to manage and track the entire purchasing order lifecycle throughout the whole supply chain. With such function, all entities will be able to manage and track, in real-time, the complete end-to-end process for discrete, replenishment, demand pull from order creation, acquiring information from the Toyota Vehicle Order Processing System (TVOPS) residing in the main BEA WebLogic 8.1 system.

Goal 4: Vertical industry logistics collaboration

Increasingly, automotive manufacturers in Australia are concentrating on their core competencies and outsourced their non-strategic operations to other parties. Usually, the outsourced elements include transportation, warehouse management and customers order fulfillment. Third party logistics (3PL) is one natural outcome of this approach and enables companies to dramatically reduce the burden of physical facilities, lower their cost, improve their responsiveness, and gain logistics agility.6 These manufacturers share its inventory and a part of sales order information (delivery notes) with its 3PL provider, but the 3PL provider does not give any input to the manufacturer’s activities. Nevertheless, it is not
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Based on Case study

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Toyota Business Case possible to attain optimisation of operations within a single party involved where the overall system performance will still be poor. This causes the coordination and decision-making processes to be difficult, iterative, inflexible and time consuming especially in terms of logistics. To solve such intricacy, a forth party logistics (4PL) by means of an intelligent logistic coordinating agent can be applied in the form of a collaborative e-logistic hub, to conduct continuous planning functions to permit real-time optimisation. This real-time adaptive optimization will thus allow participating automotive manufacturers to achieve complete logistic operation taking even the smallest constraints into account, having multiple 3PL providers.

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Toyota Business Case

4. Business Requirements
The driving force behind the efficient supply chain process is the ever-increasing market pressure on responsiveness, cost efficiency, and the drastically shorting product lifecycle. This efficiency is expected to bring significant cost improvement, customer satisfaction, production innovations, increasing market shares by utilizing legacy resources more efficiently and the deployment of new technologies throughout the supply chain. Nevertheless, as previously identified, weaknesses are presents in the current supply chain processes that impede its efficiency. To remedy the current inefficient supply chain, the section on Business needs have identified what TMCA required to be accomplished. To illustrate how these goals enable the improvements of the overall supply chain process, the following will highlight on what business requirements will be met if these goals are accomplished. Goal 1: Provide a comprehensive domestic supplier base

With the implementation of a supplier website, it will allow opportunities for TMCA to achieve full localisation of suppliers within Australia. This indeed will improve the JIT production drastically as less waiting time is required for imports of components. Additionally, with the reduction of waiting time, it will thus allow better forecast and shorter time required for productions, which eventually leads to customer satisfaction. In addition, with the website, it will allow TMCA to have a comprehensive overview of their current suppliers. It will also reduce the red-tap involved for smaller suppliers to be part of the TMCA supplier. Moreover, it provides TMCA with a channel to disseminate important supplier related information to its upstream entities. Most importantly, the website will indirectly lead TMCA towards a more efficient supply chain and reduce the risk of currency exposure due to imports.

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Toyota Business Case Goal 2: Provide initiatives for a non-linear, hub-based supply chain system

Due to the complexities in supply chain, the representation of the coordination of activities, inter-organization interdependency, and the synergy of supply chain are challenging issues. Nevertheless, with the implementation of an agent-based an agent-based e-marketplace initiative, TMCA will be able to achieve more efficient supplies from its suppliers. With the new system, the acquisition process though can be faster, cheaper and more effective. Additionally, with the emarketplace which integrates suppliers, service providers, visibility would speed decision making and enables communication through every level of TMCA’s supply chain. With such, suppliers are able to coordinate and conduct “milk run” which trucks can follows looped routes, make quicker and more frequent stops to pick up smaller batches of several suppliers components within a region before delivering these orders to the Altona’s plant. Optimization in terms of collaboration and logistics will thus be achieved. Most importantly, the JIT production will be drastically improved as more regular trips can be made to the plant, resulting in save cost and plant space, reduced production time and most importantly, increase customer satisfaction.

Goal 3: Provide real-time updates on demand and supply allocation

With the real-time tracking function module incorporated into the current electronic BEA system, it will first reduce the bullwhip effect which causes erratic shifts in orders up and down supply chain. It will also possibly eliminate any stockpiling cause by the current forecast method of determining the quantity of components needed for the productions. Most importantly, with such function, all entities will be able to manage and track, in real-time, the complete end-to-end process for discrete, replenishment, demand pull from order creation, acquiring information from the Toyota Vehicle Order Processing System (TVOPS) residing in the current main BEA WebLogic 8.1 system

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Toyota Business Case Goal 4: Vertical industry logistics collaboration

With the implementation of an intelligent logistic coordinating agent in the form of a collaborative hub, it will allow the seamless collaboration of logistics between multiple automotive manufacturers and 3PL providers. Not only will this coordinating agent enabling all the participating manufacturers lower their cost, improve their responsiveness and gain logistics agility, it will also allow coordination and decision-making processes to be easier, more flexible and time saving. Additionally, it will also allow more 3PL providers to be involved, allow optimisation of operations. Most importantly, this real-time adaptive optimization will thus allow participating automotive manufacturers to achieve complete logistic operation taking even the smallest constraints into account.

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Toyota Business Case

5. Solution Description
5.1 Solution Overview
In order to overcome the weaknesses as previously identified, analysis have been made on the following goals that have previously been set. This is to allow the team to derive the solution which can be used to address the current weaknesses. The following are the solutions which the team have derived from goals previously set:

Goal 1: Provide a comprehensive domestic supplier base Solution: Implementation of a supplier website.

Goal 2: Provide initiatives for a non-linear, hub-based supply chain system Solution: An agent-based e-marketplace initiative.

Goal 3: Provide real-time updates on demand and supply allocation Solution: Real-time tracking function module incorporated into the current electronic BEA system

Goal 4: Vertical industry logistics collaboration Solution: An intelligent logistic coordinating agent in the form of a collaborative e-logistics hub.

5.2 Concept Overview
The purposed of this Business Case is to identify any initiative to deploy IT to support and streamline the overall supply chain operation. Having this in mind, the team have this focus of providing the best solutions to improve the current supply chain operations with the minimum disruptions on the current operations. To achieve that, the follow studies are made before proposing the most appropriate solutions to eliminate the current weaknesses.

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Toyota Business Case 5.2.1 Identifying the domestics suppliers and service providers

Currently, 79% of the suppliers are actually made up of domestic’s suppliers, while the other 21% are actually based on imported materials from all over the world.7 Unlike its parent company, Toyota Japan, and other plants in States and Europe, all their suppliers’ supplies are actually received 100% from domestic suppliers. In the overall organisation’s drive, Toyota would like to has an ideal 100% domestic suppliers, due to the benefits in the Toyota’s Just In Time (JIT) System and others implication, such as Government’s intervention and also prices of the finish product. For instance, a local made product with all the locally produce and supply would be cheaper, in terms of costs availability. Therefore, in hand, Toyota Australia must vitally identify it domestic suppliers, first. The table 1 explains the potential and existing general domestic’s suppliers and the service providers:

Automotive Suppliers and Service Providers:
• • • • • • • • • • • • • Active Plastic Industries Pty Ltd Automotive Components Ltd Air International Pty Ltd Ajax Fasteners Bridgestone Australia Car Haulaways - New Zealand Dana Australia Denso Australia Edag Future Pty Ltd Hella Australia Pty Ltd Japan High Comm - Japan "K" Line Australia Pty Ltd Mark IV Automotive Pty Ltf • • • • • • • • • • • • P & O Ports Ltd Patrick Autocare Pty Ltd PBR Australia Pty Ltd Plexicor Australia Polk Australia Pty Ltd Robert Bosch Australia Pty Ltd Schefenacker Vision Systems Australia Pty Ltd SWS Australia Pty Ltd Toll Holdings Vehicle Design Australia Pty Ltd Venture Industries VPAC - Victorian Partnership for Advanced Computing Ltd

Table 1: Automotive Suppliers and Service Provider8

7 8

Based on case study AANX: Trading Partners (Online) [http://www.motor.net.au/AANX/2c02f6f3-727a-4b6f-9e8b-

728634349bf5/, Last Accessed: 06 August 2005

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Toyota Business Case As the potential and existing domestics’ suppliers and service providers have been identified in the current Australian Automotive Network e-Xchange System, from here Toyota Australia is able to built the domestic e-Marketplace efficiently and effective. Toyota Australia too can design the e-Marketplace based on an “Open Door” policy, where accessibility is the key word that best characterize their corporate philosophy towards supplier diversity. Everyone involved in their program sits on the other side of an open door. In the policy, from the co-ordinator to the buyers who actually purchases goods and services from suppliers will allow readily available and taking care to so small things right. 5.2.2 Current IT architecture, tools & technology platform IT architecture is often assumed to follow business strategy, to align IT with the business’s strategic objectives. Increasingly, though, TMCA business strategies depend on specific underlying IT capabilities, to develop a synergy between business strategy and IT architecture, TMCA must identified the IT architecture stages, each with its own requisite competencies.

Figure 4. Changing Resources Allocation across Architecture Stages9
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Jeanne, W., (2003) Creating a Strategic IT Architecture Competency Learning In Stages, MIS

Quarterly Executive Vol 2 No 1

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Toyota Business Case A suitable architecture too fit into Toyota would be based on a “modular architecture stage”, as it builds onto enterprise wide global standards with loosely coupled IT components to preserve the global standard while enabling local differences. Modular architectures will also to create the opportunity for strategic agility, by ensuring their predictability of the core processes. 9

In this case TMCA already has a core engineered process running for its supply chaining system. Moreover, with the introduction of a modular BEA architecture, any new applications can just be plugged into onto the existing SAP systems and also running side by side with the current BAE system.10 Even, if that system is a UNIX network platform background, it would not be a problem for the proposed system to integrate with the existing platform, as it would be a modular system. Therefore, it is encourages to be a modular system, which sit easy on the current platform, and able to communicate with the existing system in the network, accessing from the same data silo.

5.3 Detail Solutions
5.3.1 Solution 1 (Toyota Australia Suppliers Website)

Figure 5. Supplier website for Toyota America (Source: www.toyotasupplier.com)

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Toyota Business Case

With the sophisticated proposal to improve TMCA supply chain system, TMCA yet need to improve on its marketing strategic for attracting the key potential suppliers. This is a vital role for the Toyota Australia’s supplier team to work on, although they already have an American’s version of Toyota Supplier (www.toyotasupplier.com). Here, as TMCA increasingly focused on its core competencies in high-end design, engineering and system integration, TMCA requires suppliers that are highly focused on their own core competencies. Nevertheless, small and diverse companies have the ability to display such potential, to bring innovation, flexibility and strength to TMCA’s supply base.

In order to achieve this goal, along with the solution previously proposed by the team, TMCA first has to open its door for the domestic market suppliers to invest in their new concept of supply base. This is also in order to achieve 100% domestic suppliers. Therefore, this solution proposed will implement a supplier-centric website, to provide opportunities to expend their supplier network.

Public / Interested Suppliers

Existing Suppliers/ New Suppliers Access Access

Domestic eMarketplace

Toyota Australia Suppliers Website Access Public / Interested Suppliers Access Existing Suppliers/ New Suppliers

Figure 6. Access Flow From Toyota Australia Suppliers Website

From this website, potential suppliers will be able to acquire information on the requirements of becoming part of TMCA’s supplier network. To achieve that, potential

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Toyota Business Case suppliers need only to download or complete an online form to join the network.. In addition, information such as supplier’s guide, community activities and any core information about TMCA’s current supplier’s network can be obtained from the website. Conversely, for suppliers who are already part of the network, besides the current information which was previously mentioned, this website provides the connection links to the domestic e-Marketplace (Solution 2). As a registered member of the eMarketplace, they are able to enjoy the privileges on what the e-Marketplace is offering (Details of functions explained in solution 2). In short, this website not only provides new opportunities for TMCA and existing suppliers, but also potential suppliers who possess the capabilities to improve TMCA’s overall supply chain process. 5.3.2 Solution 2 (Agent-Oriented Domestic e-Marketplace) 5.3.2.1 General overview As e-Business grows and becomes viable in the real world, the proposed e-Marketplace are able to support a broader base of services ranging from baseline interaction and directory services to specialty market services, such as dynamic trading, cooperative supply chain integration and management. In addition, the proposed e-Marketplace enables and facilitates the relationship between business participants (including suppliers and service providers) and their supporting systems. To this end, a fundamental aspect that our proposed e-Marketplace architecture supports is many-to-many relationships between TMCA and these business partners. This enables both TMCA and suppliers to leverage economies of scale in their trading relationships and access a more liquid marketplace. This in turn allows the use of dynamic pricing models, such as auctions (one of the services provided in the proposed e-marketplace), which improve the economic efficiency of the market where uncertainty about prices and demands are common.

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Toyota Business Case

Figure 7. Logical concept of the Domestic e-Marketplace 5.3.2.2 Integration with existing systems To provide smooth and effective integration at the business level, the e-Marketplace architecture accommodates and supports interfaces to the existing business models of the participant entities through cooperative supply-chain integration and management. There is a need for well-accepted interoperability standards, which must be meshed for supply chain integration to meet business demands. Conceptually, a supply-chain manages coordinated information and material flows, production operations, and logistics of the eMarketplace. It provides the e-Marketplace with flexibility and agility in responding to customer demand shifts without conflicts in resource utilization. The fundamental objective is to improve coordination within and between various participant business entities in the supply-chain. The increased coordination can lead to reduction in lead times and costs, alignment of interdependent decision-making processes, improvement in the overall performance of each participant in the chain, as well as the supply chain itself.

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Toyota Business Case

Figure 8. Logical concept of system Integration. 5.3.2.3 Agent-Oriented e-Marketplace All services (business, market, and integration) in an e-Marketplace usually involve complex and non-deterministic interactions, often producing results that are ambiguous and incomplete. Auctions and ad-hoc service integrations are some examples. In addition, the dynamic nature of the environment requires that the components of the system be able to change their configuration to participate in different, often simultaneous roles in eMarketplaces. These requirements could not be accomplished using traditional ways of manually configuring software. Therefore agents are utilised within the proposed domestic e-marketplace. An agent within the context of the e-Marketplace will play several roles and will be able to coordinate, cooperatively or competitively, with the other agents, including humans. As shown in Fig. 4, an agent’s role can be categorized as userinterface, business-specific service, business-entity service, market service, or integration service.11

11

Ghenniwa, H., Michael, N., Shen, W., (2004) e-Marketplace for enterprise and cross enterprise

integration. (Online) [www.dcce.ibilce.unesp.br/~mariot/03_06_JAVA_Artigo_3.pdf, Last Accessed: 08 August 2005].

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Toyota Business Case

Figure 9. The architecture of the e-Auction within the proposed e-Marketplace (Source: e-Marketplace for enterprise and cross enterprise integration.)

Below are the Agents for the proposed e-Marketplace:

User interface agents: The main functionality of user interface agents is to support and collaborate with users in the same work environment to achieve the users’ goals12.

Business-specific service agents: Are specialists that provide a collection of business-services available in the e-Marketplace. Performing the functionality of a business service is typically the cooperative integration of several agents including business-specific service agents and market service agents. A businessspecific service agent is a representative in the e-Marketplace for some
12

ibid

27

Toyota Business Case functionality that is based on legacy applications or libraries, such as a product catalogue Web site.13

Market service agents: are specialists that provide a collection of functions for generic e-Businesses in e-Marketplace environments in which a single entity (usually an agent) can perform its tasks in the e-Marketplace. Market services (value-added and core services) are horizontal, i.e., services that are used in several business domains by several business entities. 14

Integration service agents are specialists that provide a collection of integration functions for a cooperative distributed system in which a single entity (agent, component, object, etc.) can perform its tasks. Integration services are used by several distributed entities. For example, a brokering agent provides a capabilitybased integration service in the e-Marketplace. Another type of integration agent provides view-integration, which is a service to merge and map the description of business-objects (e.g., source schemas) in the e-Marketplace supported by the business ontology into an integrated view or schema 5.3.2.4 Solution description / Scenario of the purpose e-Marketplace In the proposed e-Marketplace, referring to figure 8, ABC Corp and XYZ Inc. are virtual business entities registered with the e-Marketplace for both purchase and sales services. Individual customers or business-entity personnel in the e-Marketplace can participate in the market through a dedicated user interface agent assigned by the e-marketplace. Similarly, an agent in the e-Marketplace represents each business-entity service. These agents provide thin, intelligent, highly autonomous interfaces for the business-entity services that might be based on legacy applications. For example, the ABC purchasingservice agent represents the implementation of the business-specific purchases by ABC in
13

Yinsheng, L., Weiming, S., Ghenniwa, H., (2004) Agent-based web services Framework and

Development Environment. (Online) [http://www.blackwell-synergy.com/doi/abs/10.1111/j.08247935.2004.00260.x?cookieSet=1, Last Accessed: 4 September 2005].
14

Ghenniwa, H., Michael, N., Shen, W., op. cit.

28

Toyota Business Case the e-Marketplace. Each user interface and business-entity service agent is registered in the e-Marketplace. Thus, a user interface agent can benefit from the market, businessspecific, and business-entity services by interacting with their representative agents. Each business-entity service must also be registered with a registry agent for the corresponding business-specific service. Each layer, and its registry services, are intended to provide some aspect of information about the e-Business environment and enable an interested party to obtain information to potentially use offered services, or to join the eMarketplace and either provide new services or interoperate as a trading partner with other business-entities in the e-Marketplace. 5.3.3 Solution 3 (Real Time Inventory Tracking Module) 5.3.3.1 General Overview In any ideal supply chain operation, it would be a complete solution to provide a real time updates on the demand and supply allocation. This modular system proposed will reduce the bullwhip effect which causes shifts in orders up and down the supply chain, and eliminating any stockpiling cause by the current forecast method of determining the quantity of components needed for the productions. Moreover, this proposed system is designed to provide process visibility across the value chain, giving suppliers greater control over the process and ensure synchronization of information with all partners regardless of size or geographic location.

Figure 10: Overview of Real Time Inventory Tracking Module (Source: e2Open Solutions)

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Toyota Business Case

The real-time inventory tracking module to be incorporated into the BEA system will comprises four agents, used independently or in combination with one another to execute more advance process in the supply chain. These four agents are Forecast, Inventory, Order and Multi Tier Visibility.

Forecast Agent This agent will enables suppliers to rapidly align demand and supply in the midto-long-term planning horizon, allowing customers and their partners to arrive at a consensus forecast or plan. It provides alerts and notifications of demand supply mismatches and can support a single-phase or two-phase commit planning process.

Inventory Agent This agent enables suppliers to align demand and supply by providing visibility to inventory status levels at multiple internal and external locations, as well as intransit positions, enabling optimal levels of inventory. It allows partners to exchange key inventory-related information, such as demand-pull requests and target inventory levels and can be used to track supplier compliance to contract obligations such as min/max inventory levels. Exception alerts can be configured to flag any inventory-level violations.

Order Agent This agent enables suppliers to manage and track the entire purchase order lifecycle through TMCA’s supply process. Suppliers can manage and track, in real-time, the complete end-to-end process for discrete, replenishment, demand pull and/or blanket purchase orders from order creation through shipment, receipt, invoicing and payment.

30

Toyota Business Case Multi-Tier Visibility Module This agent allows TMCA to extend their demand/supply planning, order management and inventory management workflows beyond their first-tier partners to provide visibility to the processes executed between tier two, three and four partners. The solution allows to monitor demand/supply disconnects and exceptions throughout the extended supply chain, while providing tools to help identify the impact of problems identified multiple tiers away.

With these four agents implemented, integrated and work seamlessly with the existing BEA system, it would practically enhance the current system. Hence, give real time updates on the demand and supply allocations. In short, TMCA is now able to execute and monitor closely on their suppliers supplying operation and also the value chain. Moreover, this system will be able to supports an array of integration protocols, formats and industry standards, including:

Transport Protocols • HTTP • HTTPS • FTP • sFTP • SMTP

Protocols

Data Formats

Standards

• SOAP • AS1/AS2 • RNIF 1.1/2.0 • RPC • XPC

• XML • EDI • Flat File • Spreadsheet

• RosettaNet • UCCNet • X12 • EDIFACT • EAIJ • cXML • xCBL

Table 2: Supports an array of integration protocols, formats and industry standards (Source: e2Open Solution) 5.3.3.2 Solution Description In this proposed real-time inventory system, when an order is being placed by the salesperson, the order information like car type, date-of-order, requirements will be enter into the TVOPS. Instantaneously, the Order Agent will communicate with the TVOPS 31

Toyota Business Case and collect the necessary information and analysis the data. The Order Agent will then provide the information regarding the parts involved and any requirements on the vehicles to the Inventory Agent. The Inventory Agent will then analysis the information received from the Order Agent. The Inventory Agent will identify those suppliers involved and submit inventory request to the suppliers. In addition, the Inventory Agent will collect any key inventory-related information and update the Order and Forecast Agents, which will then be returned to the TVOPS after aggregating the data.

Simultaneously, when the analysed information is communicated between the Order Agent and Forecast Agent, information on date of order will be analysed by the Forecast Agent based on the current situations on demand and supply, and return the information to the system with the date-of-delivery. The demand and supply information will be communicated between Forecast Agent and the Inventory Agent. Nevertheless the Forecast Agent will also be having the overview of all inventories and provides alerts and notifications of demand supply mismatches. Information of such will be communicated through the Inventory Agent where all inventory locations and level will be visible to the Inventory Agent. In short, all the 3 Agents will be communicating in runtime to provide all necessary information across the whole supply chain, to allow real-time inventory tracking which eventually improve the JIT production. 5.3.3.3 Scenario of proposed module The interest of this system is focused on a complete solution to provide a real-time updates on the demand and supply allocation. In this scenario, one of the distributors of TMCA has just received an order of purchase of a locally made Toyota Camry. When the salesperson logs the order into the current BEA system, the information will immediately be sent Toyota Vehicle Order Processing System (TVOPS). Instantaneously, the realtime inventory module will acquire the new order information and be analysed. The analysed inventory information will then be sent to the respective suppliers to be updated onto their own system. For example, as a Toyota Camry requires more than 260 parts, only those suppliers involved in the production of Camry’s part will receive the information about the new order. With such message flow, suppliers can get their supply

32

Toyota Business Case ready for the next delivery to meet the JIT production in the shortest possible time needed. 5.3.4 Solution 4 (An agent-based transport and logistics coordination system) 5.3.4.1 General Overview An agent-based transport and logistics coordination system (collaborative e-market), are designed to accomplish transport and logistic coordination tasks among different automotive manufacturers in Australia. These agents are Distribution Hub Agent Logistics Coordinator Agent, Manufacturer Agent and Transporter Agent. These four types of agents represent the generic role in a typical supply chain.

They may also link to other agents such as inventory management agent and planning application to get necessary information. The sequence of task flow is depicted in Figure 3 below. The Distribution Centers of individual automotive manufacturers will send their distribution requirement (DRP) to a Logistics Coordinator who will transform the DRP into transport and manufacturing requirements. These requirements will be broadcast to the available transporters and manufacturer’s plants so that they could work on their bids. After the bids are received, the logistics coordinator will work on a global optimized solution before committing the distribution centers.

Figure 11. Framework for agent-based supply chain coordination

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Toyota Business Case

5.3.4.2 System Architecture .An architecture for agent-based distributed logistics coordination has been designed (Figure 11) based on JADE (details in the “Tools and Technology” section) agent platform.15 The minimum system requirement to run JADE is the JDK 1.2 Runtime or later.16 Each participant of a supply chain provides the agent platform with a set of agent instances. The agent platforms are linked via Internet connections. This platform includes basic management agents and application agents. Basic management agents include Registration Agent, Communication Agent, and Directory Agent to facilitate the creation and management of application agents. The logistics management agent is actually an instance of the application agent, which is used to coordinate and produce the optimized logistics decision. The application agent includes interface, activation controller, optimization/planning modules, and knowledge base. Different supply chain

planning/optimization modules such as demand forecasting, transportation/manufacturing planning could be incorporated into the platform.17

Figure 11: Platform of agent-based distributed logistics coordination18
15

Java Agent Development Framework, JADE, (Online)[http://jade.tilab.com/, Last Accessed 04

September 2005],
16 17 18

Ibid. Ibid. Zhengping, L. Melcolm, Y., Kumar, A, A Framework for Multi-Agent System Based Dynamic

Supply Chain Coordination, (Online)[ www.informatik.uni-rostock.de/~/dasd/008.pdf, Last Accessed: 04 September 2005]

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Toyota Business Case

5.3.4.3 Solution Description 5.3.4.3.1 Logistic Optimisation within Australia

In this proposed agent-based logistic system, based on ordered demand established, the Distribution Hub Agent calculates the distribution requirements.19 Thereafter the Distribution Hub Agent can pass the DRP to the Logistics Coordinator Agent by predefined data interface.

The logistics coordinator splits the requirement into manufacturing and transportation requirements. Because the demand information may have been consolidated, the Manufacturing Plant would not care about the due date to deliver the goods to the Distribution Center. Instead, they must know when the product should be ready for the Transporters. The Logistics Coordinator Agent divides the distribution requirements based on a historical knowledge base. In this database, the records show for a product, how long it will take for the Manufacturing Plants to produce a specific quantity, and how long it will take for the Transporters to deliver as shown in Table 320.

Table 3: Dividing the Distribution Requirement21

19 20 21

Ibid ibid ibid

35

Toyota Business Case In the first round of coordination, the “Price” afforded by the Distribution Center is not given to the Manufacturing Plants and the Transporters. Instead, the Logistics Coordinator waits for the service providers to bid with price. The Transporter Agents perform local optimization using their own data on routes, schedules and consignments. The Manufacturer Agents will perform local optimization using data on inventory, capacity and processing times. The results of the optimization will be transferred to the Logistics Coordinator Agent for global optimization. 5.3.4.3.2 Global Optimisation

After the Manufacturer and Transporter Agents finish local optimization process, they will commit the orders back to the Logistics Coordinator Agent. The Logistics Coordinator Agent will attempt to combine the respective commitments to produce joint commitments by summing up price and lead times (for Q1, Q2 and Q3 respectively). A Manufacturer Agent will summit three different sets of parameters, namely the preferred, upper limit, lower limit Lead Time, and their corresponding prices for each quantity. Once the Logistics Coordinator Agent receives these local optimization commitments, it combines them accordingly. For the two sets of data (with the same quantity) coming from the Manufacturers and the Transporters, the total price can be achieved by adding the price of the Manufacturer (PM) to the price of the Transporter (PT). To calculate the Due Date, the Logistics Coordinator Agent will combine the lead time of the Manufacturer (LTM) and the lead time of the Transporter (LTT) to get the total lead time of the product. Based on this total lead time, the Due Date of the product can be easily obtained. Table 4 shows examples of commitment of Manufacturers and Transporters and corresponding combined commitments. The combination of the commitments from the Transporters and Manufacturers can create multiple sets of candidate points as shown in Table 4.

36

Toyota Business Case

Table 4: Commitments from manufacturers and transporters and their combination22

The optimization searching process is to find the optimal point (see Figure 12) which with acceptable difference with that of the customer requirement (with quantity, price and due date). If the point identified is still not acceptable, a boundary box will be defined around the optimal point to set the lower and upper limits so that a second round of bidding can be done. This process will be repeated until the solution converges.

Figure 12: The search for global optimal solution23

After the optimal values for the product quantity and lead time are obtained, the Logistics Coordinator Agent then returns these suggested values to the selected manufacturers and transporters to allow them to calculate the corresponding prices, which the Logistics Coordinator Agent will compare the price result with the solution achieved by data

22 23

ibid ibid

37

Toyota Business Case matching. The Logistics Coordinator Agent may submit the solution with the lowest price to the Distribution Hub Agent. 5.3.4.4 Scenario of proposed system The interest of this system is focused on improving the current logistic demand to provide customers with the fastest delivery of their vehicles. In this scenario, TMCA may wish to send 20 cars to a country. However with only 20 cars, it is not feasible for TMCA to ship the cars. Traditionally, in such situations, TMCA will have wait for either enough cars to be sent to the country or to wait for the available ship with the capacity of 20 car slots. This will results in delaying the shipment of the vehicles to the end consumers, which eventually lead to customer’s dissatisfaction. With the proposed system, TMCA invites other automotive manufacturers to join collaborative e-logistic marketplace. With this marketplace, individual automotive manufacturers will submit their orders to the e-marketplace. Together with the shipping information provided by the freight companies, the system will conduct an optimization searching process based on manufacturer’s requirements (quantity, designation, price and due-date) and the shipping details until the search has reached a optimal point when is feasible for the shipment to be made to the country or even nearby ports with the least time needed for the vehicles to arrive to their final designations. For example, with a capacity of 200 car slots in the specialist vehicle transport ship, manufacturers like Ford, Holden, Mitsubishi and Toyota can coordinate their orders into one shipment.

38

Toyota Business Case 5.3.5 Integrating the Solutions

Others Automotive Manufacturer e-Logistic Hub

Integrated Solutions TMCA Supplier Website Domestic e-Marketplace

BEA + RTTM* Suppliers SAP Automotive System * Real Time Tracking Module Figure 13: Overview of Integrated Solution In order to overcome the weaknesses as previously identified, the team have provide with individual solution to address each weakness. Nevertheless although the team believes that each of the above mentioned solution is able to cater to the address all the weaknesses, it is nevertheless important to note that having individual stand-alone systems is not convenient for any of the participants. For example, an existing suppliers is interested to access the e-Marketplace for some procurement activities after reading some critical information from the supplier website, he will have to log into the e-Marketplace using the same username and password. Additionally, with each of the suggested solutions as stand-alone system, it is also not feasible for critical information to flow freely within the supply chain. Therefore, the team believes that a single access function is more user friendly for and participants and the flow of information. Eventually, all systems that the team proposed is meant for a common aim; to improve the overall supply chain process efficiency.

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Toyota Business Case

With such considerations in mind, the team therefore proposed an integrated solution which integrates all the four suggested solutions into one single solution, with the ability to be implemented into the existing business logic, such as within SAP. The fact that all the proposed solutions are based on open standards means that is inherently easy to modify. In fact, it is designed to be flexible, which means that it allows the stakeholders to decide on which system is to be integrated and which system to be run alone. Additionally, exposing functionality and data as services across the enterprise also helps TMCA reduce overhead by eliminating the need for infrastructure duplication. And, the messaging-oriented nature of these solutions enables the team to link sales, marketing, manufacturing, and financial applications in real-time, which improves customer service by making up-to-the-minute information accessible across our value chain. Therefore, the team strongly suggests the implementation of the integrated solution.

5.4 Tools and Technology
5.4.1 Java Agent Development Environment (JADE) The overall implementation of the solutions utilizes the JADE (Java Agent Development Environment) platform24, which is a software framework to develop agent applications in compliance with the FIPA specifications (The Foundation for Intelligent Physical Agents, 1998)25 for multi-agent systems. JADE is able to deal with all aspects external to agents that are independent of their applications, such as message transport, encoding and parsing, agent lifecycle and others. Basically, JADE supports a distributed environment of agent containers, which provide a run-time environment optimized to allow several agents to execute concurrently. This feature has been utilized to create several concurrent market sessions, such as commodity and auction sessions.

24 25

Java Agent Development Framework, JADE, op. cit. FIPA (2003) (Online) [http://www.fipa.org/., Last Accessed: 06 September 2005].

40

Toyota Business Case In addition, JADE provides support for standard FIPA and user-defined ontologies with the open source and standard software concept. On top of it, JADE is completely implemented in Java language and the minimal system requirement is the version 1.4 of JAVA (the run time environment or the JDK)26. Although the implementation takes advantage of the JADE platform and its supporting agents, such as directory facilitator, the architecture of the application agents is based on the CIR-Agent model (shown in Fig. 3). Java features, such as portability, dynamic loading, multithreading, and synchronization support make it appropriate to implement the inherent complexity and concurrency in an e-Marketplace. These features are also instrumental for executing the CIR-Agents in parallel.

Apart from using JADE, which will made up 90% of the solutions’ architecture, another set of technology will be introduce to the architecture of the website (solution 1). For that particular solution, Java Server Pages (JSP) technology is selected to provide a simplified, fast way to create dynamic web content. Therefore, it can be support by any operating platforms. In addition, JSP technology enables rapid development of the webbased applications that are server and platform independent.

In short, JSP will be only used in the particular sections of the solutions, where it is just a web based interface, while the most part of agents programming will design using the JADE. 5.4.2 Components of the an Agent An agent can be described as a collection of primitive components that provide a focused and cohesive set of capabilities. Fig. 14 depicts the Coordinated Intelligent and Rational, Agent (CIR-Agent) model27. The basic components include a problem solver, interactions, and communication, as shown in Fig. 14(b). A particular arrangement or interconnection of the agent’s components is required to constitute an agent, as shown in
26 27

Java Agent Development Framework, JADE, op. cit.
Ghenniwa, H., Kamel, M., Interaction devices for coordinating cooperative distributed, intelligent

Automation and Soft computing 6 (2) (2000) 173–184.

41

Toyota Business Case Fig. 14(a). However, no specific assumption is made on the detailed design of the agent’s components. Therefore, the internal structure of the components can be designed and implemented using object-oriented or any other technology. A CIR-Agent model provides software engineers with features at a higher level of abstraction that are useful for cooperative environments. It supports flexibility at different levels of the design: system architecture, agent architecture, and agent component architecture. These degrees of flexibility allow information systems to adapt to changes with minimum requirements for redesign.

Figure14. The CIR-Agent architecture28 (a) Detailed architecture of CIR-Agent and (b) Logical architecture of CIR-Agent

The design of each agent is described in terms of its knowledge and capabilities. The agent’s knowledge includes the agent’s self-model, goals, and local history of the world, as well as a model of its acquaintances. The agent’s knowledge also includes its desires,

28

Ghenniwa, H., Michael, N., Shen, W., op. cit.

42

Toyota Business Case commitments, and intentions as related to its goals. The main capabilities of the CIRAgent include communication, reasoning, and domain actions. Implementation of the communication component takes advantage of JADE messaging capabilities. It is equipped with an incoming message inbox, whereby message polling can be both blocking and non-blocking, and with an optional timeout mechanism. Messages between agents are based on the FIPA Agent Communication Language (ACL)29. The agent’s reasoning capabilities include problem solving and interaction devices. The problem solving of an agent is implemented through the use of complex behaviors. Behaviors can be considered as logical execution threads that can be suspended and spawned. The agent keeps a task list, containing active behaviors. The problem-solving component varies from one agent to another as will be the in the following subsections. The agent behaviors can be classified as follows: behaviors that are concerned with market services, such as a market-registry and auction services; and behaviors that are concerned with providing business-specific services, such as selling and purchasing.

29

FIPA, op. cit.

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Toyota Business Case

6. The Challenges
6.1 Financial Analysis
Since the new solution will be built on Toyota’s existing platform, significant cost will be omitted. The new solution will utilize most of the existing software and hardware. Java will be used as the main language to ensure cross-platform functionality and also integration with the existing system. Increased ROI on Existing System Through Toyota’s Weblogic platform, new business initiatives that speed services delivery, improve customer responsiveness, and increase return on investments can be realized. WebLogic development environment is built on the standards-based Java 2 Enterprise Edition (J2EE) platform. This is especially beneficial to Toyota that needs cross-platform portability and scalability for the ability to combine existing and new applications30.

6. 2 Development Cost
Toyota requires a team of developers that consist of: • 1 Project Leader • 2 System Analysts • 10 Programmers The project requires an estimated 6 months to complete. Work will be divided into 2 development teams and will work separately in 4 different modules.
Salaries and wages Team member Project Leader Senior system analyst system analyst programmer analysts programmers system programmers total salaries and wages

Salary/wages for project $50,000.00 $35,000.00 $30,000.00 $60,000.00 $160,000.00 $50,000.00 $385,000.00

Table 5: Salaries and wages
30

Tom B. (2005), The BEA WebLogic Platform and Host Integration [Online]. Available:

http://dev2dev.bea.com/pub/a/2005/03/host_integration.html?page=1 [Accessed 2005, Sep. 5].

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Toyota Business Case

Summary of Development Cost Expenses Salaries/wages Equipment/installation Trainning Facilities Utilities miscellaneous Licenses Support Staff total

Amount $385,000.00 $100,000.00 $200,000.00 $120,000.00 $70,000.00 $100,000.00 $10,000.00 $50,000.00 $1,035,000.00

Table 6: Summary of Development Cost

Developement Cost Graph
Salaries/wages
Equipment/installation
Trainning
Facilities
Utilities
miscellaneous
Licenses
Support Staff

$400,000.00 $350,000.00 $300,000.00 Amount $250,000.00 $200,000.00 $150,000.00 $100,000.00 $50,000.00 $0.00 Expenses

Figure 15: Development Cost Graph
Summary of Annual Operating Costs Recurring expense Amount Connectivity $50,000.00 Equipment/installation $20,000.00 Programming support $80,000.00 Training & ongoing assistance $120,000.00 Advertising $50,000.00 $320,000.00 Total recuring costs

Table 7: Summary of Annual Operating Costs

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Toyota Business Case

Annual Operating Cost Graph
Connectivity $120,000.00 $100,000.00 Amount $80,000.00 $60,000.00 $40,000.00 $20,000.00 $0.00 Recurring Expense Training & ongoing assistance Advertising Equipment/installation Programming support

Figure 16: Annual Operating Cost Graph

Sample Benefits Benefits/cost saving Increased localization of parts Efficiency and flexibility dealing with suppliers. Reduced shipping costs Increased sales of cars/parts Other savings Total annual benefits in

Amount $300,000.00 $200,000.00 $250,000.00 $1,300,000.00 $100,000.00 $2,150,000.00

Table 8: Sample Benefits

Sample Benefits Graph
Increased localisation of parts

$1,400,000.00 $1,200,000.00 $1,000,000.00 $800,000.00 $600,000.00 $400,000.00 $200,000.00 $0.00 Benefits/Cost Saving

Efficiency and flexibility in dealing w ith suppliers. Reduced shipping costs

Amount

Increased sales of cars/parts Other savings

Figure 17: Sample Benefits Graph

46

Toyota Business Case

6. 3 NPV & ROI
Using a discount rate of 10%, the five year NPV (Net Present Value) would be estimated at $5,902,139.79. (Refer to Appendix) The five year ROI (Return on Investment) is estimated at 262.54%, which is a reasonable return from the solution. (Refer to Appendix)

7. Challenges
7.1 Financial Challenge
Toyota needs to invest significantly to ensure the project is completed. There are some financial challenges that might arise. Project Cost The solution will require not only professional expertise in the fields of constraint programming, intelligent agent and e-business solutions but also months of development time. This requires a significant amount of investment from Toyota. The Need to Train Internal and External Users The users of the system involve the company staff, suppliers, customers, automotive manufacturers. Proper facilities, trainers, training sessions and materials need to be provided to ensure that users are capable of operating the system with minimal technical support. This requires a significant amount of time and money and is crucial to ensure project success. The Need to Retain System Experts Due to the novelty of the system, the company does not possess required skills to develop or support the system. The company needs to consider hiring experts that are well versed in the areas of constraints programming and intelligent agents to support the system. Hence, it might require hiring new employees and creating a new division that support the new solution. Preparing for Possible Outcomes As not all systems are deployed successfully, Toyota should be prepared for project failure. A contingency plan needs to be in hand to allow fallback to other alternatives, such as AANX.

47

Toyota Business Case

7.2 Organizational Challenge
The organization will be affected by the new system as a result of new organizational and cultural issues. It is crucial to identify potential risks that might arise. Some of the risks are: Collaboration with Project Team The company’s IT staff will have to work closely with the development team to meet business requirements and project goals. This requires constant communication between the development team and Toyota staff. Furthermore, there will be other issues that pertain to ownership & agreement of the final product. Collaboration with Automotive Manufacturers, Suppliers & Customers Automotive Manufacturers, Suppliers & Customers will need to co-operate with the company to identify crucial requirements in order to create a successful solution. They need to be trained on how to use the system effectively. Fostering New Relationships The eMarketplace will open up to potential customers and business partners (Vertical or horizontal industry). This requires better customer & supplier relationship management to ensure that all participants acquire what they need from the system. Advertising the New System The company needs to recommend the new system to not only internal users but also external users such as automotive manufacturers, suppliers & customers. This requires significant effort from the company in order to attract new & old users into the system. Furthermore, they need to be aware of potential benefits of the new system. Training Users with New Skills & Knowledge The company will need to provide proper training methods to both internal and external users of the system. Users will include: • Internal staff • Suppliers • Manufacturers • Customers User support will be provided through various methods such as: • On-line documentation and troubleshooting • Resident experts • Help desk • Technical support

48

Toyota Business Case A carefully designed training plan needs to be devised to improve the understanding of the system and ensure project success. Achieving Global Reach Currently, the system will be catered to the Australian domestic market. The international market remains a major challenge for TMCA as their exports are limited by trade restrictions. Convincing TMC to adopt the system The pressure will be on TMCA to deliver the system successfully and show to Toyota’s parent company that it is a viable solution to implement in other countries. Monopoly Issues Due to Toyota’s relationship with suppliers using the Black-box Method, monopoly issues might arise. Solution 4 will be an optional solution which requires careful consideration before implementing. There should be government intervention or even partnership or alliances such as AANX to ensure a common platform for all parties.

8. Feasibility
8.1 Financial Feasibility
Due to the complexity of the system, it will require a span of 6 months to develop and deploy. However, with the introduction of the new solution, Toyota will benefit tremendously in terms of shipping cost reduction, higher percentage of parts localization, increased profitability, increased efficiency, etc. Categories of Cost Significant Development/maintenance costs Getting existing suppliers to use the X system Reduction of shipping cost Attracting new suppliers X Disruptions to staff Additional staff to handle the system Threat of competitors taking advantage of similar technology and achieving similar efficiency improvements. Categories of Benefits Increased localization of parts Significant X 49 Major X Minor

X X X X

Major

Minor

Toyota Business Case Expanded sales and customer base Efficiency and flexibility in dealing X with suppliers. Gaining experience that would X assist with future e-commerce ventures. Increasing the business’ X competitive advantage Suppliers remain loyal due the X range of services offered Table 9: Cost/Benefit Analysis X

8.2 Organizational Feasibility
The new solution will work in tandem with the existing system. Using phased installation, this will ensure that organizational operations will not be affected dramatically during implementation. The relationship between Toyota and suppliers will be improved due to higher degrees of collaboration. It is highly feasible to introduce the system.

50

Toyota Business Case

9. The Implementation Timeline
Figure 18: Work Breakdown Structure

51

Toyota Business Case

10. Recommendations
A gradual implementation using a strategic mix of the demonstrated four (4) solutions should be adhered to so as to lessen the impact of the introduction of the new trading agent based system. The solutions have been tailored so that even parts thereof from each system can be “mixed-and matched” to suit the ongoing business requirements of TMCA. Although cost will be an underlying factor in the choices made when applying the solutions, it must be stressed that the best approach will be the options that provide the greatest level of user interaction as well as schedule transparency within the supply chain.

Corporate management from Toyota Kentucky (TMMK) as well as other North American subsidiaries (TMMNA) are recommended in assisting with the implementation of this solution so as to advise whether there will be any possible impacts in expanding Toyota Australia’s local supplier base using the proposed e-commerce methods. Any lessons learned from TMMNA’s experience in localising its supplier base will certainly provide essential real world case scenarios when implementing the proposed system.

11. Conclusion
As conceptualized from the point of software engineering, the weakness of TMCA’s supply chain has been rectified with the array of solutions proposed. These solutions are designed based on using multi-agent architecture to enhance the existing system in TMCA’s supply chain. Technical elements and examples of rudimentary solution to create a domestic e-Marketplace and other tools using emerging technologies exist.

The vision of the agent-enabled infomediary-based e-Marketplaces described here can benefit from the incorporation of elements of the Semantic Web initiative. Potential domestic suppliers can also now obtain information on the Toyota’s supply chain from the website. This e-marketplace provides a decided advantage to management and process over its competitors, and provides TMCA and its suppliers with a learning curve advantage in creating domestic e-Marketplaces. Intelligent agents have also received

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Toyota Business Case significant attention as powerful modeling abstractions for B2B applications. Together with emerging technologies, such as JADE and Java Servlet Pages (JSP), these provide opportunities to develop integrative e-Marketplaces throughout organizational value chains. In order, to ensure the information flow efficiently in the network, real time inventory tracking module has as been introduced into the plan. Here, system is designed to provide process visibility across the value chain, giving TMCA and suppliers greater control over the process and ensure synchronization of information with all partners regardless of size or geographic location. In addition, an agent-based transport and logistics coordination system (collaborative e-market), are introduced to accomplish transport and logistic coordination tasks among different automotive manufacturers in Australia.

These solutions are also addressed with the challenges which are going to face by TMCA, such as the financial and organisation challenge. In addition to that, a implementation timeline and feasibility studies have also added to give a clear view for the project to take place. Thorough coverage of inherent cost estimates of these solutions are shown that have allowed TMCA management to conclude that from an NPV of just less than six million dollars and an ROI of just over 260 percent, the solutions presented in this business case are flexible as well as adamantly effective for TMCA.

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Toyota Business Case

References
AANX: Trading Partners (Online) [http://www.motor.net.au/AANX/2c02f6f3-727a4b6f-9e8b-728634349bf5/, Last Accessed: 06 August 2005] Autoweb.com.au, (1999): Toyota Chooses Michelin as Original Equipment (Online). [http://autoweb.drive.com.au/cms/A_51253/newsarticle.html, Last Accessed: Accessed on 4th September 2005]. FIPA (2003) (Online) [http: //www.fipa.org/., Last Accessed: 06 September 2005]. Ghenniwa, H., Kamel, M., Interaction devices for coordinating cooperative distributed, intelligent Automation and Soft computing 6 (2) (2000) 173–184. Ghenniwa, H., Michael, N., Shen, W., (2004) e-Marketplace for enterprise and cross enterprise integration. (Online) [www.dcce.ibilce.unesp.br/~mariot/03_06_JAVA_Artigo_3.pdf, Last Accessed: 08 August 2005]. Isuzu Environmental Report 2004: Creating Environmental Sound Plants (Online) [http://www.isuzu.co.jp/world/environment/report/pdf/2004e_11.pdf, Last Accessed: 02 August 2005]. Java Agent Development Framework, JADE, (Online)[http://jade.tilab.com/, Last Accessed 04 September 2005]. Jeanne, W., (2003) Creating a Strategic IT Architecture Competency Learning In Stages, MIS Quarterly Executive Vol 2 No 1 John, W., Robert, B & Stephen, D., System Analysis and Design in a Changing World, Ed 2, Course Technology, Canada, 2002, pp. 56-61 Kanban-an integrated system, (1996), (Online). [http://www.geocities.com/Times Square/1848/japan21.html, Last Accessed: 4th September 2005]. K Line Australia: Car Carrier Services. (Online) [http://www.kline.com.au/Service/CarCarrier.aspx, Last Accessed: 01 August 2005]. Michelin Worldwide – Corporate Information: Implantations (Online). [http://www.michelin.com/corporate/front/templates/affich.jsp?codeRubrique=12&lang= EN, Last Accessed: 4th September 2005].

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Toyota Business Case

[http://www.themanufacturer.com/us/detail.html?contents_id=3112), Last Accessed: 3rd September 2005] The Manufacturer US (2005): Just-in-time drives on (online). Tom B. (2005): The BEA WebLogic Platform and Host Integration, (Online). [http://dev2dev.bea.com/pub/a/2005/03/host_integration.html?page=1, Last Accessed: 05, September 2005]. Turban, T., King, D., Lee, J., Viehland, D., 2004, Electronic Commerce: A Managerial Perspective, Ed 3, Pearson Education, Inc., Upper Saddle River, New Jersey. Pp. 274

Yinsheng, L., Weiming, S., Ghenniwa, H., (2004) Agent-based web services Framework and Development Environment. (Online) [http://www.blackwellsynergy.com/doi/abs/10.1111/j.0824-7935.2004.00260.x?cookieSet=1, Last Accessed: 4 September 2005]. Zhengping, L. Melcolm, Y., Kumar, A, A Framework for Multi-Agent System Based Dynamic Supply Chain Coordination, (Online)[ www.informatik.unirostock.de/~/dasd/008.pdf, Last Accessed: 04 September 2005]

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Toyota Business Case

Appendix
NPV & ROI
FINANCIAL ANALYSIS FOR TOYOTA PROJECT Discount rate 10%

Model
Year Costs : 0 1 2 3 4 5 Total

Development costs Ongoing costs
Total Cost Discount Factor Discounted Costs

$1,035,000.00 $320,000.00 $320,000.00 $320,000.00 $320,000.00 $320,000.00
$1,035,000.00 1 $1,035,000.00 $320,000.00 0.909090909 $290,909.09 $320,000.00 0.826446281 $264,462.81 $320,000.00 0.751314801 $240,420.74 $320,000.00 0.683013455 $218,564.31 $320,000.00 0.620921323 $198,694.82 $2,248,051.77

Benefits Discount Factor Discounted Benefits

$0.00 $2,150,000.00 $2,150,000.00 $2,150,000.00 $2,150,000.00 $2,150,000.00 1 0.909090909 0.826446281 0.751314801 0.683013455 0.620921323 $0.00 $1,954,545.45 $1,776,859.50 $1,615,326.82 $1,468,478.93 $1,334,980.84 $8,150,191.55

Discounted Benefits - Costs ($1,035,000.00) $1,663,636.36 $1,512,396.69 $1,374,906.09 $1,249,914.62 $1,136,286.02 $5,902,139.79 Cumulative Benefits - Costs ($1,035,000.00) $628,636.36 $2,141,033.06 $3,515,939.14 $4,765,853.77 $5,902,139.79 ROI 262.54%

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