Issue No 9: November 2004
The system, called WeBid, enables the bringing together of manufacturers and key suppliers as early as possible in the product-development process so that latest components and technologies possessed by the supplier can be included in the product design.
Principal Investigator, Dr George Q Huang, said: Supplier selection and involvement normally takes place after the product design is complete. It often becomes too late and too expensive to make design changes once the design is released and suppliers have been contacted.
Many problems would not occur in the first place, or would be much easier to deal with, if suppliers were identified and consulted when design decisions are being made.
One of WeBids merits is its simplicity. Normally, when a manufacturer calls for interest from potential suppliers, it details requirements in a particular language. In its response, the supplier may use another technical language.
Said Dr Huang: We prefer to use one method to express both customer requirements and supplier capabilities. It makes sense as, if a contract is being negotiated between two parties, a uniform language needs to be used. Part of the innovation is in the methodology to do this.
The researchers found they were able to merge the two languages by using the bill of materials to model supply requirements, and the product and component design specification as the basis for identifying and negotiating supply sources.
Another simplification is in arriving at four critical indices which express the potential success of a customer-supplier partnership; satisfaction, flexibility, risk, and confidence. Using the WeBid model, there is no need to input other data, said Dr Huang.
Gathering and inputting extra data is disliked by industry because its costly, time-consuming, and the data needs verification. Instead, WeBid uses overlapping statements of customer requirements and supplier capabilities.
Dr Huang explained: If a customer asks for a delivery time of between seven and 10 days and a supplier says it can deliver between five and eight days, then we have a 100 per cent overlap and so the satisfaction rate is 100 per cent. There would also be zero risk. If the satisfaction rate is zero, that means the two companies cannot do business together. Dr Huang compared the speed of reaching a satisfaction decision using WeBid to an actual industrial case of sourcing suppliers for a video conferencing system.
He said : WeBids speed of reaching a partnership decision was amazingly fast. We are talking about minutes and hours instead of days and weeks or even months.
WeBid is also designed to contain historical information. If a supplier, for example, promises delivery within seven days but takes longer for 20 per cent of orders, the confidence rating will be only 80 per cent.
Another advantage of WeBid is that it resolves issues of customers and suppliers being separated geographically. WeBid is currently not available for general use but, said Dr Huang, it is likely to be in the future. Meanwhile, it is used in master of science courses at HKU as a practical and theoretical solution in supply chain management. The system has four main Explorer modules; Supply, Bid, Partnership and Share.
Product Supply requirements in the start-up module are followed by supplier capabilities in the Bid module. Next comes the Partnership Explorer module where requirements and capabilities are matched with the customer being able to evaluate the supplier. Finally, the Share Explorer module enables the customer and supplier to share design and process information after an agreement is reached on a project.
Its almost like a blind date, said Dr Huang, with neither side knowing anything more than is vital about the other party.