Tuesday, March 5, 2013

SOA Implementation at Sharp's Green Front Sakai

In 2007 Rettig criticized ERP software due to its high complexity, high cost of implementation, low implementation success rate and poor data integration abilities.  She then introduces service orientated architecture (SOA) as a possible improvement on these shortcomings.  However, she maintains reservations about SOA due to the technical challenges of development and very long-term implementation schedules (Rettig, 2007).  Five and a half years have passed since Rettig’s article was published and I am curious to see how far SOA has come.  This blog will feature an example of SOA implementation and relate it to the supply chain concepts that we have learned.

Sharp opened a new manufacturing facility called Green Front Sakai in 2009.  Many key features of this facility relate to topics that have been discussed in class and previous readings.  These include environmental responsibility, supplier co-location, and advanced IT systems that implement service oriented architecture.   These factors result in many supply chain implications and are strongly interdependent on one another.  For example, co-location is a strong contributor to the success of environmental responsibility and SOA is a strong contributor to the success of co-locating suppliers.

Week 5’s reading about the future direction of supply chain management mentions the importance of collaborative physical logistics.  This includes shared physical infrastructure and shared information.  Although the article only mentions sharing warehouses and distribution centers as means of sharing physical infrastructure (Capgemini & Global Commerce Initiative, 2008), Sharp has taken this practice a step further by co-locating its manufacturing facilities with its major suppliers.  Developing Green Front Sakai has enabled the co-location of 19 different suppliers and brought together the following technologies and capabilities: LCD panels, sewage treatment, packaging, industrial gases, color filters, office leasing operations, liquid chemicals, logistics, glass substrates, hydrogen gas, gas, electric power, energy, pure water supply and wastewater treatment, and photoresist (Sharp Corp., 2010).   This provides environmental benefits by minimizing the transportation required between multiple links in the supply chain.

In addition to using shared physical infrastructure, Green Front Sakai moves toward collaborative physical logistics by using improved information sharing.  Sharp views integrating facilities with its suppliers as the formation of a virtual company.  As such, highly integrated IT systems need to be utilized throughout the virtual company.  To accomplish this, SOA was used to bring companies onto a single IT platform.  Using SOA allowed Sharp and its partners’ systems to communicate with each other more simply and effectively.  There are many benefits from implementing SOA.  Fundamental benefits are derived from the improved transmission speed (real-time as opposed to daily batch collection) and quality of SCM information.  Benefits derived from this fundamental improvement include a two-thirds reduction in lead time, transparent production plans being made available to all partners, elimination of work orders, and improved management of parts and materials (SAP AG, 2010).  

As you can see, through shared physical infrastructure and shared information, Green Front Sakai is helping Sharp and its partners move toward "Supply Chain 2016".  Implementing SOA plays an important role in this advancement.  Sharp's implementation gives us an idea of the progress SOA has made since Rettig's article and the future outlook for SOA.  According to this week's readings, the direction and success of enterprise software development is influenced by three main drivers.  Referred to as macro processes, these drivers include supplier relationship management (SRM), internal supply chain management (ISCM) and customer relationship management (CRM).  The chapter Information Technology in a Supply Chain states that if enterprise software doesn't focus on these macro processes, it will likely fail (Chopra & Meindl, pp. 455-456).  The Sharp example clearly shows how SRM and ISCM can be improved with SOA, but does this guarantee SOA's future success?  Do you think that SOA will generally benefit enterprise software applications, or was it only successful in this case because of the extremely close relationship between Sharp and its suppliers?

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