Science of “Theoretical Minimum Inventories” previously unexplored
Dallas, March 11, 2013 – One Network Enterprises, the leading provider of demand-driven supply chain solutions in the cloud, is partnering with the University of North Texas (UNT), to perform groundbreaking research in a previously unexplored area of academic study; the Science of Theoretical Minimum Inventories. The purpose is to determine the theoretical minimum inventories in any supply chain ecosystem, presuming all information latency is eliminated, while asset availability and performance are optimized. One Network is funding the research, and providing practical and technological expertise. UNT faculty and graduate students are performing the original research, and soon will submit their findings to academic journals for peer-review.
The ultimate objective is to leverage the research and associated analytical tools to demonstrate how applying real-time demand driven principles to supply chain management delivers substantial inventory reductions, systemic performance improvements and cost savings. A key focus of the research is the quantification of “Informational Lead Time;” the time it takes for relevant operational information to be transmitted among all affected trading partners throughout any supply chain ecosystem.
The research shows that Informational Lead Time is a key driver of excessive low inventory turns and high safety stocks. The team is developing analytic models and creating an interactive software tool that industries can use to calculate theoretical minimums in their supply ecosystems; gain insights into the interrelationships among the key supply chain levers (demand, supply, and lead time variability, asset availability, and capacity constraints); test “what-if” scenarios; and develop strategies that will enable them to turn theory into reality.
“One Network’s Theoretical Minimum project with UNT creates an entirely new branch of academic study and addresses an area of great practical importance to industry at large,” says Greg Brady, CEO of One Network and head of Research and Development. “Despite all the major technology investments over the past 20 years, supply chain performance has failed to measurably improve, and in many cases has gotten worse. Even the best supply chains still operate with massive amounts of inventory. The results of this research will bring into sharp focus the causes of this stagnation and more importantly, what can be done about it,”
The project is being delivered by UNT’s Complex Logistics Systems research cluster, and leverages expertise of researchers from complementary disciplines. Dr. Wesley Randall, UNT assistant professor of logistics, leads the research team. The UNT team was hand-picked for this project and includes Dr. David Nowicki, associate professor of logistics; Dr Victor Prybutok, associate dean of the Toulouse Graduate School and Regents Professor of information technology and decision sciences; and Dr Shailesh Kulkarni, associate professor of information technology and decision sciences.
“Optimizing inventories throughout the end-to-end supply chain is an elusive yet desirable goal,” says Dr. Randall. “Research indicates that few, if any, trading partner communities have managed to identify and eliminate supply chain wide variability in ways that substantially achieve inventory optimization and eliminate related operating costs. As a result, considerable profit is left unclaimed. Identifying and managing the “theoretical minimum” (the best possible operating points for inventory and safety stocks) inventories and safety stocks necessary to achieve true end-to-end supply chain optimization is a goal that cannot be understated. Optimizing inventory and safety stocks across the supply chain promises a strong and sustainable increase in shareholder value.”
“Our partnership with One Network is evidence of UNT’s commitment to increasing its strong and growing research reputation,” says Dr. Prybutok, Regents Professor, and Associate Dean. We believe this project validates the team-based approach we adopted in our drive to contribute meaningfully to logistics and supply chain research. This strategy showcases to industry the pragmatic research focused capabilities of our faculty and PhD students.”
About One Network Enterprises
One Network is the provider of the Real Time Value Network, the world’s first and only any-to-any supply chain network in the cloud, and the world’s first and only real time decision-making suite. The Real Time Value Network enables unlimited numbers of trading partners to plan, execute, monitor, synchronize, and optimize in real time all of the business processes and events that take place throughout their extended supply chains, from points of purchase back to raw materials suppliers. A variety of industries are connected to the Real Time Value Network, including leading companies in high tech, retail, consumer products, the public sector, automotive, energy, and logistics. Headquartered in Dallas, One Network also has offices in Europe and India. For more information, please visit www.onenetwork.com.
About the University of North Texas
UNT is nationally recognized as a hub of expertise in logistics and supply chain management, offering an exceptional base of faculty and professional resources, and comprehensive programs that incorporate leading edge research, technologies and practices across the entire field. The logistics program at UNT now is rated among the top 5 globally for research productivity. Research performed by the Complex Logistics Systems cluster focuses on the process design, network optimization, and execution of freight and passenger flows from the source of supply to delivery with the end-user. The cluster leverages these strengths with partnerships in the public and private sectors to transform the complex, supply chains used to source and distribute goods on a global basis.