Web Services and Value Chains in the Adaptive and Dynamic Supply Networks

The Internet has enhanced the ability of organizations within the adaptive and dynamic supply networks to integrate their processes through collaborative information sharing and planning, and to improve internal operations through flexible workflow management. Clusters of these organisations within each supply network begin to form to create what is traditionally known as Value Chains. An important element of managing the value chain is the ability to incorporate the requirements of a diverse group of players both within and outside the organization to create an integration plan that can be synchronized with the organization’s manufacturing, distribution, transportation and warehousing processes.

To manage and facilitate enhanced collaboration among the various participants in the value chain, organizations are increasingly deploying web-enabled value chain management software solutions to address their execution, transaction and planning requirements. Up till the advent of Web Services and the Internet, business process integration often involved the development of interfaces between proprietary databases. The usual solution was to transcribe entire databases or one enterprise to the format required by the other by developing proprietary conversion programs that are specific to each application, a very tightly coupled solution indeed. This is very costly, not very flexible, and if either enterprise needs to upgrade or replace systems, the whole process of data interface has to be re-started.

Web Services technology allows online services to be encapsulated as re-usable components or applications with well-defined programmable interfaces (APIs) that can be consumed by other services using common web protocols. This “Web Glue” loosely couples the producers and consumers of services and information within the value chains via the Internet. In essence, this glue consists of well-defined objects and methods that define the communications protocol between applications, publicising the availability and the way these services (i.e. applications and information) are invoked and consumed. The standards also seek to facilitate the management and coordination of groups of services to present a unified view to the consumer of these services.

Imagine now for a moment, entire value chains that consists of enterprises that synchronises harmoniously within the eco-system, all empowered by information services made possible by web services that are registered and published in online “yellow pages”. New participants entering the eco-system no longer have to spend millions of dollars on proprietary systems to generate product and service awareness, and to participate in the eco-system of the value chain.

The market for value chain management solutions is relatively new and is experiencing rapid growth. Industry sources estimate that the advanced planning and scheduling market was $350 million in 1996, and is projected to grow at a compound annual growth rate of 46% to more than $1.6 billion by 2000. The warehouse management systems software market was approximately $270 million in 1996, and is projected to grow to more than $1.4 billion by 2001 - a compound annual growth rate of 40%. These numbers certainly point towards an exponential growth for the new breed of SCE web services platform that seek to empower the relationship dynamics of the modern adaptive and dynamic supply networks.