Optimal method, system, and storage medium for resolving demand and supply imbalances

• US 7,783,534 B2
• Filed: 09/12/2003
• Issued: 08/24/2010
• Est. Priority Date: 09/12/2003
• Status: Active Grant

• Current Assignee: International Business Machines Corporation
• Original Assignee: International Business Machines Corporation
• Inventors: Porter, Howard K., Peters, Daniel J., Henderson, Mark A., Armstrong, Edward W., Eck, Brian T., Scheib, Linda L., Szymanowicz, Elizabeth C.
• Primary Examiner(s): Gart; Matthew S
• Assistant Examiner(s): CRAWLEY, TALIA F
• Application Number:
  US10/660,850
• Publication Number:
  US 20050060242A1
• Time in Patent Office: 2,538 Days
• Field of Search: 700/99, 700/100, 700/107, 705/7, 705/8, 705/10, 705/28, 705/29
• US Class Current: 705/29
• CPC Class Codes: G06Q 10/06375 Prediction of business process outcome or impact based on a proposed change
• CPC Class Codes: G06Q 10/087 Inventory or stock management, e.g. order filling, procurement or balancing against orders
• CPC Class Codes: G06Q 10/0875 Itemisation or classification of parts, supplies or services, e.g. bill of materials

Abstract

An exemplary embodiment of the invention relates to a method, system, and storage medium for resolving demand and supply imbalances. The method comprises identifying at least one excess component inventory liability or constraint in supply capability for an end product by matching current buying patterns for the end product against inventory liability and supply capability based on a previous demand forecast. Where excess component inventory liability exists the method refocuses the excess component inventory liability by determining alternative end products that use components identified in the excess component inventory liability; and executes sales activities for enticing sales of the alternative end products. Where constrained supply capability exists, the method determines alternative end products that are functionally equivalent to those identified in the constrained supply capability; and executes sales activities for enticing sales of functionally equivalent alternative end products.

Claims

1. A method for resolving demand and supply imbalances comprising:

identifying, via logic executing on a host system computer, at least one excess component inventory liability or at least one constraint in supply capability for an end product by matching current buying patterns for said end product against inventory liability and supply capability based on a previous demand forecast;

reducing, via the logic, supply liability for the excess component inventory liability or the constraint in supply capability for an end product using a time-phased approach that begins at 100 percent liability assessment and includes a series of mitigation activities performed over time until the supply liability reaches a specified percentage level, the time-phased approach including a procurement and development assessment sub-process, a liability council assessment sub-process, a sales activities sub-process, and a liability write off sub-process, the time-phased approach implementing;

where excess component inventory liability exists;

refocusing said at least one excess component inventory liability by determining alternative end products that use components identified in said at least one excess component inventory liability; and

executing sales activities operable for enticing sales of said alternative end products; and

where constrained supply capability exists;

determining alternative end products that are functionally equivalent to those identified in said at least one constrained supply capability; and

executing sales activities operable for enticing sales of functionally equivalent alternative end products;

wherein said sales activities result in reducing said at least one excess component inventory liability or avoiding said at least one constraint in supply capability.

2. The method of claim 1, wherein said identifying at least one excess component inventory liability or at least one constraint in supply capability includes:

exploding a bill of materials for a product structure based upon a sales forecast, demand data, and supplier commitment data;

imploding results of said exploding into end products and an available to promise statement;

translating said results into lead times for delivery; and

identifying remaining results not included in said available to promise statement as excess component inventory liability or constraint in supply capability for an end product.

3. The method of claim 1, wherein procurement and development assessment sub-process mitigation activities represent a greatest magnitude of liability, the procurement and development assessment sub-process mitigation activities implemented via the logic and includes:

rebalancing demand and supply by shifting demand or supply from one geography to another;

selling components back to vendors;

negotiating with vendors to eliminate or reduce liability based upon mutually agreed to incentives that provide incremental value to both parties;

using excess components as field parts in support of a warranty program or servicing requirements;

qualifying excess components in new products; and

adjusting said sales forecast to account for excess or constrained components;

wherein said procurement and development sub-process mitigation activities are performed first in time before other sub-processes.

4. The method of claim 3, wherein liability council assessment sub-process mitigation activities represent a magnitude of liability less than that of said procurement and development assessment sub-process, the liability council assessment sub-process mitigation activities implemented in response to receiving information concerning issues due to unresolved mitigation activities performed via the procurement and development assessment sub-process mitigation activities, the liability council assessment sub-process mitigation activities implemented via the logic and include:

updating said sales forecast to account for excess or constrained components;

conducting squared sets analysis;

brokering components or products that are no longer saleable;

creating saleable bundles with other current offerings;

developing option packages;

determining alternative routes to market; and

making liability write-off determinations;

wherein said liability council assessment sub-process mitigation activities are performed second in time after said procurement and development assessment sub-process.

5. The method of claim 3, wherein sales activities sub-process mitigation activities represent a magnitude of liability less than that of said liability council assessment sub-process, the sales activities sub-process mitigation activities implemented in response to receiving sales recommendations resulting from the liability council assessment sub-process, the sales activities sub-process mitigation activities implemented via the logic and include:

developing a promotion for long-term over supply through advertisements and communications media;

offering a solution via alternate routes to market;

authorizing pricing actions comprising at least one of;

price decreases;

discount incentives; and

pricing delegations;

establishing incentives for buying or selling;

reassessing commission structures for an offering; and

updating telesales team scripts for inbound and outbound telephone calls;

wherein said sales activities sub-process mitigation activities are performed third in time after said liability council assessment sub-process.

6. The method of claim 3, wherein liability write off sub-process mitigation activities represent a magnitude of liability less than that of said sales activities, the liability write off sub-process mitigation activities implemented via the logic and include:

negotiating with a vendor; and

scrapping components associated with said liability;

wherein said liability write off sub-process mitigation activities are performed fourth in time after said sales activities sub-process.

7. The method of claim 1, wherein said sales activities include:

cross-sell;

up-sell;

alternative-sell; and

down-sell.