September 15, 2006

HPC and Supply Chain Management

by Steve Conway

Is supply chain management poised to become an important new application for HPC? At the Council on Competitiveness’ annual HPC Users Conference on September 7, panelists from commercial powerhouses Wal-Mart, Procter & Gamble, Pratt & Whitney and Clopay Plastic Products described their experiences.

Wikipedia defines supply chain management as “the process of planning, implementing and controlling the operations of the supply chain, with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory and finished goods from point-of-origin to point-of-consumption.” In a nutshell, it means optimizing the flow of materials, information and money all the way from a company’s suppliers to its customers, including what happens within the company itself.

To explore this topic, the Council on Competitiveness assembled a high-profile panel for its third annual HPC Users Conference. Chaired by Microsoft Corporate Vice President Marshall Phelps, who’s been involved with the Council since it began 20 years ago, the panel included Gary Abyad, president of Clopay Plastic Products Company; Tom Lange, director of corporate R&D modeling and simulation for The Procter & Gamble Company; Dr. Jayant S. Sabnis, chief engineer for systems analysis & aerodynamics, Pratt & Whitney; and Nancy Stewart, senior vice president and chief technology officer, Wal-Mart Stores, Inc.

David Shaw, chairman of The D. E. Shaw Group and co-chair of the Council’s HPC Advisory Committee, said the Council is especially interested in this topic because supply chain management is increasingly important for competitiveness and profitability. There are strong competitive pressures to obtain parts quickly for assembly and to deliver finished goods quickly to outlets. Supply chain management has strong potential for HPC because it involves a lot of communication and extensive interoperability of heterogeneous systems at different companies. The Council needs to understand what drives these companies.

While large companies are beginning to use HPC for supply chain management because of their enormous data management and data analysis challenges, no two situations are exactly alike.

Nancy Stewart said Wal-Mart supercenters stock about 500,000 products each, and suppliers compete fiercely for shelf space. Every day between 3:00 and 5:00 a.m., the company runs its models to determine what is selling well in each store, then “reformats” the stores and sends the information to the stores. From its headquarters in Bentonville, Arkansas, Wal-Mart services all of its stores worldwide, right down to turning on the lights in the stores. Wal-Mart uses HPC not only for ergonomics like this, but for shelf space determinations, store planning and resource planning.

Stewart stressed that if you really understand your data, you can do predictive analysis. “Every day between 3:00 and 5:00 a.m., I have to do enough data mining and analysis to let Procter & Gamble and other suppliers know what to stock in our stores. We can’t spend a dollar of investment on HPC or anything unless we can see the ROI. That’s why we had to make the investment in HPC.”

The large companies on the panel also discussed the extent to which they expect their suppliers to use HPC, and whether they would be willing to teach the suppliers how to use this technology if they aren’t familiar with it. Most suppliers don’t use HPC yet.

According to Jayant Sabnis, Pratt & Whitney has long used HPC for the modeling and simulation of jet aircraft engines. This is because “building models on the computer is faster and lower-cost, and you can look at any level of detail. Analog models only tell you whether something will work or not, so digital models are the basis for innovation.”

Sabnis said Pratt & Whitney’s suppliers also do modeling and simulation to speed development and reduce costs for the parts they contribute to the company. If parts and other elements from the supply base don’t arrive on time or don’t meet requirements, this can create a major problem. Modeling and simulation are important enough to Pratt & Whitney’s bottom line that if suppliers are ready to use HPC, the company will reach out to help them. Pratt & Whitney builds the digital model and show suppliers what simulation is doing for the company.

“We pay a lot of attention to whether suppliers have the ability to use these tools,” Sabnis said. “Mistakes can be disastrous, so we take a lot of time determining whether suppliers can use these tools. There’s no point using HPC if you don’t understand the problem. If they don’t have the ability, we work with them.”

Wal-Mart doesn’t ask suppliers to use HPC, but is always looking for the lowest-cost, highest-quality products to satisfy the company’s large customer base. “That’s the value HPC brings to us and our customers,” Stewart said. “It’s an advantage if suppliers can link into Wal-Mart’s systems and perform their own analyses using Wal-Mart’s complex tables.”

Procter & Gamble is an important supplier to Wal-Mart and uses HPC and high-end visualization extensively itself, but does not require suppliers to use HPC and, unlike Pratt & Whitney, does not expect to teach them how to use it. But “if HPC can reduce inefficiencies on the supplier side, we strongly applaud it,” said Tom Lange.

In Procter & Gamble’s world, there are some important barriers to the use of HPC by suppliers. One is the cost of software licensing. Another is a generally lower level of engineering ability than among auto-industry suppliers. Related to this is a shortage of user-friendly middleware. ”Not enough people are producing higher-quality middleware to get this scientific stuff out into industry for things that are done every day. We need middleware to get some of the routine analysis automated, so non-experts in FEA and CFD can run it,” Lange explained.

Clopay Plastics Products was the smallest company represented on the panel, though hardly tiny (more than $1 billion in annual revenues). Wal-Mart and Procter & Gamble are both customers for Clopay’s products. Gary Abyad said Clopay isn’t convinced yet of the value of HPC, and hasn’t learned how to use it. “We need to be introduced and led with user-friendly tools that can produce results. As a public company, we don’t have the luxury of investing for 10 years for a potential payoff. Wal-Mart and P&G demand new products every day. So HPC has not made it onto our radar screen yet.”

Abyad said Clopay faces enormous competitive pressures to reduce time and costs, but is not seeing rivals tout HPC yet as a competitive weapon. He thinks larger companies can mentor smaller firms like his in the use of HPC. “But there are competitive issues,” Abyad explained. “Using these tools provides a competitive advantage, so P&G would need to decide how this would affect their own competitive advantage. Industry associations could also help smaller firms.”

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