Norman M. Sadeh e-Supply Chain Management Laboratory ISR- School of Computer Science Carnegie Mellon University Supply Chain Trading Agents: Competition-Based

Norman M. Sadeh

e-Supply Chain Management Laboratory

ISR- School of Computer Science

Carnegie Mellon University

Supply Chain Trading Supply Chain Trading Agents: Competition-Based Agents: Competition-Based

ResearchResearch

Copyright ©2006 N. Sadeh CS-50 Supply Chain Trading Agents Slide 2

Outline

Morning Session (10-11:30am) What is the Supply Chain Trading Agent

Competition (TAC-SCM)? N. Sadeh Evolution of the Competition, J. Collins The CS-50 Mini-Tournament, M. Benisch

Afternoon Session (1:30-3:00pm) CS-50 Mini-Tournament Results at 2pm Supply Chain Trading Panel

T. Sandholm, J. Collins, M. Fox, M. Benisch and N. Sadeh (moderator)


Trading is Not Just for Biz Schools


Automated Trading

On the NYSE, automated trading accounts for over 50% of portfolio trades most weeks As much as 70% in some weeks

eBay proxy bidding

Ariba spend management solutions

CombineNet’s combinatorial optimization sourcing engine

Speed is the key advantage


So Isn’t This a Solved Problem?

If it’s already taking place, why is it still challenging? Market mechanisms

Multi-attribute negotiation

Competing in concurrent markets

Adapting to opponent strategies Markets with limited number of players

Delegating decision to software programs is not free of risk


Supply Chain Management

Planning and coordinating procurement, production and distribution activities From raw material suppliers to manufacturers …

to distribution centers …to retailers and consumers

Includes in-bound, out-bound and reverse logistics

Trillions of dollars annually

Can also be viewed as extending to the service sector and to digital products With different characteristics


The Need for Agile Supply Chain Solutions

Shorter product life cycles

Increased demand for customization

Global competition

Outsourcing & focus on core competencies

Companies need to rapidly adapt their supply chains as business conditions change

Companies that can quickly evaluate a larger number of options and can effectively interoperate with others will win


How Do You Evaluate Supply Chain Trading Solutions?

Evaluating techniques against a pre-specified set of solutions does not cut it

Need to capture the competitive/strategic nature of supply chain trading

In 2003, our group launched the annual Supply Chain Trading Agent Competition (“TAC-SCM”)

20 teams from around the world in 2003

Over 30 teams in 2004 and 2005– around 150-200 researchers worldwide

Game has been refined in collaboration with SICS and U. of Minnesota.


Underlying Research Objectives

Explore future possible supply chain trading scenarios Understand tradeoffs associated with

different market mechanisms and contractual relationships

Develop competitive and robust trading strategies

Study emerging behavior resulting from multiple organizations competing in overlapping customer and supplier markets


The Supply Chain Trading Agent Competition

Six PC assembly agents compete in each game Each has access to the same suppliers and customers Each agent has the same finite capacity

A game lasts 220 days, each day is simulated in 15 seconds agents bid on customer orders and negotiate supplies assemble and ship PCs Manage finances

Customers

RFQs & orders

Delivery schedule

Productionschedule

RFQs &orders

Supply ChainManagement

Manufacturers

Suppliers

BANK

RFQ RFQRFQ RFQRFQBid BidBid

[RFQ no, price]RFQ

[Desc, Qty, Due Dt, Penalty]

Suppliers

Customers

Manufacturers

Component Market Place

PC Market Place

… …

BANK

Bid BidWinning Bid

[Bid no, price]RFQ


… …Suppliers

Customers

Manufacturers


PC Market Place

Suppliers

Customers

Manufacturers


PC Market Place

BANK

Bid BidBid

[RFQ no, price]RFQ


RFQ RFQRFQ RFQRFQ RFQ [Desc, Qty, Due Dt]

Offer OfferOffer

[RFQ no, Price,Qty,Due dt]

… …

Suppliers

Customers

Manufacturers


PC Market Place

BANK

Bid BidBid

[RFQ no, price]RFQ


RFQ RFQRFQ RFQRFQ RFQ [Desc, Qty, Due Dt]Offer Offer

Accepted Offer[RFQ no, Price,

Qty,Due dt]

… …


TAC-SCM Challenges

Concurrently compete in multiple markets with interdependencies and uncertainties

Managing capacity in an environment of constantly changing component supplies and customer demand

Adapt to adversary strategies

Suppliers

Customers

PC assembly

What supplies do I buy? When?

Who should I sell to? At what price?

How should I best use my capacity?

How should I manage my inventory? Too much is costly, too little and I lose customers

I can’t afford to be late, or I pay

customer penalties.BANK

How’s my bank balance?


TAC-SCM Tournament

Qualifying rounds (8-10 days)

Seeding rounds (8-10 days)

Final rounds over 3 days

Hundreds of games pitting many different combinations of agents under many different market conditions


CS-50 Mini-Tournament

A selection of 6 agents that reached the final rounds in 2005 GoBlueOval – Ford/U. of Michigan (USA) MinneTAC – U. of Minnesota (USA) PhantAgent – U. of Bucharest (Roumania) GeminiJK – U. of Gelsenkirchen (Germany) Mertacor – U. of Thessaloniki (Greece) CMieux – Carnegie Mellon U. (USA)

Total of 15 games

Documents

Norman M. Sadeh e-Supply Chain Management Laboratory ISR- School of Computer Science Carnegie Mellon University Supply Chain Trading Agents: Competition-Based