The goal of Smart Operations is to digitalize the supply chain and value-chain through the help of constantly advancing web solutions for the corporate companies in various fields of industry. This includes not only the vertical as well as horizontal value-chain, but also the horizontal supply-chain process of an organization. The appearance of Smart Operations is caused by the fact that internal as well as external operations are gaining in complexity and diversity, which leads to a need of master-ing these difficulties with the implementation of smart solutions to support an inte-grated analysis and evaluation of the data on behalf of the organization (Koch, Kuge, Geissbauer, & Schrauf, 2014, p. 7). The increasing complexity and diversity is due to the continuous globalization, low-cost-sourcing from emerging countries, the move-ment of production facilities towards important sales markets and the outsourcing of services, highlighting only a few reasons behind this phenomenon. For counteracting these challenges, the implementation of an end-to-end supply-chain into the organi-zation is indispensable (Bechtold, Kern, Lauenstein, & Bernhofer, 2014, p. 16).
3.3.1 Vertical Integrated Value-Chain
The Vertical Integrated Value-Chain enables the connection of various IT-Systems across all hierarchical levels of the organization, for example, in the production sys-tem, which can connect the IT-Systems of the actuator level, sensor level, steering level, manufacturing level, execution level and business planning level for a compre-hensive analysis and an integrated solution approach. The connection of the product lifecycle management system, the enterprise resource planning system and the manu-facturing execution system is leading to an overarching data communication, which can be bundled into one application managed through implemented cloud systems and, therefore, makes all data and information accessible from every location. The
concept of Vertical Integrated Value-Chain can be seen in the below figure (Dorst, 2015, p. 26).
Figure 9: Vertical Integratede Value-Chain (Koch, Kuge, Geissbauer, & Schrauf, 2014, p. 17)
Furthermore, the vertical digitalization enables a permanent dataflow across distribu-tion, product development, production and logistics (Bauernhansel, Hompel, &
Vogel-Heuser, 2014, p. 26). Due to this connection throughout individual business units, quality and flexibility can be increased and, at the same time, costs can be re-duced. The goal of the network is to create an understanding and an illustrative im-age of the value-chain within the organization. With the help of Industry 4.0, the Cyber-Physical-Systems are the biggest supplier of data for a comprehensive analy-sis of the Vertical Integrated Value-Chain in an organization (Koch, Kuge, Geissbauer, & Schrauf, 2014, p. 18).
3.3.2 Horizontal Integrated Value-Chain
The digitalization of the Horizontal Integrated Value-Chain of an organization inte-grates and optimizes the information flow and flow of goods from the suppliers through the company to the final customer and back. This process contains the inte-gration and steering of all corporate divisions such as, purchasing, production, logis-tics, planning, etc. as well as all external value-chain partners such as, suppliers, au-thorities, etc., which are necessary to fulfill the individual customer requirements.
Figure 10 below shows the concept of the Horizontal Integrated Value-Chain. The
changes in demand are tracked in real-time to coordinate and to synchronize the ply immediately with the suppliers to enable a shorter throughput time from the sup-plier to the end customer. Furthermore, the customer is informed in real-time about the order status and the delivery status of the products (Dorst, 2015, p. 19). In the meantime, the production capacity is flexibly distributed with the help of the network between the whole value-chain to guarantee an optimal utilization rate of the ma-chinery, employees, partners and suppliers. The individual production systems are joined together to a production compound. All network partners are connected through different information systems like, Product Lifecycle Management system, Advanced Planning and Scheduling (APS) system, Manufacturing Execution System (MES), Supply Chain Management (SCM) system and Enterprise Planning System.
It is essential that certain questions regarding the accountability, taxation and other legal aspects are considered before implementing a complex value-chain network overarching with partners and suppliers. These topics need to be addressed in the planning phase of the network creation (Emmerich, Döbele, Bauernhansel, Paulus-Rohmer, Schatz, & Weskamp, 2015, p. 8).
Figure 10: Horizontal Integrated Value-Chain (Koch, Kuge, Geissbauer, & Schrauf, 2014, p. 17)
3.3.3 Horizontal Integrated Supply-Chain
The concept of a Horizontal Integrated Supply-Chain is a part of the Horizontal Inte-grated Value-Chain and focuses on the supplier side of the whole equation. The goal is to connect and build up a strong network with the selected suppliers to exchange information and data for a more efficient and effective way of controlling and steer-ing the demand of the customers. For achievsteer-ing a total integration of a Horizontal Integrated Supply-Chain, the company needs to implement a Supply-Chain-Control-Tower, which operates as a central point of exchange and knowledge transfer. This
Supply-Chain-Control-Tower is one of the core elements of Smart Operations (Bhosle et al., 2011, p. 4).
All data and information are reliably collected and analyzed in real-time through the Supply-Chain-Control-Tower along the whole Supply-Chain process. With the help of the analyzed data, the company can take short-term and long-term decisions to better steer the organization close to the market needs and their strategic goals. The company gains a competitive advantage with the help of an implemented network for the Supply-Chain partners. The Supply-Chain-Control-Tower has three distinct func-tions for the management of an organization. Firstly, the network gives a long range view on what is happening currently in the organization and helps the Supply-Chain Manager to answer the question: “What happens at the moment in the Supply-Chain process?” Secondly, the network gives detailed analysis of the data for better deci-sion taking. Through the analysis, the Supply-Chain Manager can answer the ques-tions: “How did we get here?”, “What do we have to do next?” and “What do we have to improve to reach the set objectives?” The Supply-Chain-Tower is based on a
“What-if” analysis, which combines the perspective of the risk analysis for each pos-sible scenario with the potential in these scenarios to figure out the most suitable way to further operate. Last but not least comes the function of execution. Through lean processes in the fields of planning, materials management, sales and services, the Supply-Chain Manager is able to orchestrate all information and action plans in the supply chain, to monitor the current activities and to ensure the compliance of the action plans (Bhosle et al., 2011, p. 7).