Shankar Sundaresan

Manufacturing in the Digital Age: Exploiting Information Technologies for Product Realization

Information technology (IT) is both the key enabler for future manufacturing enterprises and a transformer of organizations and markets. By reducing barriers to collaboration, compressing lead time, eliminating physical movement, and enriching decision-making, IT helps manufacturers achieve their goal of meeting customer needs better, quicker, and cheaper. By providing global reach and easy connectivity, information technology has fostered cooperation while increasing market competition, and heightened customer expectations. Advances in computer and communication technologies combined with rapid changes in organizations have created new opportunities for exploiting information technologies in the entire product realization process. This paper explores these opportunities, and identifies promising directions for both basic and applied research. We first review important trends in organizations, markets, and information technologies—from increasing customer involvement and opportunistic organizational alliances to global reach and connectivity, enterprise integration, and virtualization. Adopting a process viewpoint of the product realization cycle, we translate these trends into high-impact IT applications in design and operations that offer rich potential for applied research and development. Underlying these applications are four broad classes of intelligent information processes—intelligent search, diagnosis and prognosis, collaboration, coordination, and negotiation, and understanding and learning. And, software agents provide an ideal platform to implement these processes. We briefly review developments in these basic research fields, and identify necessary scientific advances that are most important from the manufacturing perspective. Our goal is to synthesize streams of thought from many related disciplines in engineering, science, and management, and develop a framework for examining how information technologies can facilitate and influence manufacturing.

Contingency Pricing for Information Goods and Services Under Industrywide Performance Standard

This paper demonstrates that quality-contingent pricing is a useful mechanism for mitigating the negative effects of quality uncertainty in e-commerce and information technology services. Under contingency pricing of an information good or service, the firm preannounces a rebate for poor performance. Consumers determine performance probabilities using publicly available historical performance data, and the firm may have additional private information with respect to its future probability distribution. Examining the monopoly case, we explicate the critical role of private information and differences in belief between the firm and market in the choice of pricing scheme. Contingent pricing is useful when the market underestimates the firms performance; then it is optimal for the firm to offer a full-price rebate for mis-performance, with a correspondingly higher price for meeting the performance standard. We study the competitive value of contingency pricing in a duopoly setting where the firms differ in their probabilities of meeting the performance standard, but are identical in other respects. Contingency pricing is a dominant strategy for a firm when the market underestimates the firms performance. Whereas both firms would earn equal profits if they were constrained to standard pricing, the superior firm earns greater profits under contingency pricing by setting lower expected prices. We show that contingency pricing is efficient as well, and consumer surplus increases because more consumers buy from the superior firm.

Knowledge markets in firms: knowledge sharing with trust and signalling

Knowledge sharing and learning are critically important to the success of knowledge management. In this research, we study the design of incentive rewards to facilitate knowledge transfer utilizing an internal knowledge market within organizations. The internal knowledge market is modelled as a marketplace where knowledge providers can send signals about their knowledge and learners may voluntarily acquire the knowledge based on the signals. Three types of knowledge recipients are differentiated with respect to their signalling threshold functions: knowledge connoisseur, knowledge public, and knowledge dilettante. In addition, a knowledge recipient may be either humble or arrogant, with different propensities for learning characterized by different learning inhibition cost functions. For different knowledge recipients, we study the knowledge providers’ best signalling strategies and the firms optimal design of reward structures. Knowledge providers will adopt different signalling strategies if they lack the necessary trust that knowledge recipients will accurately report their learning. We analyse how the firm can offer learning rewards and employ IT support to improve the trust so as to increase knowledge transfer. This research provides valuable insights for practitioners to manage an internal knowledge market.

Facilitating knowledge transfer in organizations through incentive alignment and IT investment

Knowledge transfer plays a fundamental role in the success of knowledge management systems. Information technology facilitates knowledge sharing and learning. In this paper, we study the role of incentives and information systems in knowledge transfer. We incorporate both the reward and cost for knowledge sharing and learning in a modeling framework, capture the characteristics of both information system and incentives, and explore how the IT investment complements the incentives in facilitating knowledge transfer. We investigate the appropriate incentive mechanisms that can align the individual responses with the organizations optimal level of knowledge sharing and show that various organizational objectives (e.g., maximal profit, maximal knowledge flow, and minimal technology threshold for full sharing) can be achieved by designing different incentive schemes. We focus on the complementarity between information systems and incentives in knowledge transfer and determine the threshold level of information technology sophistication required to support full knowledge sharing.

Capacity decisions for high-tech products with obsolescence

Modern high-tech products experience rapid obsolescence. Capacity investments must be recouped during the brief product lifecycle, during which prices fall continuously. We employ a multiplicative demand model that incorporates price declines due to both market heterogeneity and product obsolescence, and study a monopolistic firms capacity decision. We investigate profit concavity, and characterize the structure of the optimal capacity solution. Moreover, for products with negligible variable costs, we identify two distinct strategies for capacity choice demarcated by an obsolescence rate threshold that relates both to market factors and capacity costs. Finally, we empirically test the demand model by analyzing shipping and pricing data from the PC microprocessor market.

Parallel teams for knowledge creation: Role of collaboration and incentives

Parallel team strategy, in which multiple teams simultaneously pursue project goals, has been widely adopted by high-tech industries for knowledge creation. In this study, we investigate the design of organizational incentives, including a fixed wage payment and an additional reward structure, for effective management of the parallel team strategy. We consider two main variants of parallel teams-collaborative and non-collaborative teams. Proposing and investigating three types of organizational reward policies, individual, aggregate, and contingent, we analyze the viability and characteristics of these policies. We show that individual reward policy performs better than aggregate policy, and that collaboration in parallel teams is vital. When parallel teams work non-collaboratively or when aggregate reward policy is used for collaborative teams, the firm achieves optimal profits by only offering a share of the knowledge creation benefit as the reward. Under some conditions for collaborative teams, we demonstrate that individual and contingent reward policies can achieve maximal benefits (first-best) for the organization. This research provides valuable insights for firms in employing parallel team strategy for knowledge creation.

Contingent bids in auctions: availability, commitment and pricing of computing as utility

Enabled by advances in grid and network computing architectures for the delivery of on-demand computing services, the vision of an e-services economy in which computing will be as ubiquitous as a utility is becoming a possibility in business computing. Major firms in the computing industry such as IBM, HP, and SUN Microsystems are focusing on agility and flexibility of computing resources and gearing up for their own versions of on-demand computing and IT outsourcing solutions. Successful business advent of these new computing models requires the development of appropriate pricing mechanisms that are consistent with the enabling technologies. Our paper presents preliminary research in this area, and introduces the notion of contingent auctions to address this lacuna. In contingent auctions, users bid for computing resources in an auction, but are relieved from the contract if demand is not realized. We study different mechanisms - ranging from an advance-commit (capacity reservation) to no-commit (pay-as-you-go) - under such demand uncertainty. We show how the different levels of commitment affect prices, revenues and resource utilization. Our initial results show promise and reiterate the need to address the availability-commitment dichotomy in the design of business models for on-demand computing and IT outsourcing.

Managing quality uncertainty through contingency pricing

We analyze quality-contingent prices as a mechanism for mitigating the effects of quality uncertainly in e-commerce and IT goods services. A contingency pricing contract specifies a sequence of possible quality levels and corresponding prices. When the public performance probabilities differ from the firms private (and true) probabilities, contingency pricing can expand market size and the likelihood of market existence. When the market underestimates the firms ability to deliver quality, contingent price contracts are strictly optimal and increase the fraction of buyers. The optimal pricing scheme has a full-price rebate for mis-performance. These results have actionable value in IT-intensive contexts such as electronic retailing, application service providers, telecommunications services, business exchanges, and on line financial trading services where the information infrastructure allows easy capture, quantification, verifiability and dissemination of quality and performance information.

Communications in hierarchical organizations and standards policies for information technology

The present invention provides a bar circuit for reducing cross talk and eddy current of an integrated circuit. The bar circuit comprises a semiconductor substrate with a first conductivity type; a strip of first well with a second conductivity type in the semiconductor substrate; and a strip of second well with the second conductivity type in the semiconductor substrate. The strip of second well is located below and adjacent to the strip of first well, whereby forms a junction barrier for reducing the cross talk and the eddy current.

An Ontology for Database Design Automation

Although it is possible to encode a great deal of process knowledge about database design into a system, experience has shown that the contribution of a human designer extends beyond his or her knowledge of database design techniques. The next step in the evolution of automated database design tools is to incorporate knowledge and reasoning capabilities to support this higher level of participation. Doing so, requires some understanding of what different terms mean. This paper presents an ontology that can be used as a surrogate for the meaning of words in a database design system to simulate the contributions that a designer would make to a design session with a user based on the designers general knowledge. The ontology classifies a term into one or more categories such as person, abstract good, or tradable document. It is comprised of a semantic network, a knowledge base containing information on the meaning of terms that have been classified, an expert system knowledge acquisition component, and a distance measure for assessing the distance between the meanings of terms. The ontology was tested by different types of users on a variety of problems and was shown to be quite effective.