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Christopher's (2001) framework in Figure 34 shows that the three levels' principles, programmes, and actions imply the terms interpretation, decision, and action respectively. The first level, 'principles' is considered as interpretation or analysis of what is needed for an agile supply chain. The framework mainly considers combining both lean and agile approaches to achieve agility. With a mixed portfolio of products and markets, Christopher (2001) argues that the demand for some products is stable and predictable, and some products that are unstable and unpredictable. It is not necessarily the case that a supply chain should be either lean or agile. It is argued that a supply chain may need to be lean for part of the time and agile for the rest. In Figure 34, postponed fulfilment refers to the adoption of lean production principles while rapid replenishment focuses on achieving agility through agile suppliers and demand driven features. The second level 'programmes,' is the decisions made to implement both lean and agile approaches. For instance, postponed fulfilment or 'lean principle' requires a flexible response, lean production and quick response. Agility approach requires demand driven, organisational agility and agile supply. The third level, 'action' is the actions required after interpretation and decisions been made. For instance, to implement lean programmes, standardization/modularization, set-up time reduction and waste reduction are needed. In contrast, to implement the agility approach, operations must be synchronized and process management is required.
Overall the framework meets the requirement to interpret, decide, act and sense. Interpret is at level 1 principles where the combination of both lean and agile is considered; decide is at level 2 where design of solutions is presented; act is at level 3, which explains the actions required to support decisions at level 2. Sense is not directly described in this framework; however, demand driven and visibility of real demand could facilitate the ability for enterprise to sense its customer requirement and environment. Christopher ( ) emphasised that not all elements are required for any one specific market context, but it is likely that many elements are required. This framework particularly considers how lean methodologies can contribute to the creation of agile enterprises. Product range can be separated according to its volume and variability; it is possible to exploit both lean and agile strategies. Lean also exceeds agile especially in the context of mass customization, where effective change depends on understanding all relevant business processes. Although this framework considers both lean and agile, ABN focuses more on agility. The agility section of this framework includes major components required to achieve agility. Before organisations can achieve agility, the organisation must achieve adaptability.
Figure : An integrated model for enabling the ASC (adapted from Christopher, 2001)
Problems of "An integrated model for enabling the ASC" (Christopher, 2001)
Problem 1 Absence of balance between coordination and collaboration
ABN that collaborates with many heterogeneous partners needs to balance coordination and collaboration to reach the 'edge of chaos' (Scheer, 2007), where the intensity of control and connectivity are balanced. Although this framework includes synchronized operations and cross functional teams this does not imply different levels of coordination and collaboration.
Problem 2 Absence of continuous business process improvement
As discussed by Moore (2010), enterprise needs to constantly engaging in a business process improvement and innovation in order to survive and maintain its competitiveness. In an ABN environment, enterprises must consider changes in business process in relation its partners. This framework fails to capture the idea of continuous innovation and adopting the business process lifecycle to achieve sustainability.
Problem 3 Absence of sharing of quality information across boundaries
Information sharing was identified as one of the key aspects of collaboration (Evgenious, 2002; Heinrich & Betts, 2003). Sharing quality information was classified as an important factor that encourages organisations to learn from each other, which complements and reinforces each and facilitates informed decision-making.
Problem 4 Absence of effective communication
Effective communication is critical for partners to perform consistent actions that will reach a common goal. Effective communication needs support via collaboration and technology: portals that facilitate effective communication and information sharing.
Problem 5 Absence of potential partner selection
Potential partner selection classified in Table 1 reinforces the idea of combining the strengths of skilled resources from different partners. Connecting/disconnecting partners is essential if organisations want to quickly adapt to changes in the environment.
Problem 6 Absence of 'high quality' for agility
High quality is a key criterion in assessing agility. Agility is responding fast to customer requirements; not doing so indicates a failure to respond to the change.
Problem 7 Absence of aggregating resources to create core value
ABN typically collects resources from partners to accomplish a common goal and deliver a valued product or services to its customers. This combination of skills and resources benefits every organisation in the network. When the network performance increases, individual performance also increases.
Problem 8 Absence of inventive product development process to enhance competitive advantage
Competitive advantage requires innovation. As other organisations can easily imitate a competitive position, management approach, or product and services, organisations must invent new products or services to create competitive advantage.
Problem 9 Absence of resource optimization strategy
Optimization discussed by Moore (2010) and Porter (1996) emphasises the importance to reduce waste, minimise effort and reduce costs to increase profitability of the organisation. Moore (2010) highlight the ability to reinvest if the processes are optimised, allowing more funds for reinvesting to create differentiated core business processes and thereby gaining competitive advantage.
Problems, Issues and Requirements in ABNs
This section summarised the problems underlined in those ABN frameworks. The identified problems are categorized by issues and requirement that address those issues.
Figure 35 shows the summary of the problems, issues, and requirement identified. Five main issues derive from the problems: collaboration, innovation, adaptability, communication, and interoperability.
Collaboration is the issue for problems of alignment of individual goals and the common goal, and absence of aggregate resources to create core value. Collaboration in ABN is based on legal agreement and mutual understanding and commitment. Heterogeneous organisations align their activities towards the common goal based on agreement. Collaboration is also the combination of key resources from various partners. ABN gathers the core processes of individual organisations to become context processes to increase value and efficiency. Collaboration requires mutual agreement that ensures consistent actions and high involvement of members. The network is resource based, as collaboration joins partners and their resources to form a community in which sharing of information and communication increases performance.
Innovation is the second issue classified as an area for problems of continuous business process improvement. The inventive product development process enhances competitive advantage. Innovation concerns invention or discovery of something substantially different. Innovation thus requires creativity and effective learning and involves experimenting and testing. Funding supports innovation of product or processes.
Adaptability, classified as a possible problem issue, involves maintaining a flexible platform to connect/disconnect partners, balancing coordination and collaboration, constant reviewing strategies, and effectively managing resources. Adaptability concerns the ability to respond to change: altering strategic directions, modifying business processes, and implementing IT and other systems. Adaptability requires a loosely coupled relationship of partners and a flexible business structure. The inter-organisational technological architecture needs to support the loose coupling of systems. High value partners are selected as the skills that the partners bring into the network determine the network's performance.
Communication, the fourth issue classified for problems, includes information visibility, effective learning, and sharing critical information required to make decisions on a constant basis. Any opportunities, risks or changes detected by partners in the network need to be effectively communicated to mitigate the risks or grasp the opportunities. Communication is facilitated by providing real-time information using multiple types of channels. Effective communication provides real data on customer demand thereby decreasing the bullwhip effect.
Interoperability also presents possible problems of standardisation of business processes. Heterogeneous partners with different operating procedures need to work together through business integrated technologies. For instance, Enterprise Application Integration (EAI) is a middleware that integrates systems and applications across the enterprises (Liu et al., 2008). ABN requires linking of business processes between partners as well as recombining different business processes to support business change.
Figure : Summary of problems, issues and requirement of ABN
Potential Technology Solution to Meet the Requirement
We have identified the problems, issues, and requirements of ABN. Based on those findings, this section attempts to discuss a possible technological solution that could meet the requirement identified. Service-oriented architecture is proposed as a possible solution to solve the problems of ABN. SOA main features are discussed in Section 2.6.1.
SOA is the software architecture that designs and implements a flexible system that supports rapid change of business processes in the complex business environment (Choi, Nazareth & Jain, 2010). SOA can be defined differently from three different perspectives. At the higher level, SOA provides the agility and adaptability for enterprises to respond to the changing business environment (Choi et al., 2010). At the business process level, SOA is a business-oriented architecture that assists fast business process change using web services. SOA provides a flexible architecture that supports loosely coupled services and interoperability between applications (Choi et al., 2010). Services are described as autonomous as each is independent and not affected by other services (Arroyo, Sicilia, & Dodero, 2007). The major objective of SOA is to improve enterprise agility. SOA allows building systems that enhance enterprises' ability to efficiently respond to rapidly changing business conditions. SOA is also known for its ability to ensure interoperability between application, deployment flexibility and resource reusability through its loose-coupling and modularity features (Choi et al., 2010).
SOA has features of loose-coupling, reusability and interoperability. Web services are defined as the loosely coupled and reusable software components that are distributed over the standard internet protocols (Iyer, Freedman, Gahnor & Wyner, 2003). That web services are based on HTTP, XML, SOAP, WSDL, and UDDI open standards has the benefit of data-exchanging with many applications independent of the underlying programming languages (Erol, Sauser & Boardman, 2009; Iyer et al., 2003). This provides the ability for heterogeneous systems to share and exchange information interoperativey as they support different platforms and languages. This also provides the agility to respond effectively and efficiently.
Web services are accessible over the internet. Through a three-step service provider who defines the services, clients can invoke and locate services to match their needs. A service broker is a directory that links the requestor to a service provider, thereby providing flexible architectural style that promotes application integration to match business needs (Izza et al., 2008). Business related services with flexibility and effectively form business processes (Arsanjani, Borges, & Holley, 2004). This is referred to as service composition, which includes choreography and orchestration: services are combined following a specific pattern to solve a specific problem or to achieve a business goal. The combined service may itself become a new service which makes a composition a recursive operation (Santos & Madeira, 2006). The interaction protocol between partners is defined from a global perspective; no one entity controls the composition, and at run time, each partner service executes its role in accordance to the behaviour of other partners. This is critical for business to achieve adaptability: responsiveness to change by modifying its processes and activities. These are supported by having flexible business architecture style (Santos & Madeira, 2006).
Web services being based on open standards allows application interoperability and cross-platform integrity. SOA use service can run on various platforms, and are independent of the underlying platform and technologies thereby facilitate interoperability. This interoperability allows software and applications on different systems to communicate independently of their implementation or technology (Arroyo, et al., 2007).
Loose coupling is defined as the degree of mutual dependency among components; it allows deployment or modification of the interface of components without affecting other components that communicate with them (Arroyo, et al., 2007). SOA services are business oriented, and have levels of granularity that mirror the multiple information processing levels within an enterprise. This granularity allows a choreography of levels of services to produce new composite services that support business processes (Arsanjani, et al., 2004; Ren & Lyytinen, 2008). Loosely coupling facilitates the reuse and reconfiguration of business systems. Reconfiguration is the re-assembling of applications for a different technical environment that has different operational constraints (Arsanjani, et al., 2004). Speedy modification of applications allows for change in business processes in response to a change in business conditions (agility). Web services can be reused allowing reassembling to form new business processes, thereby allowing adaptation to business change (Ren & Lyytinen, 2008; Wang & Kumar, 2009). This ability to select and integrate the right services to build applications supports rapid deployment of new solutions when business strategy changes.
This research attempts to formulate theories for a Design Science study. Design Science is a process of producing an artefact that solves real-world problems. This research attempts to discover the underlying key components required to implement a successful ABN. The extensive literature review revealed many related ABN theories, including agile supply chain, adaptive supply chain management, and smart business networks. They are similar in emphasising collaboration, adaptivity, and agility of the business network. Analysis exposed incomplete frameworks and architectures that formulate the components that cause ABN to be adaptive. This research attempts to produce ABN definition and theories articulated from those related definition and theories. Design Science is applied in this study, as this research attempts to draw on existing theories, concepts and framework to propose a more complete ABN framework and architecture.
Nunamaker, Chen & Purdin, (1991) propose a framework for IS research that consists of four phases (shown in Figure 36): theory building, experimentation, observation, and system development. Theory building includes development of new ideas, concepts, models and methods, and construction of conceptual framework. Experimentation includes laboratory and field testing guided by theories; results of experiments may be used to further validate and refine underlying theories. Observations include the collection of data through field studies and case studies to get a general sense of what is involved in the research domain. System development consists of five stages: concept design, constructing the architecture of the system, prototyping, product development, and technology transfer. The process tests theory including its evaluation of IT and potential for acceptance. This research adopts only the theory building approach from the Nunamkaer et al. (1991) research framework.
Figure : A multi-methodological approach to IS research (Nunamaker, et al., 1991)
Hevner's IS research framework (Figure 37) shows that IS research has three aspects: environment, IS research, and knowledge base. Environment consists of people, organisation, and technology. Business needs or problems are defined by these dimensions: people have differing roles and capabilities; organisations are influenced by their strategies-their technology infrastructure. These define and initiate a need for IS research. IS research is conducted in two ways: by developing and justifying theories, or by building and evaluating an artefact. The knowledge base consists of foundations and methodologies. Foundations are theories, constructs, models, and instances from previous research that can help to develop a theory. Building an artefact acknowledges that methodologies provide a guideline to justify a theory or evaluate and artefact. The relevance of the research is to include the environment in the research, and the rigor of the research is obtained through drawing and applying relevant existing artefacts to support building of the artefact. The design cycle at the central measures with the requirement until a satisfactory design is achieved.
Figure : Information systems research framework (Hevner, March, & Park, 2004)
Hevner et al., (2004) presented IS research framework for Design Science to include seven guidelines used to assess and analysis the extent to which the study satisfies and completes essential steps to achieve result that meet the IS research requirement. Design Science is a problem-solving paradigm, engaging in the creation of innovative artefacts to solve real-world problem. Design artefacts are assessed by their utility, for instance, artefacts that are effective. A Design Science product includes construct, models, methods, and instantiation. Constructs are the conceptualized key components that define and communicate problems and solutions. Models are sets of statements expressing their relationships through connection between problem and solution components. Methods consist of the algorithm used to perform a task and are based on a set of constructs that guide problem-solving. Instantiation is the realization of an artefact in its environment, for instance, how constructs, models or methods can be implemented in a working system. This research meets the design of constructs and models for the researched topic.
Figure 38 outlined the design research guidelines. This is used to describe how this research follows the guidelines and meets some of the criteria of the guidelines.
Guideline 1 Design as an Artefact
Emphasize production of an artefact from the research process. This research involves development of construct and model. Constructs are the key ABN components that derive from analysis and synthesis from applying existing theories and analysing related frameworks. The model is the final ABN framework that shows the connection between problem and solution components.
Guideline 2 Problem Relevance
Problem relevance emphasizes the development of a solution of relevant business problems. According to the design research cycle, relevance is gained through applying and evaluating the theories in the real business context through action research or field studies. The proposed method to evaluate the built construct and models discussed above is action research, which could provide insights into the usefulness of the artefacts.
Guideline 3 Design Evaluation
The framework is refined through an evaluating process of analyzing other frameworks and identifying problems, then categorizing problems into issues, and proposing requirements to solve those issues. The final proposed framework of ABN meets these requirements and solving issue problems accordingly. However, to increase the reliability and validity of the theory proposed, this artefact needs to apply to the environment for the purpose of predicting or explaining the phenomena related to the identified business needs. In Design Science, the built artefact can be tested through interviews and surveys to ensure its usefulness. An Action Research study can evaluate the artefact in the real world environment. Action Research aims to solve current practical problems while expanding scientific knowledge (Myers, 2009). A distinct feature of Action Research is that researchers can intervene while at the same time studying the effects of that intervention, it involves the collaboration with business people in real organisation.
Guideline 4 Research Contribution
This research uses existing literature frameworks and established business strategies to extend and derive new constructs for composing an ABN framework. The studies of other researchers have not attempted these new components. Therefore, this study satisfies the research contribution criterion through providing innovative artefacts.
Guideline 5 Research Rigor
Design Science emphasises the use scientific theories from the knowledge base. This serves as the foundation for rigorous design science. This research ensures that the design produced is innovative and no other design applications have already been produced. This research has also selected and applied many existing theories, frameworks, and methods from the knowledge base for constructing and evaluating the designed framework. The theories and frameworks are analysed and criticized to extract the relevant and high-quality components and used in composing of an ABN framework.
Guideline 6 Design as a search process
The design demonstrated process through which the components/constructs are derived from analyzing other's theories and frameworks as well as linking new theories and extending meaning in ABN context. The process of deriving the artefact is also demonstrated through identifying the problems and issues of existing frameworks. This process discovers an effective solution that satisfies the problems existing in the environment.
Guideline 7 Communication of Research
This research addresses both technology-oriented and management-oriented audiences. The constructs and models are communicated to managers to understand the underlying theories and management of ABN. The technological solution, SOA, is presented to technology-oriented audience interested in implementing SOA to solve ABN problems. During the evaluation phase, end-users are able to communicate with the development team in order to examine the finished artefact. The communication methods could include survey and interview.
Figure : Design-Science research guidelines (Hevner, et al., 2004)
Frameworks and architecture that support Adaptive Business Networks
This section discusses the proposed framework and architecture based on the requirement identified in the literature. This section explains each of the key concepts and their relationships in the framework and architecture. This also includes discussion on how the framework and architecture met the requirement and solved the problem identified in the literature.
Figure 39 illustrates ABN framework at high level. Sense and respond, plan and execute are incorporated into the framework to show the adaptability feature of ABN. The frameworks show four main dimensions associated with ABN: business environment, ABN partners, targeted customers, and processes. Sense and respond involves both environment and customers. Business environment includes uncertainty and change: Opportunities, threats, competition, IT evolution, and resources constantly emerge and change. These factors all affect the ABN network in some way, for instance, the need to obtain new resources, adopt new IT, or change operations in compliance with changes in government policy. Customers that are seen as threats of ABN network required high level of attention for ABN. Customer needs and requirements are constantly changing due to other factors in the environment; for instance, better services provided by competitors increases customer requirements for better deals.
Respond involves both environment and partners. Responding requires aligning operations and activities required to meet the change, which may include adoption of new IT or compliance with new rules; therefore, environment must be considered. Responding requires coordination as well as collaboration. Coordination guides and leads changing partners. Collaboration ensures that all individuals in the network are performing consistent activities that support change. Plan involves partners and processes. Change involves selecting the right partners and organising the right processes to undergo the change. Execute involves customers and processes. Execution must ensure consistency of operations and meeting customer requirements. To successfully achieve adaptability, business integration is required between all the partners involved, and a core strategy is essential in guiding the planning and execution process as well delivering valued product and services to meet customer requirements.
Figure : An abstract of ABN framework
Figure 40 illustrates in more detail components and relationships of the ABN network. ABN community aims to achieve adaptability and, therefore, sustainability. ABN partners pursue a common goal. Heterogeneous network partners have individual goals, roles, and responsibilities. The alignment between the common goal and individual goals is achieved through activity fit strategies, which involve consistency, reinforcement, and optimization. The network selects high value partners for their resources and skills that can contribute value to the network. Organisations constantly negotiate for profitability, as partners such as suppliers have bargaining power over the resources that they provide Customers have bargaining power over product ant service prices; their feedback provides information for organisations to alter their offering, if not pricing. These examples show that ABN is demand-driven.
Based on the information sensed from the environment and customers, ABN make plans and select relevant partners to collaborate with in order to meet customer needs. Adaptation requires quick connect/disconnect of partners. Awareness is the critical feature that supports ABN adaptability and depends on high level collaboration and coordination. Lower level processes require effective composition-orchestration, choreography, and improvisation. Integration of businesses processes is the foundation to achieve interoperability between enterprises across organisational boundaries. ABN also requires technological support including standardisation of processes that encourage collaboration, high quality information sharing, and effective communication, as well as flexible architecture that allows connect/disconnect of partners in response to change. Innovation and sustainability are achieved through the main features of ABN that includes self-organising, emergent and co-evolution of partners.
Figure : Proposed framework for ABN
Figure 41 illustrates the proposed architecture used to realise the proposed ABN frameworks. The frameworks and architecture are intended to address the issues of ABN summarised in Figure 35. The architecture implemented using SOA web services simplifies interoperability, governance technology, and reusability. The attribute of being loosely coupled allows an easy approach to respond quickly to changing business conditions, reducing the duplications of work and maximize the value of the existing assets. SOA web services allow almost instant updates of customer demand data and other information; for instances, KPIs provide the ability to sense change in customer needs.
The architecture includes a SOA eco-system that provides a Servce Bus and a repository of various artefacts, user documentation, and metadata that constitute a service registry. Legacy systems of the organisation cannot be removed and can produce new services from its own operations. Service inventory is an independent collection of services that represents a segment of an enterprise (SOA Glossary, 2010). These new services produced from legacy systems could be the result of recently sensed information from the environment and customers. For instance, competitors produce new accounting/banking systems; the service is not available from the service repository. To respond to the need within a limited time, an organisation may produce new services from the legacy systems. These new services are grouped as a new service inventory that can be stored in the service repository for reuse. These services can also be directly used by partners and the organisation via a SOA based platform. Service Bus is software architecture that provides fundamental services for complex architectures through standard-based messaging machine. Service Bus supports multiple protocols binding for message delivery usually based on recognized open standards such as HTTP, SOAP or Java. The Service Bus, built on open standards, can be implemented with SOA to support interoperability and flexibility as promised. Service Bus using standard-based messaging machine allows service communication between services across enterprises. This provides instant visibility of data, thereby supporting real time information flow across multiple organisations. SOA Governance includes the policies, post services in service registry for reuse, repository to store XML schemas, service policies management which include how the service should be use, who is authorize to use, and the service level agreement.
Figure : Proposed SOA architecture for ABN
This dissertation conclude with a brief summary followed by the contributions of the research for both research and practice. The limitations and the directions for future research are also suggested.
The increased and uncertainty of complexity mean that enterprises are facing the challenge of achieving adaptability in respond to the change in environment and customer demand. Organisations that cannot respond to the needs of customers lose their competitive advantage. Customers are requiring for faster services, more customised product and services. An enterprise operated in isolation cannot provide enough adaptability to meet customer requirements. Enterprises need collaboration with business partners to combine resources to achieve valued product and change collaboratively to meet customer needs. ABN provides the capability to be collaborative with external partners to produce valued, differentiated outcomes to its customers with the combination of strength and advantages. To achieve such adaptability, ABN needs to share relevant information for both internal and external enterprise operations. ABN allows organisations to capture new information in the environment and respond more effectively than its rivals. ABN also needs to understand the traits and importance of their relationships to optimize performance in the network and produce competitive advantage. The outcome of this research is represented as proposed frameworks and architecture with the technical support from SOA.
Existing literature appears to lack an in-depth understanding of ABN. This research draws from various existing theories, concepts, and frameworks around ABN-related topics. Existing business theories are also used to extend its implications in ABN context. Based on these findings, problems, issues, and requirement are identified. A conceptual framework and SOA based architecture propose to meet the requirements, address the issues, and solve the problems identified in the literatures. Overall, the research is based on existing literatures and contributes to current knowledge through:
Applying business theories in the context of ABN
This research used business theories from Porter (1996; 2008), Moore (2010), and Scheer (2007) to apply their concepts in ABN environment. Porter's five competitive forces are applied in ABN to explain how ABN reduces threats from customers, suppliers, and other business partners through the approach and level of coordination and collaboration. Trade-off in ABN allows ABN to focus the effort on one position and differentiate themselves from the crowd. Porter's (1996) three types of strategic fit are silent for ABN as it shows the complexity and dynamic of the relationships between organizations. Consistency in ABN concerns the activities performed by heterogeneous partners need to be aligned and lead towards achieving the common goal. Reinforce emphasise the importance of selecting the right partners that added value to the network through adding resources and skills that the network lack off and performing activities that can complement and supports other partners in the network. The choreography and orchestration are required to ensure reinforcing of activities that each partner performs. Optimisation in ABN highlights the importance of achieving agility with high quality as well as the need to achieve profitability and productivity through using modular systems. Moore (2010) discusses the need to maintain competitiveness and create sustainability requires continuous business process improvement and repurpose context processes to become the core. Scheer (2007) highlights the need to balance intensity of control and connectivity, in ABN it implies the need for balance between collaboration and coordination between partners.
Identification of problems, issues, and requirement for ABN
Many problems are identified from the existing framework and they are categorized into five main issues that ABN needs to be addressed. Organisations that aim to be implementing ABN need to overcome the five main issues namely: collaboration, innovation, adaptability, communication and interoperability which are summarised from these problems. Each of the issues requires necessary requirement in order to solve these problems. The identified requirements give researchers and organisations key understanding of what they need to consider for achieving a successful ABN.
Proposal of ABN conceptual frameworks and architecture
Based on the requirements, two conceptual ABN frameworks are proposed. The first framework provides a holistic understanding of what ABN framework needs to achieve. The detailed framework then provides the key components and their relationships with interaction to explain the key issues of ABN. The frameworks address the issues and identify problems in the literature. The architecture is proposed to realise the frameworks using the SOA technology. Architecture shows how SOA capabilities and features can solve the problems identified in the literature.
Limitations and suggestions for future research
This study has several limitations and implies suggestions for further research. Firstly, the implementation of the framework and architecture cannot be completed due to time constraints. Secondly, future research is encouraged to perform a study with empirical data from business context. The research will be helpful to testify and validate the proposed framework. Lastly, in order to gain the insight of the ABN, other theories may extract from differentiated business themes and even other subjects such as marketing, accounting, and sociology. With the understanding of multi-dimensional knowledge, the ABN will become the ultimate solution to assure adaptability and agility.
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