15.778 Summer 2004
Management of Supply Networks for Products and Services: Concepts, Design, and Delivery
Management of Supply Networks for Products and Services:
Course Review
15.778 Management of Supply Networks for Products & Services
Course Review
Services as a Foundation for Emerging Value Networks
Globalization
Competition
Redefinition Of
Business Model
&Customers
Productivity
Customer
Satisfaction
Service Excellence
Based on the Framework of Service Operations
Competition and Differentiation based on services ((Strategy)
Globalization
Customer Need
Customer
Expectations
Competition
Redefinition of
Business Model
&Customers
Competitor
Offering
Our
Offering
Productivity
Customer
Satisfaction
Service Excellence
Based on the Framework of Service Operations
Characteristics of Services
Globalization
Understand drivers for
productivity and customer
satisfaction (quality) well for traditional supply chain
settings….
Competition
Redefinition of
Business Model
&Customers
Productivity
Customer
Satisfaction
But what happens when we
start to measure productivity
and service quality for
services? Need to understand
service characteristics…..
ATTRIBUTES OF SERVICES
•Intangibility - explicit and implicit intangibles
•Perishability - an hour of non-production is an hour lost
•Heterogeneity - inherent variability of service
•Simultaneity - services are simultaneously produced and
consumed
•Based on Consumer Perception
•Value Added Concept
•Main Services Versus Facilitating Services
Service Excellence
Based on the Framework of Service Operations
A Basic Service Operations Framework
Globalization
Competition
Redefinition of
Business Model
&Customers
Productivity
Competitive
Analysis
Customer
Satisfaction
Financial
Analysis
Strategic
Analysis
Manager
t
c ep
Con
ign
des
Operations
Management
Service
Management
Orders
Marketing
Information
about needs
External
Environment
Backroom
Server
Resources
Service
Performance
Customer
De c
oupli
ng
Internal
Environment
Service Excellence
Based on the Framework of Service Operations
Understanding the dynamics of customer satisfaction
Globalization
Competition
Redefinition of
Business Model
&Customers
PEOPLE SERVICE PROFIT
Ritz-Carlton Case
British Airways Case
Productivity
Customer
Satisfaction
MANAGEMENT
Loyalty, IInnfo
fo on Customers’
Customers’
Feed
back and O
pportunities
Feedback
Opportunities
f Continuous Improvement
for
Improvement
Complaints, Compliments,
Suggestions
ggestions
Su
Fair Treatment (Pay,
(Pay, Benefits
Benefits,,
Respect), Training,
Training, Support of
IInternal
nternal Environment Personnel
SERVER
Feedback, Ti
Tips,
ps,
Gratitude, Respect
Products and Policie
iciess tha
thatt
Satisfy
atisfy Needs and Desires
S
Struggle for
Co
ntrol in
Control
Different Phases
of Encounter
Encounter
Requirements
for
Servi
Service
ce
Guarantees
Requirements
Requirements
for Customer
Customer
Satisfaction /
Loyalty
Effort, S
Skill,
kill, Respect,
Positive Att
Attitude
itude
CUSTOMER
Service Excellence Based on the Framework of Service Operations
Defining measures for customer satisfaction
Globalization
GAP MODEL FOR
SERVICE QUALITY
Competition
Redefinition of
Business Model
&Customers
Ritz-Carlton Case
British Airways Case
Productivity
Customer
Satisfaction
How to
distinguish
between and
address quality
issues?
Personal Needs
Past Experience
Expected Service
GAP 5
Perceived Service
GAP 1
How ttoo define
quality
performance
measures?
SER
SERVICE
VICE BUSINESS
Intangibility,
perishability,
heterogeneity,
simultaneity
CONSUMER
Word-of-mouth
Communications
Service Delivery
(including contacts)
GAP 4
External Communications
To Consumers
GAP 3
Translation of Perceptions
into Service Quality
Specifications
GAP 2
Management Perceptions
of Consumer Expectations
Service
Service C
Course
ourse
Source: Z
Source:
Zeithaml
eithaml and Bitner
Bitner
Service Fram
Service
Framewo
ework
rk
r
Service Excellence Based on the Framework of Service Operations
Understanding the productivity side of the equation
Globalization
Competition
Redefinition of
Business Model
&Customers
MATCHING SUPPLY AND DEMAND
Merrill Lynch Case
Call Center Case
Productivity
Customer
Satisfaction
Waiting Time /
•
•
Recall the physics of dynamic
systems that point to the lack
of managerial control at high
levels of utilization.
Best-in-class firms strive
strive for
superior mechanisms for
matching supply and demand
to reduce utilization levels
Unsatisfied
customers /
Operating costs
Superior Mechanisms for
Matching Supply & Demand
Utilization rate ((r))
.8x
Service Excellence Based on the Framework of Service Operations
1.0
Understanding the productivity side of the equation
Globalization
Competition
REDUCING UNCERTAINTY
AND VARIABILITY!
Redefinition of
Business Model
&Customers
Merrill Lynch Case
Call Center Case
Barilla Case
Productivity
•
•
•
•
Best-in-cl
Best-in-class
ass firms further
understand that reducing
uncertainty can alter the
fund
amental d
ynamics of their
fundamental
dynamics
systems an
d strive towards
towards this
and
Please recall the consequences of
uncertainty in operational
processes, and the benefits from
mitigating them from the Key
Ta
keaways Part IV document
Takeaways
JIT systems are a limit
limit (ideal)
state of dynamic systems when
we e
liminate all uncertainty in
eliminate
operations
Hence in practice, JIT requires
requires a
Just-in-ca
se approach as well…
Just-in-case
Customer
Satisfaction
Waiting Time /
Mechanisms for
Reducing Uncertainty
Unsatisfied
customers /
Operating costs
Utilization rate ((r))
.8x
Service Excellence Based on the Framework of Service Operations
1.0
Focus on Value Networks and the Role of Information
Globalization
Competition
Redefinition of
Business Model
&Customers
UPS Project
Productivity
Customer
Satisfaction
Buye
rs:
Buyers:
VN Leaders
s
Working Capital
Working
Value
Network
Visibility
Suppliers
Suppliers
Logistics
s
Providers
s
Providers
Velocity
Suppliers
r Logistics
Logistics Providers
Buyers
Buye
rs Suppliers
From linear to b
buyer-centric
uy
yer-centric value network ((VN))
Service Excellence Based on the Framework of Service (Oriented) Operations
Evolving and changing needs of customers
Globalization
Competition
Redefinition of
Business Model
&Customers
UPS Project
Customer
Satisfaction
Productivity
Needs
Opportunities
CS
CM
OEM
• Sell excess
production capacity
• Incidental sales
force
• Financing
• Increased sourcing
scope
LP
LP
CS: Component Supplier
CM: Contract Manufacturers
OEM: Original Equipment Manufacturer
Service Excellence Based on the Framework of Service (Oriented) Operations
What we learnt from guest speakers
• Yossi Sheffi (MIT)
• Emerging trends in supply chain technology
• Technology supports services and business models, and not the other way
around…
• Carmen Baez (Omnicom)
• Managing autonomous service organizations
• PSP Example
• Jim Walker (Merrill Lynch)
• Managing change
• Managing distributed services provided by independent agents
• Val Fiegenbaum (General Systems Co.)
• Innovation in Management
• Charlie Fine (MIT)
• Industry dynamics and evolution
• Age of temporary advantage
• Adriana Pereira (CVRD Brazil)
• IT as an enabler of productivity
• Managing change
• Jake Barr (P&G)
• Services play a critical role in P&G supply chain– P&G does not provide any
service to customers, but recall that P&G sells $0 out of $51 Billion, directly to
the customer…
15.778 Management of Supply Networks for Products & Services Course Review
A few things to remember…
• In services, our imagination and creativity are the limit to
our success
• Please don’t forget to materialize your services
• There are no mature businesses but only mature ways of
doing business
• Supply chains that deliver superior service services
efficiently can offer to their customers a differentiated and
superior product. P&G is a prime example of such a supply
chain…
• Just-In-Time cannot exist without Just-In-Case
• People-Service-Profit
15.778 Management of Supply Networks for Products & Services Course Review