1. Ch. 13 Service Supply Relationships

2. 實務問題 transaction business VS. relationship business
Supply Chain Management → Service Industry
outsourcing: uncertainty

3. Learning Objectives 1. supply chain management
2. bidirectional service supply relationship
3. sources of value in SSR
4. outsourcing services

4. 1. Supply chain management
(1) Total systems view of the entire
supply chain. “Bullwhip effect”
(2) Network of value-adding material-
processing stages.
(3) Uncertainty:
supplier delivery performance, manufacturing reliability,
customer demand.
(4) Buffered by inventory stocks.

5. 1. Supply Chain for Physical Goods
Suppliers
Product and Process Design
Manufacturing
Distribution
Retailing
Consumer
Disposal
Recycling/Remanufacturing
After-sales
Service
Information Transfer
Material Transfer

6. 1. Customer-Supplier Duality in Service Supply Relationships (Hubs)
Material transfer
Information transfer
Supplier
Service
Design
Provider
Customer

7. 1. Strategy of postponement
(1) Partially completed product is held
until a customer order is received.
(2) Fast-food restaurants:
assemble-to-order. VS make-to-order.
(3) Dell computer:
“service-like” goods producer.

8. 2. Single-Level Bidirectional Service Supply Relationship
Category
Customer
-Supplier
>Input
Output>
Provider
Minds
Student
>Mind
Knowledge>
Professor
Bodies
Patient
>Tooth
Filling>
Dentist
Belongings
Investor
>Money
Interest>
Bank
Information
Client
>Documents
1040>
Tax Preparer

9. 2. Two-Level Bidirectional Service Supply Relationship
Category
Customer
-Supplier
>Input
Output>
Provider
Provider’s
Supplier
Minds
Patient
>Disturbed
Treated>
Therapist
>Prescription
Drugs>
Pharmacy
Bodies
>Blood
Diagnosis>
Physician
>Sample
Test Result>
Lab
Belongings
Driver
>Car
Repaired>
Garage
>Engine
Rebuilt>
Machine
Shop
Information
Home
Buyer
>Property
Loan>
Mortgage
Company
>Location
Clear Title>
Title
Search

10. 2. Managerial implications of BR
(1) Service supply relationships are hubs,
not chain.
(2) Service capacity is analogous to
inventory.
(3) Customer supplied inputs can vary in
quality.

11. 3. Source of value in SSR (1) Bi-directional Optimization
(2) Managing Productive Capacity - Transfer: make knowledge available
(ex. web based FAQ database) - Replacement: substitute technology for
server (ex. digital blood pressure device) - Embellishment: enable self-service by
teaching (ex. change surgical dressing)
(3) Management of Perishability: mobile workers.

12. 4. Outsourcing Process Need Identification Information Search
Vendor Selection
Problem Definition
"Do-versus-Buy" Analysis
Involve Interested Parties
Specification Development
References
Personal Contact
Recommendations
Trade Directory
Experience
Cost
Reputation
Location
References
Size
Performance Evaluation
Identify Evaluator
Meet Deadlines
Quality of Work
Flexibility
Communication
Dependability

13. Outsourcing Services
Benefits • Allows the firm to focus on its core competence • Service is cheaper to outsource than perform in-house • Provides access to latest technology • Leverage benefits of supplier economy of scale
Risks • Loss of direct control of quality • Jeopardizes employee loyalty • Exposure to data security and customer privacy • Dependence on one supplier compromises future negotiation leverage • Additional coordination expense and delays • Atrophy of in-house capability to perform service

14. 4. Taxonomy for Purchasing Business Services
Importance of Service
Low
High
Property
Focus
Facility Support:
-Laundry
-Janitorial
-Waste disposal
Equipment Support:
-Repairs
-Maintenance
-Product testing of
People
Employee Support:
-Food service
-Plant security
-Temporary personnel
Employee Development:
-Training
-Education
-Medical care
Service
Process
Facilitator:
-Bookkeeping
-Travel booking
-Packaged software
Professional:
-Advertising
-Public relations
-Legal

15. Facility Support Service
Focus on Property
Facility Support Service
• Low cost
• Identify responsible party to evaluate performance •
Precise specifications can be written
Equipment Support Service
• Experience and reputation of vendor
• Availability of vendor for
emergency response
• Designate person to make service call and to
check that service is satisfactory

16. Employee Support Service
Focus on People
Employee Support Service
• Contact vendor’s clients for references
• Specifications prepared with end user input
• Evaluate performance on a periodic basis
Employee Development Service
• Experience with particular industry important
• Involve high levels of management in vendor
identification and selection
• Contact vendor clients for references
• Use employees to evaluate vendor performance

17. Focus on Process Facilitator Service Professional Service
• Knowledge of alternate vendors important
• Involve end user in vendor identification
• References or third party evaluations useful
• Have user write detailed specifications
Professional Service
• Involve h
igh level management in vendor
identification and selection
• Reputation and experience very important
• Performance evaluation by top management

18. Topics for Discussion
What are some possible disadvantages associated with the product postponement strategy?
Discuss the similarities and differences in the product postponement strategy used by Hewlett-Packard and Taco Bell?
Speculate on the effect that the Internet will have on the process of business-to-business purchase of services?

19. Interactive Exercise
The class divides into small groups and members come up with examples of multilevel bidirectional service relationships (i.e, service supplier relationships with three or more levels). Be prepared to argue why such service relationships are so rare.