Service Operations Management:
The total experience
Chapter Five
Service Supply and Logistics Networks
Supply networks: commercial organizations
A supply network comprises supply chains that are integral
to a system of organizations, people, technology, activities,
information and resources involved in transferring a
service from the provider to the customer.
Service delivery networks
The value chain
Fig. 5.1 Traditional representation of tangible
product supply chain
Fig. 5.2 Services input-transformationoutput model
Fig 5.3 Generic value chain
Supply networks: non-commercial organizations
‘Joining-up’ is high on e-government agendas for most
developed countries, and Australia is no exception, as
this is expected to improve service delivery to citizens
and businesses.
Coordination of a supply chain can take place under
a central or a decentralized control - emphasising
either optimisation of the business process, or in the
latter case, decentralised control fostering
autonomy at the expense of efficiency.
Fig 5.4
Representa
tion of a
supplier
network
Supply-importance relationships
Not all services should be considered equal; some need
to be treated differently due to the inherent risk
associated with their delivery.
Kraljic's Matrix, also known as ‘supplier positioning’, is a method of
assessing supplier relationships in the context of associated risk. The
matrix shows the supplier as one axis, and service vulnerability (risk) to
their failure or disappearance as the other. The former has the great
advantage of being objectively measurable, while the latter is a matter
of judgment. The model generates four categories of supplier:
• Acquisition
• Security
• Profit
• Critical
Fig 5.5
The
Kraljic
matrix
Fig 5.6
Organizationmarket
relationship
matrix
Developing relationships with service suppliers
Mutual benefits can be gained through:
• Innovation in designing and developing services or processes
• Differentiate the services so as to reduce competitive pressure
• Reduce the time it takes to deliver new services to market
• Improved quality and service levels
• Enhancing brand and reputation recognition
• Outsourcing / offshoring
• Reduced capital requirement
• Cost reduction
• Risk reduction
• Joint forecasting
• Joint design
• Joint investment planning
• Sharing market intelligence
Supply network co-ordination
Process requirements for co-ordination
•
•
•
•
•
•
•
Long-term business planning
Operational ordering and planning
Request and feasibility study
Exception handling
Multi-sourcing co-ordination
Visibility of order progress
Network performance management
Demand and supply information visibility
Exception-focused supply chain planning and execution