Value Chain Strategy for Services

automation

self-service

offshoring

selective outsourcing

insourcing

selective automation

selective outsourcing

offshoring

outsourcing

globalization

one-stop shop

offshoring

in-house automation

selective outsourcing

globalization

Simple Process Complex Process

Customized

Service

Standardized

Service

Source: Uday Karmarkar, “Will You Survive the Services Revolution?” Harvard Business Review (June 2004), pp101-107.

Value Chain Strategy for Services

Realign Strategy

Take advantage of shortened information chain

Recognize changing customer demands and behavior

Redesign Process

Assess potential for outsourcing

Synchronize with customers and other firms

Restructure the Organization

Support the redesigned processes

Create a learning organization

“Instead of competing over links in the chain, service companies

should compete for the chain itself.”

“Getting it Done”

© 2007 Pearson Education

Virtual Supply Chains

Virtual Supply Chain: Outsourcing some part of the entire order fulfillment process with the help of sophisticated, Web-based information technology support packages.

Benefits include:Reduced investment Greater service or product variety Lower costs Lower transportation costs

Supply Chain Process Analysis

1. Identify the major opportunities and threats?

2. Define the scope: What processes are involved?

3. Document the processes: Value chain flows

HP’s Tape Drive Supply Chain

Supply Chain Process Analysis

4. Evaluate the performance: Competitive priorities, gaps, effectiveness of prior supply chain decisions.

5. Redesign the processes: Alternatives; actions to be taken.

6. Implementation: Considerations to be made.

HP’s Tape Drive Supply Chain

Hewlett-Packard Virtual Supply Chain

• Identify core processes the firm should focus on.

• Thoroughly understand the market requirements and how to best meet them.

• Establish a consistent strategy for outsourcing: Isolated decisions can create a complex and fragmented supply chain.

• Choose outsourcing partners with consideration for compatible cultures, commitment, risk, and ability to meet competitive priorities.

• Different phases of the life-cycle of products require different approaches and new collaborative efforts between partners.

• Implementation requires ongoing joint management.