Building and Managing Modern EServices

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Building and ManagingModern E-Services

• John Hamilton
• James Cook University,Australia

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Abstract

• The chapter address the development of recent
  services models
• It considers that all products involve services
  and consequently maybe be considered as service
  systems.
• Today,the recent concept of utilizing service
  value networks offers a key to future competitive
  solutions.
• This chapter also highlights the progression to
  service value networks.

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Definition of service (cont.)

• Economic in three sectors(Clark 1940)
• Primary(agricultural)
• Secondary(manufacturing)
• Tertiary(services)
• Service sector
• Home related service(food,house)
• Business service
• Other(recreation, health care, and education)

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Definition of service (cont.)

• Definition of service
• Activities, benefits, or satisfactions which are
  offered for sale, or are provided, in connection
  with the sale of goods.
• Ex
• Banking,education,entermainment,finance, medical
  areas
• Individual services (barber shop,piano tuner)

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Definition of service (cont.)

• Broadened definition of services
• All economic activities where output was not a
  physical product
• Intangible value-add
• Extravel comfort
• Levitt(1972)suggestsThere are only industries
  whose service components are great or less than
  those of other industries.

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Definition of service

• Service industry moves toward
• Globalization
• More electronically based delivery system
• E-service operation
• E-service value chains may offer a pathway to
  delivering enhanced customer value.

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Service models(Rust and Metters 1996)
Custormer Behavior Models Dynamic Models of
retention Stochastic models of behavior
External Custormer Models
Service models
Service Quality Impact Models Aggregate
models customer satifaction effects
Disaggregate Models Financial impace of a
component
internal Service Provider models
Normative Service Models Marketing
Models Complaint management Operations Models
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Service models

• Cook et al.(1999) recognized that services could
  be split into marketing(product) or
  operations(process) orientations.
• In delivering a final customized
  solution,there remained a need to integrate and
  interact with both orientations.

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Integrated schematic representation of services
(cook et al., 1999)

• Marketing Orientated
• Tangibility
• Object of service
• - People
• Goods
• Type of customer
• -individual
• -institutional

For profit
Product
Interaction and integration Custonization Qualit
y
services
priviate
Operations orient- ated Customer
contact Production process
Process
public
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The service strategy triad

• Service strategy triad triad separated the what
  , the how, and the who of service
  encounters.
• Who are the right customers?
• What is the product bundle offered?
• How will services be delivered?
• Service Encounters
• What happens when service and customer meet and
  interact?

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The service strategy triad
Target Market
Service Encounter
Service Delivery System Design Choices
Service Concept
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Service delivery systems atchitecture

• Goal
• Service concept by the customer may differ from
  the service offered by the service provider.
• To overcome this, a feedback loop was proposed
• Execution, assessment of gap, renewal
• Investigate three dynamic comnents of service
  delivery systems
• Strategic service design
• Service delivery execution system
• Customer percieved value of total service concept

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Service delivery systems atchitecture
Renewal
Structural Techology and equipment Plan Service
product-process interfaces
Infrastructural People Policy Processes Performanc
e Systems
Realized Service Delivery System
Execution
Customer Perceieved Value of the total Service
concept
Integration Operation Organizations
coordination Service Supply Chains Integration
techonology
Assement of Gaps
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Supply Chain management

• Definition
• The integration of business process from end-user
  through to original suppliers that provide
  products,services and information and add value
  for customers.
• Goal
• Improve Timing
• Costs Down

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Supply Chain management (cont.)

• Lee define the stable supply process,where
  manufacturing process and technology were mature
  and stable, and the evolving supply process,
  where manufacturing and techonology were in early
  stages of development and were rapidly changing.
• From the perspective the market challenge for
  business was to operate a supply chain as a
  responsive or agile model.

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Supply Chain management (cont.)

• Responsive supply chains
• Demand and supply communication channel
  intertwine,
• Deliver business-determined, information-based,cus
  tomer-targeted outcomes
• May be termed e-supply chain
• The agile supply chain model has typically
  targeted the high-risk, customer-driven solutions
  ,while minimizing the downstream risks of supply
  disruptions

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The Internet

• The Internet has driven new supply chain
  solutions in several dimensions.
• Information storage and transmission
• E-business,
• Web-based customer relationship management
• Supply chain management

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DEMAND CHAIN MANAGEMENT

• From, the late 1990s onwards, there has been a
  distinct move from supply to demand chain
  management.
• Demand chain management aims to serve customers
  individually with customized bundles of goods and
  services, thereby delivering high levels of
  customer satisfaction and of customer loyalty

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DEMAND CHAIN MANAGEMENT

• Beech argued for an integration of the supply and
  demand chains
• They needed to be capable of working
  cooperatively with other organizations in the
  chain.
• The core processes of the supply and demand
  chains, as viewed from a broad cross-enterprise
  vantage point , rather than as discrete
  functions.

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DEMAND CHAIN MANAGEMENT

• The integrating processes that created the links
  between the supply and demand chain.
• The supporting infrastructure that made such
  integration possible.

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Figure 5. Demand and supply chain processes
Demand Chain process
Value added Distribution
Category Selection and Management
Pre-sales services
selling
Trade Marketing
Store marketing
suppliers
manufacturers
End-users
services
Reseller
distributors
Store operations
procurement
Post-sales services
production
Warehousing and distribute
Buying
supply Chain process
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DEMAND CHAIN MANAGEMENT

• the demand chain was really about the informed
  customer, customers dictating what they wanted,
  where and why.
• It moved the underdeveloped supply chain into a
  complex Web of customer-driven supply chain
  systems.
• New demand chain capabilities emerged, and these
  become coordinated across the business supply
  chains.

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Demand chain management

• From a technical viewpoint, demand chain
  management remained a set of applications, to
  electronically automate and optimize the
  business processes an enterprise performed
  between its networks of customers and selling
  partners.
• The demand chain management applications enabled
  business-customer encounters, and did so at
  reduced servicing costs.

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DEMAND CHAIN MANAGEMENT

• Demand chain management consultants like
  Comergent and IBM focused on the selling and
  ordering processes.
• Comergent simplified the external sales
  processes into five key areas
• Analytics and metrics
• Product information management
• Pricing, configuration, quoting
• Distributed order management
• Commerce portal

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Figure 7. the external sales process( source
Comergent, 2003)
Demand chain management
Analytics Metrics
Product Information management
Pricing, Configuration and management
Distributed Order management
Commercial portal
Direct sales
customers
partners
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DEMAND CHAIN MANAGEMENT

• IBMs i2 managed and shaped demand-based supply
  positions and delivered customers the
• product
• Price
• Delivery time
• IBM offered specialized business intelligence
  systems like
• Sale configurator
• Sale pricer
• Demand fulfillment

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THE VALUE CHAIN

• Definitions of value have varied (Zeithaml,
  1988), but common themes have indicated customer
  value as
• Linked to the use of a product or service,
  thereby removing it from personal values
• Perceived by the customers, rather than
  objectively determined by the seller
• Often traded between what the customer wants, and
  what the customer gave up to acquire, and use, a
  product or service

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THE VALUE CHAIN

• Value may also be loosely defined in terms of
  business or customer perspective equations
• Business value(Benefits of each delivered value
  chain activity minus its cost) (Benefits of
  each service interface between value chain
  activity minus its cost).
• Customer value(Benefits of each customer service
  interface interaction) (Benefits of each added
  value business offering) (Benefit perceived for
  the cost involved).

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THE VALUE CHAIN

• In 1985 porter promoted the notion of the value
  chain as a key activity by which a business could
  manage and deliver added value to the customer.
• Internal value chain
• External value chain
• It was possible to add value to each customer by
  reducing cost, either within each element of the
  value chain or at the interface between value
  chain components.

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THE VALUE CHAIN

• Rayport and Sviokla defined two value chain
• The virtual value chain
• The physical value chain
• The Internet enabled value creation by gathering,
  organizing, selecting, synthesizing, and
  distributing information.
• The virtual value chains was information
  technology based, and involved the delivering of
  e-business-to-e-business, and e-business-to-custom
  er solutions.

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THE VALUE CHAIN

• The value chain targeted the real-time
  environment.
• Online promotions by leading e- tailers could be
  monitored on an hourly basis to test customer
  response and to review the competitors offers.

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THE VALUE CHAIN

• Greater business-customer alignment between the
  value chain activities and e-customer was
  possible.
• The value chain may deliver efficiencies, and
  e-sales, that may be controlled from either
  internal or external value chain constituents or
  partners.

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THE VALUE CHAIN

• Kalakota and Robinson discussed disaggregation of
  the value chain as a means to streamline
  efficiencies
• Timmers noted that the value chain may no longer
  be viewed as a series of discrete steps, and that
  technology was offering more possibilities for
  integrated solutions.

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THE VALUE CHAIN

• Dell has used online customized ordering systems
  to
• Reduce its time to market,
• Improved customer tracking and monitoring,
• Thereby reducing its customer response and
  delivery times.
• It deployed considerable alliance partner
  involvement, with its partners having
  instantaneous data access concerning customer
  purchasing and special requests.

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VALUE CHAIN MANAGEMENT

• Vermijmeren suggested that flexible, intelligent
  supply chain engines could drive these dynamic
  supply chains, delivering value in an efficient
  manner.
• Van Looy, Gemel, and Dierdonck considered the
  value chain as a value constellation, and
  proposed a more holistic view of the way in
  which the innovation process creates value for
  the final customer.

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VALUE CHAIN MANAGEMENT

• Sampson demonstrated that service supply chains
  were bi-directional, and that communication
  between customers and suppliers, and vice versa,
  must occur.
• Sampson also indicated bi-directional supply
  chains were typically short lived, but had
  just-in-time implications with inherent
  value-added expectations.

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VALUE CHAIN MANAGEMENT

• To measure such information, new metrics tools
  have been devised. These metrics tools helped
  management to
• Convert and distribute information, products, and
  services
• Manage knowledge, quality, and connectivity
• Work with virtual partners and customers
• Deliver strategic information to management

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VALUE CHAIN MANAGEMENT
The traditional Value Chain Start with Assets,
Core Competencies
Inputs, Raw material
Product/ service offering
Assets/core competencies
channels
The Customer
The Modern Value Chain Start with Customer
Inputs, Raw material
Product/ service offering
Assets/core competencies
channels
Customer Priorities
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VALUE CHAIN MANAGEMENT
Revised value chain
environment
environment
The three support activities entrepreneurial
drivers Management capability Resource
Infrastructure
margin
The four primary activities
Operational processes
Mission Objectives
Service
Marketing
margin
environment
environment
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Inbound Logistics
Manufacturing
Product Warehousing
Strategic core VC partners
Upstream VC partners
Value Chain Integrators
Downstream VC partners
Fulfillment
suppliers
Admin eg travel
Sell Side Intermediaries
Buy side intermediaries
Value Chain Integrators
Non-Strategic service partner
Admin eg travel
Finance
Human Resources
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VALUE CHAIN MANAGEMENT

• Porter outlined how the Internet has enabled, and
  driven, new business solutions, forcing lower
  cost options and operational efficiencies across
  the supply side to be strategically investigated.
• Today, business services solutions have become
  increasingly complex, and often these can no
  longer be considered as simple lock-step value
  chains.

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SERVICE VALUE CHAINS TO SERVICE VALUE NETWORKS(1)

• Services value chain
• Becks model (Figure 11)

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SERVICE VALUE CHAINS TO SERVICE VALUE NETWORKS(2)

• The business aggregator solution delivers the
  optimized internal systems.
• It optimizes the relationships between the
  internal business and its external
  customer-strategic partners associates.

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SERVICE VALUE CHAINS TO SERVICE VALUE NETWORKS(3)

• Service value network
• - external supply chains
• - internal value integrators
• - various strategic approaches
• Service value networks interlink the
• - businesss down stream business e-supply
• chain networks
• - its upstream customer service offerings

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THE BALANCED SCORECARDBUILDING SERVICE VALUE
CHAIN NETWORKS(1)

• Balanced scorecard model (Figure 12)

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THE BALANCED SCORECARDBUILDING SERVICE VALUE
CHAIN NETWORKS(2)

• Nine-step balanced scorecard strategy development
  cycle. (Figure 13)

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THE BALANCED SCORECARDBUILDING SERVICE VALUE
CHAIN NETWORKS(3)

• Growth and learning cycle (Figure 14)

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THE BALANCED SCORECARDBUILDING SERVICE VALUE
CHAIN NETWORKS(4)

• The strategic components delivering the
  e-services balanced scorecard outcomes (Figure
  15)

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THE BALANCED SCORECARDBUILDING SERVICE VALUE
CHAIN NETWORKS(5)

• The balanced scorecard model is a highly useful
  tool can assist with the focusing, targeting, and
  delivery of optimized growth approaches for an
  industry block.
• Pharmacy network balanced scorecard model.
  (Figure 16)

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THE BALANCED SCORECARDBUILDING SERVICE VALUE
CHAIN NETWORKS(6)

• All activities may be costed, and incorporated
  into one of four measurable strategic areas
• - customer
• - internal business processes
• - financial area
• - innovation, learning, and growth sectors

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CONCLUSION(1)

• E-services built around 3- supply chain networks
  are increasingly targeting meeting customer
  needs.
• Service value networks offer a comprehensive
  pathway towards enhanced competitiveness.
• The balanced scorecard offers a strategic
  measurement agenda.
• glocal (global and local) solution.

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THE FUTURE(1)

• Strategic positioning and extended customer value
  may be utilized to develop measures and to frame
  new business models.
• Further tools
• - quality functional deployment
• - strategic e-marketing
• - 4PL logistics solutions
• - learning across e-demand chain systems

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THE FUTURE(2)

• The early stages of industry-wide service value
  networks are emerging in tourism.
• E-supply chain networks will continue to improve
  their capabilities in this regard, and will form
  an integral part of service industry business
  solutions into the future.

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THANK YOU