How Does Services Science, Management, and ...

2009 Fourth International Conference on Computer Sciences and Convergence Information Technology

How does services science, management, and engineering (SSME) improve to Supply Chain Liang-Chuan Wu

Liang-Hong Wu

Institute of Electronic Commerce, National Chung Hsing University Taichung, Taiwan [email protected]

Department of Business Administration National Central University Chung-Li, Taiwan [email protected]

merely as secondary activities [11]. Therefore, companies in the supply chain need to understand the needs of the service stakeholders in order to identify problems and opportunities. [12]

Abstract—Most current works in supply chain view customers as being outside the supply chain design; however, in this paper, we focus on the missing link of the customer’s role in the supply chain. We present an original discussion of the emerging discipline of services science, management, and engineering (SSME) in SCM, identify and bridge the gaps between the two disciplines, and discuss ways to align them. In addition, we consider the specific challenges as well as the opportunities for SSME in the supply chain field.

In recent years, an emerging discipline called services science, management, and engineering (SSME) has tried to combine fundamental science and engineering theories, models and applications with facets of the management field [12, 13]. SSME stresses the critical importance of customers, and emphasizes the balance between technology and the management of customer needs. It provides a framework for organizations to rethink their service design philosophy and re-exam the enabling process in a scientific manner.

Keywords-Framework, Service Science, Management and Engineering (SSME), Supply Chain

I.

INTRODUCTION

The global supply chain facilitates functions like purchasing, operations, manufacturing, and logistics, and thus plays an important role in supplying goods and services to the final customers [1]. Traditionally, the focus of the global supply chain has been on operational issues, such as manufacturing and efficiency [2, 3]. However, supply chain management has undergone substantial changes since the foundation of the field was laid in the manufacturing industry in the 19th century. In today’s highly competitive global economy, changes in customer requirements, the business environment, and supply networks as well as shortened product cycles have changed the competitive environment of supply chains. There is now a greater need for rapid responses to meet customers’ demands for more high quality products and services in today’s supply chain [2]. Clearly, the keen competitive environment of the 21st century requires SCM to be more proactive than previously.

Since SSME is a new discipline, academics and practitioners in the SSME community are still laying the groundwork for this challenging new research area [14]. Researchers argue that there is an urgent need to 1) explore the use of SSME in the supply chain; 2) tackle the service dimension within complex, global and emerging supply chains and increasingly service orientated enterprises; and 3) enhance and advance service innovation [15-19]. Researchers are therefore keen to identify the frameworks and theoretical perspectives that would be appropriate for studying service-oriented management issues [5, 6, 20]. However, relatively few studies have focused on ways to bridge the gap between SSME and SCM. Given this background, we attempt to address the following research questions in the current study: 1) What can SSME contribute to the global supply chain, and what are the gaps between SSME and SCM? 2) What new conceptual frameworks and theoretical perspectives would be appropriate for studying service-oriented technologies and management practices?

Because of the continuing transformation of industrialized economies from a manufacturing base to a service orientation, the global supply chain, which is characterized by multi-layered supplier-customer relationships, presents a number of opportunities and challenges [4-6]. Numerous studies have shown that, for suppliers, quality and service are critical to meeting supply chain challenges, as well as enhancing their competitive position in today’s global environment [2, 7-10].

We provide a survey of SSME, and express our views about the field and its development. In particular, we discuss its relevance to SCM, opportunities to introduce SSME into the supply chain, and identify unique opportunities in this field. We also identify gaps between the traditional view and the SSME view on supply chain management. Finally, we present an SSME-based supply chain framework that

However, it has been argued that academics have underemphasized the importance of services by viewing them

978-0-7695-3896-9/09 $26.00 © 2009 IEEE DOI 10.1109/ICCIT.2009.326

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Spohrer et al., [6] define service as the application of competence and knowledge to create value between providers and receivers. Based on this definition, some researchers have suggested that a service system must permit dynamic value co-creation [5, 27-29]. To date, the majority of SSME studies have focused on system development. For example, Spohrer et al. [6]proposed a three-phase (infancy, maturity, and reincarnation) lifecycle to describe the evolution of a service system. Some researchers have explored specific SSME issues. For example, Bowen et al. [30] focused on human resources issues that arise in high customer contact environments, and presented a literature review to differentiate between the managerial issues that affect services and manufacturing. Roth et al. [15] presented a service strategy framework to motivate service research in the operations management (OM) field. Bretthauer [31] introduced the concept of service management and identified six research directions that reflect current trends in Operations Management; while Chase et al. [22] and Metters et al. [11]) traced the history of research in service operations.

pinpoints how to apply SSME in this field. Our goal is to foster a better understanding of how best to encourage service innovation in the increasingly complex business environment. II.

LITERATURE REVIEW

In the 21st century, service innovation is rapidly becoming the key driver of socio-economic growth, and thus warrants increased attention from both academia and the business community [19, 21]. In most industrialized nations, the majority of people in the workforce are now engaged in providing services rather than agricultural or manufacturing activities. For example, in the United States, the services sector accounted for 83% of employment compared to only 10% in manufacturing in 2006 [22]. Research also provides evidence that many of the major manufacturing companies generate a sizable portion of their revenues from service units. For example, Bryson et al. (2004) observed that the demand for services as an input to the production of goods has been growing continuously. Subsequently, Chase et al. [22] noted that the continuing growth of the service sector has raised the awareness of researchers and practitioners about the importance of service in the supply chain.

A number of studies argue that most of the interest in services focuses narrowly on marketing, management or service sector economics [5]. For example, Menor et al. [32] and Nair et al. [33] focus on the financial services industry; Chevalier et al. [34] and van Dijk et al. [35] study call center operations; while Cayirli et al. [36] consider the health care industry. Li et al. [12] observe that, since SSME is a relatively new area, a large number of SSME studies try to provide an overview of the field; however, some of the studies are not even directly relevant to SSME. The high proportion of overview studies together with studies that are not directly relevant to SSME is not surprising because service has long been a research theme in the management discipline; hence, it has been widely discussed by researchers in the fields of management, marketing, operations, and human resources. However, the role of service in the current research stage is different to that in the early stage of the field’s development. Previously, service was only discussed from a business perspective, but it is now considered from a business-technology perspective, which induces more synthesis. [12]

Service innovations have the potential to influence service productivity, service quality, and the rates of growth and return for service systems [6]. As a result, most large manufacturing companies have now recognized the importance of service and adopted service-oriented business strategies accordingly. For example, leading global corporations, such as IBM, Hewlett Packard, Accenture, Oracle, and EDS, have shifted their business strategies from product-orientation to service orientation [12]. Recently, the management of IBM has transformed the company into an on-demand service business because of the realization that the company must achieve effective service innovations [5]. In the 1940s, IBM made tremendous efforts to facilitate the development of the computer science discipline. Since 2004, the company has expended similar efforts on incorporating service concepts into its business model, and thus redefined its business strategy. IBM’s key service concepts are to improve quality, sustainability, learning from customers, and innovation [7] [12, 23].

Our survey of previous works identifies several trends in existing SSME studies. First, although the goal of SSME is to balance service innovation and technology issues, activity to date has focused on the technological underpinnings of the new discipline (Abe, 2005). The issue of service-oriented technologies, especially service-oriented architectures and the science of service, are currently being studied and discussed intensively by researchers and practitioners in different fields [5, 6, 23, 25-27, 29, 37]. However, SSME requires cross-disciplinary collaboration to fully harness its power [19, 21, 24, 25, 38], and there is great need to study SSME from the business perspective [4, 5, 20, 39].

Service Science, Management, and Engineering (SSME) developed from the pioneering work of researchers at IBM and associated institutions [20, 24, 25]. It provides the basis for the interdisciplinary study of the challenges that face the services industry [6, 19, 21]. SSME highlights the importance of service, and tries to harness the power of science and engineering theories, models and applications to support service design as a industrial product, and thereby enhance service innovation and user satisfaction [26]. Therefore, the need for SSME has been nurtured by both practitioners and academics (IfM and IBM, 2007).

Second, the literature shows that SSME is still in the exploration phase. Voss et al. [16] propose a service framework for the field of operations management. They

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introduce four management-controlled levers to define the concept of experience-centric services and examine its implications for operations strategy. Generally speaking, a framework that can help the field develop is important in the exploration phase. In the preliminary stage of the development of SSME, researchers attempted to define the discipline, its research scope and its implications for future research. Now, it is time to develop a clear concept and framework for SSME (Li et al. 2007). Surprisingly, the literature on the supply chain is quite sparse. Hence, there is a great need for a framework that 1) includes the unique characteristics of SCM; and 2) can identify the specific challenges and opportunities in the supply chain. III.

than a global perspective. This aspect is highlighted by the following questions, which were posed by [40]: Should manufacturers be responsible if their retailers run out of stock? After shipping their products, should manufacturers be responsible for on time delivery to the final customers? Should retailers be responsible if their suppliers’ inventories are too small/too large? These questions show the nature of the supply chain and provide a basis for rethinking how SSME can be integrated into a supply chain framework. Through our literature review, we find that SSME provides a different but complementary perspective of the supply chain field. The gaps between SSME and SCM have multi-dimensional facets. The first gap is the relationship between buyers and suppliers. Traditionally, supply chain management has viewed customers as the last stage of the whole commercial process. This point of view, combined with the traditional mindset of suppliers to minimize their total costs, sees customers as the enemy. Take the customer view for example, the traditional supply chain logic views selling as the end of the trading process. However, SSME considers that customer satisfaction and customer needs should be dominant. This philosophy differs from the “duality” view that is deeply rooted in the traditional supply chain. The production process is another dimension that reflects the difference that is deeply rooted in the structure of the traditional SCM mindset. Traditional supply chain logic views the process as a standard, mechanical process, while the SSME philosophy rethinks all the roles and boundaries. Table 1 details the gaps between SCM and SSME.

THE FRAMEWORK

Before describing our framework, we discuss the gap that exists between SCM and SSME. Supply chain management possesses unique characteristics that differentiate it from other fields. First, the supply chain has been characterized as the link between different parties; therefore, it must have a strong service-oriented foundation to satisfy customers. More specifically, goods and services pass through a series of linked channels before being delivered to end customers. Each layer of the buyer-supplier relationship is a subdivision of the whole supply chain, and must satisfy the customers in that stage. This high level of interaction suggests that the units coordinate dynamically. In today’s competitive global market, where customers’ needs change rapidly, customers are less inclined to stay with one supplier because they have more options to change their suppliers on an ad-hoc basis. Business relationships tend to be short-lived, especially when the environment is complex and dynamic. Thus, companies have to adapt to rapidly changing customer requirements to ensure better service delivery.

TABLE 1 MINDSET GAPS BETWEEN SCM AND SSME

Another characteristic is the nature of multi-layered, supplier-buyer relationships, which are especially apparent in the global supply chain and thus have the potential to cause disruptions in service delivery. Each node in the supply chain plays a dual-role, i.e., buyer and supplier. Hence, each node must integrate semi or partly-finished services/products derived from upper layer suppliers with its own value-added service/product and deliver it to its customers. This characteristic makes it more difficult to guarantee the quality of goods and on-time delivery to end customers. The traditional supply chain philosophy suggests that suppliers should reduce their inventories. Although most studies argue that information sharing and customer satisfaction are critical, the philosophy is a top-down planning strategy. In other words, it does not incorporate ex-ante service planning, so it is difficult to devise a global plan, especially in the presence of uncertainty and the long-whip effect. Therefore, lead times and inventories make a long supply chain more unpredictable. The third characteristic is that each node in the current global supply chain works in an isolated manner. As a result, each node’s strategy is based on a micro perspective rather

We have identified the gaps that exist between the traditional and the SSME-based supply chain perspectives,

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and examined the reengineering requirements. Next, we link the supply chain and SSME to service characteristics via the proposed framework, as shown in Figure 1.

2) Single Solution provider: Complex supplier network is invisible to customers. Customer-centered service design ensures that an enterprise acts like a “service provider.” For example, a company may want to offer different procurement functions, such as searching for a rare item, as “services on demand.” This requires that business processes should be rendered as services that can be integrated dynamically to meet changing customer demands. The ability to create or restructure such services means that a company can react quickly in a dynamic environment. For example, when customers visit a bank, they do not care about the how inter-bank transfers involve complex technology and complex units; they just want their needs to be satisfied quickly on the spot. Therefore, service quality in a global supply chain must be coordinated to satisfy each customer’s particular needs. 3) Melting of both intra-organization and interorganization boundaries. It is crucially important that a supply chain can provide prompt, correct services to the final customers. The SSME-based philosophy re-defines the boundaries in/between organizations by linking divisions, and thereby shortens the supply chain. The re-definition of boundaries can be implemented both intra-organizationally and inter-organizationally, as shown by the arrows between the circles in Figure 2.

FIGURE 1 THE SSME-BASED SUPPLY CHAIN FRAMEWORK The following aspects of the framework should be emphasized. 1) The dual philosophy of mutual construction replaces the bipolar distinction of dualism. An SSME-based supply chain encourages more effective and efficient ex-ante interaction and engagement, and also fosters proactive dialogue and cooperation with customers. This is because the exchange of experiences requires the collaboration of both parties to design the configuration of the service-based supply chain. Suppliers and users enter into a dialogue to ensure mutual understanding and define the nature and extent of the exchange. They then continue this dialogue to ensure that the exchange is effective. Moreover, by maintaining this ongoing discussion of the client’s requirements, both parties can extend and strengthen their relationship. In this sense, the customer is one of the dual components of a supply chain, and thus contributes to its construction. The two-way dialogue must begin before the design of the products, services, and structures that support all the necessary activities. The traditional linear and oneway relationship thus becomes a mutual cause and consequence form of relationship, where the customer actually participates in the production process. Servicecentered supply chains differ from manufacturing-centered supply chains because of the intangible nature of services, and the difficulty of gauging customers’ true needs. For example, there are numerous cases where suppliers fail to meet their customers’ true requirements, even though their products are high-quality Therefore, researchers and practitioners must recognize that customers are critical components in an SSME-based supply chain, and adopt an innovative approach to meeting customer needs.

4) Virtual / Organic concept of supply chain partners. In Figure 2, the service process links one atom with another directly, and breaks the mechanically designed organizations and original functions into smaller atoms. The recombination of the atoms turns isolated organizations into virtual service-oriented providers for different customers. Thus, based on the virtual design, the whole supply chain becomes an organic structure that coordinates the functions and atoms. In Figure 2, the components in the outer circle work dynamically with those in the inner circle to meet rapidly changing customer needs. 5) The role of information and communication technologies (ICT). Understanding the evolution of service systems is a central problem in service science. Although the service industry has implemented IT and service servicerelated processes for decades, re-defining the scope of ICT to ensure that it is fully utilized is a critical issue. The importance of ICT in the supply chain has been welldocumented; however, in a service oriented supply chain, it is critical that ICT should be used to implement the concept of the virtual service provider. Traditionally, IT systems have been limited to support roles and functions instead of being seen as service autonomies; thus, they have tended to function in isolation both within organizations and between organizations. The new definition of ICT expands its role to support the link between service autonomies outside the traditional boundaries. In other words, ICT becomes the central neural network that enables the SSME supply chain to provide fast responses. In Figure 2, the ICT design breaks the boundaries between customers and suppliers in the outer and inner circles to provide two-way information exchanges

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and thereby reduce uncertainty and the whip effect. This sharing of information streamlines the service procedure and facilitates the preparation of the bill of materials (BOM), ordering and customer needs. These services use ICT to support the network of suppliers, the enterprise, and the customers. Monolithic IT architectures limit the leverage of interconnected service unit delivery. Consequently, services based on the new architecture are essential to ensure that the supply chain is flexible. IV.

functional irrelevance if they fail to adjust to these changes [11]. For researchers, our study synthesizes, integrates, and formalizes the findings reported in recent SSME literature, highlights the gaps in the field of supply chain management, and tries to close those gaps. Second, the proposed framework aligns SSME with the supply chain concept, and integrates emerging SSME knowledge into supply chain management strategies. Our study is one of the first to focus on the topic; thus, we hope that it will stimulate further discussion of SSME based on SCM.

CONCLUSION

For practitioners, how to respond to the dramatic changes and incorporate SSME into a multi-layered supply chain has long been an issue. This paper offers guidelines to help practitioners rethink their supply chain strategies. Most importantly, mindset re-engineering helps managers change their traditional attitudes and methods, adapt to the modern supply chain environment, and explore opportunities to provide new services.

In this paper, we have explored the opportunities that SSME provides to improve supply chain management. Essentially, SSME enables a supply chain that involves service intensive activities to respond quickly to changes in the business environment. To summarize, SSME provides opportunities to close the gaps that exist between resource re-engineering, boundary re-engineering, process reengineering, technology re-engineering, and most importantly, mindset re-engineering. As a result, serviceoriented businesses can respond to the need for the dynamic configuration of resources to reduce the boundaries between organizations, as well as between organizations and customers.

Future studies should stress the need for practitioners and academics to address issues unique to field of supply chain management. They should also expand service science knowledge by analyzing how service socio-systems evolve over time, what factors are critical to sustaining service excellence, and use the unprecedented opportunities to facilitate business-service science alignment.

Our study has several implications. The dramatic and ongoing changes in the service environment present a number of opportunities for further research. It has been suggested that management scholars run the serious risk of [1]

[2]

[3]

[4]

[5]

[6]

[7]

[8]

[9]

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