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 ProcessComplex Process Customized Service Standardized Service Source: Uday Karmarkar, “Will You Survive the Services Revolution?” Harvard Business Review (June 2004), pp

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

PhillipsMitsumiSeagate

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.