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Services Supply Chain
IES will optimize your services
supply chain by identifying the most profitable
demand it is capable of fulfilling
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Services’ Supply Chain: The current
practices associated with viewing the delivery of
services products as the fulfillment of a supply chain
order are described in the following three articles:
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http://www.intelligententerprise.com/showArticle.jhtml?articleID=175002433
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http://www.lionhrtpub.com/orms/orms-6-06/frservice.html
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“IBM’s New Transformation: Services Supply
Chain,” “Global Logistics and Supply Chain Strategies”
magazine, February 2008, page 38-39.
The
current practice is summarized with the following quotes
from all three references.
“Information technology support and in particular models
and analytic tools, for the business services industry
lags behind manufacturing and financial services
counterparts.”i
“When IBM
started the project (i.e., workforce optimization) in
2004, the company saw the first barrier to development
of a common “skills-supply” database was a lack of a
common language to define skills and job role…IBM
developed a skills taxonomy…in the long term, the
taxonomy would drive standardization in job
descriptions..”
“Quick
response staffing is just one capability; as in supply
chain management scenarios, resource optimization is a
second benefit…it’s important we assign our own staff to
more valuable tasks and use subcontractors for the other
(more commoditized) work..”
“Over
time, the workforce project has had a positive effect on
corporate culture and staff morale…many people took
their skills for granted and now realize what assets
they are…”
“The bill
of materials for our services business is labor, skills
and talent …we are buying contract labor, third party
software, hardware, niche consultants, industry experts
and high-end engineering skills to solve a specific
problem for a customer.”
“…but it
is difficult, and in some cases, impossible to directly
apply the analytical tools developed for manufacturing
and supply chain to services….Since in most cases,
services cannot be inventories, consumption takes place
at or near the time and location of production..”
“Key
questions that planners and operators of business
services need to answer include:
o
Forecast demand for services
o
Forecasting demand for resources to
produce services
o
Strategic and tactical planning of
acquisition, training and termination of resources
o
Allocating resources to specific
activities
o
Pricing services contracts
“In
services, demand forecasts are used primarily for
financial planning, capacity and workforce planning and
to drive procurement or creation of assets used to
deliver services…the stochastic nature of demand likely
has an even larger impact in service industry planning
that in manufacturing environment.”
“Research
areas that could support improved demand forecasting for
business services include…improved models linking demand
with pricing and other promotional activities…”
“Data
analysis may also support efforts to define a “bill of
services” that would play an analogous role to a bill of
materials in manufacturing by specifying the relative
quantities of service production resources that must be
applied in combination and over time to fulfill a unit
of service consumption.”
“Service
providers could benefit from models that help
determine…the profitability and/or risk of an individual
contract..”
“Although
there is some applicability of existing O.R. models to
business services, broader applicability and acceptance
of these models will need to leverage results from other
domains, including marketing…”
·
IES Benefits, given current services
supply chain practices. IES’s ability to contribute
to the services supply chain work is a function of its
maturity. If the “bill of services” and associated
annual forecasting, planning and budgeting efforts have
progressed sufficiently to approximate the equivalent
traditional product –oriented activities, then the
answer is a resounding “Yes!”
IES would
enable, thus, the determination of the maximally
profitable services products the services supply chain
could manufacture and fulfill by relaxing the constraint
of a fixed forecast. In so doing, it collapses the
three separate planning activities of forecasting,
capacity planning and budgeting into a single,
simultaneously optimal step (see
Palladium and
One Model, page 3).
Further,
issues of lumpy demand and the stochastic nature of the
supply could be handled with different scenarios.
Finally,
recognizing the IES response curves that enable the
fixed forecast assumption to be relaxed are, themselves,
forecasts, the response curve variance analysis process
illustrated in Palladium allows the IES model to
correct itself as the response curves are deemed
inaccurate. Thus, IES keeps the services supply chain
or, more accurately, profit chain continually focused on
the maximally profitable demand it can fulfill.
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