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Service supply chain integration in multi-organisation networks –
   Applying integration enablers and aligning process ca...
Despite extensive SCM literature over the last twenty years and the increasing
importance on services, the area of SSC is ...
1.1. Defining the Service Supply Chain

The alternative definitions of SSC and SSC management that have been identified
fr...
Moreover, two connected relationships of interest themselves can be both directly and
indirectly connected with other rela...
The research method used is a case study methodology. Case studies are particularly
useful when exploring new areas of res...
that consists of the area of research and the related authors that are in agreement with
those integration enablers.

    ...
Collaborative
                                                                 resources
   Shared risks
   and rewards
  ...
simplification of metrics and capabilities at each point of the organisation and can be
seen as a useful method to priorit...
The approach is to be implemented along key nodes in the service supply chain as
schematically presented in figure 4. The ...
Case material, group sessions, external process models, performance metrics and
other supply chain process models have bee...
Additional literature review on network integration and service supply chains has
identified dimensions and specific proce...
This research study makes an initial knowledge contribution towards service supply
chain integration in multi-organisation...
Anderson J., Hakansson H., Johanson J., (1994) ‘’Dyadic Business Relationships
within a Business Network Context’’, Journa...
Ephraim N., Singh S., Ettore P., (2007), ‘’Integrating the Supply Network: Aligning
Capabilities of Strategic Business Uni...
Liker J., Choi T., (2004), ‘’Building Deep Supplier Relationships’’, Harvard Business
Review, December

MacCormack A., For...
Soosay C., Hyland P., Ferrer M., (2008), ‘’Supply Chain Collaboration: Capabilities
for Continuous Innovation’’, Supply Ch...
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  1. 1. Service supply chain integration in multi-organisation networks – Applying integration enablers and aligning process capabilities Antigoni Iakovaki, Dr. Jagjit Singh Srai, Dr. Tomas Harrington University of Cambridge, Institute for Manufacturing, ai252@cam.ac.uk, jss46@cam.ac.uk, tsh32@cam.ac.uk Keywords: Service supply chain, Multi-organisation networks, Network integration Process capabilities Abstract The effect of globalisation such as borderless markets, increasing competition, rapidly improving technology and changing customer requirements has changed the nature of original equipment manufacturers. As equipment provision has become more complex and competition heightened, firms have felt the pressure to add value, predominantly through the provision of services. This has encouraged supply chain collaboration with other key network partners, depending on establishing relationships with key supply chain partners. The network perspective provides a new approach to how firms might acquire and exploit the capabilities of multiple firms in supporting future products and services. It is therefore becoming important for supply chain partners to understand how to integrate processes across the network. As services represent a growing share of revenue for some manufacturing companies, the area of service supply chain (SSC), a key enabler of this transformation, remains largely unexplored. This research study introduces a methodology for integrating processes across the multi-organisation network (MON) using a process-capability assessment process. The full scope of this study involves case study research into multiple partners of a UK complex multi-organisation network. Preliminary results demonstrate that the agreement of a common set of integration enablers can be applied as an integration filter on critical process capabilities in MON. Furthermore, a process and performance hierarchy can be defined to support the integration of business, strategic and operational drivers, as well as to support the development of shared goals across the network. Theoretical implications include a series of integration enablers for MON and a methodology for evaluating processes across network members. Practical implications include an integration process tool and new approaches to multi-organisation service network design. The outputs will be used to define key processes in managing or integrating multi-organisation networks. 1. Introduction 1
  2. 2. Despite extensive SCM literature over the last twenty years and the increasing importance on services, the area of SSC is largely unexplored; as commented by several authors (Ellram et al 2004, Sengupta et al 2006, Niranjan 2007, Baltacioglu et al 2007, Spring 2008). This can be partly attributed due to the difficulties that arise from the unique nature of services and their distinct characteristics; intangibility, simultaneity, heterogeneity and perishability, which make services difficult for people to visualise and measure. Globalisation of services (Ellram 2004), competition (Baltacioglu 2007) and issues of mass partnering (Liker 2004) add even more complexity into the service supply chain arena. The gap in the academic world has recently only started to be addressed by directly using the SSC concepts and terminology (Sampson 2000, Ellram et al 2004, Cohen 2006, Baltacioglu et al 2007, Avery 2008), identifying similarities and difference between product and SSC’s (Niranjan 2007, Sengupta et al 2007, Spring 2008) and suggesting frameworks specifically for SSC’s (Ellram et al 2004, Baltacioglu et al 2007). Previous research has established linkages between network integration, business performance and competitive capabilities (e.g. Frohlich and Westbrook 2001, Rosenzweig et al 2003). Similar work has looked at relationships among business conditions, integration and performance in supply chains (Van Donk et al 2007) and the relationship among supply chain coordination, performance and after-sales network (Saccani et al 2007). Despite current findings, there is a gap in the current body of research where the unit under investigation needs to shift from the ‘’firm’’ to ‘’the network of collaborative companies’’ (Srai 2007, Ephraim et al 2007, Baltacioglu et al 2007, Van Donk & Van der Vaart in Kotzab eta al 2005, Bowersox et al 2003) and ‘’a comprehensive definition of the processes’’ (Croxton et al 2001) that are key to network integration. Whether results of these studies of integration are important, a deeper understanding of the complex phenomena of MON integration requires capturing the perspectives of all the various partners involved in the integrative activities (McCarty & Golicic in Kotzab et al 2005). This identified the need for research at multiple nodes across MON and addressed the importance for a more integrated approach towards capability and performance measurement assessment (Iakovaki & Srai 2008). This research is a continuation of previous related studies undertaken for an output- based service availability defence aerospace contract (Srai 2007, Iakovaki & Srai 2008, Iakovaki & Srai 2009). Its unique multi-organisational structure with several nodes involved in the delivery of complex service offering justified the reasons behind this selection. This research study introduces a methodology for evaluating SSC integration in multi- organisation networks using a capability assessment process. A set of integration enablers informed by literature and tested within an operational environment have been developed. A process hierarchy, in line with previous work (Iakovaki & Srai 2008) was defined to support the integration of business and operational drivers as well as activities. Preliminary findings demonstrate opportunities for shared goals across multiple partners within MON. 2
  3. 3. 1.1. Defining the Service Supply Chain The alternative definitions of SSC and SSC management that have been identified from the extensive literature review describe SSC as a network of resources (Cohen et al 2006, Srai 2007 ) or a SC that enables efficient after-sales support (Gosling & Colborn 2004, Waart & Kemper 2004); others as an adaptive SC incorporating planning and execution capabilities (Poole 2003) or a SC that matches the urgency and criticality of its customer needs (Cohen et al 2000); and yet others as the management of information, processes, service performance, resources, capacity and funds (Ellram et al 2004, Baltacioglu et al 2007) In summary, the key concepts that have emerged are: • SSC as a network of resources • SSC as a service offering • ‘’Flexibility’’ in SSC • SSC as a customised solution The determination of these key elements, led to the development of a SSC definition. This is: ‘’Service Supply Chain is a network of inter-connected organisations that utilises resources and transforms their inputs (skills and knowledge) into the service offering to enhance the delivery of a ‘’flexible’’ customised solution’’ In order to be precise about what ‘’flexible’’ means, we use Zhang et al 2002 definition in which flexibility is being defined as ‘’the organisations ability to meet an increasing variety of customer expectations without excessive costs, time, organisational disruptions or performance losses’’. 1.2. Defining the multi-organisation network The articulation of supply networks, as an extension of supply chains, seeks to accommodate and explain the commercial complexity associated with the creation and delivery of goods and services from the source of raw materials to their destination in end-customer markets (Lamming et al 2000). Supply networks are, therefore an extension of the supply chain. They are more complex and the need of the management of the relationships including different interests increases. The business relationships, in which each exchange relation in between business firms, are conceptualised as collective actors (Emerson 1981 in Anderson et al 1994). This study refers to actors as nodes within the supply chain. The actors (or nodes) network context is structured according to three dimensions; the actors, who they are and how they are related to each other; the activities performed in the network and the ways in which they are linked to each other; and the resources used in the network and the patterns of adaptation between them (Anderson et al 1994). 3
  4. 4. Moreover, two connected relationships of interest themselves can be both directly and indirectly connected with other relationships that have some bearing on them, as part of a larger business network (multi-organisation network). 2. Research Methodology The research question for this research study is ‘’How to configure and operate a multi-organisation service network?’’. The approach involves the extendibility of supply chain manufacturing concepts to a service supply chain network domain and includes a literature review on the areas below. Service Supply Chain integration in MON RQ: How to configure & operate a Multi-Organisation Service Network? Service Supply Chain Process capabilities Literature review Service Networks Performance metrics Integration Research method Case study Case selection Air sector (ATTAC) Develop case study methodology 1. Node-to-node analysis 2. Process capability models review 3. Integration enablers development 4. Process & performance hierarchy determination 5. Integrating process / metrics selection Additional case studies Naval Land Non-defence Research Contribution 1. Integration factors in MON/ SSC’s 2. Methodology for evaluating integration processes across nodes 3. New approach towards service network design Figure 1: Research Methodology A literature review on Service Supply Chain concepts and the determination of a SSC definition; The service network context where a series of node-to-node analysis have taken place in an attempt to increase alignment of goals within the multiple partners in MON; Process capability models review informed by literature review and external practice; Network integration literature review where a set of integration enablers are developed; SC process and performance hierarchy concepts to visualise, categorise and simplify process capabilities and performance metrics; Integration of processes and metrics across the multiple partners in order to increase process and metrics alignment. 4
  5. 5. The research method used is a case study methodology. Case studies are particularly useful when exploring new areas of research and when intangible phenomena such as services are core concerns (Eisenhardt 1989, Yin 1984). The UK Defence and Aerospace sector has been chosen as the main case study for this research study due to its transformation towards a more efficient integrated service offering for complex engineering assets. The importance of long term strategic partnering agreements and increasingly integrated service solutions for the provision of defence military capability has been addressed by the UK defence industrial strategy. Additional case studies in the UK defence land and naval sector as well as in a non-defence service environment will formulate part of the ongoing research. Implications for theory development are discussed, specifically the development of methodologies for evaluating SSC integration in multi-organisation service networks. A series of integration factors in MON / SSC’s as well as a methodology for evaluating integration processes across nodes will formulate outputs of this research and will provide insights for a new approach towards service network design. 3. Evaluating Network Integration A series of integration enablers and the determination of a process and performance hierarchy have been used to evaluate, categorise and visualise network integrated process capabilities and performance metrics. 3.1. Integration enablers The suggested network integration enablers informed by literature review and tested within an operational environment are presented in table 1. Network Integration Definitions Enablers Build meaningful and cooperative relationships with clearly Common Goals defined roles, integrative resources and joint ownership of decisions Set up appropriate risk management mechanisms that remain Shared Risk and Rewards flexible and adaptable for collective responsibility of risk and benefit sharing Executing activities and operations in an optimum sequence that maximises responsiveness through effective material and Network Synchronisation information flows to enhance the way at which essential functions are performed Exploit organisational routines through the ability to make use of Collaborative Resources complementary resources that can contribute to create decision- support capabilities in the future Willingness to exchange key technical, financial, operational and strategic information to appropriate stakeholders via effective use Knowledge Sharing of information systems that contribute to quick, accurate and proactive decisions Table 1: Network integration enablers (Iakovaki & Srai 2009) The arguments towards their selection and the implications of each enabler and related statement from an integrative perspective are being discussed in previous research (Srai & Iakovaki 2008). Table 2 presents a summary of the literature review 5
  6. 6. that consists of the area of research and the related authors that are in agreement with those integration enablers. Sharing Area of Common Network Collaborative Knowledge Author of risks & research goals synchronisation resources sharing rewards Cao et al 08 x x Bowersox et al 03 x x x x Gimenez et al 08 x x x x x Barros et al 08 x Hollweg et al 05 x x x Stank et al 01 x x x SC Mounkes 04 x x collaboration MacCormack et al 07 x x x Wadhwa et al 06 x x x Barratt 04 x x x x x Spekman et al 98 x x x Soosay et al 08 x x x x x Lee & Billington 92 x Van Donk et al 08 x x Vieira et al 09 x x x x Asif et al 08 x x Ellinger et al 00 x x x Frohlich & Westbrook 01 x x x Stank et al 01-02 x x x x x SC Rosenzweig et al 03 x x x Integration Ian Sadler x x x Van Donk & Van der Vaart 05 x x x Sakun & Himangshun 05 x x x x x McCarthy & Golicic 05 x x Simatupang et al 02 x x x x Lee & Whang 01 x x x x Demand Xu & Dong 04 x collaboration Kahn et al 06 x x Buyer - Jost et al 05 x x x supplier relationships Liker et al 04 x x x Table 2: Integration enabler’s literature review The contextual factors and the breakdown structure of each integration enabler are schematically presented in figure 2 below. The contextual factors have been suggested after grouping associated factors from literature review under each integration enabler (see table 1). Additionally testing was carried out in the case study that follows in section 4. The operational knowledge and data gained have been used to explore these factors more deeply, look for patterns and enable sub-groupings. Common Network goals synchronisation common vision Shared goals Synchronisation of coordinated workflow common language and objectives operations synchronised planning top management support 6 trust Relationship Joint improvement value stream mapping role specificity management plans process integration ConOps protocols
  7. 7. Collaborative resources Shared risks and rewards Allocating and shared resources prioritising Risk and benefit gain share mechanisms resources Resource flexibility sharing incentive alignment team building Utilise collective continuity of staff engagement manpower risk analysis reduced resource duplication Risk contingency planning management risk pooling skill complementary Utilise collaborative expertise build collaborative capabilities shared learning Knowledge sharing information transparency Data sharing data capture data quality shared language Interoperability knowledge transfer common tools network connectivity Efficient IT Systems real time/timely data exchange efficient IT infrastructure Figure 2: Integration enabler’s breakdown structure* 3.2. Process and performance hierarchy The concept of hierarchy of goals, enabling processes, and supporting activities has been considered by several researchers as a suitable approach of relating different types / levels of activity in support of assessing overall business outcomes (Lee et al 1995, Rangone 1996, Saccani et al 2007). More recently, the hierarchy concept has been considered as a method of relating different types / levels of supply chain capabilities and performance measures (Hafeez et al 2001, Hofman 2004, Srai & Gregory 2008, Iakovaki & Srai 2008). The proposed capability hierarchy (see figure 3) is seen as key to providing linkages between discrete strategic and operational processes, including complex support activities, providing a platform for process alignment, metrics development and network integration. The four stages, as depicted in figure 3, facilitate the 7
  8. 8. simplification of metrics and capabilities at each point of the organisation and can be seen as a useful method to prioritise capabilities for the strategic and functional unit (Srai & Iakovaki 2008) Business goals -> Business development Strategic capabilities -> Supply network development -> Tactical supply opportunities? Operational capabilities -> Process routines -> Operational rigour? Basic activities/ procedures Figure 3: Process and performance hierarchy (Srai & Gregory 2008) 4. Case Study The proposed methodology, as described in section 3 has been applied in the case study that follows (see figure 4). The case study has been conducted in a UK complex defence Aerospace multi-nodal supply chain and specifically in an output-based service supply chain contract. Field research Prime on-base Prime on-base customer customer Field R + case data Prime on-base Prime on-base Ongoing research supplier supplier Scheduled, Scheduled, Procurement (emergent work), Routine Routine Key suppliers Key suppliers Procurement (emergent work), Ultimate customer servicing & upgrade maintenance maintenance Ultimate customer servicing & upgrade Supplier Other functions integrator Other functions Facilities Facilities Figure 4: Defence Aerospace multi-nodal SSC The approach taken uses the integration enablers in a series of node-to-node assessments in order to identify process capabilities and associated performance metrics at each node. These are centred on supply network processes (case material and external process models); informed by metrics used (as reported in literature / observed) and by other supply chain process models. 8
  9. 9. The approach is to be implemented along key nodes in the service supply chain as schematically presented in figure 4. The principal nodes studied so far include the prime on-base customer, the prime on-base supplier and one major supplier integrator. 4. Case study findings The assessment process has identified a selection of process capabilities key to network integration for each of the node examined and positioned them against the appropriate hierarchical level at the process and performance hierarchy; as previously described in section 3.2. This has resulted in distinct process and performance hierarchies and distinguished the findings under ‘’elements of commonality’’ and ‘elements of divergence of view’’ (Iakovaki & Srai 2008). Initial results (Iakovaki & Srai 2008) showed an alignment of business goals across the nodes examined. They’ve also highlighted some contradictory strategic and operational priorities, largely identified from contextual complexity (supply network and product service) rather than competing commercial interests. These differences identify an absence of a shared view on critical enabled processes across partners in this complex multi-nodal service supply chain. An integrating methodology across multiple nodes that tackles the misalignment of process objectives and the priorities of the various network members under a ‘’common perspective’’ is being discussed in the next section. 4. Integrating Methodology across Multiple Nodes Accepting that separate capability hierarchies, addressing different and specific customer and supplier business needs respectively is warranted. Ensuring these are shared between network members, using a common single hierarchy with ‘’shared set of goals’’ and common terms that all members are familiar with, is however essential for achieving network alignment. Developing a common process capability hierarchy across the Defence Aerospace MON enterprise level by combining supplier and customer perspectives can be achieved by: • prioritising process capabilities according to their importance and relevance towards network integration in a combined session to arrive at a common and shared perspective, captured within a common and shared enterprise hierarchy • applying a common theoretical framework informed by the suggested integration enablers and mapping the processes and metrics that fit under its integrated dimensions Figure 5 illustrates the integrating methodology across the nodes examined. The five integration factors (see table 1) have been applied as clusters in the process and performance hierarchy and the associated processes have been mapped against them. 9
  10. 10. Case material, group sessions, external process models, performance metrics and other supply chain process models have been used to test the validity of the initial case results. Field research Prime on-base Prime on-base customer customer Field R + case data Prime on-base Prime on-base Ongoing research supplier supplier Scheduled, Scheduled, Procurement (emergent work), Routine Routine Key suppliers Key suppliers Procurement (emergent work), Ultimate customer servicing & upgrade maintenance maintenance Ultimate customer servicing & upgrade Supplier Other functions integrator Other functions Facilities Facilities a. use process alignment b. use hierarchy c. use metrics alignment Business goals -> Business development Strategic capabilities -> Supply network development -> Tactical supply opportunities? Operational capabilities -> Process routines -> Operational rigour? Basic activities/ procedures Figure 5: Integrating methodology across the Defence Aerospace MON 6. Findings The methodology described explores possible processes for achieving a common, shared multi-nodal set of supply chain process-capabilities, captured within a hierarchy of business goals, strategic and operational capabilities and activities. The approach taken has considered ‘’elements of commonality’’ and ‘’elements of divergence of view’’ within the case study nodes examined and suggested the development of a shared group objective pyramid that addresses network priorities and contractual obligations. This has been achieved by focusing on the processes that have identified as important to network integration and identified shared views on processes that are different or placed in different hierarchical stages. 10
  11. 11. Additional literature review on network integration and service supply chains has identified dimensions and specific process capabilities that were previously not addressed as important to integration. These have been compared against other supply chain process models and a selection of these has been considered as important. The nature and characteristics of the process capabilities that have been added, removed or redistributed across the four hierarchical stages of the process and performance hierarchy are presented below (see also figure 6). Process capabilities that have been added - Relationship management - Risk management - Product & service enhancement - Infrastructure support data Process capabilities that have been removed - Supply chain design - Transport operations - Manage repairs Processes capabilities that have been redistributed - Major sub-contract management - Inventory management - Utilisation of e-business tools and techniques Product & service enhancement Inventory management Major sub-contract management Relationship management SC design Manage repairs Risk management Utilisation of e-business Transport operations tools & techniques Infrastructure support data Figure 6: Rearranging process capabilities 8. Conclusions 11
  12. 12. This research study makes an initial knowledge contribution towards service supply chain integration in multi-organisation networks by suggesting a methodology for evaluating critical integration processes across multiple network members. It identifies the processes that support network integration in a complex multi-nodal service supply chain. The approach taken allows the identification and simplification of processes and metrics that support network integration at each node and at a MON level through a common and shared perspective. The methodology enables the integrating processes to be identified, and captured within a hierarchy. The determination of the process and performance hierarchy has been defined to support the integration of business and operational drivers as well as activities. A selection of five key integration enablers (Common Goals, Shared Risks and Rewards, Network Synchronisation, Collaborative Resources, Knowledge Sharing), informed by literature and practice, have been applied as an integration filter for the suggested processes and metrics. Initial results demonstrate that using a common hierarchy with a ‘’shared set of goals’’ and a common terminology within various network members can support process and metrics alignment. The identification of a common set of critical processes that enable network integration, including their strategic and operational relevance, provide insights to service network design. References 12
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