services supply chain

8/9/2019 Services Supply Chain

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PROJECT REPORT

On

SERVICES SUPPLY CHAINMANAGEMENT

by

Manoj Gupta



To compete in today's global markets, organizations strive to deliver their products and services inboth an efficient and effective manner. A critical component in this effort is the design and

coordination of the supply and distribution networks--supply chain management (SCM). SCM wasoriginally limited to traditional areas like purchasing, distribution and logistics. Over time, SCM has

evolved as a field of inquiry and has expanded to include a myriad of areas, including supplier relationships, supply network structure and supplier collaboration.

It is important to highlight the differences between service supply chains and the more traditionalmanufacturing supply chains. In service supply chains, human labor forms a significant component of the value delivery process and while, physical handling of a product leads to standardized andcentralized procedures and controls in manufacturing supply chains, in services this is not entirelypossible as many of the decisions are taken locally and the variation and uncertainties in outputs arehigher because of the human involvement. In addition, the focus of efficiencies in service supplychains is on management of capacity, flexibility of resources, information flows, service performanceand cash flow management.

But still we can chart out the similarities between traditional supply chain and services Supply chain.

Fig. Similarities between traditional SCM and services SCM

Traditional SCM Services SCM

Production Capacity Personnel expertiseBill of Materials Combination of skill setsSC Performance measures Meeting customer expectationsInventory Excess capacity or disappointed customersForecast requirement Forecast demand

For a company in medical services that distributes medical and surgical supplies to medicalpractitioners and home health care industry, a supply chain management system will coordinate withthe manufacturers of the medical suppliers, the retailers, the logistical department of major hospitals.By keeping tracking of the usage patterns, the supply chain management system will be able toforecast the demand of medical/surgical products by seasons, by regions and by customer types.This will save the inventory cost for the medical service company and major hospitals that order themedical supplies.

When one visit to a hospital for an elective procedure it is assumed that there will be a right roomsupply with the right staff, and right materials available (food/beverage/etc.) and availability of servicein right quantity. From the process perspective in the example above the core processes in the supplychain would be Planning (of facility capacity or staff and supplies, in sourcing (of staff), make (of ICUsetup etc.), Deliver(via In-Patient or Out-Patient), CRM/CSM(via Staff Patient consultation, MedicalReview Board), and Return management( via scheduling follow-up). Along with this, we haveinformation systems and technologies (Patient record management, Diagnostic and Treatment andfacility environment).

A typical Medical supply chain would be Suppliers supplying to Buying Organisation (Centralprocurement organization), which then deliver it to hospital which also gets input from consultants.Hospital then delivers the service to patient through the tangibles like operative tools and consultants.Innovation can be added to the services in this example through Global Radiology labs for remotediagnostics, US healthcare reforms, shared services business model for procurement, staff andAccounting & HR, and increased life care facilities for baby boomers.

IBM Case Study

The major issue that needs to be answered is that is there something as a Software Supply Chain.The points that support this issue are:

• Information based products have all the issues of a physical product except for space.

• Inputs are typical programming activities and customer requirements.



• Delivery time is a key performance measure.

• Output is a physical product.

Software requirements

The requirements as required by any product development can be fulfilled by software too. It isillustrated as below:

• Programmers (Expertise and capacity)

• Hardware (Resources and capacity)

• Project Managers (Expertise and capacity)

• Customer Input (User requirements)

Performance objectives

• Capture and implement customer requirements

• Eliminate field errors (cost of failure)

• Meet standards

• Minimize cost = programmer hours

• Software compatibility

• Localizability

DHL case study

Fig. DHL Service Parts logistics offerings

DHL had challenges in front of it while restructuring its services supply chain. The main challenge wascustomer needs in terms of expected improvement in cost and service level, need to manageentitlement and differentiated service levels. Other challenges were Retain and re-format, Developexit strategies, Change of management relationship e.g. LLP (4PL), Knowledge retention in partner

organizations. There were implementation challenges as well like Service degradation & cost risk,Seamless transition for existing customers, Pressure for rapid implementation.



The salient features of ultimate re-structuring solution which DHL designed to cater to thesechallenges were Identify partners with - design, implementation and program resources, Identifypartner who can manage service network; Focus on overall IT backbone for network management.

References:

www.dhl.com/en/logistics/supply _ chain _solutions.html

www.ibm .com/ibm /environment/supply /

http://www.medicalsupplychain.com/

http://www.dhl.com/en/logistics/supply_chain_solutions.html






http://www.ibm.com/ibm/environment/supply/








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