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Five Steps to Service Supply Chain Excellence Newsletter of the Stanford Global Supply Chain Management Forum Vol. 10 Issue 4 • Fall 2004 Five Steps to Service FORUM PARTNER MEMBERS Supply Chain Excellence Accenture ADX By Dirk de Waart and Steve Kemper AT Kearney Agile Software Applied Materials For decades, companies have struggled with the seemingly competing forces Cisco Systems of excellent customer service and best-in-class operational cost. The pre- Deloitte Research vailing view dictated that customer satisfaction required a high price and Dow Chemical aftermarket service was a necessary evil. Only recently have companies E2Open realized that they can run their service business as a profit center, making Hewlett-Packard IBM Corporation both their customers and their shareholders happy. The advantages of Ingram Micro Logistics achieving excellence in service supply chain management include increased Intel Corporation customer satisfaction and retention, product sales, and service contract rev- Intuit enue as well as higher margins. Given the higher emphasis of customers on Motorola after-sale support, the importance of excellence in service supply chain Nike Nokia Mobile Phones management—and the risks of not taking proper steps to improve perfor- Nomura Research Inst. mance in this area, are expected to further increase in the future. Oracle This article describes a five-step process to help companies swiftly get on palmOne that road to service supply chain excellence: PeopleSoft Samsung Electronics Step 1: Understand Your Service Supply Chain. The service supply SAP Labs LCC chain is defined as all processes and activities involved in the planning, SeeCommerce movement, and repair of materials to enable after-sales support of the Solectron company’s products. As a first step, companies should move into viewing Sun Microsystems the service supply chain as a cross-functional core process. Currently, UPS Viacore many companies tend to have the service supply chain subprocess owners report into different organizational functions, which typically subopti- AFFILIATED AIM MEMBERS mizes performance. There Advanced Micro Devices Step 2: Determine How to Measure Your Service Supply Chain. Cisco Systems is no single metric that defines the service supply chain’s performance. Ford Motor Corporation This challenge is complicated by the multitude of operational models typ- General Motors Corporation ically in play. It’s essential to choose the right metrics, that are aligned Genentech with the organization’s strategy and balance operational and financial Honda R&D Americas measures, and measure them in the right way. Otherwise, performance is Intel Corporation Sun Microsystems likely to be suboptimized. Toyota Motors Step 3: Develop the Business Case for Improvement. Enhanced service supply chain performance can drive higher business growth or lower cont. on page 8 Upcoming Events Global Supply Chain Management Conferences Date: September 16th Event: Research Roundtable Topic: Design Reliability across the Supply Chain Co-Host: Swiss Federal Institute of Technology Lausanne (EPFL-IPR) Location: Lausanne, Switzerland This year’s topic is “Design for System Reliability across the Supply Chain.” Many products and services today require combinations of hard- ware and software as well as external infrastructure. The roundtable seeks to uncover these challenges in various industries, identify the best practices, and set the agenda for the future collaborative research between Stanford, EPFL, and industries around the world. Date: October 7th Event: 1-day Conference Topic: Demand-Driven Supply Networks: Innovations for Top-Line Revenue Growth Co-host: Oracle Corporation Location: Stanford University Campus The event will focus on the evolution of the Supply Chain to Demand-driven Supply Networks (DDSN) and the key elements and practices required for making the transformation. The forum will also have an industry focus and will feature an executive roundtable on outsourcing to Asia. Date: October 20th Date: February 9th Event: 1-day Seminar Event: 1-day Conference Topic: Service Management Topic: tba Co-host: Wharton Co-host: Accenture Location: Stanford University Campus Location: Stanford University Campus Date: November 18th Date: June 2–3 Event: Research Roundtable Event: Annual Symposium Topic: RFID Innovations and Values Topic: Outsourcing and Offshoring Co-host: MIT Location: Stanford University Campus Location: Stanford University Campus European Supply Chain Forum Events Stanford Forum members are invited to attend one of the Eindhoven Forum’s events each year (up to two attendees), space permitting. If you are interested in attending or speaking at one of these events, please contact Christel Nieman ([email protected]). You may also want to visit their general web site at www.tm.tue.nl/efgscm/ Date: October 6–7 Date: November 17th Topic: Intelligent Logistics with RFID Topic: Operational Logistics Alliances & Smart Supply Chains Location: Eindhoven, The Netherlands and Packaging with RFID Location: Copenhagen, Denmark 2 oooo The Supply Chain Connection sion, the team listed the future challenges News from the Team in System Reliability. Amongst the top of the list was coordination amongst integra- Professors Hau Lee, Warren Hausman Professor Hau Lee is chairing the orga- tors and supplies during the design stage and Erica Plambeck joined 40 other nizing committee of this year’s Electronic to identify potential failures related to thought leaders in this year’s Supply Supply Network Conference, which will interfaces between system elements. Chain Thought Leaders Roundtable, take place in San Jose, CA on Sept. Identification of mismatch between hard- which was held in Woodstock, Vermont in 27–29. The theme of the conference is ware, software, and controls also emerged July. Professor Plambeck shared with the Agility, Adaptability, and Alignment, as an important challenge to address. group research trends in relationship con- based on Lee’s forthcoming paper in Another research roundtable will take tracts, while Professor Lee presented Harvard Business Review on this topic. place in Lausanne, Switzerland on research opportunities in supply chain Professor Erica Plambeck has received September 16, 2004, co-sponsored by the management in China. A few weeks ear- the Presidential Early Career Award for Forum and EPFL-IPR (Swiss Federal lier, Professor Plambeck gave a similar Scientists and Engineers, an award that Institute of Technology Lausanne, talk on “Renegotiation of Supply was created to honor and support the Institute for Production and Robotics). Contracts” at Genentech, an affiliated extraordinary achievements of young pro- The roundtable will focus on Design for member of the Forum through AIM. fessionals at the outset of their indepen- System Reliability across the Supply During her recent visit to INPG dent research careers in the fields of sci- Chain. (National Polytechnical Institute of ence and technology. On Sept. 9 all recip- As in previous years, the Stanford Grenoble), Professor Feryal Erhun has ients of the 2003 Award were honored in Graduate School of Business offered this given on June 28 a talk on “Inventory an award ceremony, attended by President summer its Executive Education course: Control Policies Under Stochastic Bush. Managing Your Supply Chain for Global Quantity Discounts” at ENSGI-INPG, The Manufacturing Modeling Competitiveness. The course was held on Laboratoire GILCO, Grenoble, France. Laboratory (MML) hosted a New Product August 22-27 and introduced the best The talk was based on her joint work with Introduction (NPI) Roundtable on practices, innovative ideas, and critical Nihat Altintas (Ph.D. Candidate) and “System Reliability of Product Platforms” thinking of integrative demand and supply Sridhar Tayur, both from Carnegie Mellon to discuss challenges faced by organiza- chain management. Professor Hau Lee University. One of her co-authors, Sridhar tions from different domains on July 16. directed the program, and the faculty Tayur, presented the same paper at the The roundtable, chaired by Professor Kos involved included Professors Bob Manufacturing and Service Operations Ishii, revealed common challenges in pre- Carlson, Warren Hausman, Haim Management (MSOM) conference, which dicting reliability, using failure informa- Mendelson, Evan Porteus and Jin took place on July 1–2 at the Technische tion to improve the reliability for the next Whang. Universiteit Eindhoven in The design, and product platforms. The pre- Holly Lutze, a Ph.D. candidate at the Netherlands. The title of the talk was senters at the roundtable event included department of Management Science and “Role of Quantity Discounts on a Buyer’s Glenn Havskjold from Boeing, Shinya Engineering, has successfully defended Ordering Behavior.” At the same confer- Sekimoto from Toshiba, Glen Griffiths her dissertation in August. Holly’s disser- ence, Professor Erhun presented a talk on and Marcos Esterman from HP, Gene tation title is “Mitigating Supply Chain “Quantitative Risk Assessment in Supply Wiggs from GE Aircraft Engines, Kosuke Risk: Pooling, Contracting, and Supply Chain Management,” based on a joint Ashihara from Ebara, doctoral student Channel Selection,” and her work was work with Professor Elisabeth Paté- Seung Rhee, and doctoral student Larry supervised by Professor Özalp Özer. Cornell and Ph.D. Candidate Léa Deleris. Chao. During the wrap-up discussion ses- Educational Seminar Analysis: systems. The event began with a focus on devel- oping the capability to “measure
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