TJTS E50 –Yritysverkostot ja niiden

informaatiojarjestelmat 2006

Jukka Heikkiläjups@cc.jyu.fi

Marikka HeikkiläMarikka.heikkila@jyu.fi

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Systemic view on an organisation

Res

&

developm

Modularization

Strategy

Sourcing

Prod

plans

PDM

Production

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Make!= DIY

Persuasion

Delivery

Commitments

Finance

Supplier

Customer

Res

&

Developm

Modularization

Strategy

Sourcing

Prod. planning

PDM

Production

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Production typologies

• Make-to-Stock (MTS)• Make-to-Order (MTO)• Assembly-to-Order (ATO)• Engineer-to-Order (ETO)• Hybrid• Effects companies needs for

– Making material acquisitions (Scarcity)– Production schedules– Overall strategic planning for the individual company

as well as for the whole value net• As a result, the typologies influence the composition of a

network

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Make-to-Stock(Kankaanpää, 1999)

• Standard goods produced prior to customer order

• Production amounts based on forecasts– Demand histories

• Finished goods stored in warehouses until actual demand arises

• Goods shipped to retailers or directly sold to end-consumers

• E.g. a factory producing standard goods.

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Make-to-Order(Kankaanpää, 1999)

• Similar to MTS-typology• Produces standard goods based on forecasts

– BUT, when customer order is received the production method changes

• Instead of producing goods for the inventory (warehouse), the produced goods under the MTO-typology are (in a way) “sold” by the time they are produced

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Assembly-to-Order(Kankaanpää, 1999)

• Goods assembled from standard assemblies and semi-finished components based on customer specifications

• Combines the different production typologies • Produces semi-finished standard components

– Based on the forecast– Stored in a warehouse

• Customer order converts the production to the final assembly of the product

• E.g. An automobile assembly plant

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Engineer-to-Order(Kankaanpää, 1999)

• Customer order driven product design• Final product is not fully specified at the

moment an actual customer order is accepted• Order triggers the engineering tasks that define

the final specifications of the product• The customer orders mould the process all the

way until the actual production

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Customer Order DecouplingPoint (CODP) 1/2

• Defines which part of the SC is customer orderdriven– Identifies investments made independently of

customer orders – Beyond CODP no anonymous stock exists

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Customer Order DecouplingPoint 2/2

(c.f. Kankaanpää, 1999)

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Production typologies and value chain vs. network

• Combining a value chain with varyingproduction typologies– Forecasts– Processes– Inventories

• Scarcity

– Changes in production• Is it a network or a value chain?

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Interconnected business

• Exchange of information between partners, subcontractors, even competitors– Pooled resources

• Breeding environment– Outsourced services, universities, science parks,

financiers, etc.

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Defining a value net (orvalue creating network)

c.f. Bovet & Martha, 2000

• One size fits all• Arm’s lengt and sequential

• Rigid, inflexible• Slow, static• Analog

• Customer-aligned• Collaborative and systematic

• Agile, scalable• Fast-flow• Digital

Value netSuppliers

Company

Customers

’Traditional’ supply chain

Demand … Manufacturing… Warehousing…Customer forecasting

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Drivers of networked business(Kumar & Van Dissel, 1996)

• Environmental forces– Globalization– Environmental turbulence

• The support role of IT in reducing transaction costs and transaction risks

• Enabling role of IT in making the collaboration feasible• The motives of the co-operating parties dealing with

issues such as:– Resource pooling– Risk sharing– Utilizing relative advantages– Reducing supply-chain uncertainty– Increasing resource utilization.

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e-Business shapingorganizations

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The Game of Business (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

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The Game of Business (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

A player is your competitor if customers value your product less when they have the other player’s product than when they have your product alone

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The Game of Business (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

Traditionally, the other companies in your industry- those companies that make similar products to yours in a manufacturing or engineering sense

Example:Coca cola vs. Pepsi

As people think more in solving their customer’s problems, the industry perspective becomes irrelevant.

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The Game of Business (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

Intel and Air France may end up as competitors as videoconferencing takes off and becomes a substitute for business trips

Paper producers and computer industry can end up as competitors as both offer tools for graphical and textual presentation

What else might my customers buy that would make my product less valuable to them?

How else might customers get their needs satisfied?

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The Game of Business (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

CompanyA player is your complementor if customers value your product more when they have the other player’s product than when they have your product alone

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The Game of Business (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

Product & spare parts, maintenance

What else might my customers buy that would make my product more valuable to them?

Hot dogs & mustard

Computing power & sophisticated software

Digital cameras & SoftwarePrintersSpecialty papers

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The Game of Business:Co-opetition (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

Players often occupy more than one role

-> try to co-operate and compete at the same time (Co-opetition)

Clothing shops are gathered together in a mall

Museums -Compete for paintings etc.-Compete for customers-Co-operate in weekend passes etc.

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The Game of Business:Co-opetition (Nalebuff & Brandenburger, 1996)

Competitors

Suppliers

Complementors

Customers

Company

With whom should With whom should we cowe co--operate operate with?with?

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Chain

Actor A Actor B Actor C Actor D

• Each link connects exactly to one other link

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Tree

• Each link connects exactly to one other linkActor D

Actor CActor F

Actor GActor B

Actor E

Actor A

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Network

• Nodes can have several parents

Actor B

Actor A

Actor C

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Definition of business network

• The network of – connected and interdependent

organisations– mutually and cooperatively working

together – To control, manage, and improve – the flow of materials and information

from suppliers to end-users. (Christopher, 1998)

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Why interest in Networks?

• Individual organisations are already trimmed to be ‘lean-and-mean’,

• Already efficient Supply Chains• improvements easier to achieve in network

relations– Instead of efficiency also agility, adaptiveness

and alignment of goals needed

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What is Smart business network?(Vervest, Preiss, van Heck & Pau, 2005):

• A network of participating businesses – With compatible

goals,– Interacting in novel

ways,– Perceived by each

participant as increasing its own value,

– Sustainable over

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Smart Business Network?

Dynamic, chancing pool of local/case-dependentsubcontractors

Subcontractors, static

Network of partners, static

Customer

Dynamic network: Companies ready to be pulled together for a given run and then disassembled to become part of another temporary alignment (Miles & Snow, 1992, pp. 66–67).

Static network: tight relationships with a limited set of actors that also serve organizations outside the network.Business partners carefully selected and tied with contracts