TEC 401 Session Two

1. TEC 401 Session Two Human Factors In Technology Joseph Lewis Aguirre

2. Objectives- WS2 • The Customer and The Virtual Value Chain • Value systems analysis. • Effect of Technology on Business Partnering • Electronic neighborhoods. • Reinventing commerce. • Extracting information from communication exchanges. • Technology As a Driver for Organizational Change • Use of the Internet for competitive analysis (e.g., collection of intelligence). • Collection of corporate data for new product development (e.g., internal analysis of sales records to identify potential new products for customers). • Increasing responsiveness and effectiveness through the use of Internet technology for customer service and marketing.

3. Objectives- WS2 • Impact of Technology on Business • Describe technology as a driver for organizational change. • Examine the effects of technology on partnering. • Discuss the customer and the virtual value chain.

4. Decision Making Framework Information Characteristics Decision Structure Pre specified Scheduled Detailed Frequent Historical Internal Narrow Focus Business Professionals Operational Management Efficient, do thing right Structured Tactical Management Business Unit Managers -Effective, right thing Ad Hoc Unscheduled Summarized Infrequent Forward looking External Wide Scope Semi Structured Strategic Management Executives, Directors -Transformation Un Structured RELATIVE TIME SPAN

5. Decision Making Drivers Decision Making Drivers at Work: Decision Making Drivers at Large : Technology Complexity Competition Globalization Environmental/Regulatory Change

6. The Weakest Link Useful information Creative Alternatives Characteristics of Quality Decision Clear Values Sound Reasoning Helpful Framework Commitment to Follow Through

7. Decision Making Framework Reasoning Technology Personal/Interpersonal Personal self-awareness Interpersonal skills Team Dynamics Process Framing problem Finding alternatives Identifying consequences Encoding probabilities

8. Accounting and Financial Management Supply Chain Management Customer Relationship Management Business Decision Support Enterprise Resource Planning Human Resource Management Enterprise Applications

9. The Customer and The Virtual Value Chain Value systems analysis. Value cluster analysis. Value web analysis.

10. Virtual Value Chain Attributes 1. Manage resource allocation - all of a company’s resource consumption is focused on adding value 2. Material fluidity effectiveness 3. Information on fluidity - right information for network partners 4. Cost management use 5. Profit margin sustainability - focus on 6. Sustain value margins - Porter posits that value-making is related to user’s continuous consumption

11. Virtual Value Chain Attributes (cont) 7. Network capability - description of relationships within industry specific network 8. Adaptability to external changes - market driven 9. Level of integration with Supplier’s value chain 10. Level of integration with Customers value chain 11. Utilization of Information Technology 12. Utilization of the Internet 13. Capability of adapting the Extended Enterprise Concept 14. Accessibility to virtual company structure

12. Virtual Value Chain Management 1. Static Value Chain - Functional description of activities where position of suppliers and relationship to retailers, distributors and market are not taken into account 2. Virtual Value Chain - network viewpoint with strong use of IT. Company’s value chain is closely couple to supply chain 3. Dynamic Value Chain - network viewpoint with strong use of IT. Company’s value chain is inseparable from supply chain and structure immediately reveal market changes. 4. Knowledge Based Value Chain Management- Does not take into account the technology dependent relationship to suppliers Source: Breite & Vanharanta

13. Virtual Value Chain Management 2. Virtual Value Chain 3. Dynamic Value Chain Use of Technology in Value Chain 4. Knowledge Based Value Chain Management 1. Static Value Chain Knowledge Level of Value Chain Source: Breite & Vanharanta

14. Value Chain Management References Ansari, S.L., Bell (1997) Cokins, G (1996) Cox, A. (1996) Cristopher, M. (1998) Cronin, M. J., (1995) Day, D.S. (1990) Hines, P. (1994) Porter, M.E (2001) Rayport, J.F., Sviokla, J.J. (1995) Samuelson, K. (1981)

15. Value Web Analysis Objective is the development of a method to macroscopically analyze linkage of basic technology, industrial technology, and products/market by application of data mining. e.g. - Analysis of linkage between research paper and patent.- Verification of linkage between patent and market.- Verification of effectiveness of this method

16. Needs Transactions Classic Supply Chain Supplier Company Aspirations Customer Opportunities Customer’s Customer

17. Porters’ Generic Value Chain • Support Functions • Infrastructure • HR Management • Information Technology • Procurement Inbound logistics Operations Outbound logistics Marketing & Sales Service

18. The Weakest Link Inbound Logistics Support Functions Operations + Technology Outbound Logistics Sales Marketing

19. Porters’ Cost Drivers • Economies of scale • Learning • Capacity utilization • Activity coupling • Business units coupling • Vertical Integration • Timing of market entry • Policy with regards to cost differentiation • Geographic location • Regulation Service

20. Value Chain Value Chain analysis may be useful in analyzing specific activities through which firms can create competitive advantage Inbound logistics Operations Outbound logistics Marketing & Sales Service

21. Virtual Value Chain Supplier’s Value chain Firm’s Value Chain Channel Value chain Buyer’s Value Chain End User

22. Potential Entrants Suppliers Threat of new entrants Leverage Leverage Threat of Substitution Buyers Substitutes Competition Porter’s Competitive Forces

23. Value Chain Operations Reference (VCOR) model VCOR REFERENCE MODEL

24. VCOR REFERENCE MODEL

25. VCOR REFERENCE MODEL http://www.value-chain.org/en/cms/?4

26. Value Chain From Value Chain to Value Cluster Supplier Company Suppliers Partners Customers Customers Customer Company Customer’s Customers Customer’s

27. Value Cluster Suppliers Partners TRENDS & OPPORTUNITIES Customer Company Aspirations Capabilities Customer’s Customers

28. Value Chain End Users Invest in Future Laptop Computer Study Sell Annuities Skandia Brokers Wholesale Annuities Select Events Manage Funds Fund Managers

29. Value Chain End Users 100,000++ 2400 Skandia Brokers 84 80,000 Fund Managers

30. The Effect of Technology on Business Partnering • An innovative approach toward business functions is partnering with sites that draw like-minded customers. • Electronic neighborhoods. • Reinventing commerce. • Extracting information from communication exchanges.

31. Technology As a Driver for Organizational Change The high-level sophistication of the technological marketplace requires the recognition of technology as a driver for organizational competitiveness. Use of the Internet for competitive analysis (e.g., collection of intelligence). Collection of corporate data for new product development (e.g., internal analysis of sales records to identify potential new products for customers). Increasing responsiveness and effectiveness through the use of Internet technology for customer service and marketing.

32. Supply Chain Operations Reference-model (SCOR)

33. Process Reference Model • Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework Business Process Reengineering Best Practices Analysis Process Reference Model Benchmarking Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance

34. SCOR Five MGMT Processes Plan Return Return Source Deliver Return Return Return Return Return Return Make Deliver Source Make Deliver Source Deliver Make Source Customer’sCustomer Your Company Supplier Customer Suppliers’Supplier Internal or External Internal or External SCOR Model Building Block Approach Processes Metrics Best Practice Technology

35. SCOR 6.0 Processes Plan P1 Plan Supply Chain P4 Plan Deliver P5 Plan Returns P3 Plan Make P2 Plan Source Source Make Deliver M1 Make-to-Stock S1 Source Stocked Products D1 Deliver Stocked Products Suppliers S2 Source MTO Products M2 Make-to-Order D2 Deliver MTO Products Customers M3 Engineer-to-Order S3 Source ETO Products D3 Deliver ETO Products D4 Deliver Retail Products Return Deliver Return Source Enable

36. SCOR Scope • SCOR Spans: • All supplier / customer interactions • Order entry through paid invoice • All physical material transactions • From your supplier’s supplier to your customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc. • All market interactions • From the understanding of aggregate demand to the fulfillment of each order • Returns

37. SCOR Scope (cont) • SCOR does not include: • Sales administration processes • Technology development processes • Product and process design and development processes • Some post-delivery technical support processes • SCOR assumes but does not explicitly address • Training • Quality • Information Technology (IT) administration (non-SCM)

38. SCOR Project Road Map • Competitive Performance Requirements • Performance Metrics • Supply Chain Scorecard • Scorecard Gap Analysis • Project Plan Analyze Basis of Competition Operations Strategy SCOR Level 1 • AS IS Geographic Map • AS IS Thread Diagram • Design Specifications • TO BE Thread Diagram • TO BE Geographic Map Configure supply chain Material Flow SCOR Level 2 Align Performance Levels, Practices, and Systems • AS IS Level 2, 3, and 4 Maps • Disconnects • Design Specifications • TO BE Level 2, 3, and 4 Maps Information and Work Flow SCOR Level 3 Implement supply chain Processes and Systems Develop, Test, and Roll Out • Organization • Technology • Process • People

39. Manufacturing Warehouse Warehouse Warehouse Warehouse European Supplier Latin American Suppliers Other Suppliers Material Flow Map (S1, D1)(SR1,DR1,DR3) (S1, S2, M1, D1)(SR1,,DR1) (S1)(SR1,SR3) (S1)(SR1,SR3) (D2)(DR1) (S1, D1)(SR1,DR1,DR3) (S1, D1)(SR1, DR3) (D1) (D1) (S1)(SR1,SR3) (S1)(SR1,SR3) (S1, D1)(SR1,DR1,DR3)

40. Mapping Execution Processes Americas Distributors S1 SR1 D2 M2 S2 European RM Supplier SR3 S2 D1 M1 S1 D1 S1 DR1 SR1 DR1 SR1 DR1 SR1 DR3 SR3 DR3 SR3 S1 D1 S1 M1 Key Other RM Suppliers Alpha Regional Warehouses RM Suppliers ALPHA Distributors

41. Identifying Plan Activities P1 P1 P1 P3 P2 P4 P3 P2 P4 P4 P2 D2 M2 S2 European RM Supplier S2 D1 M1 S1 D1 S1 S1 M1 Key Other RM Suppliers D1 S1 Alpha Regional Warehouses Consumer RM Suppliers ALPHA Distributors

42. Performance Attribute Performance Attribute Definition Level 1 Metric Supply Chain Delivery Reliability The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. Delivery Performance Fill Rates Perfect Order Fulfillment Supply Chain Responsiveness The velocity at which a at which a supply chain provides products to the customer. Order Fulfillment Lead Times Supply Chain Flexibility The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. Supply Chain Response Time Production Flexibility Supply Chain Costs The costs associated with operating the supply chain. Cost of Goods Sold Total Supply Chain Management Costs Value-Added Productivity Warranty / Returns Processing Costs Supply Chain Asset Management Efficiency The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital. Cash-to-Cash Cycle Time Inventory Days of Supply Asset Turns Linking Attributes and Metrics

43. Level One Performance Metrics Customer-Facing Internal-Facing SCOR Level 1supply chain Management Responsiveness Flexibility Supply Chain Reliability Cost Assets Delivery performance  Fill rate  Perfect order fulfillment  Order fulfillment lead time  Supply Chain Response Time  Production flexibility  Total SCM management cost  Cost of Goods Sold  Value-added productivity  Warranty cost or returns processing cost  Cash-to-cash cycle time  Inventory days of supply  Asset turns 

44. Supply Chain Scorecard and Gap Analysis Supply Chain SCORcard Performance Versus Competitive Population Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements Delivery Performance to 85% 90% 95% 50% Supply Chain Reliability Commit Date 63% 94% 96% 98% Fill Rates 80% 85% 90% Perfect Order Fulfillment 0% $30M Revenue EXTERNAL Order Fulfillment Lead times Responsiveness 35 days $30M Revenue 7 days 5 days 3 days Key enabler to cost and asset improvements Supply Chain Response Time Flexibility 97 days 82 days 55 days 13 days 30 days 25 days 20 days Production Flexibility 45 days Total SCM Management 3% $30M Indirect Cost Cost 19% 13% 8% Cost NA NA NA NA NA Warranty Cost INTERNAL Value Added Employee NA $156K $306K $460K NA Productivity 119 days 55 days 38 days 22 days NA Inventory Days of Supply Cash-to-Cash Cycle Time Assets 196 days 80 days 46 days 28 days $7 M Capital Charge Net Asset Turns (Working 2.2 turns 8 turns 12 turns 19 turns NA Capital)

45. Metrics Decomposition Revenue Accounts Receivable Cash Flow Perfect Order Fulfillment Cycle Time Supplier on time delivery Schedule Achievement Perfect Order Fulfillment On Time On Time Delivery Performance In Full In Full Docs Docs European RM Supplier Damage D2 M2 S2 Damage Supplier on time delivery Perfect Order Fulfillment S2 Key Other RM Suppliers D1 M1 S1 D1 S1 D1 S1 M1 S1 Alpha Regional Warehouses Consumer RM Suppliers ALPHA Consumer

46. Revenue Accounts Receivable Cash Flow Performance Measurement Perfect Order Fulfillment Perfect Order Fulfillment Goal – 95% Cycle Time Inventory Metrics Conflict Supplier on time delivery Schedule Achievement Perfect Order Fulfillment Supplier on time delivery Actual – 85% Schedule Achievement Actual – 95% Perfect Order Fulfillment Actual – 90% Perfect Order Fulfillment Actual - 85% On Time On Time Delivery Performance In Full Delivery Performance Actual – 99% In Full Docs Docs • Under-performance • Process • Systems European RM Supplier Damage D2 M2 S2 Damage Supplier on time delivery Perfect Order Fulfillment S2 • Under-performance • Process • Systems Key Other RM Suppliers D1 M1 S1 D1 S1 D1 S1 M1 S1 Alpha Regional Warehouses Consumer RM Suppliers Consumer RM Suppliers ALPHA Consumer

47. Implementation Issues • SCOR Implementations • Vary in scope and objective • Green Field • Distribution analysis • Planning Improvements • Change Management / COTS-Consultant Selection • How to conduct an ROI evaluation • Senior Management support vs. Middle Manager resistance • Project timelines • Benchmarking • Implementation • Tools

48. AT&T Wireless

49. Intel - As Is model Suppliers Supplier Suppliers Assemble/ Package Distribution Centers Geo Ports of Entry Americas---> Europe---> Asia--->

50. Gold’n Plump