TJTS E50 Yritysverkostot ja niiden informaatiojarjestelmat Jukka Heikkilä Marikka Heikkilä

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1 TJTS E50 Yritysverkostot ja niiden informaatiojarjestelmat 2006 Jukka Heikkilä Marikka Heikkilä

2 2 Systemic view on an organisation R e s & d e v e l o p m M o d u l a r i z a t i o n Strategy S o u r c i n g P r o d p l a n s P D M P r o d u c t i o n

3 3 Make! = DIY Persuasion Delivery Commitments Finance S u p p li e r C u s t o m e r R e s & D e v e l o p m M o d u l a r i z a t i o n Strategy S o u r c i n g P r o d. p l a n n i n g P D M P r o d u c t i o n

4 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 4

5 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. 5

6 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 6

7 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 7

8 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 8

9 Customer Order Decoupling Point (CODP) 1/2 Defines which part of the SC is customer order driven Identifies investments made independently of customer orders Beyond CODP no anonymous stock exists 9

10 Customer Order Decoupling Point 2/2 (c.f. Kankaanpää, 1999) 10

11 Production typologies and value chain vs. network Combining a value chain with varying production typologies Forecasts Processes Inventories Scarcity Changes in production Is it a network or a value chain? 11

12 Interconnected business Exchange of information between partners, subcontractors, even competitors Pooled resources Breeding environment Outsourced services, universities, science parks, financiers, etc. 12

13 Defining a value net (or value creating network) c.f. Bovet & Martha, 2000 Value net Traditional supply chain Suppliers Company Customers Demand Manufacturing Warehousing Customer forecasting One size fits all Arm s lengt and sequential Rigid, inflexible Slow, static Analog Customer-aligned Collaborative and systematic Agile, scalable Fast-flow Digital 13

14 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. 14

15 e-business shaping organizations 15

16 The Game of Business (Nalebuff & Brandenburger, 1996) Customers Competitors Company Complementors Suppliers 16

17 The Game of Business (Nalebuff & Brandenburger, 1996) 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 Competitors Customers Company Complementors Suppliers 17

18 The Game of Business (Nalebuff & Brandenburger, 1996) Traditionally, the other companies in your industry- those companies that make similar products to yours in a manufacturing or engineering sense Competitors Example: Coca cola vs. Pepsi As people think more in solving their customer s problems, the industry perspective becomes irrelevant. Customers Company Suppliers Complementors 18

19 The Game of Business (Nalebuff & Brandenburger, 1996) What else might my customers buy that would make my product less valuable to them? Customers How else might customers get their needs satisfied? Competitors Company Complementors Intel and Air France may end up as competitors as videoconferencing takes off and becomes a substitute for business trips Suppliers Paper producers and computer industry can end up as competitors as both offer tools for graphical and textual presentation 19

20 The Game of Business (Nalebuff & Brandenburger, 1996) Customers Competitors Company Suppliers Complementors A 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 20

21 The Game of Business (Nalebuff & Brandenburger, 1996) What else might my customers buy that would make my product more valuable to them? Customers Hot dogs & mustard Product & spare parts, maintenance Competitors Company Complementors Computing power & sophisticated software Suppliers Digital cameras & Software Printers Specialty papers 21

22 The Game of Business: Co-opetition (Nalebuff & Brandenburger, 1996) Players often occupy more than one role Customers Clothing shops are gathered together in a mall -> try to cooperate and compete at the same time (Co-opetition) Competitors Company Suppliers Complementors Museums -Compete for paintings etc. -Compete for customers -Co-operate in weekend passes etc. 22

23 The Game of Business: Co-opetition (Nalebuff & Brandenburger, 1996) Customers With whom should we co-operate operate with? Competitors Company Complementors Suppliers 23

24 Chain Actor A Actor B Actor C Actor D Each link connects exactly to one other link 24

25 Tree Actor A Actor B Actor E Actor G Actor C Actor F Actor D Each link connects exactly to one other link 25

26 Network Actor B Actor C Actor A Nodes can have several parents 26

27 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) 27

28 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 28

29 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 29

30 Smart Business Customer Network? Network of partners, static Subcontractors, static Dynamic, chancing pool of local/casedependent subcontractors 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 Dynamic network: Companies ready to be pulled together for a given run and then disassembled to become part of another temporary alignment (Miles & 30 Snow, 1992, pp ).