Description
Great changes within the business environment in the last 2 decades have made supply chain management
(SCM) an important topic for academics and practitioners. Globalization, larger reliance on
layered suppliers for specialized capabilities and innovation, changing customer needs, reliance on
supply networks to maintain a competitive advantage, and developments in technology have all
contributed to a very different supply chain environment. Most current works view customers as being
outside the supply chain design; however, we believe that customers are the missing link in the supply
chain. Therefore, in this paper, we focus on the customer's role in the process. We present an original
discussion of the emerging discipline of services science, management, and engineering (SSME) in SCM,
identify and bridge the gaps between SSME and SCM, as well as discuss ways to align them. In addition,
we consider the specific challenges as well as the opportunities for SSME in supply chain management.
Improving the global supply chain through service engineering: A services
science, management, and engineering-based framework
Liang-Chuan Wu
a, *
, Liang-Hong Wu
b
a
Institute of Technology Management, National Chung Hsing University, Taichung, Taiwan
b
Business School, University of Shanghai for Science and Technology, Shanghai 200093, China
a r t i c l e i n f o
Article history:
Received 22 April 2013
Accepted 26 July 2013
Available online 9 March 2015
Keywords:
Service science
Management and engineering
Supply chain
a b s t r a c t
Great changes within the business environment in the last 2 decades have made supply chain man-
agement (SCM) an important topic for academics and practitioners. Globalization, larger reliance on
layered suppliers for specialized capabilities and innovation, changing customer needs, reliance on
supply networks to maintain a competitive advantage, and developments in technology have all
contributed to a very different supply chain environment. Most current works view customers as being
outside the supply chain design; however, we believe that customers are the missing link in the supply
chain. Therefore, in this paper, we focus on the customer's role in the process. We present an original
discussion of the emerging discipline of services science, management, and engineering (SSME) in SCM,
identify and bridge the gaps between SSME and SCM, as well as discuss ways to align them. In addition,
we consider the speci?c challenges as well as the opportunities for SSME in supply chain management.
© 2015 College of Management, National Cheng Kung University. Production and hosting by Elsevier
Taiwan LLC. All rights reserved.
1. Introduction
The global supply chain facilitates functions such as purchasing,
operations, manufacturing, and logistics. It plays a key role in
supplying goods and services to ?nal customers (Narasimhan &
Talluri, 2009). Traditionally, interest in global supply chains has
focused on operational issues, such as manufacturing and ef?ciency
(Kuei, Madu, Lin, & Chow, 2002; Lin, Chow, Madu, Kuei, & Yu,
2005). However, since its foundation in the manufacturing in-
dustry in the 19
th
century, supply chain management has under-
gone substantial changes. In today's highly competitive global
economy, changes in customer requirements, the business envi-
ronment, and supply networks, as well as shortened product cycles,
have together changed the competitive environment of supply
chains. There is now a greater need for rapid responses to meet
customers' demands for more high quality products and services
(Lin et al., 2005). Clearly, the keen competitive environment of the
21
st
century requires supply chain management (SCM) to be more
proactive than in the past.
Because of the continuing transformation of industrialized
economies from a manufacturing base to a service orientation, the
global supply chain, which is characterized by multilayered
supplier-customer relationships, presents a number of opportu-
nities and challenges (Demirkan et al., 2008; Smith, Karwan, &
Markland, 2007; Spohrer & Maglio, 2008). Numerous studies
have shown that high levels of quality and service are essential if
suppliers wish to meet supply chain challenges and enhance their
competitive position in today's global environment (Abdullah &
Tarib, 2012; Bendoly, Donohue, & Schultz, 2006; Chua & Linb,
2011; Doukidis, Pramatari, & Lekakos, 2008; Lin et al., 2005;
Roussinov & Chau, 2008; Singhal, Singhal, & Starr, 2007). Howev-
er, some scholars argue that the importance of services has been
underemphasized (Metters & Marucheck, 2007). Therefore, com-
panies in the supply chain must understand the needs of service
stakeholders in order to identify problems and opportunities (Li,
Wang, Yu, & Yang, 2007).
In recent years, an interdisciplinary ?eld called services science,
management, and engineering (SSME) has emerged to coordinate
the design and implementation of services systems. The rationale
behind SSME is that service is a complex system that requires
organizing people and technologies to perform tasks that provide
* Corresponding author. Institute of Technology Management, National Chung
Hsing University, 250 Kuo Kuang Road, Taichung 402, Taiwan.
E-mail address: [email protected] (L.-C. Wu).
Peer review under responsibility of College of Management, National Cheng
Kung University.
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Asia Paci?c Management Review 20 (2015) 24e31
value for others. The objective is to combine fundamental scienti?c
and engineering theories, models, and applications with facets of
the management ?eld (Dietrich, Paleologo, & Wynter, 2008; Li
et al., 2007). Most importantly, SSME stresses the critical impor-
tance of customers, and emphasizes the balance between tech-
nology and the ful?llment of customers' needs. It provides a
framework for organizations to rethink their service design phi-
losophy and reexamine the enabling process in a scienti?c manner.
SSME is a new discipline, so academics and practitioners in the
SSME community are still laying the groundwork for this chal-
lenging research area (IBM, 2009). Researchers argue that there is
an urgent need to: (1) explore the use of SSME in the supply chain;
(2) consider the service dimension of complex, global, and
emerging supply chains, and increasingly service-orientated en-
terprises; and (3) facilitate and enhance service innovation
(Johnston, 2005; Neely, 2007; Paton & McLaughlin, 2008; Roth &
Menor, 2003; Voss, Roth, & Chase, 2008). Hence, researchers are
keen to identify the frameworks and theoretical perspectives most
appropriate for studying service-oriented management issues
(Demirkan et al., 2008; Maglio & Spohrer, 2008; Spohrer & Maglio,
2008). However, relatively few studies have focused on ways to
bridge the gap between SSME and SCM.
Given this background and our belief that customers are a
fundamental part of the supply chain, we consider the following
research questions in this study: (1) What can SSME contribute to
the global supply chain, and what are the gaps between SSME and
SCM? (2) What are new conceptual frameworks and theoretical
perspectives appropriate for studying service-oriented technolo-
gies and management practices?
In the remainder of this paper, we provide a survey of SSME, and
express our views about the ?eld and its development. In particular,
we discuss the relevance of SSME to SCM, and examine opportu-
nities to emphasize the concept in supply chain management. We
also identify opportunities to make SSME help SCM. Finally, we
present an SSME-based supply chain framework that pinpoints
how to use SSME to SCM. Our goal is to foster a better under-
standing of how best to encourage service innovation in an
increasingly complex business environment.
2. Previous work
2.1. The service background
Service innovation is a critical driver for business growth, and
has gained much attention in the last decade (Paton & McLaughlin,
2008; Paulson, 2006). The majority of workforce is engaged in
service providing rather than in agricultural or manufacturing ac-
tivities in modern world. Research also provides evidence that
many of the major manufacturing companies generate a growing
portion of their revenues from service activities. Bryson et al.
(2004) argued that the demand for services as an input to the
production of goods has been growing enormously in the past
decades. Given that background, Chase and Apte (2007) pointed
out that researchers and practitioners have been aware of the
importance of services in the supply chain with the continuing
growth of the service sector. Weng, Su, and Lai (2011) also argued
that service is indispensible part of business success, while Lien,
Wen, and Wu (2011) emphasized the critical role of service qual-
ity for process.
Service innovations have the potential to in?uence service
productivity, service quality, and the rates of growth and return of
service systems (Spohrer & Maglio, 2008). As a result, most large
manufacturing companies have now recognized the importance of
service and adopted service-oriented business strategies accord-
ingly. For example, a shift from service orientation to the focus of
product-orientation of their business strategies by leading global
corporations, such as IBM, HP, and EDS, have been observed (Li
et al., 2007). Moreover, top management of IBM transformed it-
self as an service business because of realizations that the company
must achieve effective service innovations (Demirkan et al., 2008).
Since 2004, the company has expended efforts on incorporating
service concepts into its business model, and thereby rede?ned its
business strategy. IBM's key service concepts are to improve quality,
sustainability, learning from customers, and innovation (Li et al.,
2007; Zhao, Tanniru, & Zhang, 2007).
2.2. SSME
SSME developed fromthe pioneering work of researchers at IBM
and associated institutions (Allen, Mugge, & Wolff, 2006;
Chesbrough, Vanhaverbeke, & West, 2006; Maglio & Spohrer,
2008). Speci?cally, SSME highlights the importance of service,
and tries to harness the power of scienti?c and engineering the-
ories, models and applications to support service design as an in-
dustrial product. This enhances service innovation and user
satisfaction (Bitner & Brown, 2008), and motivates both practi-
tioners and academics to nurture the adoption of SSME (IBM, 2009).
Spohrer and Maglio (2008) emphasized that service can create
value and supported by many studies (Demirkan et al., 2008; Lusch,
Vargo, & Wessels, 2008; Sampson & Froehle, 2006; Vargo & Lusch,
2004). To date, the majority of SSME studies have focused on sys-
tem development.
Studies of services have been applied on marketing, manage-
ment or service sector economics (Demirkan et al., 2008). For
example, the call center operations (Chevalier & Van den Schrieck,
2008), the ?nancial services industry (Menor & Roth, 2007; Nair &
Anderson, 2008), and the health care industry (Cayirli, Veral, &
Rosen, 2008; Van Dijk & van der Sluis, 2008). Li et al. (2007)
observed that there are still few studies in SSME because SSME is
a relatively newarea. Many studies focus on an overviewof the ?eld
and are not directly relevant to SSME. A business-technology
perspective, which induces more synthesis, is greatly needed;
despite this, earlier studies only discussed service from a business
perspective (Li et al., 2007).
Our survey of previous works identi?ed several trends in
existing SSME studies. First, service innovation and technology is-
sues should be both valued, in contrast to merely focusing on the
technological aspect for the new discipline (Abe, 2005). Second,
service-oriented architectures must be emphasized as this issue
has been emphasized by many studies (Bitner & Brown, 2008;
Chesbrough et al., 2006; Demirkan et al., 2008; Janner, Schroth, &
Schmid, 2008; Lusch et al., 2008; Spohrer & Maglio, 2008; Vargo
& Lusch, 2004; Zhao et al., 2007).
2.3. The need for an SSME framework
SSME requires interdisciplinary research to enhance its appli-
cations while the attention from multiple disciplines acting inde-
pendently is positive (Abe, 2005; Allen et al., 2006; Chesbrough
et al., 2006; Paton & McLaughlin, 2008; Paulson, 2006). There is
also a great need to study SSME from a business operation
perspective (Demirkan et al., 2008; Goo, Kishore, Rao, & Nam,
2009; Maglio & Spohrer, 2008; Smith et al., 2007).
SSME is in its exploratory phase. Voss et al. (2008) proposed a
service framework for the ?eld of operations management. They
argued that framework developing is young in this ?eld and to
develop a clear concept and framework contribute to the devel-
opment of SSME (Li et al., 2007). Nevertheless, the literature on the
supply chain is quite sparse. Hence, there is a great need for a
framework that: (1) includes the unique characteristics of SCM; and
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 25
(2) can identify the speci?c challenges and opportunities in the
supply chain.
3. The framework
Before describing our framework, we consider the gaps between
SCM and SSME. SCM possesses unique characteristics that differ-
entiate it from other ?elds. First, the supply chain has been char-
acterized as a link between different parties; therefore, it must have
a strong service-oriented foundation to satisfy customers' needs.
More speci?cally, goods and services pass through a series of linked
channels before being delivered to the ?nal customers. Each layer of
the buyeresupplier relationship is a subdivision of the whole
supply chain, and must satisfy the customers in that stage. This high
level of interaction suggests that the units coordinate dynamically.
In today's competitive global market, where customers' needs
change rapidly, customers are less inclined to stay with one sup-
plier because they normally have several opportunities to change
their suppliers on an ad-hoc basis. Business relationships tend to be
short-lived, especially when the environment is complex and dy-
namic. Thus, to retain customers, companies must be able to adapt
to rapidly changing customer requirements and constantly improve
their service delivery.
The second gap between SCMand SSME is that supply chains are
characterized by multilayered supplierebuyer relationships.
Because of their prevalence in the global supply chain, they have
the potential to cause disruptions in service delivery. Each node in
the supply chain plays a dual role, i.e., buyer and supplier. Hence,
each node must integrate the partly ?nished services/products
derived from upper layer suppliers with its own value-added ser-
vice/product, and then deliver the latter to its customers. This
characteristic makes it more dif?cult to guarantee the quality of
goods and on-time delivery to ?nal customers. The traditional
supply chain perspective suggests that suppliers should reduce
their inventories as much as possible. Although most studies argue
that information sharing and customer satisfaction are critical, the
concept is a top-down planning strategy. In other words, it does not
incorporate ex-ante service planning, so it is dif?cult to devise a
global plan, especially in the presence of uncertainty and the long-
whip effect. Therefore, lead times and inventories make a long
supply chain more unpredictable.
The third key gap is that each node in the current global supply
chain works in an isolated manner. As a result, each node's strategy
is based on a micro rather than a global perspective. This aspect is
highlighted by the following questions, which were posed by
Simchi-Levi, Kaminsky, and Simchi-Levi (2003): (1) Should manu-
facturers be responsible if their retailers run out of stock? (2) After
shipping their products, should manufacturers be responsible for
on-time delivery to the ?nal customers? (3) Should retailers be
responsible if their suppliers' inventories are too small/too large?
These questions show the nature of the supply chain and provide a
basis for rethinking howSSME can be integrated into a supply chain
framework.
In our literature review, we found that SSME provides a com-
plementary, perspective of the supply chain ?eld. The gaps be-
tween SSME and SCM are multidimensional. The ?rst gap is the
relationship between buyers and suppliers. The traditionally supply
chain management perspective regards customers as the last stage
of the whole commercial process. This point of view, combined
with the traditional mindset of suppliers that their total costs must
be minimized, does not always give customer service a high pri-
ority. From the customers' perspective, the traditional supply chain
views selling as the end of the trading process. In contrast, SSME
considers that customer satisfaction and addressing customers'
needs are of paramount importance. This approach differs fromthe
duality view that is deeply rooted in the traditional supply chain.
The production process is another dimension that re?ects a gap
that is in the structure of the traditional SCM mindset. The tradi-
tional supply chain views the process as a standard, mechanical
process, but the SSME approach rethinks all roles and boundaries.
Table 1 details the gaps between SCM and SSME.
Based on our study of the gaps between the two concepts, we
examine the reengineering of the traditional supply chain mindset
before presenting our framework. Fig. 1 shows the re-engineering
required to bridge the concepts between SCM and SSME. In the
traditional supply chain, the consequence ?ow is strict and well-
de?ned from the supplier to the organizations downstream and
then to the ?nal customer. Customers are receivers of upstream
products and services. Although some organizations do consider
customer satisfaction, such evaluations are by nature ex post, and
they are not part of an organization's ?ow/product/service design.
Therefore, reengineering of the customer-dominant mindset is
necessary. That is, end customers must push their requirements so
that upstream suppliers understand their needs precisely, instead
of simply being passive recipients of the products/services offered
by suppliers. The same situation exists in everyday life. If a
customer orders a book from an online e-bookstore, they do not
care about the complex electronic process used by the supplier. The
customer only wants to obtain the desired product, and the process
involved constitutes their buying experience. Thus, a dialogue must
be fostered so that the supplier can learn the customer's needs. In
this way, the traditional push fromsuppliers to customers would be
reversed, i.e., from customers to suppliers.
For the quality dimension, it is critical that the complex supplier
hierarchy be invisible to customers. Essentially, customers need a
single contact window to provide quick and comprehensive
Table 1
The gap between supply chain management (SCM) and service science, management, and engineering (SSME).
SCM view SSME mindset Gaps
Customer All sales ?nal Customer satisfaction is paramount. Duality/bipolarity
Tangible goods Intangible services Re-engineering of services
Cost oriented Value added Bene?ts shift to value
Hard issues Soft issues included Feeling/psychology re-engineering
Ex-post customer satisfaction Ex-ante customer satisfaction Mutual consequence (mutual cause and effect)
concept
Process Mechanism/standard Rethink roles/boundaries Removes boundaries and changes roles
Mass production/cost minimization
generates revenue
Services generate revenue Customer needs being the ?rst priority
Customer excluded from process design Customer included in the
process design
Customer-driven process
Technology User requirement Customer requirement Re-de?nes the concept of users and customers
System standardization Service innovation Provides technology as a service to customers
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 26
service. This requirement transforms the supplier into a single
contact window and virtual service provider for customers.
To meet the reengineering requirement of information and
communication technology (ICT) for an SSME-based supply chain,
the traditional boundary design approach must be broken down. At
the intraorganization level, the boundaries between different units
must be removed to meet the requirement. Meanwhile at the
interorganization level, geographical boundaries are being broken
down and the ways that buyers and suppliers conduct business are
changing to enable the service-oriented units of different suppliers
to work together. As a result, customers are central to the design of
the whole supply chain.
We have identi?ed the gaps that exist between the traditional
and the SSME-based supply chain perspectives, and examined the
reengineering requirements. Next, we link the supply chain and
SSME to service characteristics via the proposed framework, as
shown in Fig. 2.
The following aspects of the framework are especially
noteworthy:
1) The concept of mutual construction replaces the bipolar distinction
of dualism. An SSME-based supply chain encourages more
effective and ef?cient ex-ante interaction and engagement, and
also fosters proactive dialogue and cooperation with customers.
This is because the exchange of experiences requires collabo-
ration between various parties to design the con?guration of the
service-based supply chain. Suppliers and users enter into a
dialogue to facilitate mutual understanding, and to de?ne the
nature and extent of the exchange. They then continue this
dialogue to ensure that the exchange is effective. Moreover, by
maintaining this ongoing discussion of the client's re-
quirements, both parties can extend and strengthen their rela-
tionship. In this sense, the customer is one of the dual
components of a supply chain, and thus contributes to its con-
struction. The two-way dialogue must begin before the design of
the products, services, and structures that support all the
necessary activities. The traditional linear and one-way rela-
tionship thus becomes a mutual cause and consequence type of
relationship, where the customer actually participates in the
production process. Service-centered supply chains differ from
manufacturing-centered supply chains because of the intangible
nature of services, and the dif?culty of gauging customers' true
needs. For example, there are numerous cases where suppliers
fail to meet their customers' true requirements, even though
they provide high-quality products. Therefore, researchers and
practitioners must recognize that customers are critical com-
ponents in an SSME-based supply chain, and adopt an innova-
tive approach to meeting customers' needs.
2) Single solution provider: the complex supplier network is invisible
to customers. Customer-centered service design ensures that an
enterprise acts like a service provider. For example, a company
may want to offer different procurement functions, such as
searching for a rare item, as services on demand. This requires
that business processes should be rendered as services that can
be integrated dynamically to meet changing customer requests.
The ability to create or restructure such services means that a
company can react quickly in a dynamic environment. For
example, when customers visit a bank, they care more that their
needs are met quickly on the spot rather than background
technology such as interbank transfers; they just want. There-
fore, service quality in a global supply chain must be coordi-
nated to satisfy each customer's particular needs.
3) Melting of intraorganization and interorganization boundaries. It
is crucially important that a supply chain can provide prompt,
correct services to ?nal customers. The SSME-based approach
rede?nes the boundaries between and within organizations by
linking divisions, and thereby shortens the supply chain. The
rede?nition of boundaries can be implemented both intra- and
interorganizationally, as shown by the arrows between the cir-
cles in Fig. 2.
4) Virtual/organic concept of supply chain partners. In Fig. 2, the
service process links one atomwith another directly, and breaks
the mechanically designed organizations and original functions
into smaller atoms. This recombination of atoms turns isolated
organizations into virtual service-oriented providers for
different customers. Thus, based on the virtual design, the
Fig. 1. How boundaries in the traditional value chain are removed and the differences in a service science, management, and engineering (SSME)-based supply chain are addressed.
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 27
whole supply chain becomes an organic structure that co-
ordinates functions and atoms. In Fig. 2, the components in the
outer circle work dynamically with those in the inner circle to
meet rapidly changing customer needs.
5) Virtual and physical integration. Designing a supply chain from
the microcomponent level to the macro level requires that the
chain should be integrated both virtually and physically. From
the virtual aspect, virtual R&D alliances, virtual service-oriented
architecture integration, and virtual joint production all
improve the supply chain's ability to respond to the changing
business environment.
6) The role of ICT. Understanding the evolution of service systems is
a central problem in service science studies. Although the ser-
vice industry has implemented IT and service-related processes
for decades, rede?ning the scope of ICT to ensure that it is fully
utilized is a critical issue. The importance of ICT in the supply
chain has been well-documented; however, in a service-
oriented supply chain, it is critical that ICT should be used to
implement the concept of the virtual service provider. Tradi-
tionally, IT systems have been limited to support roles and
functions instead of being seen as service autonomies; thus,
they have tended to function in isolation both within organi-
zations and between organizations. The new de?nition of ICT
expands its role to support the link between service autonomies
outside traditional boundaries. In other words, ICT becomes the
central neural network that enables the SSME supply chain to
provide fast responses. In Fig. 2, the ICT design breaks the
boundaries between customers and suppliers in the outer and
inner circles to provide two-way information exchanges,
thereby reducing uncertainty and the whip effect. This sharing
of information streamlines the service procedure and facilitates
the preparation of the bill of materials, ordering and assessing
customers' needs. These services use ICT to support the network
of suppliers, the enterprise, and customers. Delivering
interconnected service units is dif?cult under a monolithic ICT
architecture. Consequently, services based on a newarchitecture
are essential to ensure that the supply chain is ?exible.
4. Case study
To assess the validity of the proposed framework, we applied it
to three international companies that belong to different real-life
supply chains. We chose different sized companies that belong to
different industries to guarantee research validity. After inter-
viewing relevant managers, we explained our framework in detail,
the rationale behind our approach, the gaps between SCM and
SSME, and the scope of our study.
The ?rst company (Supplier A) specializes in the design, pro-
duction and marketing of ?tness and medical equipment. Founded
in 1975, it now sells a range of products under four brand names
through 18 marketing companies that it has established worldwide.
The high quality products, which are sold in 60 countries including
the USA, target the commercial and home-use ?tness markets.
Supplier A is a worldwide manufacturer, and its brands target
different levels of customers. This feature can help us investigate
the global supply chain. The director of the Taiwan factory is
responsible for purchasing materials fromsuppliers, processing the
materials, and providing partially assembled products to the com-
pany's customers. Because of expanding overseas business, thou-
sands of components need to be ready for assembly. Quality
suppliers, on-time delivery of goods, and service are the keys to
smooth processing of the heavy loading factory.
The second company (Supplier B) is a major bicycle manufac-
turer that specializes in high-end bicycles and electric bicycles. The
company is currently Taiwan's second largest bicycle manufacturer.
Since it was founded 30 years ago, Supplier B has been committed
to producing high-quality bicycles. It has also provided high value-
Fig. 2. The service science, management, and engineering-based supply chain framework.
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 28
added services, to create an international market and expanding
territory; the company nowmarkets its products in 62 countries. In
the product after-sales service, Supplier B combines dealers from
around the world, to provide consumers with convenient, precise
service at any time. The company's global marketing network
wishes to quickly capture worldwide changing market trends,
product information, and feedback from customers in order to
immediately develop fashionable models for consumers and pro-
vide a wide range of bicycle accessories.
The third company (Supplier C) focuses on tabletop cooking
devices, water heaters, and kitchenware. The company was founded
in1979, and is nowone of the most famous brands in China. Because
it is concerned about after-sales service and making customers feel
comfortable towards its products, the company offers free safety
checks. AlthoughSupplier Cwas affectedbythe global recessionand
had to resolve other dif?culties, such as an aging brand, its products
now account for 45% of the water heater market. Supplier C has
accumulated more than 300 million served households, and the
voice of these customers provides the direction of product design.
To ensure customer satisfaction, the company launched a series of
business innovations and business reengineering projects. In addi-
tion to efforts to promote total quality management, six sigma full
movement, net promoter system process improvement and other re-
forms, Supplier C has joined forces to develop more high-quality
products in response to customer feedback.
The managers from the three companies were asked to quantify
their suitability towards the six dimensions of the proposed
framework. Each evaluation stands for how realistically the item
speaks for their needs. The scores were 1 (strongly disagree), 2
(slightly disagree), 3 (neutral), 4 (slightly agree), and 5 (strongly
agree). The results are shown in Table 2.
The interviewees' evaluations show their level of agreement
with the six dimensions in the supply chain framework. Overall, the
evaluations of all six dimensions are positive. Information tech-
nology and the virtual/organic concept of supply chain partners
were given the highest and lowest ratings, respectively. Following
the evaluation, the three managers were asked to share their views
on the dimensions of the framework in an open interview. We
report their responses below.
1. The concept of mutual construction: Company A's manager
commented that incorporating customer requirements needs solid
tools. Quality Function Deployment (QFD) might be extended to
this setting by helping bring the requirements list into practical
design, and even more speci?cally into manufacturing.
Manager B felt that because his company produces high-end
bicycles, customer needs are critical to this top of the pyramid
market for capturing customized demands. The company conducts
market surveys to gauge functional demand. However, the manager
noted that nonfunctional requirements, such as stylish designs, the
demand for fashionable auto-gear transmission, and the tire width
of a product, are implicit and dif?cult to observe from a mere
questionnaire survey. Customer surveys conducted by experienced
market analysts are therefore necessary to learn about implicit
customer demands.
The manager of Company C also supported the customer feed-
back approach. He argued that by taking note of customer feedback,
the ?rst dimension can be realized and put into practice more
easily.
2. Single Solution provider: From Supplier A's perspective, the
one solution concept is a good idea. However, he noted that the
concept has yet to gain wide acceptance in his industry. It seems
that, currently, the only similar concept is a joint bank loan to the IC
(integrated circuit) industry. The banking industry uses this
concept to share risks among all participants, rather than a
customer-oriented service design concept. Therefore, it is a good
direction to improve supply chain design. To this end, the nodes
and networks in the global supply chain need to collaborate closely
to implement the one solution concept.
This dimension is supported by the manager of Supplier B, who
stressed that his company provides on-site service specialists to
help customers. The working processes Supplier B uses for pro-
duction and logistics, which are not customer concerns, serve as
background processes.
Manager C agreed that customers should not be bothered with
details of the complicated background supply chain process,
because how the supply chain works is irrelevant to them.
3. The melting of intraorganization and interorganization
boundaries: Manager A commented that, in his industry, QFD can
easily transform business functions into a process-oriented strat-
egy. Thus, QFD can be used to implement the proposed model from
the reference level to the operational level.
Supplier C expressed his concern about the lack of proper tools
to put this dimension into practice, but he acknowledged that the
dimension could improve the ef?ciency of the supply chain. Sup-
plier B did not comment on this dimension.
4. Virtual/organic concept of supply chain partners: Supplier A
noted that the concept could expand the use of supporting tools,
such as the Supply Chain Operations Reference model, a proposed
standard for supply chain management that requires supply chain
players to co-plan a framework. To realize the virtual/organic
concept of supply chain partners, future supply chains should be
designed to take advantage of the collaborative blueprint, pro-
cesses, best practices, and performance metrics. Moreover, people
must be organized into an integrated structure for de?ning and
linking, in order to achieve the service-oriented design aim.
Supplier C expressed his concern about the lack of proper tools
to put this dimension into practice, but he acknowledged that
Dimension 4 could improve the ef?ciency of the supply chain.
Supplier B suggested a way to make this dimension work. He
explained that, in the bicycle industry, a similar A-team strategy is
used to integrate upstream-downstream resources, and to
encourage cooperation between the various suppliers. The objec-
tive is to strengthen the partnerships between factories, suppliers,
warehouses, and distributors. Fostering upstreamedownstream
integration will improve a company's global competitiveness so
that it has a strategic position in the global market.
5. Virtual and physical integration: Manager A noted that to
satisfy rapidly changing customer needs, ?exibility in improving
the global supply chain is critical. New era technology must satisfy
Table 2
Evaluation of the dimensions of the proposed framework.
Dimension Company A
(Fitness and
Medical
Equipment)
Company B
(Bicycles)
Company C
(Heaters)
1) The concept of mutual
construction replaces the
bipolar distinction of dualism.
4 5 4
2) Single solution provider:
complex supplier network
is invisible to customers.
5 4 5
3) Melting of intraorganization
and interorganization
boundaries.
5 4 4
4) Virtual/organic concept
of supply chain partners.
3 4 3
5) Virtual and physical
integration.
5 4 4
6) The role of information
and communication
technologies (ICT).
5 5 5
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 29
relevant needs to make technology-aided customer-oriented ser-
vice redesign possible. In practice, we have to make choices be-
tween quality control policy and economic policy. A bill of material
is subject to every change from manufacturers and should not be
subject to a ?xed link with any supplier. Delivery deadlines, prices,
and quality between candidate supplies must be powered by a
?exible ef?cient communication technology. This is another issue
that must be addressed in the design of customer-oriented supply
chains.
Supplier B did not comment on this dimension, but Supplier C
posited that the concept is realizable in his industry because cross-
divisional meetings are held regularly to discuss the design of new
gas-operated hot water heaters. However, he noted that more could
be done to break down the divisional boundaries and exploit the
synergy of virtual/physical integration.
6. The urgent need for more intelligent and more ?exible ICT:
Supplier A suggested a way to enhance Dimension 6 in the
framework. He argued that feedback tools, such as key performance
indices, could be used to periodically evaluate dynamic recon?gu-
ration. Moreover, he believes that enterprise resource planning
enables this dimension to meet different logistical deadlines froma
variety of suppliers and cross upstream and downstream real-time
work.
Factory director B offered his viewpoint of the practical pro-
cesses in their supply chain, suggesting that the just-in-time sys-
tem is useful for their bicycle industry to facilitate background
supply chain work and to render these processes invisible from
?nal customers.
The input of the three supply chain players demonstrates the
differences between their respective industries. For Supplier A in
the ?tness and medical equipment industry, faced with numerous
layered supply chains, a single solution is critical. This contrasts
with Supplier B in bicycle manufacturing, where fashion trends and
learning customers' needs are the major concerns. For Supplier C in
the kitchen equipment industry, traditional cross-function meet-
ings remain the major way for designing new products. More
function-breaking mechanisms could be further explored.
Despite these industry differences, the three factory directors
agreed on the importance of supporting technology. This shows
that the critical nature of information technology, or more explic-
itly, a cross intra/inter function/organization collaborative mecha-
nism, should be considered in the design of supply chains.
5. Conclusion
In this paper, we have explored the opportunities that SSME
provides to improve SCM. Essentially, SSME enables a supply chain
that involves service intensive activities to respond quickly to
changes in the business environment. SSME provides opportunities
to close the gaps that exist between resource reengineering,
boundary reengineering, process reengineering, technology reen-
gineering, and most importantly, mindset reengineering. As a
result, service-oriented businesses can respond to the need for
dynamic con?guration of resources to reduce the boundaries be-
tween organizations, as well as between organizations and
customers.
This study offers a new and interdisciplinary perspective of
SSME and SCM. We provide insights on how to incorporate SSME
theories to broaden and deepen interdisciplinary discussion in the
supply chain ?eld. In addition, we present a framework to help
suppliers meet their customers' needs more ef?ciently, and thereby
gain a competitive advantage. In fact, to gain business competi-
tiveness, the relationship between SCM and SSME should be
emphasized. These concepts are not alternative strategies for
management. SSME is about recognizing the duality of all
relationships in a service system, and that the quality of services is
an outcome of co-production. Hence, managing by principles of
SSME is not really a choice. Supply chains are and should be service
systems. The choice is rather whether to identify and address ser-
vice system gaps or to work solely to meet internally set and
unilaterally oriented performance speci?cations without under-
standing customer perspectives.
Despite these achievements, the limitations of this research
should be acknowledged. It would obviously be necessary to
replicate the research in different organizational settings for
further validation. The dramatic and ongoing changes in the service
environment present a number of opportunities for further
research. It has been suggested that management scholars run the
serious risk of functional irrelevance if they fail to adjust to these
changes (Metters & Marucheck, 2007). The small number of re-
spondents in our research indicates research limitation and future
direction. For researchers, our study synthesizes, integrates, and
formalizes the ?ndings reported in recent SSME literature, high-
lights the gaps in the ?eld of supply chain management, and tries to
close those gaps. In addition, the proposed framework aligns SSME
with the supply chain concept, and integrates emerging SSME
knowledge into supply chain management strategies. Our study is
one of the ?rst to focus on the topic; thus, we hope that it will
stimulate further discussion of SSME based on SCM.
For practitioners, how to respond to the dramatic changes and
incorporate SSME into a multilayered supply chain has long been an
issue. Our study provides some guidelines for the design and
management of supply chains, and helps practitioners rethink their
supply chain strategies. Most importantly, mindset reengineering
helps managers change their traditional attitudes and methods,
adapt to the modern supply chain environment, and explore op-
portunities to provide new services. Speci?cally, practitioners can
use the ?rst dimension of the framework (dual construction) to
rethink their service design. The concept allows customers to
actively design services rather than passively accept designed ser-
vices. This contrasts with the traditional supply chain design, which
only allows customers to passively choose from provided services
that may or may not suit them. The ?rst dimension enables cus-
tomers to design their own services according to their true needs
without any unwanted parts. The second dimension (single solu-
tion provider) facilitates better customer service and therefore
improves customer satisfaction. For practitioners, our study helps
managers better understand that not only mechanical work?ow
designs, but customer needs, can improve supply chain design.
Overall, our study provides practical suggestions to improve busi-
ness management in a competitive world.
In future research, scholars could conduct case studies by using
the proposed framework to compare the supply chain operations of
various companies. Future studies should also exploit interdisci-
plinary knowledge, and stress the need for practitioners and aca-
demics to address issues unique to the ?eld of supply chain
management. Moreover, it is necessary to expand service science
knowledge by analyzing how service socio-systems evolve over
time, what factors are critical to sustaining service excellence, and
howbest to use unprecedented opportunities to facilitate business-
service science alignment.
Con?icts of interest
All contributing authors declare no con?icts of interest.
Acknowledgments
The authors wish to thank the anonymous reviewers for their
valuable suggestions. This research is supported by The Programfor
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 30
Professor of Special Appointment (Eastern Scholar) at Shanghai
Institutions of Higher Learning and Shanghai Leading Academic
Discipline Project (No. XTKX2012).
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doc_994286530.pdf
Great changes within the business environment in the last 2 decades have made supply chain management
(SCM) an important topic for academics and practitioners. Globalization, larger reliance on
layered suppliers for specialized capabilities and innovation, changing customer needs, reliance on
supply networks to maintain a competitive advantage, and developments in technology have all
contributed to a very different supply chain environment. Most current works view customers as being
outside the supply chain design; however, we believe that customers are the missing link in the supply
chain. Therefore, in this paper, we focus on the customer's role in the process. We present an original
discussion of the emerging discipline of services science, management, and engineering (SSME) in SCM,
identify and bridge the gaps between SSME and SCM, as well as discuss ways to align them. In addition,
we consider the specific challenges as well as the opportunities for SSME in supply chain management.
Improving the global supply chain through service engineering: A services
science, management, and engineering-based framework
Liang-Chuan Wu
a, *
, Liang-Hong Wu
b
a
Institute of Technology Management, National Chung Hsing University, Taichung, Taiwan
b
Business School, University of Shanghai for Science and Technology, Shanghai 200093, China
a r t i c l e i n f o
Article history:
Received 22 April 2013
Accepted 26 July 2013
Available online 9 March 2015
Keywords:
Service science
Management and engineering
Supply chain
a b s t r a c t
Great changes within the business environment in the last 2 decades have made supply chain man-
agement (SCM) an important topic for academics and practitioners. Globalization, larger reliance on
layered suppliers for specialized capabilities and innovation, changing customer needs, reliance on
supply networks to maintain a competitive advantage, and developments in technology have all
contributed to a very different supply chain environment. Most current works view customers as being
outside the supply chain design; however, we believe that customers are the missing link in the supply
chain. Therefore, in this paper, we focus on the customer's role in the process. We present an original
discussion of the emerging discipline of services science, management, and engineering (SSME) in SCM,
identify and bridge the gaps between SSME and SCM, as well as discuss ways to align them. In addition,
we consider the speci?c challenges as well as the opportunities for SSME in supply chain management.
© 2015 College of Management, National Cheng Kung University. Production and hosting by Elsevier
Taiwan LLC. All rights reserved.
1. Introduction
The global supply chain facilitates functions such as purchasing,
operations, manufacturing, and logistics. It plays a key role in
supplying goods and services to ?nal customers (Narasimhan &
Talluri, 2009). Traditionally, interest in global supply chains has
focused on operational issues, such as manufacturing and ef?ciency
(Kuei, Madu, Lin, & Chow, 2002; Lin, Chow, Madu, Kuei, & Yu,
2005). However, since its foundation in the manufacturing in-
dustry in the 19
th
century, supply chain management has under-
gone substantial changes. In today's highly competitive global
economy, changes in customer requirements, the business envi-
ronment, and supply networks, as well as shortened product cycles,
have together changed the competitive environment of supply
chains. There is now a greater need for rapid responses to meet
customers' demands for more high quality products and services
(Lin et al., 2005). Clearly, the keen competitive environment of the
21
st
century requires supply chain management (SCM) to be more
proactive than in the past.
Because of the continuing transformation of industrialized
economies from a manufacturing base to a service orientation, the
global supply chain, which is characterized by multilayered
supplier-customer relationships, presents a number of opportu-
nities and challenges (Demirkan et al., 2008; Smith, Karwan, &
Markland, 2007; Spohrer & Maglio, 2008). Numerous studies
have shown that high levels of quality and service are essential if
suppliers wish to meet supply chain challenges and enhance their
competitive position in today's global environment (Abdullah &
Tarib, 2012; Bendoly, Donohue, & Schultz, 2006; Chua & Linb,
2011; Doukidis, Pramatari, & Lekakos, 2008; Lin et al., 2005;
Roussinov & Chau, 2008; Singhal, Singhal, & Starr, 2007). Howev-
er, some scholars argue that the importance of services has been
underemphasized (Metters & Marucheck, 2007). Therefore, com-
panies in the supply chain must understand the needs of service
stakeholders in order to identify problems and opportunities (Li,
Wang, Yu, & Yang, 2007).
In recent years, an interdisciplinary ?eld called services science,
management, and engineering (SSME) has emerged to coordinate
the design and implementation of services systems. The rationale
behind SSME is that service is a complex system that requires
organizing people and technologies to perform tasks that provide
* Corresponding author. Institute of Technology Management, National Chung
Hsing University, 250 Kuo Kuang Road, Taichung 402, Taiwan.
E-mail address: [email protected] (L.-C. Wu).
Peer review under responsibility of College of Management, National Cheng
Kung University.
HOSTED BY
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Asia Paci?c Management Review
j ournal homepage: www. el sevi er. com/ l ocat e/ apmrvhttp://dx.doi.org/10.1016/j.apmrv.2014.12.002
1029-3132/© 2015 College of Management, National Cheng Kung University. Production and hosting by Elsevier Taiwan LLC. All rights reserved.
Asia Paci?c Management Review 20 (2015) 24e31
value for others. The objective is to combine fundamental scienti?c
and engineering theories, models, and applications with facets of
the management ?eld (Dietrich, Paleologo, & Wynter, 2008; Li
et al., 2007). Most importantly, SSME stresses the critical impor-
tance of customers, and emphasizes the balance between tech-
nology and the ful?llment of customers' needs. It provides a
framework for organizations to rethink their service design phi-
losophy and reexamine the enabling process in a scienti?c manner.
SSME is a new discipline, so academics and practitioners in the
SSME community are still laying the groundwork for this chal-
lenging research area (IBM, 2009). Researchers argue that there is
an urgent need to: (1) explore the use of SSME in the supply chain;
(2) consider the service dimension of complex, global, and
emerging supply chains, and increasingly service-orientated en-
terprises; and (3) facilitate and enhance service innovation
(Johnston, 2005; Neely, 2007; Paton & McLaughlin, 2008; Roth &
Menor, 2003; Voss, Roth, & Chase, 2008). Hence, researchers are
keen to identify the frameworks and theoretical perspectives most
appropriate for studying service-oriented management issues
(Demirkan et al., 2008; Maglio & Spohrer, 2008; Spohrer & Maglio,
2008). However, relatively few studies have focused on ways to
bridge the gap between SSME and SCM.
Given this background and our belief that customers are a
fundamental part of the supply chain, we consider the following
research questions in this study: (1) What can SSME contribute to
the global supply chain, and what are the gaps between SSME and
SCM? (2) What are new conceptual frameworks and theoretical
perspectives appropriate for studying service-oriented technolo-
gies and management practices?
In the remainder of this paper, we provide a survey of SSME, and
express our views about the ?eld and its development. In particular,
we discuss the relevance of SSME to SCM, and examine opportu-
nities to emphasize the concept in supply chain management. We
also identify opportunities to make SSME help SCM. Finally, we
present an SSME-based supply chain framework that pinpoints
how to use SSME to SCM. Our goal is to foster a better under-
standing of how best to encourage service innovation in an
increasingly complex business environment.
2. Previous work
2.1. The service background
Service innovation is a critical driver for business growth, and
has gained much attention in the last decade (Paton & McLaughlin,
2008; Paulson, 2006). The majority of workforce is engaged in
service providing rather than in agricultural or manufacturing ac-
tivities in modern world. Research also provides evidence that
many of the major manufacturing companies generate a growing
portion of their revenues from service activities. Bryson et al.
(2004) argued that the demand for services as an input to the
production of goods has been growing enormously in the past
decades. Given that background, Chase and Apte (2007) pointed
out that researchers and practitioners have been aware of the
importance of services in the supply chain with the continuing
growth of the service sector. Weng, Su, and Lai (2011) also argued
that service is indispensible part of business success, while Lien,
Wen, and Wu (2011) emphasized the critical role of service qual-
ity for process.
Service innovations have the potential to in?uence service
productivity, service quality, and the rates of growth and return of
service systems (Spohrer & Maglio, 2008). As a result, most large
manufacturing companies have now recognized the importance of
service and adopted service-oriented business strategies accord-
ingly. For example, a shift from service orientation to the focus of
product-orientation of their business strategies by leading global
corporations, such as IBM, HP, and EDS, have been observed (Li
et al., 2007). Moreover, top management of IBM transformed it-
self as an service business because of realizations that the company
must achieve effective service innovations (Demirkan et al., 2008).
Since 2004, the company has expended efforts on incorporating
service concepts into its business model, and thereby rede?ned its
business strategy. IBM's key service concepts are to improve quality,
sustainability, learning from customers, and innovation (Li et al.,
2007; Zhao, Tanniru, & Zhang, 2007).
2.2. SSME
SSME developed fromthe pioneering work of researchers at IBM
and associated institutions (Allen, Mugge, & Wolff, 2006;
Chesbrough, Vanhaverbeke, & West, 2006; Maglio & Spohrer,
2008). Speci?cally, SSME highlights the importance of service,
and tries to harness the power of scienti?c and engineering the-
ories, models and applications to support service design as an in-
dustrial product. This enhances service innovation and user
satisfaction (Bitner & Brown, 2008), and motivates both practi-
tioners and academics to nurture the adoption of SSME (IBM, 2009).
Spohrer and Maglio (2008) emphasized that service can create
value and supported by many studies (Demirkan et al., 2008; Lusch,
Vargo, & Wessels, 2008; Sampson & Froehle, 2006; Vargo & Lusch,
2004). To date, the majority of SSME studies have focused on sys-
tem development.
Studies of services have been applied on marketing, manage-
ment or service sector economics (Demirkan et al., 2008). For
example, the call center operations (Chevalier & Van den Schrieck,
2008), the ?nancial services industry (Menor & Roth, 2007; Nair &
Anderson, 2008), and the health care industry (Cayirli, Veral, &
Rosen, 2008; Van Dijk & van der Sluis, 2008). Li et al. (2007)
observed that there are still few studies in SSME because SSME is
a relatively newarea. Many studies focus on an overviewof the ?eld
and are not directly relevant to SSME. A business-technology
perspective, which induces more synthesis, is greatly needed;
despite this, earlier studies only discussed service from a business
perspective (Li et al., 2007).
Our survey of previous works identi?ed several trends in
existing SSME studies. First, service innovation and technology is-
sues should be both valued, in contrast to merely focusing on the
technological aspect for the new discipline (Abe, 2005). Second,
service-oriented architectures must be emphasized as this issue
has been emphasized by many studies (Bitner & Brown, 2008;
Chesbrough et al., 2006; Demirkan et al., 2008; Janner, Schroth, &
Schmid, 2008; Lusch et al., 2008; Spohrer & Maglio, 2008; Vargo
& Lusch, 2004; Zhao et al., 2007).
2.3. The need for an SSME framework
SSME requires interdisciplinary research to enhance its appli-
cations while the attention from multiple disciplines acting inde-
pendently is positive (Abe, 2005; Allen et al., 2006; Chesbrough
et al., 2006; Paton & McLaughlin, 2008; Paulson, 2006). There is
also a great need to study SSME from a business operation
perspective (Demirkan et al., 2008; Goo, Kishore, Rao, & Nam,
2009; Maglio & Spohrer, 2008; Smith et al., 2007).
SSME is in its exploratory phase. Voss et al. (2008) proposed a
service framework for the ?eld of operations management. They
argued that framework developing is young in this ?eld and to
develop a clear concept and framework contribute to the devel-
opment of SSME (Li et al., 2007). Nevertheless, the literature on the
supply chain is quite sparse. Hence, there is a great need for a
framework that: (1) includes the unique characteristics of SCM; and
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 25
(2) can identify the speci?c challenges and opportunities in the
supply chain.
3. The framework
Before describing our framework, we consider the gaps between
SCM and SSME. SCM possesses unique characteristics that differ-
entiate it from other ?elds. First, the supply chain has been char-
acterized as a link between different parties; therefore, it must have
a strong service-oriented foundation to satisfy customers' needs.
More speci?cally, goods and services pass through a series of linked
channels before being delivered to the ?nal customers. Each layer of
the buyeresupplier relationship is a subdivision of the whole
supply chain, and must satisfy the customers in that stage. This high
level of interaction suggests that the units coordinate dynamically.
In today's competitive global market, where customers' needs
change rapidly, customers are less inclined to stay with one sup-
plier because they normally have several opportunities to change
their suppliers on an ad-hoc basis. Business relationships tend to be
short-lived, especially when the environment is complex and dy-
namic. Thus, to retain customers, companies must be able to adapt
to rapidly changing customer requirements and constantly improve
their service delivery.
The second gap between SCMand SSME is that supply chains are
characterized by multilayered supplierebuyer relationships.
Because of their prevalence in the global supply chain, they have
the potential to cause disruptions in service delivery. Each node in
the supply chain plays a dual role, i.e., buyer and supplier. Hence,
each node must integrate the partly ?nished services/products
derived from upper layer suppliers with its own value-added ser-
vice/product, and then deliver the latter to its customers. This
characteristic makes it more dif?cult to guarantee the quality of
goods and on-time delivery to ?nal customers. The traditional
supply chain perspective suggests that suppliers should reduce
their inventories as much as possible. Although most studies argue
that information sharing and customer satisfaction are critical, the
concept is a top-down planning strategy. In other words, it does not
incorporate ex-ante service planning, so it is dif?cult to devise a
global plan, especially in the presence of uncertainty and the long-
whip effect. Therefore, lead times and inventories make a long
supply chain more unpredictable.
The third key gap is that each node in the current global supply
chain works in an isolated manner. As a result, each node's strategy
is based on a micro rather than a global perspective. This aspect is
highlighted by the following questions, which were posed by
Simchi-Levi, Kaminsky, and Simchi-Levi (2003): (1) Should manu-
facturers be responsible if their retailers run out of stock? (2) After
shipping their products, should manufacturers be responsible for
on-time delivery to the ?nal customers? (3) Should retailers be
responsible if their suppliers' inventories are too small/too large?
These questions show the nature of the supply chain and provide a
basis for rethinking howSSME can be integrated into a supply chain
framework.
In our literature review, we found that SSME provides a com-
plementary, perspective of the supply chain ?eld. The gaps be-
tween SSME and SCM are multidimensional. The ?rst gap is the
relationship between buyers and suppliers. The traditionally supply
chain management perspective regards customers as the last stage
of the whole commercial process. This point of view, combined
with the traditional mindset of suppliers that their total costs must
be minimized, does not always give customer service a high pri-
ority. From the customers' perspective, the traditional supply chain
views selling as the end of the trading process. In contrast, SSME
considers that customer satisfaction and addressing customers'
needs are of paramount importance. This approach differs fromthe
duality view that is deeply rooted in the traditional supply chain.
The production process is another dimension that re?ects a gap
that is in the structure of the traditional SCM mindset. The tradi-
tional supply chain views the process as a standard, mechanical
process, but the SSME approach rethinks all roles and boundaries.
Table 1 details the gaps between SCM and SSME.
Based on our study of the gaps between the two concepts, we
examine the reengineering of the traditional supply chain mindset
before presenting our framework. Fig. 1 shows the re-engineering
required to bridge the concepts between SCM and SSME. In the
traditional supply chain, the consequence ?ow is strict and well-
de?ned from the supplier to the organizations downstream and
then to the ?nal customer. Customers are receivers of upstream
products and services. Although some organizations do consider
customer satisfaction, such evaluations are by nature ex post, and
they are not part of an organization's ?ow/product/service design.
Therefore, reengineering of the customer-dominant mindset is
necessary. That is, end customers must push their requirements so
that upstream suppliers understand their needs precisely, instead
of simply being passive recipients of the products/services offered
by suppliers. The same situation exists in everyday life. If a
customer orders a book from an online e-bookstore, they do not
care about the complex electronic process used by the supplier. The
customer only wants to obtain the desired product, and the process
involved constitutes their buying experience. Thus, a dialogue must
be fostered so that the supplier can learn the customer's needs. In
this way, the traditional push fromsuppliers to customers would be
reversed, i.e., from customers to suppliers.
For the quality dimension, it is critical that the complex supplier
hierarchy be invisible to customers. Essentially, customers need a
single contact window to provide quick and comprehensive
Table 1
The gap between supply chain management (SCM) and service science, management, and engineering (SSME).
SCM view SSME mindset Gaps
Customer All sales ?nal Customer satisfaction is paramount. Duality/bipolarity
Tangible goods Intangible services Re-engineering of services
Cost oriented Value added Bene?ts shift to value
Hard issues Soft issues included Feeling/psychology re-engineering
Ex-post customer satisfaction Ex-ante customer satisfaction Mutual consequence (mutual cause and effect)
concept
Process Mechanism/standard Rethink roles/boundaries Removes boundaries and changes roles
Mass production/cost minimization
generates revenue
Services generate revenue Customer needs being the ?rst priority
Customer excluded from process design Customer included in the
process design
Customer-driven process
Technology User requirement Customer requirement Re-de?nes the concept of users and customers
System standardization Service innovation Provides technology as a service to customers
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 26
service. This requirement transforms the supplier into a single
contact window and virtual service provider for customers.
To meet the reengineering requirement of information and
communication technology (ICT) for an SSME-based supply chain,
the traditional boundary design approach must be broken down. At
the intraorganization level, the boundaries between different units
must be removed to meet the requirement. Meanwhile at the
interorganization level, geographical boundaries are being broken
down and the ways that buyers and suppliers conduct business are
changing to enable the service-oriented units of different suppliers
to work together. As a result, customers are central to the design of
the whole supply chain.
We have identi?ed the gaps that exist between the traditional
and the SSME-based supply chain perspectives, and examined the
reengineering requirements. Next, we link the supply chain and
SSME to service characteristics via the proposed framework, as
shown in Fig. 2.
The following aspects of the framework are especially
noteworthy:
1) The concept of mutual construction replaces the bipolar distinction
of dualism. An SSME-based supply chain encourages more
effective and ef?cient ex-ante interaction and engagement, and
also fosters proactive dialogue and cooperation with customers.
This is because the exchange of experiences requires collabo-
ration between various parties to design the con?guration of the
service-based supply chain. Suppliers and users enter into a
dialogue to facilitate mutual understanding, and to de?ne the
nature and extent of the exchange. They then continue this
dialogue to ensure that the exchange is effective. Moreover, by
maintaining this ongoing discussion of the client's re-
quirements, both parties can extend and strengthen their rela-
tionship. In this sense, the customer is one of the dual
components of a supply chain, and thus contributes to its con-
struction. The two-way dialogue must begin before the design of
the products, services, and structures that support all the
necessary activities. The traditional linear and one-way rela-
tionship thus becomes a mutual cause and consequence type of
relationship, where the customer actually participates in the
production process. Service-centered supply chains differ from
manufacturing-centered supply chains because of the intangible
nature of services, and the dif?culty of gauging customers' true
needs. For example, there are numerous cases where suppliers
fail to meet their customers' true requirements, even though
they provide high-quality products. Therefore, researchers and
practitioners must recognize that customers are critical com-
ponents in an SSME-based supply chain, and adopt an innova-
tive approach to meeting customers' needs.
2) Single solution provider: the complex supplier network is invisible
to customers. Customer-centered service design ensures that an
enterprise acts like a service provider. For example, a company
may want to offer different procurement functions, such as
searching for a rare item, as services on demand. This requires
that business processes should be rendered as services that can
be integrated dynamically to meet changing customer requests.
The ability to create or restructure such services means that a
company can react quickly in a dynamic environment. For
example, when customers visit a bank, they care more that their
needs are met quickly on the spot rather than background
technology such as interbank transfers; they just want. There-
fore, service quality in a global supply chain must be coordi-
nated to satisfy each customer's particular needs.
3) Melting of intraorganization and interorganization boundaries. It
is crucially important that a supply chain can provide prompt,
correct services to ?nal customers. The SSME-based approach
rede?nes the boundaries between and within organizations by
linking divisions, and thereby shortens the supply chain. The
rede?nition of boundaries can be implemented both intra- and
interorganizationally, as shown by the arrows between the cir-
cles in Fig. 2.
4) Virtual/organic concept of supply chain partners. In Fig. 2, the
service process links one atomwith another directly, and breaks
the mechanically designed organizations and original functions
into smaller atoms. This recombination of atoms turns isolated
organizations into virtual service-oriented providers for
different customers. Thus, based on the virtual design, the
Fig. 1. How boundaries in the traditional value chain are removed and the differences in a service science, management, and engineering (SSME)-based supply chain are addressed.
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 27
whole supply chain becomes an organic structure that co-
ordinates functions and atoms. In Fig. 2, the components in the
outer circle work dynamically with those in the inner circle to
meet rapidly changing customer needs.
5) Virtual and physical integration. Designing a supply chain from
the microcomponent level to the macro level requires that the
chain should be integrated both virtually and physically. From
the virtual aspect, virtual R&D alliances, virtual service-oriented
architecture integration, and virtual joint production all
improve the supply chain's ability to respond to the changing
business environment.
6) The role of ICT. Understanding the evolution of service systems is
a central problem in service science studies. Although the ser-
vice industry has implemented IT and service-related processes
for decades, rede?ning the scope of ICT to ensure that it is fully
utilized is a critical issue. The importance of ICT in the supply
chain has been well-documented; however, in a service-
oriented supply chain, it is critical that ICT should be used to
implement the concept of the virtual service provider. Tradi-
tionally, IT systems have been limited to support roles and
functions instead of being seen as service autonomies; thus,
they have tended to function in isolation both within organi-
zations and between organizations. The new de?nition of ICT
expands its role to support the link between service autonomies
outside traditional boundaries. In other words, ICT becomes the
central neural network that enables the SSME supply chain to
provide fast responses. In Fig. 2, the ICT design breaks the
boundaries between customers and suppliers in the outer and
inner circles to provide two-way information exchanges,
thereby reducing uncertainty and the whip effect. This sharing
of information streamlines the service procedure and facilitates
the preparation of the bill of materials, ordering and assessing
customers' needs. These services use ICT to support the network
of suppliers, the enterprise, and customers. Delivering
interconnected service units is dif?cult under a monolithic ICT
architecture. Consequently, services based on a newarchitecture
are essential to ensure that the supply chain is ?exible.
4. Case study
To assess the validity of the proposed framework, we applied it
to three international companies that belong to different real-life
supply chains. We chose different sized companies that belong to
different industries to guarantee research validity. After inter-
viewing relevant managers, we explained our framework in detail,
the rationale behind our approach, the gaps between SCM and
SSME, and the scope of our study.
The ?rst company (Supplier A) specializes in the design, pro-
duction and marketing of ?tness and medical equipment. Founded
in 1975, it now sells a range of products under four brand names
through 18 marketing companies that it has established worldwide.
The high quality products, which are sold in 60 countries including
the USA, target the commercial and home-use ?tness markets.
Supplier A is a worldwide manufacturer, and its brands target
different levels of customers. This feature can help us investigate
the global supply chain. The director of the Taiwan factory is
responsible for purchasing materials fromsuppliers, processing the
materials, and providing partially assembled products to the com-
pany's customers. Because of expanding overseas business, thou-
sands of components need to be ready for assembly. Quality
suppliers, on-time delivery of goods, and service are the keys to
smooth processing of the heavy loading factory.
The second company (Supplier B) is a major bicycle manufac-
turer that specializes in high-end bicycles and electric bicycles. The
company is currently Taiwan's second largest bicycle manufacturer.
Since it was founded 30 years ago, Supplier B has been committed
to producing high-quality bicycles. It has also provided high value-
Fig. 2. The service science, management, and engineering-based supply chain framework.
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 28
added services, to create an international market and expanding
territory; the company nowmarkets its products in 62 countries. In
the product after-sales service, Supplier B combines dealers from
around the world, to provide consumers with convenient, precise
service at any time. The company's global marketing network
wishes to quickly capture worldwide changing market trends,
product information, and feedback from customers in order to
immediately develop fashionable models for consumers and pro-
vide a wide range of bicycle accessories.
The third company (Supplier C) focuses on tabletop cooking
devices, water heaters, and kitchenware. The company was founded
in1979, and is nowone of the most famous brands in China. Because
it is concerned about after-sales service and making customers feel
comfortable towards its products, the company offers free safety
checks. AlthoughSupplier Cwas affectedbythe global recessionand
had to resolve other dif?culties, such as an aging brand, its products
now account for 45% of the water heater market. Supplier C has
accumulated more than 300 million served households, and the
voice of these customers provides the direction of product design.
To ensure customer satisfaction, the company launched a series of
business innovations and business reengineering projects. In addi-
tion to efforts to promote total quality management, six sigma full
movement, net promoter system process improvement and other re-
forms, Supplier C has joined forces to develop more high-quality
products in response to customer feedback.
The managers from the three companies were asked to quantify
their suitability towards the six dimensions of the proposed
framework. Each evaluation stands for how realistically the item
speaks for their needs. The scores were 1 (strongly disagree), 2
(slightly disagree), 3 (neutral), 4 (slightly agree), and 5 (strongly
agree). The results are shown in Table 2.
The interviewees' evaluations show their level of agreement
with the six dimensions in the supply chain framework. Overall, the
evaluations of all six dimensions are positive. Information tech-
nology and the virtual/organic concept of supply chain partners
were given the highest and lowest ratings, respectively. Following
the evaluation, the three managers were asked to share their views
on the dimensions of the framework in an open interview. We
report their responses below.
1. The concept of mutual construction: Company A's manager
commented that incorporating customer requirements needs solid
tools. Quality Function Deployment (QFD) might be extended to
this setting by helping bring the requirements list into practical
design, and even more speci?cally into manufacturing.
Manager B felt that because his company produces high-end
bicycles, customer needs are critical to this top of the pyramid
market for capturing customized demands. The company conducts
market surveys to gauge functional demand. However, the manager
noted that nonfunctional requirements, such as stylish designs, the
demand for fashionable auto-gear transmission, and the tire width
of a product, are implicit and dif?cult to observe from a mere
questionnaire survey. Customer surveys conducted by experienced
market analysts are therefore necessary to learn about implicit
customer demands.
The manager of Company C also supported the customer feed-
back approach. He argued that by taking note of customer feedback,
the ?rst dimension can be realized and put into practice more
easily.
2. Single Solution provider: From Supplier A's perspective, the
one solution concept is a good idea. However, he noted that the
concept has yet to gain wide acceptance in his industry. It seems
that, currently, the only similar concept is a joint bank loan to the IC
(integrated circuit) industry. The banking industry uses this
concept to share risks among all participants, rather than a
customer-oriented service design concept. Therefore, it is a good
direction to improve supply chain design. To this end, the nodes
and networks in the global supply chain need to collaborate closely
to implement the one solution concept.
This dimension is supported by the manager of Supplier B, who
stressed that his company provides on-site service specialists to
help customers. The working processes Supplier B uses for pro-
duction and logistics, which are not customer concerns, serve as
background processes.
Manager C agreed that customers should not be bothered with
details of the complicated background supply chain process,
because how the supply chain works is irrelevant to them.
3. The melting of intraorganization and interorganization
boundaries: Manager A commented that, in his industry, QFD can
easily transform business functions into a process-oriented strat-
egy. Thus, QFD can be used to implement the proposed model from
the reference level to the operational level.
Supplier C expressed his concern about the lack of proper tools
to put this dimension into practice, but he acknowledged that the
dimension could improve the ef?ciency of the supply chain. Sup-
plier B did not comment on this dimension.
4. Virtual/organic concept of supply chain partners: Supplier A
noted that the concept could expand the use of supporting tools,
such as the Supply Chain Operations Reference model, a proposed
standard for supply chain management that requires supply chain
players to co-plan a framework. To realize the virtual/organic
concept of supply chain partners, future supply chains should be
designed to take advantage of the collaborative blueprint, pro-
cesses, best practices, and performance metrics. Moreover, people
must be organized into an integrated structure for de?ning and
linking, in order to achieve the service-oriented design aim.
Supplier C expressed his concern about the lack of proper tools
to put this dimension into practice, but he acknowledged that
Dimension 4 could improve the ef?ciency of the supply chain.
Supplier B suggested a way to make this dimension work. He
explained that, in the bicycle industry, a similar A-team strategy is
used to integrate upstream-downstream resources, and to
encourage cooperation between the various suppliers. The objec-
tive is to strengthen the partnerships between factories, suppliers,
warehouses, and distributors. Fostering upstreamedownstream
integration will improve a company's global competitiveness so
that it has a strategic position in the global market.
5. Virtual and physical integration: Manager A noted that to
satisfy rapidly changing customer needs, ?exibility in improving
the global supply chain is critical. New era technology must satisfy
Table 2
Evaluation of the dimensions of the proposed framework.
Dimension Company A
(Fitness and
Medical
Equipment)
Company B
(Bicycles)
Company C
(Heaters)
1) The concept of mutual
construction replaces the
bipolar distinction of dualism.
4 5 4
2) Single solution provider:
complex supplier network
is invisible to customers.
5 4 5
3) Melting of intraorganization
and interorganization
boundaries.
5 4 4
4) Virtual/organic concept
of supply chain partners.
3 4 3
5) Virtual and physical
integration.
5 4 4
6) The role of information
and communication
technologies (ICT).
5 5 5
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 29
relevant needs to make technology-aided customer-oriented ser-
vice redesign possible. In practice, we have to make choices be-
tween quality control policy and economic policy. A bill of material
is subject to every change from manufacturers and should not be
subject to a ?xed link with any supplier. Delivery deadlines, prices,
and quality between candidate supplies must be powered by a
?exible ef?cient communication technology. This is another issue
that must be addressed in the design of customer-oriented supply
chains.
Supplier B did not comment on this dimension, but Supplier C
posited that the concept is realizable in his industry because cross-
divisional meetings are held regularly to discuss the design of new
gas-operated hot water heaters. However, he noted that more could
be done to break down the divisional boundaries and exploit the
synergy of virtual/physical integration.
6. The urgent need for more intelligent and more ?exible ICT:
Supplier A suggested a way to enhance Dimension 6 in the
framework. He argued that feedback tools, such as key performance
indices, could be used to periodically evaluate dynamic recon?gu-
ration. Moreover, he believes that enterprise resource planning
enables this dimension to meet different logistical deadlines froma
variety of suppliers and cross upstream and downstream real-time
work.
Factory director B offered his viewpoint of the practical pro-
cesses in their supply chain, suggesting that the just-in-time sys-
tem is useful for their bicycle industry to facilitate background
supply chain work and to render these processes invisible from
?nal customers.
The input of the three supply chain players demonstrates the
differences between their respective industries. For Supplier A in
the ?tness and medical equipment industry, faced with numerous
layered supply chains, a single solution is critical. This contrasts
with Supplier B in bicycle manufacturing, where fashion trends and
learning customers' needs are the major concerns. For Supplier C in
the kitchen equipment industry, traditional cross-function meet-
ings remain the major way for designing new products. More
function-breaking mechanisms could be further explored.
Despite these industry differences, the three factory directors
agreed on the importance of supporting technology. This shows
that the critical nature of information technology, or more explic-
itly, a cross intra/inter function/organization collaborative mecha-
nism, should be considered in the design of supply chains.
5. Conclusion
In this paper, we have explored the opportunities that SSME
provides to improve SCM. Essentially, SSME enables a supply chain
that involves service intensive activities to respond quickly to
changes in the business environment. SSME provides opportunities
to close the gaps that exist between resource reengineering,
boundary reengineering, process reengineering, technology reen-
gineering, and most importantly, mindset reengineering. As a
result, service-oriented businesses can respond to the need for
dynamic con?guration of resources to reduce the boundaries be-
tween organizations, as well as between organizations and
customers.
This study offers a new and interdisciplinary perspective of
SSME and SCM. We provide insights on how to incorporate SSME
theories to broaden and deepen interdisciplinary discussion in the
supply chain ?eld. In addition, we present a framework to help
suppliers meet their customers' needs more ef?ciently, and thereby
gain a competitive advantage. In fact, to gain business competi-
tiveness, the relationship between SCM and SSME should be
emphasized. These concepts are not alternative strategies for
management. SSME is about recognizing the duality of all
relationships in a service system, and that the quality of services is
an outcome of co-production. Hence, managing by principles of
SSME is not really a choice. Supply chains are and should be service
systems. The choice is rather whether to identify and address ser-
vice system gaps or to work solely to meet internally set and
unilaterally oriented performance speci?cations without under-
standing customer perspectives.
Despite these achievements, the limitations of this research
should be acknowledged. It would obviously be necessary to
replicate the research in different organizational settings for
further validation. The dramatic and ongoing changes in the service
environment present a number of opportunities for further
research. It has been suggested that management scholars run the
serious risk of functional irrelevance if they fail to adjust to these
changes (Metters & Marucheck, 2007). The small number of re-
spondents in our research indicates research limitation and future
direction. For researchers, our study synthesizes, integrates, and
formalizes the ?ndings reported in recent SSME literature, high-
lights the gaps in the ?eld of supply chain management, and tries to
close those gaps. In addition, the proposed framework aligns SSME
with the supply chain concept, and integrates emerging SSME
knowledge into supply chain management strategies. Our study is
one of the ?rst to focus on the topic; thus, we hope that it will
stimulate further discussion of SSME based on SCM.
For practitioners, how to respond to the dramatic changes and
incorporate SSME into a multilayered supply chain has long been an
issue. Our study provides some guidelines for the design and
management of supply chains, and helps practitioners rethink their
supply chain strategies. Most importantly, mindset reengineering
helps managers change their traditional attitudes and methods,
adapt to the modern supply chain environment, and explore op-
portunities to provide new services. Speci?cally, practitioners can
use the ?rst dimension of the framework (dual construction) to
rethink their service design. The concept allows customers to
actively design services rather than passively accept designed ser-
vices. This contrasts with the traditional supply chain design, which
only allows customers to passively choose from provided services
that may or may not suit them. The ?rst dimension enables cus-
tomers to design their own services according to their true needs
without any unwanted parts. The second dimension (single solu-
tion provider) facilitates better customer service and therefore
improves customer satisfaction. For practitioners, our study helps
managers better understand that not only mechanical work?ow
designs, but customer needs, can improve supply chain design.
Overall, our study provides practical suggestions to improve busi-
ness management in a competitive world.
In future research, scholars could conduct case studies by using
the proposed framework to compare the supply chain operations of
various companies. Future studies should also exploit interdisci-
plinary knowledge, and stress the need for practitioners and aca-
demics to address issues unique to the ?eld of supply chain
management. Moreover, it is necessary to expand service science
knowledge by analyzing how service socio-systems evolve over
time, what factors are critical to sustaining service excellence, and
howbest to use unprecedented opportunities to facilitate business-
service science alignment.
Con?icts of interest
All contributing authors declare no con?icts of interest.
Acknowledgments
The authors wish to thank the anonymous reviewers for their
valuable suggestions. This research is supported by The Programfor
L.-C. Wu, L.-H. Wu / Asia Paci?c Management Review 20 (2015) 24e31 30
Professor of Special Appointment (Eastern Scholar) at Shanghai
Institutions of Higher Learning and Shanghai Leading Academic
Discipline Project (No. XTKX2012).
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