Amplification in Service Supply Chains: An Exploratory Case Study From the Telecom Industry

Abstract

Evidence on the impact of amplification effects on supply chain performance primarily has been derived from studies in manufacturing industries. In this article we reported on a case study from the telecommunication industry and aimed to analyze relevant root causes and associated countermeasures of the amplification phenomenon in service supply chains. Our case findings confirm the occurrence of upstream amplification of workload in the service supply chain, workload being a more appropriate measure for amplification effects in service supply chains than inventory levels. Not all of the root causes for amplification effects known from research in manufacturing environments were found to apply in this particular service context, especially those related to the use of inventory. In addition, our telecom case study highlighted a new root cause for amplification: interactions of high workloads and reduced process quality that start reinforcing each other once workloads pass a certain threshold. In this particular case, many of the known countermeasures to eliminate amplification did not apply, because of the specific characteristics of the service process, or yielded only limited results. A potentially very powerful countermeasure identified was to implement quality improvements throughout the service chain. This quality dimension links our research to the literature on service management in general, where service quality is on top of the research agenda.

Investigating the formation of service supply chains

“…Through proposition 6, we showed that the effectiveness and efficiency of technology-enabled information exchanges increases whenever a service supply chain maintains interpersonal relationships between its actors. As such, our findings do not support the argument that ICTs themselves are central coordination mechanisms (Akkermans & Vos, 2003;Arshinder &Deshmukh, 2008). However, Mithas, Ramasubbu, andSambamurthy (2011) argue that a firm's customer management capabilities mediate the impact of information management on firm performance.…”

“…By exploring the role and input of service customers and service providers, we address methodological shortcomings in service research more broadly (Heinonen et al, 2010), and address specific research priorities in service supply chain research (Maull et al, 2012). As such, this study extends firm-centric studies that typically attempt to transfer insights from traditional supply chain studies into service research by assuming the existence of a mature service supply chain (Frohlich & Westbrook, 2002;Akkermans & Vos, 2003;Ellram et al, 2004), and also contributes to the service sourcing literature (e.g., Allen & Chandrashekar, 2000;Baltacioglu et al, 2007;McIvor, 2010).…”

“…Thus, attempts to transfer insights gained from 'product' to service supply chains have not been particularly successful, due to their focus on service providers and omission of service customers from the inquiry. For example, Akkermans and Vos (2003) examine the bullwhip effect in a telecommunications service supply chain, while Frohlich and Westbrook (2002) compare supply chain integration in the manufacturing and service sector. These 'goods-centric' attempts stand in contrast to the current understanding of economic exchange rooted in the service-dominant (SD) logic (Vargo & Lusch, 2004).…”

“…For example, Ellram et al (2004) argue that service supply chains rely on a flow of information rather than a flow of physical goods. Akkermans and Vos (2003) argue that the unique characteristics of services like customer interaction, simultaneity of production and consumption, intangibility, perishability, and labor intensity, are elements unique to service supply chains. These scholars thereby followed a well-established idea from the service marketing literature that, though not without criticism (Lovelock & Gummesson, 2004), has long argued that 'services' should be delineated from 'goods' by using the criteria of intangibility, heterogeneity, inseparability, and perishability (Zeithaml, Parasuraman, & Berry, 1985).…”

Embedding the New Discipline of Service Science

“…Ackerman and Voss (2003) provide an excellent example of a Telco implementing a new customer service process that includes four separate activities, selling, installing, provisioning an billing each of which is carried out by a different department. The interactions between the departments led to enormous amplification where a 10% increase in sales order volumes leads to a 250% increase in provisioning, 140% in installing and 175% in billing (Akkermans and Vos 2003).…”