PROFESSIONAL SERVICE SUPPLY CHAIN:
EXTERNAL INTEGRATION BARRIERS
Master Thesis, MSc Supply Chain Management
University of Groningen, Faculty of Business and Economics
January 26, 2015.
Abstract
INDEX
1. INTRODUCTION ... 4
2. THEORETICAL BACKGROUND ... 5
2.1 Professional Service Supply Chain (PSSC) ... 5
2.2 Supply Chain Integration (SCI) ... 7
2.2.1 External supply chain integration ... 8
2.2.2 Barriers in external supply chain integration ... 8
2.2.3 Conceptual model ... 11
3. METHODOLOGY ... 12
3.1 Sample Selection ... 12
3.2 Development Interview Protocol ... 14
3.2.1 Interviews ... 14
3.2.2 Interviewer & Interviewees ... 15
3.3 Data Collection ... 16
3.4 Data Reduction ... 16
4. RESULTS ... 17
4.1 Within-case Analysis ... 17
4.1.1 Professional service supply chain characteristics in PSSC1, PSSC2 and PSSC3. ... 17
4.1.2 Supply chain integration in PSSC1, PSSC2 and PSSC3 ... 19
4.1.3 External integration barriers in PSSC1, PSSC2 and PSSC3 ... 21
4.2 Cross-case Analysis ... 23
4.2.1 Professional service supply chain characteristics ... 23
4.2.2 External Integration barriers in professional service supply chains ... 23
5. DISCUSSION ... 25
6. CONCLUSIONS & FUTURE RESEARCH ... 28
1. INTRODUCTION
Due to the current global economy and the more and more competitive marketplace, the business environment is constantly evolving. Moreover, the provision of services has become an increasingly important component of the economy of industrialized countries and the revenue stream for many traditional product companies (Shu et al., 2013). However, despite of the importance of services and the growing servitization of world economies, service activity lags behind in process excellence and performance, compared with manufactured goods in the supply chain (Van Ark, et al., 2008). One of the reasons for such advancements in processes in manufactured organizations is the integration of the supply, production and delivery processes of their core products in a synchronized fashion within the network (e.g. with the use of effective information systems) (Giannakis, 2011). At the same time, only few studies have researched how service organizations can create value (performance) through the integration of processes that extend their organizational boundaries (Field & Meile, 2008). Considering that services are multivariate in nature and that have not been well managed and understood from a supply chain perspective (Ellram et al., 2004), a monolithic managerial framework for the management of their supply chains is inadvisable (Giannakis, 2011).
Many services involve a high degree of customer contact, and the involvement of the customer in the service creation and delivery process introduces uncertainty in the final service, including differing customer perceptions and evaluations of the delivered service (Chase, 1981; Harvey, 1998; Kellogg & Nie, 1995). While the uncertainty inherent in services increases the importance of managing information flows, it also makes it more difficult to design and implement effective operational processes at the supplier-customer interfaces of the service supply chain (SSC) (He & Lai, 2012). According to Schmenner (1986), the type of service that shows the highest degree of consumer interaction & customization and labor intensity, leading to more flexible processes, is professional service (PS). Thus, PS experiences a high level of uncertainty. Supply chain literature suggests closer integration between supply chain members, especially when there is high business uncertainty (Pagell, 2004). Therefore, as professional service supply chains (PSSC) experience a high level of uncertainly, is supply chain integration (SCI) achievable?
RQ: What are the major barriers faced by various players in professional service supply chains during the external integration?
Three Dutch PSSCs were studied including at least three parties working together on providing an end-service to an end-customer (business-customer), by performing a qualitative research.
This paper is structured as follows. Firstly, section two introduces to a literature review of PSSC and SCI. The utilized methodology for this study is then presented in section three; followed by the results obtained in section four. Section five provides the discussion and finally, section six postulates the conclusions, limitations and suggestions for future research.
2. THEORETICAL BACKGROUND
In this section the concepts of PSSC and SCI are reviewed and discussed. It is necessary to highlight that a specific definition of PSSC has not been found in literature. Hence, in this attempt, the existing service supply chain (SSC) literature is used as a valuable base to develop such topic more in detail and contribute to its explanation and investigation.
2.1 Professional Service Supply Chain (PSSC)
Services are not only different from products, but there are also different types of services. PS is designated as the type of service that experiences the highest degree of labor intensity as well as the highest degree of interaction & customization. Labor intensity is described as the ratio of the labor cost incurred to the value of the plant and equipment. Consumer interaction means the degree to which the consumer is related or collaborates to the service process, while customization is the degree to which the service is personalized to the customer (Schmenner, 1986, 2004; Lewis & Brown, 2012). Doctors; consultancy, legal and accounting firms; investment bankers, and the like, are the typical examples of PSs.
The structural difference of a SSC basically arises from the unique characteristics of services, which distinguish them from goods (intangibility, simultaneity, heterogeneity and perishability) (Hill & Neely, 1988; Baltacioglu et al., 2007). These differences also change the nature of services in practice (Baltacioglu et al., 2007). However, for PSs such characteristics might have a singular effect on PSSCs. Intangibility means that PSs cannot be seen, touched, smelt or tasted, as are considered “performances” rather than “things”. In a PSSC, the physical flow of the PS from the supplier to the producer and then to the consumer is not possible (Baltacioglu et al., 2007), and as a consequence, the customer is not able to evaluate the service until it is received. Since PSSC involves the highest level of customization and interaction with the customer, uncertainty is present in the final PS. Thus, organizations collaborating with each other to provide a PS need to work even closer towards achieving customer requirements and reducing ambiguity.
In terms of: PS Characteristic(s): Author(s):
Processes
• PS has most complex processes in comparison to the other types of services because of the highest degree of labor intensity and consumer interaction & customization:
• High-labor intensive business involves relatively little plant and equipment usage and more considerable worker time, effort and cost.
• With a high level of interaction, the consumer actively and closely intervenes in the service process, and will often demand a certain additional service or request some aspects of the service to be deleted. • With a high service customization, the focus is to satisfy individual’s
particular preferences.
Schmenner (1986). Lewis & Brown
(2012).
• PSSC have a high degree of service process variation due to high levels of customer interaction/customization and situations where judgments have a central role in service delivery.
Schmenner (2004).
Customers
• Control high levels of customer input variability is challenging. Schmenner (1986).
• It is widely accepted that PS has the most customer interaction and/or customization.
Silvestro et al. (1992). Schmenner (2004).
Lewis & Brown (2012). • Customers are the most important characteristic in affecting strategies and
decisions of PSSC. Kellogg & Nie (1999). • Customers might find very hard to evaluate PS’s quality and are influenced by
other factors (e.g. expectation and perception of service, employee appearance, reputation of the organization, etc.).
Lewis & Brown (2012).
Professionals
• PSs bring challenges to managers in terms of high labor intensity (e.g. employee welfare, hiring, training) and high interaction/customization (e.g. maintaining quality, reacting to customer intervention in process).
Schmenner (1986).
• Professionals follow implicit norms for an appropriated professional behavior, and explicit external codes of ethics that can minimize the influence of managers in PSSC.
Harvey (1990). Goodale et al. (2008).
Lewis & Brown (2012). • PS firms are extremely dependent on their ability to attract, mobilize, develop
and transform the knowledge of the highly educated employees to create value for their customers.
Løwendahl et al. (2001). • The mobility and transferability of employee skills and the lack of effective
mechanisms for including professional judgment in operating equipment, products and “routines”, increases employee bargaining power.
Lewis & Brown (2012).
Simultaneity indicates that in a PSSC the customer contributes to the production process of the PS, and once the production is realized, it is followed by instant consumption in a simultaneous manner (Baltacioglu et al., 2007). Accordingly, the PS provider and the customer must be present for the PS to be delivered (Hill & Neely 1988; Baltacioglu et al., 2007), which increases dependency between them in the PSSC and the influence they both have in the final PS (Davies, 1998). The strong component of face-to-face interaction with the customer, conducts to subjective quality assessment and more demanding labor intensity, requiring special skills from the professionals imparting the PS, such as training and knowledge of key decisions and activities of the PS process (Løwendahl, 2005). Owing to PSs are heterogeneous (Hill & Neely, 1988), standardization is difficult in (Kellogg & Nie, 1995) PSSCs. A PS is never the same for a particular consumer; it depends on perceptions, mood and atmosphere (Baltacioglu et al., 2007). Therefore, organizations involved in a PSSC need to avoid discrepancies of expectations from different parties by having common goals and working in line for a better control of flexible processes (Lewis & Brown; 2012); as well as continuously evaluating customer satisfaction. PS are perishable, and if are not consumed when available, then there is no possibility to storage them for future use. Hence, perishability implicates a total inapplicability of the warehousing function (Baltacioglu et al., 2007), constant control of resources, professionals and systems needed to deliver the PS in a specific time, and an efficient cooperation among organizations in the PPSC.
Giannikis (2011) argues that in SSCs, the complexity of the coordination of their activities increase due to the flexibility in the chain, and the service providers act, in this case, as “mediators” for the service provision. Since PSs also experience flexible processes, this statement might apply and have an effect on the structure of PSSCs. In addition, the nature of the PS, the high level of customization and interaction with the customer might lead to variations in the network of a PSSC; and hence, the PSSC structure would be hard to be generalized.
2.2 Supply Chain Integration (SCI)
Biemans, 2003) between organizations. Thus, as argued by Gosh et al. (2014), well-integrated processes ultimately lead to better coordination and performance within the supply chain.
SCI practices make it possible to survive environmental uncertainty in supply chain networks while also reducing opportunism (Danese et al., 2013). Consequently, since PSSC experiences a high level of uncertainty, this study uses the theory existing about SCI to examine how organizations collaborate with each other in a PSSC (See section 2.2.1 External integration); and if the current knowledge about SCI is applicable to PSSC.
2.2.1 External supply chain integration
External integration is “the degree to which a principal company partners with its external partners to structure inter-organizational strategies, practices and procedures into collaborative, synchronized processes” (Stank et al., 2001). Supplier integration and customer integration are regarded as two basic categories of external integration scope (Wong & Boon-itt, 2008). Additionally, according to Bowersox et al. (1999), customer integration involves core competencies derived from coordination with critical customers, while supplier integration involves core competencies related to coordination with critical suppliers. Since in external integration is recognized the relevance of establishing close andinteractive relationships with customers and suppliers; this perspective is important in allowing supply chain members to act in a determined way in order to maximize the value of the supply chain (Flynn et al., 2010).
During external integration firms can also achieve two main advantages, as affirmed by Rosenzweig et al. (2003). First, high integration among partners in supply chains can turn into more responsive organizations to face volatile demand due to increased information visibility and operational knowledge (Kim, 2006). And secondly, highly integrated supply chain partners have the potential to decrease net costs of doing business and total delivered costs to customers (Swink et al., 2007).
Quesada et al. (2008) states that external SCI is a key strategy to obtain competitive advantages in an uncertain environment, such as PSSC. But, external integration has proved to be difficult to implement (Sabath & Fontanella, 2002), and since organizations in PSSCs work in a particular way due to the PS that they offer, some barriers might appear and impede organizations to reach positive results from external SCI.
2.2.2 Barriers in external supply chain integration
These theoretical assumptions will be determinant to identify if the existing literature of barriers in external integration is suitable for PSSCs in practice.
The silo mentality barrier, in which organizations only look for their own benefits, might have a great impact on the supply chain, its long-term competitiveness and profitability, since they do not consider the influence of their actions (Mujuni, 2011). The “I win, you lose” silo mentality manifests itself in the form of paying little attention to the needs of customers, using cheaper suppliers, and assigning few resources to service design (Wisner et al., 2006). Eventually, organizations in a supply chain can cause: specialization barriers, including contrasting perspectives regarding to objectives, and political barriers, which may lead to power issues (Barki & Pinsonneault, 2005). Cachon (2005) argues that silo mentality for manufacturing supply chains, is a significant obstacle to overcome in SCI. Nevertheless, for PSSCs this barrier might be hard to show up, due to the importance of connecting the same vision among organizations to work together towards providing the PS that the customer requires. In PSSCs the customer plays an essential role and is deeply involve in the creation and delivery of the PS. Therefore, if little attention is paid to customers, customization would be complicated to achieve. In addition, suppliers should be chosen for their capabilities to meet customer expectations and to support the development of the PS required. The allocation of resources for service design might be significant, in order to support the planning and interactions with the customer, the organization of parties to deliver the PS, the high degree of labor intensity of professionals, and the customization of the PS. As a result, if PSSC’s goals are not aligned among organizations, discrepancies might affect the flow of the PS in the chain, influencing quality, costs, delivery time and expectations of PSs; while also causing customer service issues for not meeting what agreed.
Lack of information visibility along the supply chain is a common external integration problem (Mujuni, 2011); meaning that there is not enough flow and access of information among parties. Furthermore, Cachon & Fisher (2000) discuss that organizations in a supply chain sometimes try to prevent access to valuable external data, causing limited information visibility. For PSSC, this barrier might imply an even higher level of labor intensity, while trying to get over limitations by collecting information needed, or solving issues to deliver the PS. Lack of visibility might also lead to time wasting, lost of customers and higher costs through the PSSC. Moreover, since nowadays technology allows integration across extended supply chains and firms usually construct their own supply chain information infrastructures (e.g. software) (Mujuni, 2011); organizations might also adapt information technology (IT) to their needs and use it as a valuable tool to enhance an appropriate flow of information, in order to facilitate collaboration within the PSSC.
relationships employing trust result in win-win situations for the organizations involved. Unfortunately, firm practices and human nature will not change overnight. But, until parties understand that it is in their own best interest to trust each other, the success in a supply chain will be difficult. For PSSCs a trust barrier might be fatal. Organizations in PSSCs must be able to develop good relationships with both, suppliers and customers, since are dependent in each other to deliver PSs. More specifically, trust is essential with suppliers to avoid bad practices and intentions, since it would be complicated to change a supplier every time that a dispute appears or a task is not performed as supposed to. With customers, organizations must make them feel comfortable to interact while working together and thus, provide the PS that the customer desires. Trust enables cooperative behavior (e.g. knowledge sharing), promotes network-based forms of organization, reduces conflicts, promotes effective responses to crises, leads to more positive environments (e.g. collaborative culture) and performance outcomes (e.g. PSSC performance) (Rousseau et al., 1998; Matzler & Renzl, 2006); facilitating external integration in PSSCs.
Mujuni (2011) also states that another obstacle that organizations collaborating might face is the lack of knowledge among organizations. In a PSSC, the culture and process knowledge are significantly different among each firm, and the way of working basically depends on the customized PS. Therefore, PS providers might consider offering certain type of education to organizations (e.g. about roles, responsibilities, the customized PS), in order to increase their capabilities to follow the same perspective and smoothly cooperate towards reaching a common goal. Also, as already mentioned that organizations develop supply chain information infrastructures, organizations may find themselves with multiple systems and software that need to be integrated externally (Mujuni, 2011). Thus, PS providers must realize the importance of providing training to organizations involved in the PSSC and their personnel, in order to use IT systems in an efficient way.
Openness and honesty are also needed from an external perspective (Hogarth-Scott, 1999). For instance, if there is going to be a delay from the supplier or the PS provider to the customer in a PSSC; the recipient should be informed as soon as possible to be able to apply a contingency plan (Barratt, 2004) and avoid the creation of a barrier. Openness and honesty may also overcome an obstacle of information sharing, which can actually develop commitment and respect among parties involved, as a result of certainty and reliability (Hoyt & Huq 2000). Efforts against this barrier include methods for reducing incongruences, such as sharing information, developing guidelines for managing relationships, joint goals and performance measures, while improving the means for assessing customer requirements (Richey et al., 2010).
2.2.3 Conceptual model
The findings made by Chase (1981), Harvey (1998) and Kellogg & Nie (1995), explaining that the characteristics of PSs, lead to uncertainty; Pagell (2004), Quesada et al. (2008) and Danese et al. (2013), stating that SCI practices make it possible to survive in a uncertain environment; as well as Sabath & Fontanella (2002) and Mujuni (2011), declaring that external SCI has proved to be difficult to implement and that barriers might exist; correspond to the fundaments for constructing the conceptual model of this research (See Figure 1.Conceptual Model).
The conceptual model consists in a PSSC network, including a supplier, a main organization providing the PS and a customer; which will help to identify external integration barriers in certain relationships: between the supplier and the main organization providing the PS, the main organization and the customer, and lastly, the customer and supplier.
3. METHODOLOGY
The aim of this thesis is to gather insights into:RQ: What are the major barriers faced by various players in professional service supply chains during the external integration?
Therefore, the unit of analysis of this research is PSSC, while the variables are the barriers in external supply chain integration and the organizations involved in the PSSC (supplier, PS provider, customer). In order to answer the research question, a qualitative research was performed, using interviews as a primer source of data. Qualitative interviewing was selected to obtain a more detailed understanding of individuals’ beliefs, perceptions, and accounts related to the particularities of the context (Lloyd, V. et al., 2006) of PSSCs, as well as to reduce the risk of superficiality (Forza, C. 2002).
3.1 Sample Selection
PSSC: PS: Main aim: Organization: Tasks: Particularities in PSSC: PSSC1 Educational Services Provide teaching services to students, by hiring external professors / supervisors. Supplier: External professors / supervisors • Teaching.
• Answering e-mails from students. • Making sure that the course material is
correct.
• Coordinating the grading of the examinations.
• Give support and guidance for thesis research.
• Providing contact hours and giving feedback. Business to end customer relationship. All the organizations are related to each other. Main organization providing PS: Department of Operations of University
• Hiring external professors (legally allowed to act as independent providers) to mainly coordinate large first year courses
(outsourcing).
• Hiring supervisors for bachelor thesis, and rare, but sometimes, for master thesis. • Coordination of professors/supervisors. • In charge of measuring quality by
contemplating if students are satisfied with the professors/supervisors.
• Setting up contracts with
professors/supervisors and making sure their invoices are paid.
Customer: Student
• Study.
• Prepare presentations.
• Group works and many meetings • Individual assignments. PSSC2 Facility Services Deliver and offer a whole package of facilitating services to customers, specialized in hospitality services (e.g. recepcionists). Supplier: SPARQ
• Provide a full package of services respecting outsourcing of personnel and their training.
• Specialized on hospitality and facility management services, such as front office staff, hosts, and retail personnel.
• Responsible to fill personnel schedules. Business to business
environment. All the organizations are related to each other. Main organization providing PS: Facility Management Agency (AAFM)
• In charge of managing the hired personnel from SPARQ and position such personnel to its customers.
Customer: Different organizations
• Organizations that want to outsource a complete package of facilitating services. • The range of customers is very broad, it
3.2 Development Interview Protocol 3.2.1 Interviews
As discussed, interviews were the basis for gaining data in this research (See APPENDIX A). The interview questions were meant to cover the main concepts reviewed in the theoretical background of this paper and to be deeply related to the conceptual model presented. The funnel model was applied as a structure for preparing the questions used in the interviews. This model starts with broad and open questions first, and as the interview progresses, the questions become more specific, and the detailed questions come last. Correspondingly, due to the explorative nature of this research, by conducting interviews, it was possible to ask additional questions if necessary. Firstly, every interview started by showing to the interviewee a descriptive image of the PSSC they are part of, to check if the understanding of the PSSC was correct from the interviewer perspective. They all agreed with the imaged provided and mentioned that it facilitated the understanding of the questions and the conversation. The interview questions were the same for each supplier, PS provider and customer of every PSSC researched, in order to gain and enhance data with greater reliability (Voss, C., 2002). The three types of interviews contained common sections, and other sections included supplementary and more personalized questions, to be able to compare their perspectives and to complement and profounder the results from the perspective of each party. PSSC3 Consultancy Services Guide organizations in the Province of Zuid Holland that want to enter to the Chinese market, by offering a full package of services, ranging from advising to translations. Supplier: Dutch Sino Business Promotions (DSBP)
• Guiding and giving support the organizations in the Province. • Advising and promoting Dutch
organizations of the Province of Zuid Holland interested on setting business in China, as well as Chinese companies willing to use the Province of Zuid Holland as a gateway to the Dutch and European markets.
• Translation services when a business trip is planned.
• Help the Province of Zuid Holland to build and maintain the relationship with China.
Business to business environment. All the organizations are related to each other. Main organization providing PS: Province of Zuid Holland (Governmental Department)
• Hires DSBP to assist on building and maintaining cooperation programs with China. Customer: Organizations in the Province of Zuid Holland
• Look for business opportunities in China. • Develop the business once advise has
been given.
3.2.2 Interviewer & interviewees
Due to the similarities of topics concerning to this master thesis, time restrictions and difficulties for finding appropriated organizations for the research, two interviewers executed the interviews phase. We worked together on the elaboration of the interview questions and on the transcriptions of the interviews. Afterwards, each of us, continued individually on the rest of the facets for the thesis.
For the research, it was aimed to have at least one interviewee for every PSSC (See Table 3. Interviewees). In PSSC1, all the parties involved were able to cooperate on time, so three interviews took place. Yet, the main organization providing the PS, decided to remain anonymous, so as a consequence the names of the supplier and the customer were excluded too. Regarding to PSSC3, in the same interview appointment with Mrs. Nan Su, Mr. Shaw Qin, a Project Manager of DSBP, who also worked as an intern for the Province of Zuid Holland, joined us to complement and provide the perspective of the Province in certain questions. Besides the willingness of collaborating with this research, each party showed interest on receiving our thesis while finished. We also decided to send to them a short management report involving an analysis of their PSSC and the collaboration among partner organizations, as appreciation and commitment for their cooperation.
PSSC: Organization: Name: Position: Location: Interviewed?
PSSC1
Supplier Anonymous professors/supervisors External Anonymous Yes
Main organization
providing PS Anonymous
Department of operations of
University Anonymous Yes Customer Anonymous Student Anonymous Yes
PSSC2
Supplier Mr. Koen Plasmeijer
Senior Consultant Regio Noord-West, from the
company SPARQ
Amsterdam Yes
Main organization providing PS
Mrs. Claudia van
Betten Facility Coordinator of AAFM Groningen Yes Customer Organizations Not applicable Not applicable No
PSSC3
Supplier Ms. Nan Su & Mr. Shaw Qin
Partner at DSBP / Project Manager of DSBP & ex- intern
for the Province of Zuid Holland
Rotterdam Yes
Main organization providing PS
Province of Zuid
Holland Not applicable Not applicable No
Customer
Organizations in the Province of Zuid
Holland
Not applicable Not applicable No
3.3 Data Collection
One face-to-face interview was performed to every interviewee. The interviews had a duration of about one hour in average for PS providers and suppliers, while for the customer took less time, approximately half an hour. Both interviewers participated actively and synchronously in the interviews, and the same protocol for every interview was implemented to enhance validity (Voss et al. 2002). Interviews were audio recorded by digital devices (Tablets and cellphones), in order to certainly provide an accurate rendition of what has been said in the interviews and to have the opportunity of checking data how many times needed. All the stakeholders gave us their permission for recording and did not showed inhibited from our point of view. Once the results of the interviews were gained, we documented the interviews by doing a transcription of every interview tape, and thus, we developed a written record of the information collected. It was not possible to present to each stakeholder such transcription for verification due to deadlines limitations.
3.4 Data Reduction
A tree coding was created based on the main concepts of the theoretical section of this research, to reorganize and categorize the data collected from the interviews (See Table 4. Tree Coding). In order to start the coding, it was necessary to catalogue each answer of all the interviews according to a topic and a subtopic. Subsequently, an extent analysis of every statement directly related to a code was done. If this code was different that the ones presented, it was classified as other. For instance, if a stakeholder explained that lack of trust was a difficulty for external integration, it means that the topic was “External supply chain integration”, the subtopic was “Barriers” and the code was “Trust”, since it is included in the definition of the code.
Topic Subtopic Code Code definition
Service Characteristics (Schmenner, 1986). Professional Services (PSs).
Customization of final PS. Degree to which the PS is personalized to the customer. Level of interaction with the
customer.
Degree to which the costumer is related or collaborates to the PS process.
Labor intensity. Degree of labor efforts needed to deliver the PS. Other Other characteristics to be detected in every PSSC according to the interviews.
Supply Chain Integration (SCI)
(Ellram, 1990).
Collaboration between parties in
the Supply Chain.
Inter-organization processes. To what extent there is cooperative management of organizations’ processes.
Strategic collaboration. To what extent are partnerships looking for reaching mutual beneficial objectives.
Performance measurement. Which metrics are considered to measure performance in the PSSC.
- Integration with: Supplier. Party that deliveries specific PS(s) to the PS provider. Customer. To whom the final PS is provided.
External Supply Chain Integration (Flynn et al., 2010). Barriers (Mujuni Katunzi, T. 2011).
Silo mentality. To what extent parties only look for their own benefits and do not consider the influence of their actions.
Supply chain visibility. To what extent there is flow and access of information among parties.
Trust. To what extent exists trust among parties. Knowledge. To what extent personnel is trained and educated for cooperation among parties.
Openness and honesty. To which extent there is commitment and reliability among parties.
Other. Other barriers to be detected in every PSSC according to the interviews.
4. RESULTS
This section presents the main analysis outcomes of the three PSSCs studied. Once all the interviews were coded in an excel file (see APPENDIX B) by considering the tree coding presented in Table 4, a summary of every code theme per organization interviewed was created. Then, a within-case analysis (see section 4.1 Within-Case Analysis) was developed by combining the perspectives of all the parties interviewed per PSSC, generating one version of each PSSC. Lastly, a cross-case analysis (see section 4.2 Cross-Case Analysis) was performed, by incorporating the three PSSCs versions from the within-case analysis, which in turn contributed to obtain useful information to draw valid conclusions for this research.
4.1 Within-Case Analysis
4.1.1 Professional service supply chain characteristics in PSSC1, PSSC2 and PSSC3.
Table 5 shows the first code theme of the tree coding (Table 4): the PS’s characteristics of every PSSC studied. All the parties interviewed in PSSC1 agreed that the level of customization for the final PS was high, but only adapted to customer needs in a certain way. As mentioned by the PS provider, this happens because “Normally a customer is a king, but not here”; meaning that this type of customer has responsibilities. Therefore, other factors also have to be considered for the PS delivery. The level of interaction with the customer while providing the PS very much depends on the type of supplier hired; but they usually show willingness to provide help and advice according to customer requirements. Labor intensity is supposed to be based on the amount of hours that the supplier has to perform per course, but in practice, it varies. For example, a customer said that
Table 5. PSSC Characteristics - PSSC1, PSSC2, PSSC3. .
besides the course, if requested, personalized meetings with the supplier take place to solve questions. In PSSC2, the PS provider said in the interview that there are basic parts of the PS that sometimes are standardized, “Like when a receptionist has to pick up a phone according to certain guidelines and protocols, but you never know who is on the receiving end, so it is also about improvising”; but the PS is still highly customized. The level of interaction with the customer is elevated and it is influenced by how the relationship between the supplier and the customer is managed by the main organization providing the PS. Furthermore, labor intensity of the supplier is rigid by a fixed contract per customer, but since the job demand is very flexible, the workload has to be adapted (e.g. when a substitution of an employee is necessary). Moreover, for PSSC3, the customization of the PS is high and contemplates the requirements of both, the PS provider and the customer. The supplier is the one having the direct interaction for most of the customers and personally visits them. During the interview, the supplier stated: “More customization, leads to more concrete and better results, but it requires much more work in our organization”. Hence, there are labor intensity limitations; since the supplier can only help the customers by opening the doors and making contacts to get business opportunities, but customers have to do the rest of the business themselves. PS characteristics: PSSC1 PSSC2 PSSC3 Customization of final service. • High level. • Educational service is customized to customers depending on: role of supplier in the PS and customer needs. • Also influenced by: strategic goals of PS provider and supplier experience.
• High level.
• The facility service is different for each type of customer, depending on: customer requirements, business environments and geographical differences.
• High level.
• The consultancy service is adapted according to: PS provider requirements and customer needs to create business opportunities.
Level of interaction with
the customer.
• High level.
• PS provider communicates with customers only through evaluations.
• Supplier has direct contact with customers since they provide the educational service.
• Differs according to the type of supplier and customer needs.
• High level.
• PS provider and supplier have direct interaction with PS provider’s customers. But supplier delivers the facility service.
• Depends on: type of office, location of office, customer.
• High level.
• Supplier is the direct contact for most of the customers of the PS provider.
• Supplier conforms a fixed team to better understand Chinese and Dutch Side: two Chinese and two Dutch people.
Labor intensity.
• High level.
• Workload according to the hours expected for educational service.
• If requested, personalized meetings take place or exchange of information via e-mail to solve questions from customers.
• High level.
• PS provider has fixed contracts with supplier regarding to certain amount of hours per customer, but there are also flexible agreements.
• High level.
4.1.2 Supply chain integration in PSSC1, PSSC2 and PSSC3.
SCI: PSSC1 PSSC2 PSSC3
Inter-organizational
processes.
• Meetings between PS provider and supplier before starting the educational service, to discuss about activities and schedules (sometimes adapted).
• Boundaries are not experienced by supplier since is a skilled professional and able to do the job.
• Cross-functional activities exist between supplier and PS provider’s personnel.
• PS provider’s back office supports supplier and customer.
• Information between supplier and customer is usually through mail and PS provider’s platform.
• Information exchange between customers and PS provider is only by customer evaluations.
• Information exchange between supplier and PS provider is informal and difficult.
• Customer provides a program with demands and expectations about the facility service levels for an office. PS provider evaluates this program and if all parties agree, then the facility service starts.
• Processes are aligned and matched between PS provider and customer, but the facility service differs according to environments. • Activities are synchronized in a certain point between supplier and customer.
• There are not cross-functional teams, but PS has regularly meetings separately with the supplier and customer.
• Information sharing between PS provider and supplier is via e-mail, and between PS provider and customer is via PS provider’s software.
• Manuals are placed at every front office of customer (guideline to handle activities and processes for supplier’s personnel).
• The PS provider hired a member of supplier’s team for half of year, to have a better understanding of how the project works and overcome boundaries between supplier and PS provider.
• Supplier has direct contact with the customer and shares information by e-mail, receptions and company visits. • Information exchange between supplier and the PS provider is through daily phone calls and e-mails.
Strategic collaboration.
• Goals are determined by PS provider and are not aligned with supplier and customer.
• Scheduled deadlines are planned in advance for customers and supplier, but sometimes are adapted.
• There are not regular meetings between supplier and PS provider. • The educational service is designed by PS provider and executed by supplier.
• Structure of the educational service is ruled by strict deadlines and a high workload for customer.
• Structure of educational service and processes sometimes are adapted for supplier.
• There are not shared decisions between customer and PS provider. • Supplier is not trained by PS provider.
• Collaborative culture between PS provider and supplier is occasional.
• Goals are aligned between supplier and PS provider depending on the customer and the facility service. • Alignment of the size of supplier’s personnel and the amount of hours that supplier needs to fill up for PS provider, according to customer requirements.
• Meetings take place between PS provider and supplier to discuss expectations of customer.
• Quarterly meetings exist between PS provider and customer about the facility service.
• Ad-hoc and less formal meetings exist between PS provider and supplier’s personnel at customer offices (e.g. secretary).
• Supplier imparts customized training to its personnel according to PS provider and customer requirements.
• Most decisions between PS provider and supplier are taking in mutual agreement, since PS provider has final contract with customer. • There is a collaborative culture between supplier and PS provider to satisfy customer.
• PS provider acts in a proactive way to anticipate complaints from customer.
• Supplier and PS provider have a shared goal, and each of them persuades own goals as well.
• Collaboration between supplier and PS provider takes place by having regular meetings.
• Supplier organizes annual events, activities and a big trade mission to China for customers.
• PS provider is always the decision maker.
4.1.3 External integration barriers in PSSC1, PSSC2 and PSSC3.
Table 7 summarizes external integration barriers that were found for each PSSC. PSSC1 experiences supply chain visibility barriers (1) since during collaboration the flow of information is informal and difficult between the PS provider and supplier; (2) and there is poor interaction/communication between PS provider and customers (only by evaluations); (3) The existence and mandatory use of a specific IT platform is complicating the efficient flow of information between supplier and PS provider, and acting more like a stumbling block. A knowledge barrier was identified since (4) there are the different ways of thinking between PS providers and customers due to different levels of knowledge, educational backgrounds and cultural differences, leading to: “harder work to meet professor’s expectations in a course”. Other barriers also emerged: (5) the relationship between the PS provider and the supplier is not professional in terms of flexibility. As an example, the supplier mentioned: “The Department of Operations says that this course is rated for about 300 hours. But if then, the number of hours goes up because there are more students or something to develop during the course, that is bad luck for you as supplier”; and (6) there is no real structure of processes while collaboration takes place. For PSSC2, a supply chain visibility barrier is present (1) since customer is supposed to use a software for requests and sometimes, reaches managers personally instead, affecting how processes are coordinated; knowledge barriers (2) there is lack of understanding about the PSSC structure from supplier’s personnel perspective. This causes that personnel perform extra tasks that they are not supposed to do for customers, affecting supplier’s control during integration; and (3) there are different viewpoints between organizations involved about suitability of personnel according to customer requirements. Openness and honesty barrier also exist, (4) since sometimes there is not commitment from the supplier to meet agreements and standards of the service delivered, even though they promised to. Additionally, other barriers were detected: (5) sometimes there is lack of willingness of supplier’s personnel to be adapted to work in different situations, to have continuous trainings according to the PS that a customer
Performance measurement.
• Outcomes (e.g. grades). • Customer feedback.
• Customer evaluation forms.
• Customer satisfaction surveys and feedback.
• Interviews between PS provider and customer, and between PS provider and end users (customer’s employees).
• Meetings to discuss, review and evaluate take place between PS provider and supplier. From such meetings reports are prepared and shared through the entire PSSC. • During the contract period, programs are continuously evaluated and revised according to new needs.
• Outcomes.
• Number of customers participating in the program. • Annual reports.
• Overview of activities carried out and number of signed contracts.
requires, as well as to be available in case of additional or ad-hoc requests; (6) customer is not that flexible with ad-hoc requests, accepting only supplier’s personnel that have already worked for the customer; (7) PS provider’s managers cannot be present every day at customer offices, and if there is any difficulty or request, is harder to solve it while there is distance in between, since as the PS provided argued: “If you do not see things by yourself, you sometimes can come with the wrong solution”. Lastly, PSSC3 showed two knowledge barriers, (1) lack of knowledge of customers about supplier’s role and responsibilities while working together; and (2) the PS provider has been working with China for quite a long time already. The PS provider is supposed to know everything about China, which is not 100% true. So the lack of knowledge of PS provider about the relationship with China, negatively influences the cooperation and collaborative culture with supplier. Furthermore, other barrier was identified: (3) the supplier has to balance customization, because even though obtaining extra work leads to better results for the customer, the supplier does not get more paid.
External
Integration Barrier: PSSC1 PSSC2 PSSC3
Silo mentality - - -
Supply chain visibility
• Information sharing is very difficult and it is not formalized between PS provider and supplier (e.g. additional changes in educational service are not communicated).
• Poor interaction between the PS provider and customer, only by evaluations.
• IT complicates the flow of information among supplier and PS provider (e.g. PS provider’s platform).
• Customer is supposed to use software for requests and sometimes, but reaches managers personally instead.
-
Trust - - -
Knowledge
• Different ways of thinking between supplier and customer due to different levels of knowledge, educational backgrounds and cultural differences.
• Lack of knowledge and understanding of supplier’s personnel regarding to the construction of the PSSC, and do not keep boundaries in mind (e.g. supplier’s personnel performing extra tasks not included in agreements).
• Different understandings between PS provider and supplier, and between PS provider and customer about suitability of personnel to do a specific task.
• Lack of knowledge from customers about supplier’s role and responsibilities. • Lack of knowledge from the PS provider about project environment, affecting collaboration with supplier.
Openness and
honesty -
• Lack of honesty and commitment when supplier does not meet agreements and standards of the service delivered (e.g. make promises that they cannot deliver).
4.2 Cross-case Analysis
4.2.1 Professional service supply chain characteristics
The incorporation of the three PSSCs from the within-case analysis indicates that there is a high level of customization in PSs. This points out that the PS is never the same for diverse customers, but particularly adapted by considering their own needs, and other factors that are exclusive for the context of each PSSC. In practice, some elementary standardized activities can exist in PSSCs, but the PS is still personalized. For example, a customer with an office environment asks for other type of PS than a customer active in a chemical environment. As a consequence, the high level of customization leads to a high level of interaction, which also varies with every customer. The PSSCs evaluated have exposed that the organizations involved are dependent and related to each other in order to deliver the final PS that the customer requires. This suggests efforts to have a closer contact between PS provider and customers, suppliers and customers, and PS provider and suppliers. The PS provider is the intermediary of such relationships by managing separated contracts. Along with these contracts, which determine certain amount of hours or tasks to be executed, PS providers generally keep flexible agreements with the suppliers, to be able to adjust their workload, tasks, training, skills, etc. if necessary, to provide the PS demanded by the customer. Thus, the high levels of customization and interaction with customers require elevated labor intensity in PSSCs.
4.2.2 External Integration barriers in professional service supply chains
The characteristics of PSSC’s previously reviewed, the character and environment of a customized PS, influence how parties collaborate in PSSCs. According to the analysis performed by combining the three PSSCs, integration in a PSSC starts by
Other
• The relationship between the PS provider and supplier is not professional in terms of flexibility (e.g. extra course hours).
• There is no real structure of processes during collaboration between PS provider and supplier.
• Lack of supplier’s personnel willingness to: be adapted to work in different situations (e.g. different offices) and to cooperate by constantly improving technical skills (customized training) to be available for ad-hoc requests or in case of disruptions (e.g. if somebody is needed in the next hour or a substitution for somebody sick). • Lack of customer flexibility, since in case of ad-hoc requests, customer only accepts supplier’s personnel that have worked with before. • Hard to solve issues at customer offices, when there is physical distance in between for PS provider’s managers.
• Supplier has to balance and put limits on customization. Extra work leads to better results for customer, but supplier does not get more paid.
the coordination of inter-organizational processes. It includes meetings between the PS provider and customer about the PS to be delivered; and between the PS provider and the supplier to discuss roles and responsibilities to work in line, which are often modified and adapted to each customized PS. In some occasions, cross-functional activities exist and education is imparted for guidance and control of boundaries. Information exchange among all the organizations is frequently transmitted by the use of information technology systems. Accordingly, further management of such processes by the PS provider is necessary. Inter-organizational processes are very associated to how organizations have determined to carry out strategic collaboration. To strategic collaborate is indispensable that organizations really trust each other, since they pursuit a common objective towards achieving customer requirements by delivering the PS expected. In addition, since the customization of the PS leads to flexible processes, organizations handle activities during the cooperation by arranging formal meetings among parties while working together (informal interactions habitually appear in time); sharing decision making processes between the PS provider and supplier; and executing different practices to strengthen relationships, which encourages collaborative culture within the PSSC. The metrics of measuring the performance of the integration among parties varies, but it is frequently assessed in terms of outcomes, customer feedback and continuous improvement. Nevertheless, when external integration is not managed properly, barriers are originated; obstructing collaboration in PSSCs. In PSSCs (1) supply chain visibility barriers appear when the communication during the collaboration is casual and difficult to achieve among organizations (e.g. including the use of IT tools that sometimes complicate interaction). Communication in PSSC is fundamental, since processes are constantly changing, organizations depend in each other to deliver the customized PS and need to adjust their workload. Thus, if this type of barrier is not overcome, customer expectations will be hard to achieve. Furthermore, the three PSSCs studied experienced common (2) knowledge barriers; since there are different perspectives and lack of understanding about the structure of the PSSC, the roles and responsibilities that each organization has to perform, or the characteristics for the specific PS that the customer expects. This barrier leads to different objectives and ways of thinking among organizations about the customized PS and the collaboration; addressing to higher levels of labor intensity due to harder efforts to meet PS expectations. (3) Openness and honesty barriers emerge when there is lack of commitment of promises made to meet standards of the PS to be delivered, or agreements, which are also persuaded by the flexibility of processes. This barrier mainly has an effect in the expectations of the organizations of the PS to be delivered and in the reliability of organizations.
5. DISCUSSION
Considering that services have not been well understood from a SC perspective (Ellram et al., 2004), the SCI literature of manufacturing supply chains was used to determine what external integration barriers are present in PSSCs. The results of this research have brought new insights about PSSCs. Nevertheless, even though PSSCs experience distinctive characteristics and a high degree of PS process variation (Schmenner, 2004), part of SCI theory applies to PSSCs. This section interprets and debates the outcomes of the research, starting by comparing PSSCs’ theory with how PSSCs are developed in real life, followed by external integration barriers in PSSCs.
Professional service supply chains in practice
By taking into account that Kellogg & Nie (1995) and Baltacioglu et al. (2007) argue that the different characteristics of (professional) services in comparison to goods, such as heterogeneity, address the fact that PS cannot be easily standardized. And that, PSSCs have a high degree of service process variation due to the high levels of customer interaction/customization and situations where judgments have a central role in service delivery (Schmenner, 2004). It was expected that PSSCs did not experience standardization in processes. Contradictorily, this research has found that in practice standardized processes exist in PSSCs. Standardized processes are used for organizations as guidelines, protocols, trainings and performance measurement for delivering a certain level of consistent quality in PSs and to facilitate external integration practices in PSSC.
Professional service supply chains: External integration barriers
Cachon (2005) already argued the importance of overcoming the silo mentality barrier during external integration; and as assumed before, this barrier was not detected in PSSCs. This situation goes in line with the statement discussed by Wisner et al., (2006), explaining that the silo mentality barrier reveals itself while paying little attention to the needs of customers, using low cost suppliers and allocating few resources to service design; since PSSCs experiment total different characteristics. In PSSCs, the customer is the one providing the input and receiving the output, meaning that customer requirements are considered essential for the creation and delivery of the PS. Moreover, it was found that PS providers mentioned that the most important element that they consider for performance is quality (See APPENDIX B). Hence, as the name itself says, the service is considered professional, so the PS provider is emphasized on acquiring a skilled and competent supplier that has the capacity of supporting the PS that meets customer requirements. The allocation of few resources to service design does not either fit with the behavior of PSSCs. Since PSs are highly customized, highly use of planning and organization resources (e.g. people, IT, material) is needed. Nevertheless, the effects of silo mentality might be faced as well by PSSCs. These include contrasting perspectives regarding to objectives and power issues (e.g. authority & control) (Barki & Pinsonneault, 2005).
Lack of supply chain visibility was another barrier discussed by (Mujuni, 2011), in which the flow and access of information among parties is limited, obstructing external integration. PSSCs encounter this barrier when information sharing is difficult and not formalized among organizations. This barrier has a great impact in how organizations collaborate, since the lack of information exchange complicates that organizations get connected to each other, influencing their way of working, the PS and customer expectations; leading to waste of time when the work has to be done again or when extra activities have to be performed to get information needed for the delivery of the PS. Likewise, Mujuni (2011) explained that IT allows integration across organizations, however, this research has also found, that In spite of the fact that IT systems can facilitate collaboration (e.g. communication through distance or faster information exchange and processes), if it is not managed accordingly, it can act as a block for integration and affect how processes are coordinated among organizations in PSSCs.
element anymore, but the contrary, creating more barriers during external integration.
Mujuni (2011) also states that lack of knowledge as an obstacle that organizations might face during integration, since the way of working, culture and knowledge process are different among organizations. The findings of the research have shown that the three PSSCs studied experiment knowledge barriers and that are in line with theory. More specifically, the causes of the appearance of these barriers are mainly focused on the context of PSSCs. The fact that PSs are always adapted to specific customer requirements has address different perspectives among organizations about the PS to be delivered, affecting the expectations of the final PS. In addition, it was found that the structure of the PSSCs was hard to understand for some parties, leading to performing tasks that were not necessary for the PS. Therefore in order to avoid misunderstandings, certain level of education while collaborating in PSSCs is needed, to make sure that uncertain perspectives are reduced and that all the parties have the same vision towards the PS that the customer requires.
Openness and honesty was another barrier found in PSSCs. This barrier matches the studies made by Hoyt & Huq (2000) and Mujuni (2011), stipulating that openness and honesty are influenced by lack of information sharing and commitment. It was detected that sometimes parties does not meet the PS expected, according to agreements. As an effect, this barrier might cause other issues related with the delivery of the PS, affecting the reliability of the party and the organizations involved in the PSSC. Since organizations in the PSSCs studied already present a high level of trust, in case of confronting any disruption, they should be able to notify the rest of the parties, so they can be capable of preparing an action plan, and thus enhance certainty and avoid a barrier during collaboration. As already distinguished, several barriers identified while studying three different PSSCs, adequately fit into the tree coding (Table 4), which was based on the existing theory of external integration obstacles proposed by Mujuni (2011). Nevertheless, some barriers were recognized as “Other”. Therefore, it means that this research has brought new insights to external integration barriers of PSSCs and also of SCI. This situation was expected, since PSSCs experience unique characteristics in comparison to other types of services and goods (Schmenner, 1986; Lewis & Brown, 2012). Hence, two new categorizations were added to three coding, and “Supply chain visibility” was updated by adding the influence of IT during collaboration: “Supply chain visibility & IT”. Table 8 encompasses the findings of this research.
customer expectations of the PS would be affected, the performance of the PSSC would be influenced, to mention some.
The environment in which PSSCs are developed and the unique characteristics of PSs have lead to the creation of a new external integration barrier for PSSCs: Flexibility. Even though organizations are aware of the existence of flexibility in processes or that flexible agreements exist among them, the three PSSCs researched presented flexibility barriers. This type barrier is caused due to the high level of customization of PSSCs. Flexibility has an impact in how organizations, processes, people and relationships have to be adapted to a specific PS. Hence, certain limitations in customization of PSs need to be established to equilibrate labor intensity with agreements and relationships in PSSCs.
6. CONCLUSION & FUTURE RESEARCH
This research has found valuable insights to answer the research question proposed. It can be concluded that SCI theory about external integration barriers, in part, applies to PSSCs, since “supply chain visibility”, “knowledge” and “openness and honesty” barriers were presented in the PSSCs studied. In addition, the results of this thesis have recognized that besides facilitating information exchange among organizations, IT systems can also limit access to information in supply chains, hence, the barrier of “supply chain visibility” was adapted to “supply chain visibility & IT”. Lack of “structure of processes” among organizations was also detected as a new barrier for SCI. One barrier did not applied at all with the principles of PSSCs, named “silo mentality”, which expresses itself while paying little attention to customer needs, using cheaper suppliers, and allocating few resources to service design. Nevertheless, the effects of this barrier might exist inTopic Subtopic Code Code definition
External Supply Chain Integration (Flynn et al., 2010). Barriers (Mujuni Katunzi, T. 2011). Silo mentality.
To what extent parties only look for their own benefits and do not consider the influence of their
actions. Supply chain visibility & IT.
To what extent there is flow and access of information among parties; and IT facilitates
collaboration.
Knowledge. To what extent personnel is trained and educated for cooperation among parties.
Openness and honesty. To which extent there is commitment and reliability among parties.
Other barrier(s) Structure of processes. To what extent there is structure of processes influencing collaboration among organizations. External PSSC
Integration PSSC barriers Flexibility.
To what extent is adaptability affecting processes, people and relationships.
PSSCs, such as specialization barriers (e.g. contrasting perspectives regarding to objectives) and political barriers (e.g. power issues). The three PSSCs exposed a high level of trust during external integration, so the “trust” barrier was not present either. On the other hand, as expected, the uniqueness of PSs brings along a specific external integration barrier in PSSCs: Flexibility; which implies how adaptability affects processes, people and relationships during collaboration. The results from this research have several theoretical contributions. For one side, it provides insights and develops the understanding of the concept of PSSCs and the theory of external integration in PSSCs. In contradiction with Kellogg & Nie (1995) and Baltacioglu et al. (2007), arguing that services in comparison to goods, cannot be standardized; and Schmenner (2004), discussing that PSSCs experience a high degree of service process variation; in practice, organizations implemented several standardized processes to ensure certain level of quality. Additionally, one aspect that has not being mentioned in theory is that customization in PSs has limitations during integration; meaning that not only the requirements of customers should be considered, but also other important factors during the collaboration, as restrictions of flexible agreements of organizations. Likewise, it was identified that facilitators, such as IT systems, can also have a negative effect for external integration. Lastly, new insights of external integration barriers for SCI and PSSCs were revealed. Moreover, the practical contribution relies in the fact that practitioners can consider this research in order to facilitate external integration among organizations and to overcome external integration barriers in practice. In addition, this research would be useful for the organizations participating, by analyzing and creating solutions regarding to the barriers identified.
The strengths of this study are that it was emphasized on researching three PSSCs belonging to completely different environments (education, facility and consultancy services); and that several organizations were taking into account (supplier, PS provider, customer), which enhances the validity of this thesis. A number of limitations to this research can be noted. Since PSSCs experience unique characteristics, the results cannot be totally generalized. Also, carrying out interviews has limitations and risks (Voss, C., 2002), and there are some common practices that may lead to inconsistent interviews. For example, information is subject to bias introduced by human interaction, interviews are less anonymous, first impression may have an influence on the information provided, time pressure to answer the interview’s questions and the participants may feel uncomfortable with a face-to-face interview.
