CIE42 Proceedings, 16-18 July 2012, Cape Town, South Africa 2012 CIE & SAIIE

SERVICE SUPPLY CHAIN: AN INTEGRATED CONCEPTUAL FRAMEWORK

1

S. Sakhuja1 and V. Jain1

Department of Mechanical Engineering
Indian Institute of Technology, Delhi
sumitsakhuja@gmail.com
vjain@mech.iitd.ac.in
ABSTRACT

It is necessary to integrate, coordinate and collaborate the different service operations

performed in various organizations in order to deliver the services at the highest level of
customer satisfaction. This integration can be done through a service supply chain, which
includes different players/organizations connected by a network of activities. Based on
literature review on Service Supply Chain, structure, decisions as well as the application
area of service supply chain are highlighted in this paper. Service supply chain is then linked
with key service operations with the help of a proposed conceptual framework. The paper
also highlights the important research directions which can be a part of service supply chain.
This paper is an attempt to conceptualize a service supply chain through a framework which
helps in visualizing the integrated service network.
Keywords: supply chain management, service supply chain, service operations

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1 INTRODUCTION
A critical part of any organizations endeavour to compete in todays market is the design of
their supply and distribution networks. This is true not only for product companies, but also
for service companies [1]. The service economy has always been the driving force of
economic growth of every developed nation [2]. The concept of supply chain management
has been applied in manufacturing sector by various researchers and the results obtained are
found to be very fruitful in terms of cost optimization and increased quality level. Service
operations have unique characteristics that are not found in manufacturing [3]. In fact,
similar to the production of manufacturing goods, services production involves the
collaboration of several actors; the service providers, the suppliers of other services or
resources needed for the design and delivery of these services and the service clients, all
working together to co-produce value in complex value chains or networks. But due to
certain differences in manufacturing and services [1], there are inherent difficulties in
developing standard models for services due to the peculiarities of service exchanges which
also contributed to the dearth of research in the area [4].
Services are considered as supply chain processes that are balanced around the capacity of
the firm through the upstream sourcing processes [2]. Various reasons why services can be
viewed as a part of supply chains [2] are coordination of processes, improved performance
through process integration, and improvement of the customer interface. It is necessary to
integrate, coordinate and collaborate the different service operations performed in various
organizations in order to deliver the services at the highest level of customer satisfaction.
This integration can be done through a service supply chain (SSC), which includes different
players/organizations connected by a network of activities. A SSC can be described as a
network of service provider facilities, each of which is capable to process one or more
service tasks on an as needed basis [5]. Two key characteristics of a SSC are i) the business
service is decomposable into several sequential tasks that can be processed by different
service providers, and ii) the primary capacity resource is skilled labor, and there is no
inventory and material flow in SSC.
All the decisions in any SSC chain can be categorized in three levels depending on the
timeframe and the effect. Level-one decisions are in the area of service business planning,
and they have a long term effect on the SSC. Examples of level-one decisions are dynamic
sourcing, service provider selection, capacity planning, service delivery, service quality,
service productivity etc. Level-two decisions are in the area of tactical planning, and they
have a shorter life than level-one decisions. Examples of level-two decision are capacity
planning, effectiveness in scheduling, supplier cost and pricing issues, forecasting accuracy
etc. Level-three decisions are in the area of operational planning and scheduling. The effect
of these decisions is short term and they are constrained by level-one and level-two
decisions. Examples are staff scheduling, short term forecasting, resource allocation, the
service order entry method, the customer service order path, capacity utilization, operating
ratio of actual to planned working hours, etc.
Based on the current research trend in SSC management, a theoretical understanding is
developed and hence an integrated conceptual framework is proposed in this paper. The
proposed framework highlights the structure, decisions and operations that are carried out
in a typical SSC. The proposed framework will provide an aid to service operations managers
to take vital decisions in building up the service package in an efficient and cost effective
manner. This will ultimately result in the timely delivery of the services to the customer and
enhancing the level of customer satisfaction.
2. LITERATURE REVIEW
In this section, literature review is performed from the area of SSC management. The review
starts with different definitions on SSC addressed in the literature. The definitions are

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followed by the literature dealing with the structure of SSC. Finally, the area of application
of SSC has been summarized.
2.1 Service Supply Chain Definitions
SSC has been researched and defined by various authors and subsequently applied to various
service sectors. Table 1 summarizes the SSC definitions given by different authors.
2.2 Structure of SSC
The structure of SSC has some similarities with the product supply chain, as the services are
created, purchased and transferred from one element to another in a form of a chain. The
structure of SSC is a complex network, which combines direct or indirect service providers
around service integrator [12]. The initial contribution was from [26], a SSC consists of a
customer, a service provider and an initial service provider. The author also mentioned the
bidirectional nature of SSCs. A social capital link was introduced between customer and
service provider as well as service provider and service supplier [13]. Based on the delivery
of the different forms of services, the structure of SSC can be divided into three forms:
serial-SSC, parallel SSC and hybrid SSC [9]. Demirkan et al. [14] structured an application
SSC with three members that are application infrastructure provider, application service
provider and customer.
Peng et al. [15] discussed the structure of third party payment services, which include three
basic structural elements that are ebanks, third party payment companies and e-commerce
websites. In an education supply chain [16], the members are suppliers (education and
research suppliers), service provider (universities) and customers (education customers and
research customers). Tourists, tour operators and service suppliers constitute a complete
tourism supply chain and patients, health-care centres and relevant suppliers constitute
health-care supply chain [10]. Three roles in a human resource (HR) SSC are consultants,
administrative service providers and technology enablers.
SSC's basic architecture is professional service provider, service integrator, the final
consumer, and the chain members participate in the entire process of service [17 and 11].
Song et al. [12] analyzed the producer services and structured their supply chain with three
basic elements which are: the direct services contractor at the core; the indirect services
provider and the services demander as the node enterprises.
A typical SSC consists of three basic structural elements that are customer, service
integrator and service provider. As services are intangibles, there is no material flow
between these elements; in fact they are connected with information only.
Table 1: Summary On SSC Definitions
AUTHOR

DEFINITION

Kathawala et al.
[6]

The supply chain management for the service industry is the ability of
the company/firm to get closer to the customer by improving its
supply chain channels. The SSCs will include responsiveness,
efficiency, and controlling

Ellram et al. [7]

Supply chain management is the management of information,

processes, capacity, service performance and funds from the earliest
supplier to the ultimate customer.

Baltacioglu et al.
[8]

The SSC is the network of suppliers, service providers, consumers and

other supporting units that performs the functions of transaction of
resources required to produce services; transformation of these
resources into supporting and core services; and the delivery of these
services to customers.

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AUTHOR

DEFINITION

Baltacioglu et al.
[8]

SSC management is the management of information, processes,

resources and service performances from the earliest supplier to the
ultimate customer.

Li et al. [9]

SSC is a service-network that reorganizes different service entities in

order to satisfy customers' require by using modem management
technology to break down and rebuild a system which considers
customers' demands as starting point and takes a complex service or an
Integrated Service Package as a series of process in service when the
service-industries are developed to some extent.

Wu et al. [10]

SSC can be defined as follows: an integration of a series of entities

(individual person, organization, enterprise) to provide personalized
service directly or indirectly.

He et al. [11]

SSC refers to the supply and demand chain of service which integrates
the service resources using new technologies and management models.

Song et al. [12]

The Producer SSC management is an integrated management mode of

service information, service processes, service capacity, service
performance and service funds from the initial service supplier to the
ultimate customer in the process of producer service outsourcing.

2.3 Previous Work On SSC

The knowledge of the structure of supply chains in service businesses is still scant [8] and
the concept and application of SSC is in its inception. Very few researchers have made an
attempt in understanding and building of supply chains of services, through the adaptation
of existing SCM models [7, 1 and 8]. Studies so far focused on how traditional supply chain
functions can be defined in services [6] and [19] and investigated the dyadic relationship
between the service provider and the end consumer of a service [18].

Figure1: Service Supply Chain (Source: Baltacioglu et al. [8])

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Customers are the suppliers in a SSC, the inputs from the customer sides are considered as
the supplies [18]. In an attempt to develop a service SCM framework, [19] assessed the
utility existing SCM models and have adapted six processes of the global supply chain forum
framework [20] for application to a SSC: information flow, capacity and skills management,
demand management, customer relationship management, supplier relationship
management, service delivery management, and cash flow. Since the beginning of SSC
concept, various researches have been carried out in different service sectors. Lee et al.
[21] used the structural equation models to study the relationships among internal service
quality, employee satisfaction, employee loyalty, external service quality, and customer
satisfaction. Li et al. [9] discussed the different attributes of a SSC, like Object attribute,
Structure attribute, Dynamic attribute, and Operation attribute. Social capital has a positive
impact on SSC performance; moreover it is found that this impact is greater on pure services
supply chain in comparison to other service structures. The small service industries seem to
have benefited by the social capital [13].
2.4 Application Area Of SSC
From the literature of SSC, few of the application area of SSC are highlighted in Table 2. It is
thus observed from the literature the wide applicability of SSC management in different
service organizations.
As discussed earlier, service organizations have been studied and analyzed from different
viewpoints by different authors. A SSC is a network of different service organizations, which
operates independently as well as in collaborations. Each organization handles its service
operations like demand management, capacity management, forecasting etc. Figure 2 shows
few of the key service operations that have been studied in the past.
Table 2: Application Area Of Service Supply Chain
AREA OF STUDY

AUTHORS

AREA OF STUDY

AUTHORS

Healthcare

[22, 10, 23, 8]

Telecommunication

[30]

Tourism and Hotel

[24, 25, 26, 27]

Management Consulting

[2]

Logistics

[9, 12, 28, 29, 17, 10]

Application Services

[14]

Education

[16]

Others

[17]; [11]; [10]; [15];[21]

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Service
provider
selection
&
Service
Outsourcing

forecasting

Service
performance

Demand
management

measurement

Service quality
measurement

Service
Operation
s/Activiti
es

Capacity
management

Coordination &
Collaboration

Customer
related
issues
Application of
manufacturing
principles

Figure 2: Key Service Operations

3. INTEGRATED CONCEPTUAL FRAMEWORK
It has been observed from the literature that there is a need to link different service
operations in a SSC with an aim to deliver the required service to the customer. It is
essential to understand the activities performed at various stages of SSC. In order to build
this link between SSC and service operations, an integrated conceptual framework is
proposed.
3.1 Link Between Service Supply Chain And Service Operations
After going through the history of SSC and understanding the key service operation issues in
a service organization, an integrated conceptual framework is proposed which integrates the
structure and decisions to form a SSC. The proposed framework highlights the structure of
the SSC which has been discussed earlier in literature review section with three basic
elements that are customers, service integrator as a core and service providers. The
structure obtained from the literature is modified in this framework by adding various
service operations and decisions that are required at different levels of a SSC. The proposed
framework clearly explains the flow of key activities that are carried out in a typical SSC.
The various steps involved in the whole process of service delivery can be understood with
the help of developed framework. It shows that in a SSC, there can be a number of
customers, each of their individual service demands are forwarded to the service integrator.
The service integrator here is considered as the core element of the SSC. Service integrator
is responsible for managing customer demand, through its demand management capability.
Next stage is managing the capacity to perform service operations and ultimately delivery of
service to the customers. If the integrator lacks service capacity, as in most cases, the
responsibility of the integrator is to manage its capacity. Capacity management can be done
by selecting service providers who are capable of performing the required service tasks.
These service operations can also be outsourced to different service provider using various
service outsourcing strategies.

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CUSTOMER

CUSTOMER

CUSTOMER

CUSTOMER

SERVICE INTEGRATOR
C
O
L
L
A
B
O
R
A
T
I
O
N

SERVICE
CAPACITY
MANAGEMENT

SERVICE
PROVIDER
SELECTION

SERVICE
PROVIDER

SERVICE
CUSTOMIZATION

SERVICE
OUTSOURCING

SERVICE
PROVIDER

INFORMATION MANAGEMENT

SERVICE
DELIVERY

SERVICE
DEMAND
MANAGEMENT

SERVICE
INTEGRATION

SERVICE
PROVIDER

SERVICE
PROVIDER

Figure 3: An Integrated Conceptual Framework For Service Supply Chain

After the service providers perform their operations and come up with service solutions,
these services need to be integrated and customized depending upon the customer
requirements. This task is again accomplished by the service integrator. Finally, the
customised service package is delivered to the final customer through a well managed
service delivery system, which is again the core activity of the service integrator. It is
imperative to integrate and coordinate various activities in order to deliver the services to
the customer at the requisite time, in an efficient and cost effective manner and also
maintaining the flexibility for any sought of variability.
3.2 Research Directions
It is worth mentioning that the research in the area of SSC is still in its early stage. So, there
is a need to address the various research directions that can be a part of SSC of an
organization. Based on the literature on service operations, SSC, service marketing
management and supply chain management, some of the key research directions that can be

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highlighted here are service demand forecasting, service provider selection, service
outsourcing, cooperation and collaboration between players, demand and capacity
management in services, service customization, service delivery systems, service quality and
performance measurement etc.
4. CONCLUSION AND FUTURE SCOPE
This paper provides insights into the conceptualization of the service supply chain
management (SSCM) field. The SSC is a structured chain which is needed to be managed with
supply chain principles in order to produce and deliver services at competitive level. The
work enables us to briefly describe SSCM, suggest how it should be described and structured
and also highlights the various decisions that are needed to produce and deliver the services
to the customer through a SSC network. The work provides a conceptual model of SSC, which
discuss the core elements of SSC as well as the various key operations carried out in the
service flow through a well managed SSC. This generic model can fit to different service
industries, and also provides the vision to the service operation managers to carry out their
service activities in a systematic and planned manner to achieve organizational objectives.
However, the study is based on general theory and lacks the support of real life case studies
with actual data which can truly relate to the structure and decisions highlighted in the
framework. So, this study can be extended by incorporating the proposed framework in
different service industries and relating the structures and decisions of their SSCs with the
proposed framework. At the same time, the role of different structural elements and the
impact of various decisions on the performance of the chain can also be studied in future.
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