Principles and Practices for Orchestrating Digital Value Chains

Procurement as a business discipline has matured over the past few decades. The times are over of procurement as an intermediary functions that records agreements with suppliers and supervises their fulfilment. That is too limited a view in today’s business environment, where management is confronted with a multitude of issues impacting on the role and responsibilities of procurement.   It has been recognised that an effective and efficient procurement function can significantly contribute to business’ bottom line: competitive financial result. What’s more, many organisations feel the need to improve their relationships with suppliers in order to be better able to reduce costs, improve quality, increase flexibility and boost innovation in order to survive. Especially in these challenging economic times where outsourcing is used as a means to cut cost quickly is it necessary to move away from the traditional role of procurement as an intermediary functions that records agreement...

"Restoring American Competitiveness" is an article from Gary Pisano and Willy Shih in the juli/august issue of Harvard Business Review. The article points out that, against the general consensus, American companies will be unable to develop the next generation high tech products due to underestimating the impact of sending their manufacturing offshore. If this is true, can similar effects be expected for the service industry? In other words: will Western countries not only have to fight an uphill battle in manufacturing, but soon also in services? The article in HBR uses the value chain of personal computers and laptops as an example. Where American companies like HP, Dell and Compaq outsourced initially only their manufacturing to low cost offshore destinations, is now almost the whole industry based in Asia. Every laptop sold by an American brand, with the exception of Apple, is today designed, developed and manufactured outside the U.S.. The same applies to most phones a...

In the previous post related to this topic I wrote some of my thoughts on CMMi for acquisitions and ISO/IEC 12207.These two plus ISPL are models which can be used to structure an outsourcing process. The aim of these models in a nutshell is providing the client organisation with: the right service/product, for the best price, at the desired quality levels, from the best vendor, at or within the risk appetite of the company. The three models mentioned in these posts scratch only the surface of (proprietary) models which can be used to structure an outsource process. For those situations where these models are too complex, ISO 9001:2008 could be of help as purchasing is one of the processes addressed. The purchase process described consists of three sub-processes: supplier evaluation (section 7.4.1), purchase orders (section 7.4.2) and goods receipts checks (7.4.3). CMMi for acquisitions and ISO/IEC 12207 were addressed in the previous post, but not ISPL. ISPL stands for Information Serv...

In this post I wrote on the rise of the Chinese IT service providers which could be the new kids on the block and give established Indian service providers a run for their money. Here I want to provide some insights on the Chinese supplier market of IT services. Feel free to add any comments if you feel that I missed out some vital information. One way established service providers deal with the Chinese ‘treat’ is partnering with them, like Yucheng Technologies and Convergys. Yucheng is a China-based IT solution provider and Convergys a U.S. based provider of customer and employee relationship management solutions. As per the agreement, Yucheng Technologies will sell Convergys' Intervoice Edify Voice Interaction Platform (EVIP) and Convergys Dynamic Decisioning Solutions in the Chinese market. I wonder however whether this is a smart move in the long term. Like with the car industry did Chinese companies learn how to make cars by partnering with Western car manufacturers. Especiall...