Frontiers in Service 2014School of Business AdministrationUniversity of Miami

What theories and questions can be brought

to bear in support of achieving consumer-

centric supply chains?

Peter WardWMG, University of Warwick

David SarleyBill & Melinda Gates Foundation

David is a Senior Project Officer at the Bill & Melinda Gates Foundation responsible for vaccine delivery

Peter’s PhD at the University of Warwick is looking at the links between consumption and supply chains, with a focus on enhancing patient drug compliance in sub-Saharan Africa

We have been working together to look at how to make supply chains customer-centric, using the Service-Dominant Logic (SDL) lens and Consumption theories and Adherence practice to inform supply chain thinking

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Perspective

Our view:

– Supply chains create the value proposition and consumers exploit it to co-create value in context

– But supply chains stop at (or before) the point that a product is delivered to the consumer, while consumption does not consider the supply chain

Therefore our challenge:

– It is necessary for the end-to-end process to be represented theoretically to achieve robust consumer-centric supply chains

– What theories and questions can contribute to bridging this gap?

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Your assistance sought…

1. The problem

2. Progress

– The “last yard”

– Extending the theory

3. The challenge

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Agenda

However:

“[I]t is impossible to develop sound SCM theory until valid constructs and generally accepted definitions of terms are developed.” (Stock & Boyer 2009)

“Ultimately, the goal of SCM is to achieve greater profitability by adding value and creating efficiencies, thereby increasing customer satisfaction.” (ibid.)5

Supply chain practice: SCOR

context

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Consumption lens: SDL

However:

“Our characterization of a generalized SDL is that it is a mindset, a lens” (Vargo & Lusch 2008)

“SDL makes the consumer endogenous to the value-creation process… value… is always determined by the consumer… with SDL, the consumer orientation becomes redundant” (Vargo & Lusch

2006, pp44,47)

Motivation

A construct which is intended to bring consumption within the ambit of supply chains

– To recognise the consumer within the supply chain

– Cf. “last mile”, “last 50 yards”

In Service-Dominant Logic it could be considered the “first yard”

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The “last yard”

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Understanding the “last yard”

This highlights the range of insight which supply chains need to have in order to understand their “last yard” of consumption

Also relevant is the customer/consumer dichotomy, not often discussed in supply chain literature

Consumption Theories

Service-Dominant Logic (SDL)(lens/viewpoint not theory)

Adherence(practice not theory)

Motivation Theories

(practice not theory)

Bhaskar, Freud, etc

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Extending the theory

Theoretical coverage of the consumption space is fragmented and has gaps

Resource-Advantage Theory

– Stated as being a potential underpinning theory for SDL (Hunt &

Madhavaram 2006)

– But not picked up by others to date

Performance-Based Contracts

– “Service-Dominant Logic in action” (Randall, Wittmann, Nowicki &

Pohlen 2014)

– Another justification of SDL rather than its underpinning theory

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Other potentially relevant factors?

We have two linked research areas:

– Understand how supply chains can discover consumers’ Agency and Resources in relation to Affordances, and assess how supply chains react to such new knowledge to improve their value propositions Especially in drug supply chains in sub-Saharan Africa

– Determine what constructs, principles, theories or meta-theories can underpin this practice

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The challenge – 1

Our challenge:

– What underpinning theories for supply chains and SDL-based consumption have we missed?

– What underpinning theories for uniting supply chains with consumption – the end-to-end value realisation process – have we missed?

– What questions should we be asking in order to build stronger constructs and theories for this area?

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The challenge – 2

Frontiers in Service 2014School of Business AdministrationUniversity of Miami

Thank you!

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Bhaskar, R. (1998). Critical Realism: Essential Readings. (M. Archer, R. Bhaskar, A. Collier, T. Lawson, & A. Norrie, Eds.) (p. 760). Abingdon, Oxon: Routledge

De Brabander, C. J., & Martens, R. L. (2014). Towards a unified theory of task-specific motivation. Educational Research Review, 11, 27–44

Hunt, S. D., & Madhavaram, S. (2006). The Service-Dominant Logic of Marketing: Theoretical Foundations, Pedagogy, and Resource Advantage Theory. In R. F. Lusch & S. L. Vargo (Eds.), The service-dominant logic of marketing: dialog, debate and directions (pp. 67–84). Armonk, N.Y.: M.E. Sharpe, Inc.

Ilmonen, K. (2011). A Social and Economic Theory of Consumption. (P. Sulkunen, K. Rahkonen, J. Gronow, A. Noro, & A. Warde, Eds.) (p. 250). Basingstoke: Palgrave Macmillan

Naslund, D., & Williamson, S. (2010). What is Management in Supply Chain Management? - A Critical Review of Definitions, Frameworks and Terminology. Journal of Management Policy and Practice, 11(4), 11–28

Ng, I. C. L., & Phillips, L. A. (2013). An Integrative Framework of Value. In Toward a Better Understanding of the Role of Value in Markets and Marketing (Vol. 9, pp. 207–243). Emerald Group Publishing Limited

Pine II, B. J., & Gilmore, J. H. (1998). Welcome to the Experience Economy. Harvard Business Review, 76(July-August), 97–105

Randall, W. S., Wittmann, C. M., Nowicki, D. R., & Pohlen, T. L. (2014). Service-dominant logic and supply chain management: Are we there yet? International Journal of Physical Distribution & Logistics Management, 44(1/2), 113–13114

Relevant referencesSCC. (2013). Supply Chain Operations Reference (SCOR ® ) model. Cypress, TX: Supply Chain Council. Retrieved from http://supply-chain.org/f/Web-Scor-Overview.pdf

Stock, J. R., & Boyer, S. L. (2009). Developing a consensus definition of supply chain management: a qualitative study. International Journal of Physical Distribution & Logistics Management, 39(8), 690–711

Tokman, M., & Beitelspacher, L. S. (2011). Supply chain networks and service-dominant logic: suggestions for future research. International Journal of Physical Distribution & Logistics Management, 41(7), 717–726

Vargo, S. L., & Lusch, R. F. (2006). Service-Dominant Logic: What it is, What it is not, What it might be. In R. F. Lusch & S. L. Vargo (Eds.), The Service-Dominant Logic of Marketing: Dialog, Debate and Directions (pp. 43–56). Armonk, N.Y.: M.E. Sharpe, Inc.

Vargo, S. L., & Lusch, R. F. (2008). Service-Dominant Logic: Continuing the Evolution. Journal of the Academy of Marketing Science, 36(1), 1–10

Vargo, S. L., Maglio, P. P., & Akaka, M. A. (2008). On value and value co-creation: A service systems and service logic perspective. European Management Journal, 26(3), 145–152

Zhou, H., Benton, W. C., Schilling, D. A., & Milligan, G. W. (2011). Supply Chain Integration and the SCOR Model. Journal of Business Logistics, 32(4), 332–344

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Backup

Supply chain scope Considered by supply chain models such as SCOR to be covered by the

four activities: plan, source, make and deliver, plus an additional activity: return (SCC 2013; Zhou et al 2011)

Consumption definition The exploitation of the value proposition to co-create value in context is

usually described as consumption (Vargo, Maglio, & Akaka 2008)

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Supply chain value “Ultimately, the goal of SCM is to achieve greater profitability by adding

value and creating efficiencies, thereby increasing customer satisfaction.” (Stock & Boyer 2009)

Customer satisfaction is inherent in Service-Dominant Logic

“S-D logic makes the consumer endogenous to the value-creation process… value… is always determined by the consumer… with S-D Logic, the consumer orientation becomes redundant.” (Vargo & Lusch 2006)

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Consumption Theory (Ilmonen 2011) Meanings of consumption

Experiential aspects and emotional links

These align with co-creation of value-in-context

Service-Dominant Logic support for supply chains “Supply chains are value co-creation networks aiming to integrate

resources for service provision” (Tokman & Beitelspacher 2011)

“Performance-Based Contracting is Service-Dominant Logic in action” (Randall et al 2014)

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Consumption in more detail(under construction)

Takes account of Integrative Framework of Value (Ng & Phillips 2013); extends Universal Model of Task-Specific Motivation (de Brabander et al. 2014)