“Shift No. 2: From Physical Efficiency to Market Mediation.
OLD QUESTION: How do we minimise the costs our company incurs in production and distribution of our products?
NEW QUESTION: How do we minimise the costs of matching supply with demand while continuing to reduce the costs of production and distribution?”
Laura Ross Kopczak and M. Eric Johnson in the “MIT Sloan Management Review.”
This is a fascinating area where innovative telecommunications business models are sure to develop in coming years. With the increased value placed on apps and content over bits and bytes, I can see dynamic pricing being used in clever business models.
Enhancing this concept further is the increasing prevalence of cloud environments with almost unlimited scalability. Theoretically this capacity will also be incredibly elastic (ie stretching capacity up or down in short periods of time). The reason why I say “theoretical” is because concepts like SDN/NFV might provide speedy elasticity, but at the moment we haven’t found a way of operationalising the entire end-to-end supply chain to make it significantly faster. Innovations in OSS/BSS will have a big influence in bringing much faster elasticity into future service offerings. They have to improve as they are the operationalization bottle-necks in some carriers.
Another quote from the article in the MIT Sloan Management Review is as follows, “Companies that excel at supply-chain management effectively manage two aspects of supply. The first is physical supply; the production and distribution of physical goods through suppliers, manufacturers, distributors and resellers to end customers. Costs of the physical supply include manufacturing, transport and cycle costs. The second is market mediation; the matching of the quantity and variety of product supplied through the chain to that which is demanded. Costs of market mediation include safety stock, safety capacity, markdowns, price protection, returns and lost sales.”
OSS/BSS have the ability to improve physical supply (eg managing the pre-configuration of devices by vendors before shipping to customer sites, minimising truck rolls through more accurate work-force management, etc) as well as market mediation (eg dynamic pricing, scalable resourcing, product responsiveness to demand, etc).
Is your OSS/BSS being used in these sorts of ways yet?Read the Passionate About OSS Blog for more or Subscribe to the Passionate About OSS Blog by Email