Chapter 1 #2, 3, 4, 6
Homework #1 Solution
Marketing company that handles all the market research, telemarketing, and mass mailing
to solicit customers.
Mortgage brokers that will take the applications of the new customers.
Credit report agency that provides report of evaluates credit reports of the customer.
Mortgage brokers would prepared and submit loan document to a bank.
Bank extends the mortgage loans.
Mortgage brokers distribute the loan to the individual.
Market company – solicit more customers, with minimum cost
Mortgage brokers –maximize sales commissions
Bank – make low risk and high return loans
Credit report agency – providing relevant and accurate information
Similar to product supply chain, service chain is to provide value added services at the
right time, at right location and in a form that satisfy customer’s requirements while
minimizing total costs.
Different from the product chain, which has flow of information, physical products, and
wealth, service chain does not have the flow of physical products. In many cases, service
chain is primary flow of information and wealth. Due to the absent of physical products,
transportation, inventory cost are not major costs in the service chain. Without inventory,
the service chain needs to be even more efficient on matching supply and demand.
Finally, in a service chain, in order to understand customers and their needs, information
becomes very valuable. Thus there is a price for obtaining information. In the example
above, banks would need to pay the credit report agency for the additional information
about the customers.
Many supply chains evolve over time. Here are some examples:
Software supply chain
When the product first introduced, the price is very high. It might be distribute
through direct sales to the users. Over time, there might be standardization, so product
can be package and sell in stores as out-of-box solution. As newer version and
enhancements becomes available, software might be distributed through the web. There
also might be partnership with other software companies, and then the product would be
packaged and distributed as a suite along with other products.
Memory chip supply chain
When a new memory chip is introduced, price is high, yield is low, and
production capacity is tight, and the availability of the product is important.
Consequently, production is usually done at plants close to markets, and the management