Abstract for: Never the twain shall meet? Simulating Sales & Operations Planning ramp-up dynamics in IT-enabled service supply chains
In IT-enabled service supply chains offering services through a mix of manual and automated activities, volume ramp-ups are notoriously difficult. Especially difficult is the attempt to effectively balance the inherently conflicting objectives of the functions Sales, who want to increase output as fast as possible to capture the market, and Operations, where the emphasis is on effective utilization of scarce resources. This paper presents findings from a system dynamics model that simulates the dynamics of IT-enabled service supply chains during ramp-ups. The model is based on three real-world cases of service ramp-ups in the telecom industry and calibrated against real-world behavior in these empirical settings. Simulation analysis suggests (1) a typical “service ramp-up syndrome” in IT-enabled service supply chains, (2) root causes for this syndrome originating from intransparency and delays in the regulating feedback loops in sales and operations, reinforced by feedbacks from the rework cycle, and (3) policy options to prevent this syndrome from occurring. We put forward four propositions concerning these findings and suggest a managerial policy to improve ramp-up performance.