Revisiting the IT Productivity Paradox: A Technology Life Cycle Perspective

In this paper, we revisit the “IT Productivity Paradox,” which refers to the inconclusive relationship between IT investment and performance improvement found in empirical studies. We argue that the cause of the “IT Productivity Paradox” is more than empirical measurement difficulties. Based on a rather comprehensive review of the literature, we identified and contrasted three underlying theoretical perspectives of the empirical studies. We then propose a new theoretical framework toward an in-depth theoretical understanding of the paradox. Developed upon the contingency approach, the proposed framework considers the stages of technology life cycle. The framework not only can provide useful guidance for practicing managers but also potentially can resolve the “IT Productivity Paradox,” hence making a significant contribution to the literature

SKU classification: A literature review and conceptual framework

Purpose - Stock keeping unit (SKU) classifications are widely used in the field of production and operations management. Although many theoretical and practical examples of classifications exist, there are no overviews of the current literature, and general guidelines are lacking with respect to method selection for classifying SKUs. The purpose of this paper is to systematically synthesise the earlier work in this area, and to conceptualise and discuss the factors that influence the choice of a specific SKU classification. Design/methodology/approach - The paper structurally reviews existing contributions and synthesises these into a conceptual framework for SKU classification. Findings - How SKUs are classified depends on the classification aim, the context and the method that is chosen. In total, three main production and operations management aims were found: inventory management, forecasting and production strategy. Within the method three decisions are identified to come to a classification: the characteristics, the classification technique and the operationalisation of the classes. Research limitations/implications - Drawing on the literature survey, the authors conclude with a conceptual framework describing the factors that influence SKU classification. Further research could use this framework to develop guidelines for real-life applications. Practical implications Examples from a variety of industries and general directions are provided which managers could use to develop their own SKU classification. Originality/value - The paper aims to advance the literature on SKU classification from the level of individual examples to a conceptual level and provides directions on how to develop a SKU classification

The use of analogies in forecasting the annual sales of new electronics products

Mathematical models are often used to describe the sales and adoption patterns of products in the years following their launch and one of the most popular of these models is the Bass model. However, using this model to forecast sales time series for new products is problematical because there is no historic time series data with which to estimate the model’s parameters. One possible solution is to fit the model to the sales time series of analogous products that have been launched in an earlier time period and to assume that the parameter values identified for the analogy are applicable to the new product. In this paper we investigate the effectiveness of this approach by applying four forecasting methods based on analogies (and variants of these methods) to the sales of consumer electronics products marketed in the USA. We found that all of the methods tended to lead to forecasts with high absolute percentage errors, which is consistent with other studies of new product sales forecasting. The use of the means of published parameter values for analogies led to higher errors than the parameters we estimated from our own data. When using this data averaging the parameter values of multiple analogies, rather than relying on a single most-similar, product led to improved accuracy. However, there was little to be gained by using more than 5 or 6 analogies

Electronic Part Total Cost Of Ownership And Sourcing Decisions For Long Life Cycle Products

The manufacture and support of long life cycle products rely on the availability of suitable parts from competent suppliers which, over long periods of time, leaves parts susceptible to a number of possible long-term supply chain disruptions. Potential supply chain failures can be supplier-related (e.g., bankruptcy, changes in manufacturing process, non-compliance), parts-related (e.g., obsolescence, reliability, design changes), logistical (e.g., transportation mishaps, natural disasters, accidental occurrences) and political/legislative (e.g., trade regulations, embargo, national conflict). Solutions to mitigating the risk of supply chain failure include the strategic formulation of suitable part sourcing strategies. Sourcing strategies refer to the selection of a set of suppliers from which to purchase parts; sourcing strategies include sole, single, dual, second and multi-sourcing. Utilizing various sourcing strategies offer one way of offsetting or avoiding the risk of part unavailability (and its associated penalties) as well as possible benefits from competitive pricing. Although supply chain risks and sourcing strategies have been extensively studied for high-volume, short life cycle products, the applicability of existing work to long life cycle products is unknown. Existing methods used to study part sourcing decisions in high-volume consumer oriented applications are procurement-centric where cost tradeoffs on the part level focus on part pricing, negotiation practices and purchase volumes. These studies are commonplace for strategic part management for short life cycle products; however, conventional procurement approaches offer only a limited view for parts used in long life cycle products. Procurement-driven decision making provides little to no insight into the accumulation of life cycle cost (attributed to the adoption, use and support of the part), which can be significantly larger than procurement costs in long life cycle products. This dissertation defines the sourcing constraints imposed by the shortage of suppliers as a part becomes obsolete or is subject to other long-term supply chain disruptions. A life cycle approach is presented to compare the total cost of ownership of introducing and supporting a set of suppliers, for electronic parts in long life cycle products, against the benefit of reduced long-term supply chain disruption risk. The estimation of risk combines the likelihood or probability of long-term supply chain disruptions (throughout the part's procurement and support life within an OEM's product portfolio) with the consequence of the disruption (impact on the part's total cost of ownership) to determine the "expected cost" associated with a particular sourcing strategy. This dissertation focuses on comparing sourcing strategies used in long life cycle systems and provides application-specific insight into the cost benefits of sourcing strategies towards proactively mitigating DMSMS type part obsolescence

CONCURRENT MULTI-PART MULTI-EVENT DESIGN REFRESH PLANNING MODELS INCORPORATING SOLUTION REQUIREMENTS AND PART-UNIQUE TEMPORAL CONSTRAINTS

Technology obsolescence, also known as DMSMS (Diminishing Manufacturing Sources and Material Shortages), is a significant problem for systems whose operational life is much longer than the procurement lifetimes of their constitute components. The most severely affected systems are sustainment-dominated, which means their long-term sustainment (life-cycle) costs significantly exceed the procurement cost for the system. Unlike high-volume commercial products, these sustainment-dominated systems may require design refreshes to simply remain manufacturable and supportable. A strategic method for reducing the life-cycle cost impact of DMSMS is called refresh planning. The goal of refresh planning is to determine when design refreshes should occur (or what the frequency of refreshes should be) and how to manage the system components that are obsolete or soon to be obsolete at the design refreshes. Existing strategic management approaches focus on methods for determining design refresh dates. While creating a set of feasible design refresh plans is achievable using existing design refresh planning methodologies, the generated refresh plans may not satisfy the needs of the designers (sustainers and customers) because they do not conform to the constraints imposed on the system. This dissertation develops a new refresh planning model that satisfies refresh structure requirements (i.e., requirements that constrain the form of the refresh plan to be periodic) and develops and presents the definition, generalization, synthesis and application of part-unique temporal constraints in the design refresh planning process for systems impacted by DMSMS-type obsolescence. Periodic refresh plans are required by applications that are refresh deployment constrained such as ships and submarines (e.g., only a finite number of dry docks are available to refresh systems). The new refresh planning model developed in this dissertation requires 50% less data and runs 50% faster than the existing state-of-the-art discrete event simulation solutions for problems where a periodic refresh solution is required

Long term capacity planning with products' renewal

Long Term Capacity Planning (LTCP) consists of deciding the type and amount of capacity of production systems for multiple periods in a long term planning horizon. It involves decisions related to strategic planning, such as buying or selling of production technology, outsourcing, and making tactical decisions regarding capacity level and configuration. Making these kinds of decisions correctly is highly important for three reasons. Firstly, they usually involve a high investment; secondly, once a decision like this is taken, it cannot be changed easily (i.e. they are highly irreversible); thirdly, they affect the performance of the entire system and the decisions that will be possible at a tactical level. If capacity is suboptimal, there will be lost demand (in the present and possibly in the future); if the system is oversized, there will be unused resources, which may represent an economical loss. Long term decisions are typically solved with non-formalized procedures, such as generating and comparing solutions, which do not guarantee an optimal solution. In addition, the characteristics of the long term capacity planning problem make the problem very difficult to solve, especially in cases in which products have a short life cycle. One of the most relevant characteristics is the uncertainty inherent to strategic problems. In this case, uncertainty affects parameters such as demand, product life cycle, available production technology and the economic parameters involved (e.g. prices, costs, bank interests, etc.). Selection of production technology depends on the products being offered by the company, along with factors such as costs and productivity. When a product is renewed, the production technology may not be capable of producing it; or, if it can, the productivity and/or the quality may be poor. Furthermore, renewing a product will affect its demand (cannibalization), as well as the demand and value of the old products. Hence, it is very important to accurately decide the correct time for product renewal. This thesis aims to design a model for solving a long term capacity planning problem with the following main characteristics: (1) short-life cycle products and their renewal, with demand interactions (complementary and competitive products) considered; (2) different capacity options (such as acquisition, renewal, updating, outsourcing and reducing); and (3) tactical decisions (including integration strategic and tactical decisions)

Spare Parts Management of Aging Capital Products

Spare parts are critical for operations of capital products such as aircraft, refineries, trucks, etc/, which require maintenance regularly. Original Equipment Manufacturers (OEMs) bear the responsibility of undisrupted maintenance service and spare parts flow for their capital products. Due to various factors OEMs lose their spare parts suppliers occasionally and these losses threaten the reliability of their maintenance service and capital products. In this thesis, we consider supply risk in management of spare parts inventory. The thesis consists of two parts: First we develop advance indicators for future supply problems of spare parts and suggest a model utilizing those indicators for inventory control of spare parts. Our results indicate that OEMs can save significantly by utilizing those indicators together with our model in their daily business. Second, we consider secondary markets and their effects on spare parts supply chains of OEMs. Secondary markets are chap supply sources for spare parts needs of OEMs. Therefore effective usage of them yield significant cost savings and boost service rate of OEMs. Furthermore, secondary markets are sources of competition since low prices on those markets attract some customers of OEMs. These two factors are considered from the perspective of spare parts inventory control. In the second part, we conclude that for OEMs it is beneficial to use secondary markets as a supply source as long as they adjust their selling prices accordingly