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1 Implication of customer- value orientation in 3G supply chain – a Pilot Study Liang, Chih-Chin 1 , Hoang Thi Bich Ngoc 2,* 1 Dept. Business Administration, National Formosa University, Huwei, Taiwan (R.O.C), 1 [email protected] 2,* [email protected] I. ABSTRACT Customer value is considered to be the core value of an enterprise’s competitiveness advantage. However, it is not sufficient that customer value created relies solely on the resources of one enterprise. Supply chain, as an extension of the resources outside the enterprise, helps establish strategic alliance relationship of collaboration, information, opportunity and risk sharing between enterprises to produce customer value collaboratively. 3G mobile industry, which has increasingly predominated in telecommunication service industry, gets increasingly intensive market competition. Therefore, customer value is the key issue for those who want to own 3G market. Hence, 3G mobile network operators must compass the whole movements of 3G supply chain based on analysis of 3G customer- value orientation. Currently there are very few research studies about the relations between customers need and operating process to make products and services for customers. This pilot study is with a view to helping 3G mobile network operators basically attain the evolvement of 3G industry, the relationship between customer value and the working components of 3G supply chain, conduct and design corporately and flexibly the operating process of 3G supply chain as well as create the perfect products and services through orienting 3G customer-value. The ultimate aim of this paper is to present the three-tier framework that help 3G mobile network operators make their good decision in choosing the aspects to improve their market in order to attract new customers, retain old ones. Based on this expectation, the paper attempted to indentify some critical factors influencing the adoption of 3G supply chain via literature review. A questionnaire was proposed at the end of the paper in order to measure the importance of these factors in a future study. This study includes the Analytic Hierarchy Process method (AHP) which assumes that all given values in a question can be assigned, by 3G experts who are the rare ones grasping both working components of 3G supply chain and customers need, from the most preferred to the least, thus allowing us to identify a respondent's preference order for all alternatives. In this study, the judgments made about the relative importance of the objectives of infrastructure and network vendors, platform vendors, application developers, and distribution and marketing channels, and those about the improving 3G supply chain management to satisfy those objectives, must be made in good faith, then the AHP calculations would confirm precisely the logical consequence of those judgments based on experts’ viewpoints of 3G supply chain management. This model is applied to telecom operators in Taiwan. Keywords: Business-to-Business, E-Commerce, Technology-based service

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Implication of customer- value orientation in 3G supply chain – a Pilot Study

Liang, Chih-Chin1, Hoang Thi Bich Ngoc2,*

1Dept. Business Administration, National Formosa University, Huwei, Taiwan (R.O.C), [email protected]

2,*[email protected]  

I. ABSTRACT

Customer value is considered to be the core value of an enterprise’s competitiveness advantage. However, it is not sufficient that customer value created relies solely on the resources of one enterprise. Supply chain, as an extension of the resources outside the enterprise, helps establish strategic alliance relationship of collaboration, information, opportunity and risk sharing between enterprises to produce customer value collaboratively. 3G mobile industry, which has increasingly predominated in telecommunication service industry, gets increasingly intensive market competition. Therefore, customer value is the key issue for those who want to own 3G market. Hence, 3G mobile network operators must compass the whole movements of 3G supply chain based on analysis of 3G customer- value orientation. Currently there are very few research studies about the relations between customers need and operating process to make products and services for customers. This pilot study is with a view to helping 3G mobile network operators basically attain the evolvement of 3G industry, the relationship between customer value and the working components of 3G supply chain, conduct and design corporately and flexibly the operating process of 3G supply chain as well as create the perfect products and services through orienting 3G customer-value. The ultimate aim of this paper is to present the three-tier framework that help 3G mobile network operators make their good decision in choosing the aspects to improve their market in order to attract new customers, retain old ones. Based on this expectation, the paper attempted to indentify some critical factors influencing the adoption of 3G supply chain via literature review. A questionnaire was proposed at the end of the paper in order to measure the importance of these factors in a future study. This study includes the Analytic Hierarchy Process method (AHP) which assumes that all given values in a question can be assigned, by 3G experts who are the rare ones grasping both working components of 3G supply chain and customers need, from the most preferred to the least, thus allowing us to identify a respondent's preference order for all alternatives. In this study, the judgments made about the relative importance of the objectives of infrastructure and network vendors, platform vendors, application developers, and distribution and marketing channels, and those about the improving 3G supply chain management to satisfy those objectives, must be made in good faith, then the AHP calculations would confirm precisely the logical consequence of those judgments based on experts’ viewpoints of 3G supply chain management. This model is applied to telecom operators in Taiwan. Keywords: Business-to-Business, E-Commerce, Technology-based service

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II. INTRODUCTION

The third generation (3G) mobile industry has increasingly become dominant in telecommunication service industry. In Taiwan, telecom market has witnessed the outbreak of 3G penetration rate: from 5.3 million subscribers of 3G services, comprising 22% of the total mobile internet subscribers, including the subscribers of Wireless Application Protocol (WAP), General Packet Radio Service (GPRS), Personal Handy-phone System (PHS), as well as 3G subscribers that can access data communications, in 2007 1 to 14.4 million 3G subscribers, comprising 59% of the total mobile internet subscribers in 2009 2. Although 3G mobile networks are widespread, different kinds of wireless networks are threaten to 3G market, such as wireless local area network (WLAN) and worldwide interoperability for microwave access (WiMAX) have also been emerging 3. Beside, 3G services are being faced with increasing competition from ‘voice-over Internet protocol’ (VoIP) services such as Skype, Vonage, and Lingo 4. The profit margins of 3G mobile network-service providers, moreover, gradually decline in the intensive market competition 5 due to the decline in conventional voice service tariffs along with the growing number of mobile telecom users 6. Therefore, the abundant mobile value-added services have been released to attract new subscribers and retain old ones.

These 3G value-added services include mobile internet access, mobile intranet/extranet access, customized infotainment, multimedia message service (MMS), location-based service (LBS), and rich voice service (RVS) 6. Mobile internet access offers web browsing, file transfer, mail, streaming audio/ video. Mobile intranet/extranet access help operations in local area networks & virtual private networks. Customized infotainment provides device-independent access to personalized content via mobile portals. MMS offers messages, images, audio, and video-clips. LBS helps find machines or devices carried by other people, include knowledge of users’ own location. RVS provides voice & video calls, multimedia conferences, voice activated net access, web initiated voice calls. Those above value-added services are released with the expectation of the enterprises to meet the various needs of consumers but whether consumers will purchase them remains unknown 3, 6. Orienting customer value has become a key issue to business success because customer value orientation means organizations are orienting for the result of interaction between products, services with customer preferences and relative experiences 7. This interaction is addressed based on the difference between customer purchase intention and their in-use and after-use perspectives, and the influence of consumers’ intensions to purchase and repurchase 8. Also, understanding the value for customers and the most profitable customers are essential to retain customers 9.

Customer value (CV) is the primary characteristic as well as the driving force to build an enterprise’s core competitiveness 10-14. CV is in fact customer perceived value (CPV) which is calculated by the balance of customer perceived benefits and customer perceived sacrifices 10. The term Customer-value orientation (CVO) means value of products and services should be examined by customers’ perspective because this value is not determined by enterprises but customers’ decision. The 3G mobile value is created when the customers agree to use and utilize the reasonable value. The core value that the customers expect is achieved as the result of best value-supply chains (VSC) 15, a series of reasonable activities can help enhance firm performance and create competitive advantages since products and services are created and then

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distributed to customers. Not just viewed as the process for moving materials and goods, best value supply chains focus on strategic supply chain management: to enhance key outcomes that drive firm performance 16, elevating from function that supports strategy to key element of strategy 17. The best value supply chains are designed to deliver superior total value to the customer in terms of speed, cost, quality, and flexibility 18, 19. The research of supply chain management (SCM) is hence worthy for the creation of CV and the enhancement of enterprises’ core competitiveness.

By indentifying some critical factors influencing the adoption of 3G supply chain via literature review, and by analyzing the correlations between 3G VSC and CV regarding six kinds of mobile value-added service, the implication of customer-oriented value in 3G SC must be revealed. To clarify these correlations and develop marketing strategies, this study proposed a questionnaire based on Analytic Hierarchy Process (AHP) to measure important factors that the experts in 3G field currently consider to improve 3G SCM through orienting CV. The procedure of the AHP results in not only the identification of the most important alternative but also the preference of all alternatives for each respondent. The paper uses AHP technique as the main method to help 3G mobile operators in Taiwan solve the problem of choosing the improving directions for their market to get optimal customer core-value. The respondents in this study are 3G experts, who are familiar with the customer requirements and the operations of 3G industry, directly mastering the working processes of 3G supply chain to create value for customers. 3G industry is a large-scaled conception that not everyone could deeply understand its evolvement and development. Hence, eliciting 3G experts’ opinion would be precisely. For that selection of the literature and methodological approaches, this paper is of significance as its contribution to 3G mobile industry.

The remainder of this paper is organized as follows. Section 2 describes literature review findings. Section 3 characterizes the research framework then research method with proposed questionnaires. Finally, concluding remarks are presented in Section 4.

 

III. RELATED WORK

A. SCM-based view The ultimate success of any enterprise is no longer built around a firm’s capability and

capacity but on a supply chain’s capability and capacity 20. Therefore, SCM is considered to be the lodestar for the operations to satisfy customer’s requirement about better and cheaper products in shorter response times with more product lines and higher service levels 21- 23. SCM includes not only traditional logistics, which just focuses on activities such as procurement, distribution, maintenance and inventory management, but also activities such as marketing, new product development, finance, and customer service. What the SCM conducts is the fellowship and the flow of information and materials, which is beyond the boundary of the enterprise 24-26

Harland (1996) 27 described SCM as managing business activities and relationships (1) internally within an organization, (2) with immediate suppliers, (3) with first and second-tier suppliers and customers along the supply chain, and (4) with the entire supply chain. The formation of a network chain resulted from the supply of products and services to upstream and

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downstream businesses, with the purpose of satisfying customer needs and ensuring the members of the supply chain to achieve performance 28. As stated by Porter (1985) 29, the competitiveness of enterprises is formed by producing value for customers 30. It is required the strategic alliance of members with collaboration, information sharing to enhance the level of overall operation of the supply chain. Hence, the definition of SCM here would be drawn as: Supply chain management is the coordination of production, inventory, location and transportation between the members of the supply chain to meet smoothly and efficiently the needs of the customers.

In SCM, supply chain and the company are considered as a unique entity which offers a systematic approach to understand and manage the different activities required to combine product lines and services to best serve their customers. The true is that customers have more and more powerful due to more service provider choices, especially more options of how to access mobile and fixed service in telecommunication industry 31. Therefore, supply chain management must elevate: neither using cutting-edge and expensive equipment, nor emphasizing rich teamwork at all stages of the chain; what it focuses is each nature of problem must be solved. Supply chain management here elevates from a function supports strategy to key element of strategy. To summary, the concept of strategic supply chain management occurs as the requirement of business development.

Strategic supply chain management is to create competitive advantages and enhance firm performance 30, 17. Strategic supply chain management is argued to have four competitive priorities 18, 32: (1) Speed shows the time duration from initiation to completion of the supply process. (2) Quality refers to the relative reliability of chain activities. (3) Cost involves supply chains’ efforts to enhance value by either reducing expenses or increasing customer benefits. (4) Flexibility refers to a supply chain’s responsiveness to change in customer needs. The value of strategic supply chain management is reflected in the way the firms have used their supply chains to gain advantages over peers by providing highest level of total value through balancing these four factors. For example, the high level of 3G value-added services results from high transmission rate, good voice quality, perfect customer services, high customer benefits and fluently interacts between 3G subscribers and the firms in 3G supply chain. 3G values for customers are created during the process of 3G supply chain management.

B. The illustration of 3G supply chain management

Mobile telephony technology has got the tremendous value since recent decades through product engineering, designing, system integration 33, and making innovation which create strong stickiness between the mobile service providers and the end-consumers, enhance the competitiveness of the mobile services supply chain 34. In 3G industry, the firms compete and negotiate with suppliers and customers over the complex global value chain (GVC) 35 which is formed as 3G brokenness of technology allowing a higher transmission rate and more complex e-commerce interactions.

3G value-supply chain (VSC) involves the strategic interactions and integrations among 3G operators, vendors, distributors, marketing and service centers, functioning different, rational and supplementary missions to create the different kinds of 3G value-added service providing to customers. Currently, as commercial applications in 3G industry, there is still no conclusion

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regarding the names and participating roles on the mobile commerce value chain. Guoyin, Bin and Youtian (2009) 36 stated the supply chain of mobile services is composed by the major content providers, service providers, terminal equipment providers, operators and users. Terminal equipment providers produce the physical carrier for contents and services so 3G operators’ mobile network is the channel from all content providers and service providers to the terminal users.

In summary, this study focused on the type 2 of operators who are the directly working and cooperating components of 3G supply chain to create 3G value chain. (Type 1 of operators concludes Mobile network operators, Mobile virtual network operators, Hosting network operators, who occupy the crucial decision-making that affect the survival of mobile industry 37-

42). The components of type 2 are so-called (1) infrastructure and network vendors, (2) platform vendors, (3) application developers, and (4) distribution and marketing channels. The composition structure is shown as Fig. 1.

Fig.1 3G value-supply chain Regarding to the activities towards creating new value, the progress of mobile

communication system requires Infrastructure and network vendors to “create a high-speed (transmission speed, high-capacity (spectrum efficiency), low-latency network (transmission latency – maximum effect)” 43 comfortable enough so that the end-users receive the least stress in communication, safety and security due to the flexible and reliable infrastructure network. Operators in this group design and manufacture all kinds of infrastructure required to build and provide mobile communication networks or in other word “telecommunication corporations” 44, mobile phones or other devices that support WAP, GPRS, 3G, or other communication technologies 37. Besides, they also play the role of promoting innovations of the industry and technology 45 such as realizing the SEN (Service Enabler Network) as a platform that creates value-added services through “convergence of telecom services with web services” and “advanced media processing” 43;

3G Operators (Type 1)

3G operators (Type 2)

Infrastructure & network vendors

Platform vendors

 

Application developers

 

Distribution & marketing  channels

 

Customers

 

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Fig. 1.1 Critical factors of Infrastructure & network vendors

Infrastructure and network vendors are composed of five main criteria: Equipment, spectrum, operations 38, network and broadband 43, 46. (Fig. 1.1) Equipment helps provide terminal, network, devices, server equipment. Spectrum offers speed, capacity, power, latency. Operations regard working environment and terminals intention. 43 Network offers communication-enabled networks and devices; Network operators refer to telecommunication corporations regarding customers need for accessing any kind of mobile service through this channel. Broadband helps create the capacity in transmission speed. 37, 38, 43, 46

Fig. 1.2 Critical factors of Platform vendors Platform vendors create the new service platform based on the network and terminal collaboration to utilize customer base, network data, and user data from terminals 35. Technology platform and Application platform are mentioned within the key values in the mobile commerce value chain (Fig. 1.2); Technology platform vendors work effectively in transmission data, advanced media processing. In this group, the terms of operation and maintenance of backbone network base stations as well as the infrastructure are dealt with; The transmission of mobile data between mobile users and application service providers are facilitated; In addition, the operators in this group are responsible for providing necessary operating systems for micro-browsers to mobile Internet services. 37 Application platform vendors provide prebuilt-components, including wireless middleware and application middleware so that they play the role of middleware providers on the value chain. 37 In this case, the benefits are offered the consumers in term of accessing the Internet services via mobile devices, and the enterprises in extending the commercial applications to the mobile network.

Fig. 1.3 Critical factors of Application developers

Infrastructure & network vendors

Infrastructure & network vendors

 

Spectrum

 

Equipment

 

Operations

 

Network

 

Broadband

 

Application developers

 Network

development

 

Application software

 

Content aggregations

 

Portal

 

Platform vendors

 Technology platform

 

Application platform

 

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Application developers help create network development, convert all kinds of Internet-based applications into the wireless environment, and even improve application software of any kind to enrich the compass and content aggregations. Portal, a “gate” to mobile Internet as well as the first contact point of browsing mobile Internet, is involved in application development due to its role under the inborn limitation of mobile services 37, in aggregating services and information content of all kinds of properties, information indexes, search tools, and related services are also provided to assist users in searching for desired information 47. Network development offers the intermediation function to develop network. Application software covers compass and content of mobile applications. Content aggregations include various kinds of products and services with solution of content; The operators in this group have functions of aggregating, integrating, repackaging or distributing products and services like games, financial messages, news, etc. In order to faster access to desired services, searching and categorizing functions could be also provided in this group 37.

Fig. 1.4 Critical factors of The supply and Interface with End-users

The supply and Interface with end-users offer new forms of mobile services such as streaming TV, banking, trading, and shopping 48, distributing and marketing channels, and customer- care services 38, etc, which have been pretty necessary for the survival of strong stickiness between 3G providers and consumers. The manufacturers have also been developing newer products and services to entice consumers to replace their old handsets storm marketing and network services and products as well as customer care programs. Tariff and billing, distribution and marketing, Network services and products, and Customer care are covered in this group 38, 48. Tariff and billing, distribution and marketing secure network billing and tariff services as well as help the process of delivering services and products into the end-users successfully. Network services and products offer network bank, email servers, credit card 38, 43. Customer care helps differentiate and innovate services so that customers are received perfected products and services from such “one-stop shopping”. Customers, in this study, are mentioned as the end-consumers of 3G services and products.

This study considers type 2 of operators as our research target because these constructed elements have the direct and rational correlations with the needed values providing to customers. 3G value-added services are released as the result of these operators’ cooperation and working unification in 3G supply chain. In Fig.1, the relationships between the components in type 2 of 3G supply chain are shown via two-side arrows. Customers are the ones directly receive, use and perceive the value created by 3G VSC then orient to improve 3G supply chain management.

The supply & Interface with end-uses

 Tariff and billing,

distribution & marketing

 

Network services and

products

 

Customer care

 

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C. The relations between customer value orientation and 3G supply chain management The flat world and globalization produces the specialization in business operations. 49 To

better the supply chain in 3G field, the harmonious   combination  of  processes   along with   the  essential  works  should be derived on the basis of customer-value orientation.

A principle said: 20% customers bring 80% of profit to business 50, so business purpose is how to keep this small number of customers beside them as long as possible. It means they must become customer-oriented organization: customer is always considered a top priority in all their activities as well as a driving force of the organization. That will help greatly in the customers realizing that they are indeed focused on their needs. Customer orientation is stated by Drucker (1954) as “There is only one valid definition of business purpose: to create a customer” 51, meaning that satisfying customer needs is the ultimate goal of a business to market gains.

Satisfying customer needs is proved by the total value in the terms of speed, cost, quality and flexibility delivered to the customers, which are involved in the best VSC 18 that the supply chain can consequently create competitive advantages and enhance their performance. In 3G industry, the competitive advantages showed currently in six kinds of value-added service which clearly establish the total value added for customers in term of transmission rate, voice, content and service quality, etc. 3G value-added services are created from the perfect “coordination or collaboration among the supply chain partners so as to ensure profitability and continuity” 28. Moreover, the formation of 3G values for customers becomes the key orientation for managing supply chain due to the theoretical direction pointed out by Porter (1985) 28, 52, “The value chain of an enterprise must match that of the customers. The enterprise’s competitive advantage comes from its ability to create value for customers”. The relationship between customer orientation and 3G SCM is illustrated in Fig.2.

To conclude, customer value orientation (CVO) is the key for success of 3G supply chain management as CVO is the result of interaction with customer preferences and relative experiences 7, the influence of customers’ perception to pre-purchase and re-purchase, in summary, customer concern.

Fig.2 The relations between customer value orientation and 3G SCM

Infrastructure & network vendors

 

 

Platform vendors

 

Application developers

 

Distribution & marketing channels

 

Mobile internet access

Mobile intranet/ extranet access

Customized infotainment

MMS Location-based service

Rich voice

service

Customer concern

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Customer concern is used to be the intermediate value to assess the relationship between supply chain and customer value in 3G industry. Customer value could be formed in the condition of the occurrence of customer concern. To calculate customer value, it is necessary to measure customer perceived sacrifices (CPV) in term of customer concern and cost that customers accept to buy products and services. Therefore, customer concern is the dependent variable in the assessment of the output value. Moreover, the design of manufacturing operations as well as supply chains could be successful due to the input value defined as the customer order decoupling points (CODP) 30 or in summary, customer concern. To orient customers toward their products, services and images, the enterprises must interpret customer concern in order to improve customer value by bettering supply chain operations then the gap between vendor supplies and customer concerns should be figured out. Through resource sharing, improving the collaboration and response speed among the members of supply chain, the effective transfer of value could be ensured while continuously lowering cost 7. Customer-oriented supply chain management therefore formed to enhance the core competitiveness for enterprises. D. Customer-oriented supply chain management  

Customer-oriented SCM, considered as a system of coordinated strategies from the company towards the clients and others who are involved with the business, can create a long-term performance and sustainable development among the companies. A customer value-oriented SCM is able to produce competitive cost and time advantages, as well as solving problems in convergence, coordination and information sharing during the creation and transfer of value, by implementing resource sharing and collaboration between members in the supply chain 28. SCM has the ability to remove “wastes” as the “lean production concepts” 53 regarding reducing the number of suppliers, cutting down information time, reducing the incidents of inaccuracy and redundancy, etc. SCM should be implemented according to customer value orientation because the investigation into the consumers’ behavioral intention to adopt information technology (IT) has always been an important issue in information management 54. If there is no information system between upstream and downstream linkages with customers and suppliers, the chain will definitely break and business development could not be achieved 55. SCM should integrate business processes across its supply chain to create business value and satisfaction among customers and stakeholders, meaning that creating competitive advantages 18, 20. Hence customer value orientation is the key for the success of SCM.

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Fig. 3 Customer-oriented supply chain management in 3G industry

From above guided-theory, to gain the success of 3G SCM, it is required to orient customer value along with average revenue per user improved so that 3G mobile service becomes “one-stop shopping” in the true sense of the word. For that purpose, consumers’ behavior intention must be enhanced to adopt 3G value-added services. In reality, 3G consumers are still unwilling to spend much time and money on these value-added services, and service flow cannot be augmented to create revenue 6. Capturing and orienting consumers’ behavior intention, must be studied systematically based on the research of 3G SCM. To effectively manage customer-oriented SC in 3G industry, this topic propose a survey designing AHP questionnaire to ask 3G experts for their perception of preference for alternatives.

E. Survey overview The questionnaire design was proposed based on the theory of Analytic hierarchy process

(AHP) which was developed by Saaty in the 1970’s. AHP can be applied to resolve complex decision-making problems. First, complex systems are decomposed into clearly-defined layers of

Customers

Customer-­‐  oriented  supply  chain  management  

Supply chain management

Factors  considered  in  3G  supply  

chain  

 

Supply and Interface with end-users

Tariff & billing, distribution &  marketing  Network services & products  

Customer care

Application developers

Network development  

Application software

Content aggregations

Portal

Platform vendors

Technology platform

Application platform

Infrastructure and network vendors

Equipment

Spectrum  Operations

Network

Broadband

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elements. Then, the relative weight and overall order of elements are derived on each layer via pairwise comparisons 56. In this study, we established the hierarchy system based on a literature review and modified it using the opinions of ahead researches and UMTS forum 6, 56.

The respondents are the key factor to bring the precise consequences for AHP method. We considered the human factors in the correlations with 3G industry including 3G SCM and 3G CV. The research method results from these directions as follows.

 

IV. RESEARCH METHOD A. Research framework

Based on above descriptions, this study is expected for surveying the adoption of 3G SCM based on the survey of customer-perceived value orientation through their intended use of 3G value-added services (Fig. 4) The ultimate aim of this study is to produce a strategy for developing marketing and product recommendations based on real data generated by customers, collected from experts in 3G field. This study needs 3G experts as the target respondents for questionnaire design. 3G experts, in this study, defined as the members of 3G SC widely capturing the processes of making products including service quality controlling and problem-solving, directly interacting and being familiar with customer needs, and ensuring their responsibility for the profitability and continuity of the network chain. 3G industry is a large-scaled conception that not everyone could understand its evolvement and development. 3G experts’ roles are considered the same as type 2 operators described in the foregoing literature part. We hope to ask 3G experts for their perception of important factors to improve 3G SCM by orienting CV. No other researchers could deeply understand the information system between upstream and downstream linkages with customers and suppliers of 3G industry but 3G experts hence eliciting their opinion would be precisely. With the purpose of getting reliability and validity, this work applied AHP technique to analyze 3G experts’ decision-makings process which may result in precise preferences for alternatives. Firstly, the analysis of the components of 3G supply chain in dialectical relationships to create 3G value chain as well as the comprehension of customers’ willingness to use and utilize the kinds of 3G value-added service are the points to complete these goals. The descriptions of the components and critical factors of 3G supply chain and six kinds of 3G value-added service are mentioned in Introduction and Literature review parts.    

 

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Fig. 4 The AHP three-tier framework for factors considered in 3G supply chain

B. AHP AHP is a suitable method to solve the kind of decision-making problems which need to

delaminate many factors. It is easy to apply this kind of method for formulating and analyzing decisions. The process was developed to solve a specific class of problems that involve the prioritization of potential alternative solutions 57. The approach is based on three major components 58:

(1) To start with, a complex problem is separated into a hierarchy, each level consisting of some manageable aspects and each aspect is divided into another set of criteria. There is no single hierarchy structure and one of the major attributes of the AHP is that it allows decision makers flexibility. Fig. 5 is an example.

(2) Priorities among the elements within each layer of hierarchy are established by a measurement methodology. Pairwise comparison, based on a nine-point scale (Table 1), is shown up while the decision-makers (experts) evaluating each set of elements with

1. Mobile Internet access

2. Mobile Intranet/ Extranet Access

3. Customized infotainment

4. Multimedia messaging service

5. Location based service

6. Rich voice

Factors  considered  in  3G  supply  

chain  

  Application developers

Network development

Application software

Content aggregations

Portal

Supply and Interface with end-users

Tariff & billing, distribution & marketing

Network services & products

Customer care

Platform vendors Technology platform

Application platform

Infrastructure and network vendors

Equipment

Spectrum  Operations

Network

Broadband

First tier assessment

Aspect

Second tier assessment

Criteria

Third tier assessment Customer

value

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respect to each of them in a higher stratum. This measurement methodology provides the framework for data collection and analysis of the AHP.

Fig. 5 Hierarchical model for the implication of customer-value orientation in 3G SC

Table 1 AHP comparison scale Intensity of importance Definition 1 Equal importance 3 Moderate importance of one over another 5 Strong or essential importance of one over another 7 Very strong importance 9 Absolute importance 2, 4, 6, 8 Intermediate values between adjacent judgments Reciprocals of above If factor i has one of the above numbers assigned to it when compared

to factor j, then j has the reciprocal value when compared with i

(3) The third stage includes calculating priorities and consistency. Prioritization regards to

composition of various aspects and criteria at the same level with respect to an element from the upper level of the hierarchy. A consistency ratio of 0.1 is considered to be acceptable, which is calculated to check the consistency of judgments. It is likely that the inconsistency occurs when decision-makers make some careless mistakes or exaggerated judgments during the process of making pairwise comparison.

1. Mobile Internet access

2. Mobile Intranet/ Extranet Access

3. Customized infotainment

4. Multimedia messaging service

5. Location based service

6. Rich voice

Factors  considered  

in  3G  supply  chain  

 

Infrastructure and network vendors

Equipment

Spectrum  Operations Network

Broadband

Platform vendors Technology platform

Application platform

Application developers

Network development

Application software

Content aggregations

Portal

Supply and Interface with end-users

Tariff & billing, distribution & marketing

Network services & products Customer care

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The final outcome of the AHP is an optimum choice among alternative decisions. The drawback of AHP method shown up since the accuracy does not have good effect for expressing the thinking of people and the complexity of thing. The factors affecting the decision-making problem contain quantitative as well as qualitative factors in its analysis. It means decision-making needs to consider the decision-maker psychological factors, knowledge, experience and decision-making level. However, in comparison with other multi-criteria decision-making models, for selection of improvement strategies for 3G supply chain management based on customer-value orientation, AHP is revealed to be superior because the adoption of 3G supply chain management depends on many factors other than just psychological factors and economic efficiency. The experts in 3G field are being asked to make decisions based on their experience of working and real results from 3G operating industry. The advantages of AHP method establish in over specification of judgment, built-in consistency tests, use of appropriate measurement scales and applicability in elicitation of utility functions 58, 59. Due to these advantages and successful application of the AHP method to a variety of different fields 60

covering conflict resolution, forecasting, input- output analysis, planning, choice behavior, sustainable development planning 58, 60, 61 and application to mobile industry 62, 63, AHP is applied to evaluate the appropriateness of adopting 3G supply chain management in the context of this study.

C. Questionnaire design and Definition of variables  This study is developed for constructing the questionnaire then sending out to experts in 3G

field at telecom companies. The research questionnaire has two key parts. The first key part is designing the AHP questionnaire which will be used to ask 3G experts’ response to the key factors influencing the improvement of 3G SCM and orienting customer value via their intended use of six kinds of value-added services. AHP is a popular method for decision-making developed by T. Saaty (1977, 1980 64). Through AHP questionnaire, not only the most important alternative but also the preference for all alternatives for each decision-maker would be identified 65. Data from decision-maker judgments that so-called pairwise comparisons are aggregated and the degree of importance of each alternative is quantified in the AHP.

This study first reviewed the foregoing literature to determine important factors influencing customer-value orientation through the supply chain in 3G industry. These factors were then used to construct the tiers of an AHP questionnaire. The AHP questionnaire structure is shown in the Fig. 5. The AHP questionnaire has three tiers targeting the “critical factors of 3G supply chain”. The first tier assesses the four aspects of Infrastructure and network vendors, platform vendors, application developers and supply and interface with end-users. The second tier assesses the following criteria: equipment, spectrum, operations, network, broadband, technology platform, application platform, network development, application software, content aggregations, portal, tariff and billing with distribution and marketing, network services and products, and customer care. The definitions of aspects/ criteria are listed in Table 1. Experts will be asked to rank among the six kinds of value-added service according to their assessment of customers’ preference. These six kinds of value-added service are announced by UMTS forum in 2000 6, 66.

The second key part is used for further modifications of the proposed model. We construct this part in the purpose of figuring out the correlations between the working components of 3G

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supply chain and customer value. The answer of a question is multiple-choice. The questionnaires have been shown on the appendix. Additionally, for surveying Taiwan’s experts, English version and Chinese version of questionnaire must be made.

D. Sampling method This study is a pilot study which is researched to verify the reliability and validity of the

proposed questionnaire. Therefore, the formal study is expected to finish based on the questionnaire filling up of the experts in 3G telecommunication field. The questionnaire is specially designed for people who own their expertise in the operations and construction of 3G supply chain and 3G customer values as well, which are emphasized as the key to bring satisfaction to both customers and service providers in 3G industry. Toward such a specified area, our fundamental principle of getting reliability and validity of the questionnaire defines quality as the key point. Therefore, the supposed number of surveyed responses is between 20 and 30 CEO, directors, managers and professors related to 3G area, who are of the typical and special job positions relating and understanding the overall working process of 3G supply chain and service chain. Although the empirical study is expected to not have a large number of survey response, it still represented a well balanced view of both industry and academic perspectives on customer-value orientation in 3G supply chain issue because of professional purviews and management positions of respondents we expect to survey.

This study is intended to cover most of the perspectives of every relevant types of expert within the components of 3G supply chain and service chain. To find the implication of customer-value orientation in 3G supply chain, based on different positions in the supply and service chain of this special industry, we convene five groups of experts knowledgeable in 3G telecom technologies and services in Taiwan including: The 3G telecom service providers/ operators; The technical scholars (including university professors in the fields of telecommunications and electrical engineering); The non-technical scholars (including university professors in the field of management, law, and economics, etc); The telecom equipment manufacturers, gateway providers, platform providers, content providers and members of marketing division; And researchers in 3G telecommunication field. Accordingly, the formal study is expected to finish based on the proposed questionnaire with the filling up of around 10 CEO, directors and managers from Chunghwa Telecom (CHT), FarEasTone Telecommunications Co. Ltd. (FET), Taiwan Telecom, ViBo Telecom Inc; about 20 scholars of 3G telecom field from universities in Taiwan.

This study uses Telephone and E-mail to interview and confirm whether the selected samples are willing to participate in this survey. If they agree our requests, we will send the proposed questionnaire by E-mail. The analytical result will be provided in the future to assess the implication of customer-value orientation in 3G supply chain management.

V. CONCLUSIONS AND MANAGERIAL IMPLICATIONS

The conclusion of the low usage rate of current 3G value-added services and the loose

stickiness between them and 3G consumers serves as a warning for 3G telecom service providers,

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forces them to compass the whole movements of 3G supply chain based on analysis of 3G customer- value orientation since customer value is the key issue for those who want to own 3G market. This paper has illustrated 3G SCM then tried to connect the relationship between 3G SCM and customer-value orientation. Through illustrating customer-oriented supply chain management (COSCM), the paper has shown that COSCM is really important for 3G industry in the fierce competition among telecom operators. Finally, the paper has proposed a model of customer oriented SCM in 3G mobile service based on the guided-theories and opinions of the foregoing researches. This composed model was used as the map directing how to find the implication of customer-value orientation in 3G SCM. This is a synthetic problem with the impact of both forward and reverse directions. Supply chain is a closed process requiring the participation of customers, who play the central role as the recipients of products and services in the end, and also the information-sharing source of demands and requirements about services and products, help 3G mobile network operators get the job done well. Thus, the model of our study has demonstrated the two-side interaction between the working components of supply chain and the customer-value orientation through value- added services. The important part of this study is questionnaire design to survey 3G experts for their decision-making of relative important factors concerned in 3G SCM as well as in customer-value, and the correlations between the working components of 3G supply chain and customer value. 3G experts are target subjects of the survey because they are the rare members familiar with customer requirements and able to capture the evolvement and improvement of a large-scaled conception like 3G industry. AHP technique was applied to measure the precise consequence of judgments to preferences for alternatives provided from 3G experts. The forward direction helps 3G operators get an overview of the internal components and critical factors in 3G industry, and the most powerful factors in the matter of satisfying customer needs. Based on this study, we imply indicators in 3G industry for the forward direction as follow:

Xi = k!’. a! . c!!

!!!

The notion Xi means the value of six kinds of value- added service, kj’ = 1/ number of factors related to aj , aj is the value of critical factors of working components in 3G supply chain, m expresses the number of critical factors, cj =1 if aj has relation with Xi, cj =0 if aj has no relation with Xi. However, the limitation of AHP technique still covers psychological elements of experts. So we applied the indicators implication in the reverse direction to bring the precise results from the survey. In reverse direction, we rely on orientating customer needs in order to find the strongest and weakest elements of the working components in 3G supply chain. Reverse direction shows which components 3G providers should develop to meet customer needs optimally. The indicators implication for the reverse direction is shown as follow:

aj = 1/n . k!.X!′!!!!

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The notion ai means the value of critical factors in 3G supply chain, n expresses number of value-added services, ki = 1 if ai has relation with Xi, ki = 0 if ai has no relation with Xi, Xi’= 1/ number of factors related to Xi. The comparison between forward and reverse direction provide 3G operators the answer that whether their current marketing strategies are correct or not, then the inspection and control of improving 3G products and services in particular and in the field of investment development generally would be offered. Based on model of the study and indicators implication in 3G industry, the 3G network operators can understand how to adjust the working components in 3G supply chain, perfectly combine customer-value orientation with supply chain management so that customers satisfaction would be optimally.

This paper has just stop at questionnaire design. We are now sending email and collecting the samples to get the validity and reliability of questionnaire. The analytical results would be provided in the future to assess perfectly the overview of the supply chain in 3G industry then marketing strategies to improve 3G products and services based on customer-value orientation would be recommended.

 

References:

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Appendix. Questionnaires.

QUESTIONNAIRES ON FACTORS CONSIDERED IN 3G SUPPLY CHAIN

Table 1: Definitions of Aspects/ Criteria in AHP Model

Aspects/ Criteria Definitions Infrastructure and network vendors Equipment

Spectrum Operations Network Broadband

Platform vendors

Technology platform Application platform

Application developers

Network development Application software Content aggregations Portal

Distribution and marketing channels Tariff and billing Network service Customer care

Composed of five criteria: Equipment, spectrum, operations, network and broadband. Provide terminal, network, devices, server equipment Offer speed, capacity, power, latency Working environment and terminals intention Offer communication-enabled networks and devices Create the capacity in transmission speed Composed of technology and application platform vendors Work effectively in transmission data, advanced media processing Prebuilt-components concluding wireless, middleware, etc Composed of four criteria: Network development, application software, content aggregations, portal Offer the intermediation function to develop network Cover compass and content of mobile applications Conclude various kinds of products and services with solution of content Contact, browse mobile internet, users’ data Composed of tariff billing, network service and customer care Secure network billing and tariff services Offer network bank, email servers, credit card Differentiate and innovate services

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Fig. 1: The AHP three-tier framework for factors considered in 3G supply chain

Factors considered in

3G supply chain

 

Infrastructure and network vendors  

Equipment  

Spectrum  Operations  

Network  

Broadband  

Platform vendors  Technology platform  

Application platform  

Application developers  

Network development  

Application software  

Content aggregations  

Portal  

Distribution and marketing channels  

Tariff and billing  

Network service  

Customer care  

1. Mobile Internet access

2. Mobile Intranet/ Extranet Access

3. Customized infotainment

4. Multimedia messaging service

5. Location based service

6. Rich voice

First tier assessment

Aspect

Second tier assessment

Criteria

Third tier assessment Customer

value

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Dear experts, The purpose of this study is to investigate the elements forming the value of 3G supply chain and the relationship between those elements with the customer values. The results of the study will be used as a reference for improvement of 3G industry. Please take ten minutes to complete this questionnaire. Your opinions are of value in helping us perfect the supply chain management in 3G field in our country. Session 1: Respondent Information 1. Professional background 2. Seniority in the industry: ____________ years 3. Content of your work, please outline? ______ � E-mail address: ________________________ Session 2: Compare the relative importance of each item. (Please check the mark “X” in the appropriate location) From a scale of 1 to 9, please compare the relative importance of the different aspects in pair wise. The definition and explanation of the AHP assessment scale is described in the following table. Definition and explanation of the AHP assessment scale. Assessment Scale

Definition Description

1 3 5 7 9 2,4,6,8

Equal Moderate Strong Very strong Extremely Strong Median of adjacent scales

The contribution of two options are equally important Experience and judgment show a slight preference to one particular option Experience and judgment show a strong preference to one particular option Show a very strong preference to one particular option Sufficient evidence to support one particular option A tradeoff between two options

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I. Please compare the relative importance of each goal and mark [v] in the blank

Relative importance ratio of 3G Mobile Service Vendors (9 is with the most importance, 1 is with the least importance)

9:1 8:1 7:1 6:1 5:1 4:1 3:1 2:1 1:1 1:2 1:3 1:4 1:5 1:6 1:7 1:8 1:9 Infrastructure and network vendors

Platform vendors

Infrastructure and network vendors

Application developers

Infrastructure and network vendors

Distribution and marketing channels

Platform vendors

Application developers

Platform vendors

Distribution and marketing channels

Application developers

Distribution and marketing channels

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II. The relative importance of each criterion (please make pairwise comparison, choose a blank in each line and mark [v]) 1. Under the goal of “Infrastructure and network vendors”, Please compare the relative importance of criteria, and mark [v] in the blank

Relative importance ratio (9 is with the most importance, 1 is with the least importance)

9:1 8:1 7:1 6:1 5:1 4:1 3:1 2:1 1:1 1:2 1:3 1:4 1:5 1:6 1:7 1:8 1:9 Equipment

Spectrum

Equipment Operations Equipment

Network

Equipment

Broadband

Spectrum

Operations

Spectrum Network

Spectrum Broadband

Operations Network

Operations Broadband

Network Broadband

2. Under the goal of “Platform vendors”, Please compare the relative importance of criteria, and mark [v] in the blank

Relative importance ratio (9 is with the most importance, 1 is with the least importance)

9:1 8:1 7:1 6:1 5:1 4:1 3:1 2:1 1:1 1:2 1:3 1:4 1:5 1:6 1:7 1:8 1:9 Technology platform

Application platform

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3. Under the goal of “Application developers”, Please compare the relative importance of criteria, and mark [v] in the blank

Relative importance ratio (9 is with the most importance, 1 is with the least importance)

9:1 8:1 7:1 6:1 5:1 4:1 3:1 2:1 1:1 1:2 1:3 1:4 1:5 1:6 1:7 1:8 1:9 Network development

Application software

Network development

Content aggregations

Network development

Portal

Application software

Content aggregations

Application software

Portal

Content aggregations

Portal

4. Under the goal of “Distribution and marketing channels”, Please compare the relative importance of criteria, and mark [v] in the blank

Relative importance ratio (9 is with the most importance, 1 is with the least importance)

9:1 8:1 7:1 6:1 5:1 4:1 3:1 2:1 1:1 1:2 1:3 1:4 1:5 1:6 1:7 1:8 1:9 Tariff & billing Network service Tariff & billing Customer care Network service

Customer care

Session 3: The correlations between the working components of 3G value-supply chain (first and second tier referred) and 3G customer value (third tier referred). Please choose the suitable number in your opinion. 1. What are the most correlated with Mobile Internet Access?                1. Equipment 2. Spectrum 3. Operations 4. Network 5. Broadband 6. Technology platform 7. Application platform 8. Network development 9. Application software 10. Content aggregations 11. Portal 12. Tariff and billing 13. Network service 14. Customer care 2. What are the most correlated with Mobile Intranet/ Extranet Access?

1. Equipment 2. Spectrum 3. Operations 4. Network 5. Broadband 6. Technology platform 7. Application platform 8. Network development 9. Application software 10. Content aggregations 11. Portal 12. Tariff and billing

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13. Network service 14. Customer care 3. What are the most correlated with Customized infotainment?              1. Equipment 2. Spectrum 3. Operations 4. Network

5. Broadband 6. Technology platform 7. Application platform 8. Network development 9. Application software 10. Content aggregations 11. Portal 12. Tariff and billing

13. Network service 14. Customer care 4. What are the most correlated with Multimedia messaging service?              1. Equipment 2. Spectrum 3. Operations 4. Network

5. Broadband 6. Technology platform 7. Application platform 8. Network development 9. Application software 10. Content aggregations 11. Portal 12. Tariff and billing

13. Network service 14. Customer care 5. What are the most correlated with Location based service?

1. Equipment 2. Spectrum 3. Operations 4. Network 5. Broadband 6. Technology platform 7. Application platform 8. Network development

9. Application software 10. Content aggregations 11. Portal 12. Tariff and billing 13. Network service 14. Customer care 6. What are the most correlated with Rich voice?              1. Equipment 2. Spectrum 3. Operations 4. Network

5. Broadband 6. Technology platform 7. Application platform 8. Network development 9. Application software 10. Content aggregations 11. Portal 12. Tariff and billing

13. Network service 14. Customer care