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Service portfolios for supply chain composition:Creating business network interoperability and agilityMarijn Janssen a & Ralph Feenstra aa Faculty of Technology, Policy and Management, Delft University of Technology , Delft, theNetherlandsPublished online: 15 Sep 2010.

To cite this article: Marijn Janssen & Ralph Feenstra (2010) Service portfolios for supply chain composition: Creating businessnetwork interoperability and agility, International Journal of Computer Integrated Manufacturing, 23:8-9, 747-757, DOI:10.1080/09511921003642139

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Service portfolios for supply chain composition: Creating business network interoperability

and agility

Marijn Janssen* and Ralph Feenstra

Faculty of Technology, Policy and Management, Delft University of Technology, Delft, the Netherlands

(Received 8 May 2009; final version received 20 January 2010)

As organisations compete more and more in supply chains, they need to work together in business networks thatrequire interoperability and agility in order to reconfigure supply chains and create new ones. In recent years,interoperability has been improved at the technological level by the introduction of service-oriented architecturesand web-service technology and at the semantic level by the creation of ontologies and the use of semantictechnologies. Yet, at a pragmatic level, many research questions remain unanswered. In this paper the authorsintroduce the concept of service portfolios, a pragmatic web instrument used to support the composition andreconfiguration of manufacturing chains. A service portfolio contains an overview of the services provided by theorganisations in a business network that can potentially be used to create a supply chain. Stakeholders can use aservice portfolio for communication and synchronisation of meaning among stakeholders and make decisions. Theconcept of service portfolios is illustrated on the basis of a computer manufacturing case study, indicating that aservice portfolio can improve the agility of a business network and speed up the formation of supply chains at lowercosts, as it enables the rapid composition of supply chain processes from reusable components.

Keywords: business networks; supply chains; virtual organisations; interoperability; agility; Service OrientedArchitecture; service portfolio; pragmatic web; governance

1. Introduction

The efficient and effective creation of supply chains isincreasingly important as competition takes placemore and more at the level of supply chains ratherthan at the level of individual organisations. Theability to create flexible alliances with partners in theform of supply chains or business networks is anincreasingly important ingredient of sustained compe-titiveness (Shapiro and Varian 1999; Tapscott, 1999).Organisations are often part of many supply chainsand competition has shifted to the level of supplychains. When a manufacturing supply chain is created,the first step is selecting the organisations that will beinvolved in the manufacturing process, after whichtheir services are invoked enabling the manufacturing,assembling and transporting activities and theirexecution monitored. Finally, improvements are rea-lised through a process of evaluation.

The emergence of the Internet has created acommunication infrastructure that allows organisa-tions to invoke each others’ services and in this waycreate a supply chain. Nowadays, Service-OrientedArchitectures (SOA) are used which are often im-plemented on the basis of web-service technology.Web-services are self-contained and encapsulate

certain functionalities (Yang 2003). The diffusion andadoption of web-service technology have reduced thethreshold for interoperability. Web-service orchestra-tion (WSO) coordinates the sequence of web-serviceinvocations (Janssen et al. 2006). WSO and web-servicetechnology make it possible to create loosely coupledsupply chain processes with far less effort thanprevious technologies.

As more business systems become accessible viaweb-services, the research emphasis shifts from enhan-cing interoperability at the data exchange level towardsthe pragmatic level. Obstacles that impede the rapidcreation of agile chains are not merely technological innature. In fact, the technological aspects may turn outto be far less of a challenge than the organisational,legal, political and social aspects (Janssen and Scholl2007) and are complicated by the diverse interest ofstakeholders that need to trust each other to cooperate(Feenstra et al. 2007).

The concept of supply chains suggests a linearitythat is not necessarily reflected in reality (e.g.Tewoldeberhan and Janssen 2008). Analyses of flowsbetween various organisations reveal a disorderlystructure and organisations may be involved in multi-ple chains. Furthermore, supply chains change overtime as a result of product innovations, new partners

*Corresponding author. Email: m.f.w.h.a.janssen@tudelft.nl

International Journal of Computer Integrated Manufacturing

Vol. 23, Nos. 8–9, August–September 2010, 747–757

ISSN 0951-192X print/ISSN 1362-3052 online

� 2010 Taylor & Francis

DOI: 10.1080/09511921003642139

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entering the market and other changing circumstances.Consequently, it makes more sense to use the term‘business network’ than the static concept of supplychains. The orchestration of the activities of indepen-dent organisations within a business network leads tothe temporary formation of a ‘chain’ aimed atmanufacturing products as a ‘virtual’ set of pooledskills and resources that are used to fulfill orders. Froma business network perspective, a manufacturingsupply chain can be created by selecting suppliers ofcomponents and raw materials, manufacturer(s) andassemblers, and carriers to transport the raw materialsand the finished products. The potential variety ofpartners, relationships and products involved in thecreation of a supply chain makes interoperability morecomplicated. A business network consists of organisa-tions having heterogeneous systems and data formats,using different processes and governance mechanismsand provide access based on services typically havingdifferent kinds of interfaces and functionality.

A large number of independent organisations withdifferent purposes and goals make up a business ormanufacturing network, as shown in Figure 1. Creat-ing a supply chain from the partners in a businessnetwork not only requires interoperability at thesemantic and syntactic levels, but also requires newcapabilities to select and integrate partners and theirservices and to monitor the execution. Semantic andsyntactic interoperability creates the conditions thathave to be met in order to move to a pragmatic leveland it is at this level that the main issues that remainopen can be found.

Consequently, the challenge is to develop manu-facturing chains that are agile enough to adapt quicklyto changing circumstance and a service portfolioshould support this (re-)configuration. Agility is afundamental requirement for business networks want-ing to remain competitive by dealing with changingcircumstances in the regulatory, technological, custo-mer-oriented and competitive environments. One ofthe factors that enable the creation of agility is thepresence of interoperability at all levels (e.g. Panetto2007). Agility is needed in a competitive environmentthat is characterised by uncertainty and change tocreate new chains and virtual partnerships in businessnetworks in which knowledge and capabilities areshared (Goldman et al. 1995). Nowadays, the creationof virtual partnerships is the most critical successfactor when it comes to making such chainscompetitive (Putnik et al. 2005). Whereas, in thepast, manufacturing business networks were static,new supply chains can now be created by under-standing the (characteristics of the) services that canbe provided by existing and new network partners.Furthermore, potential new partners and servicesneed to be identified to extend the business networkin response to strategic developments. This paperintroduces the concept of service portfolios to managethe set of services provided by the various organisa-tions in a business network. Service portfolios are aninstrument aimed at enabling the creation of agilechains, by providing insight into the capabilities andservices of business partners at a pragmatic level(e.g. Janssen and Feenstra 2006). As such, service

Figure 1. Organisations in a manufacturing network.

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portfolios complement technological, syntactic andsemantic interoperability.

Although our focus is on business networks andsupply chains, a business network can also be viewedas a type of agile/virtual organisation (Cunha et al.2005, Putnik et al. 2005). Cunha et al. (2005) discussthe need for a Market of Resources for the reconfigura-tion of virtual organisation. Such a market is viewed asa condition sine qua non for virtual organisations. Themarket should ensure the management of efficientconfiguration, ensuring quality, reduce risk and lowertransaction costs. Such a resource market can beoperated by a broker (Avila et al. 2005). From ourperspective, this market consists of services providedby the organisations in a business network. Servicesencapsulate organisational resources. Although ourobjective is to support the members of the businessnetwork, who cooperatively make use of serviceportfolio and jointly manage it, a broker can use aservice portfolio as instrument to manage the marketof services.

This paper is structured as follows. The next sectionaddresses various layers of interoperability and the shiftin research emphasis towards the pragmatic level. Next,the concept of service portfolio is introduced as apragmatic instrument that makes it possible to createinteroperable and agile manufacturing chain. Thisconcept is illustrated and analysed on the basis of acase study involving a computer-manufacturing net-work. Finally, the conclusions are presented.

2. Developments in interoperability research

There are many definitions of interoperability thatvary in meaning and content, and that refer to differentdomains (Institute of Electrical and Electronics En-gineers (IEEE) 1990, Putnik et al. 2005, Panetto 2007),ranging from the technological to the organisationallevel. The Institute of Electrical and ElectronicsEngineers (IEEE) defines interoperability as ‘‘theability of two or more systems or components toexchange information and to use the information thathas been exchanged’’ (Institute of Electrical andElectronics Engineers (IEEE) 1990). This definitionfocuses on interoperability at the level of systems andcomponents. However, interoperability is also neededat the organisational level to create new supply chainsfrom organisations in the business networks. Inaccordance with Scholl and Klischewski (2007), thisstudy defines interoperability as the ability of diversesystems and organisations to work together. In thisperspective, interoperability can be viewed as theability to create agile manufacturing networks, whilecomposition involves the selection of services providedby organisations in a business network and

orchestration refers to the execution of a process (byinvoking web-services) that is aimed at manufacturing,assembling, transporting and delivering a product.

Many researchers draw a distinction between thesyntactic, semantic and pragmatic levels of interoper-ability (Wigand et al. 1997, Singh 2002, Putnik et al.2005, Janssen and Scholl 2007), in a way that is similarto the semiotic framework for interoperability thatincludes six levels: physical, empiric, syntactic, seman-tic, pragmatics and social (Putnik et al. 2005). In thisresearch we prefer to keep it simple by using the fourlayers, technological (including physical and empiric),syntactic, semantic and pragmatic (including prag-matics and social) layer.

The technological layer refers to the transportationnetwork, which includes elements like security, relia-bility, domain names and authentication. The syntacticlayer should ensure that the data being exchanged hasthe same structure and adheres to the same standards.An example is an order having a certain structure(number, amount, product price) described in theXML, the eXtensible Markup Language and commu-nicated using web services technology. The third layeris the semantic layer which is meant to ensure that thecommunicating systems interpret the information inthe same way. Semantics provide meaning and isnecessary to refer to what data denotes. For example,it should be known that if something is ordered in abusiness network, the ordered product should beavailable and shipping should be arranged. Finally,the pragmatic layer refers to the context-sensitiveaspect of meaning (Singh 2002). In response to thesemantic web, Singh denotes this as the pragmatic web.De Moor (2005) states that the context is the essence ofthe pragmatic web owing to the multiple, changing,and imperfect sources of meaning. He further arguesthat ‘to select the right (parts of) ontologies, thecommunicative situation needs to be taken intoaccount’’ (p. 3). For our research, the pragmatic levelrefers to the use and the impacts of services. Typicalelements of this level include the trust amongorganisations that is necessary for collaborating inbusiness networks and the addressing of dependencieslike that authentication and authorisation is necessarybefore accepting an order.

Communication and social interaction processesand mechanisms are an important part of the pragmaticlayer. These processes and mechanisms enable stake-holders to synchronise the meaning given to concepts.In this way a shared picture can be created. From theperspective of the pragmatic web, De Moor (2005)argues that ‘services cannot be described independentlyof how they are used . . . social mechanisms are there-fore needed for evaluation and discovering trustworthyproviders and consumer of services’’ (p. 3).

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The pragmatic layer can be further divided intogovernance-related, organisational and business pro-cess sub layers. Only by understanding these aspects ofthe pragmatic layer can a better understanding of themeaning be created. The term governance refers to thesystem, routines, processes and structure used to definestrategies and policies, monitor policy implementationsand manage and coordinate the procedures andresources aimed at ensuring the efficient and effectiveexecution of services. Governance mechanisms deter-mine how communication, responsibilities and deci-sion-making structures are formalised. The governanceof a business network is a complicated endeavour, as itoften involves multiple agencies with different objec-tives, resources, capabilities, processes and levels of IT-sophistication. The essence of governance is commu-nication between the diverse set of stakeholders.Governance is not only necessary to ensure theallocation of responsibility, decision-making andaccountabilities, but also that persons provide thesame meaning to concepts.

The organisation layer contains the contracts andagreements between the organisations involved, con-tinuous improvement, business process reengineering(BPR), trust, goodwill, etc, issues related to the smoothexecution of supply chain processes. At this layer,design-related decisions often have to do with thegranularity and function of services, the types of serviceinterfaces, the willingness to share information (whichmay be limited for competitive reasons), the types ofrelationships (cooperative vs. competitive), etc.

The process layer includes value-creating, controland monitoring activities and associated

responsibilities. The focus here is on process-drivenintegration, in which the processes are coordinated andorchestrated in a coherent and goal-oriented way. Theunderstanding of processes will provide better meaningto data than without having any process knowledge(e.g. Singh 2002).

In the layered model presented in Figure 2, eachlayer contains some relevant aspects with regard tocreating interoperability, with higher layers dependingon the interoperability provided by the other layers.The Internet provides the technological vehicle forinteroperability, while XML, SOA and web-serviceprotocols already provide a common syntactic ap-proach. At the semantic level, all kinds of standardsare under development, with the aim of creatingvendor-built software to diffuse the relevant technol-ogies. By contrast, all kinds of issues remain open atthe pragmatic level, as can be inferred from the triangleto the left in Figure 2.

Orchestration and coordination requires that sup-ply chain partners share information such as stocklevels, production planning, inventory, products andprices. SOA is becoming the prominent paradigmwhen it comes to providing access to these types ofinformation and an increasingly common approachamong manufacturing companies. Web-services andSOA represent a technological and interactive frame-work in which modular systems are loosely coupled tocreate applications from well-defined and readilyavailable components (Fremantle et al. 2002). In anSOA, a service is a function that is well-defined andself-contained, and ideally does not depend on thecontext or state of other services. Web-service

Figure 2. Architecture layers for interoperability (based on Janssen and Scholl, 2007).

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technology uses an integration model that allows forthe flexible integration of heterogeneous systems froma variety of domains (Linthicum 2004). Although theWeb-Service Description Language (WSDL) is used tospecify the operations that are available within a web-service and the structure of data being transferred, itdoes not specify the semantic meaning or semanticconstraints on the data.

Up to now, web-service technology to a large extentremains limited to the syntactical level. More recently,web-services and semantic technology have beenmerged in Semantic Web-services (SWS), which offer away to solve conflicts in data models and barriers ininteraction protocols. However, so far its success hasbeen limited (Burstein et al. 2005). The Semantic Web isan extension of the existing web in which information isgiven clearly defined meaning, enabling computers andpeople to interact (Berners-Lee et al. 2001). The Web-Service Modelling Ontology (WSMO) provides anontological framework that supports the deploymentand interoperability of SWS by including user goals,ontologies for describing the service, mediators toprovide interoperability between the different ontolo-gies and a semantic description of the web-service,including a description of the capabilities (functional)and interface (usage) (http://www.wsmo.org/). TheWeb-Service Modelling Language (WSML) providesformal syntax and semantics for WSMO. Theseprotocols provide a basis for semantic interoperabilitythat, although the take off has yet to come, shifts theresearch focus towards the pragmatic level.

WSO is a technology designed to automate supplychains that makes it possible to connect to the looselycoupled business processes of network partners(Tewoldeberhan and Janssen 2008), invoking internaland external web-services from a predefined process flowthat is executed by an orchestration engine (Zhao andCheng 2005), thus enabling the creation of supply chainprocesses by specifying the rules that govern the processflow. However, before any exchange can take place,there has to be an agreement between the variouspartners regarding the extent and quality of transactionsand exchanges and the allocation of chain responsibil-ities. The pragmatic web or pragmatic layer poses amajor challenge, because stakeholders may have diver-ging interests and requirements. A truly interoperablebusiness network is able to access and reuse potentialinformation for a variety of expected and unexpectedpurposes, in this way improving agility. Creating such abusiness network is a huge challenge and requires theinvolvement of many organisations with heterogeneousinformation systems and various interests and goals andacting within different contexts, and it may be influencedby other factors like goodwill and trust, while requiringthe creation of shared vision and objectives.

3. Service portfolios

Owing to developments in SOA, a manufacturingsupply chain can be created by invoking the (semantic)web-services of the organisations in a business net-work. As such, the emphasis of supply chain manage-ment is on managing of services. Planning andcomposing a supply chain and selecting suppliers andother companies can be viewed as the planning andselection of services. First of all, this requires anoverview of existing and potential services.

3.1. What constitutes a service portfolio?

On the semantic level, a service portfolio is a kind ofcatalogue of services that can be used as the basis forcomposing a manufacturing supply chain. To createsuch a list, more information is needed, includingcapabilities and interfaces, the agreements madebetween the parties involved, product prices based onthe amount of turnover, and so on. This kind ofinformation is easy to collect and store. However, aservice portfolio is more than a kind of catalogue ofreadily available services that can be reused in newsupply chain processes. At the pragmatic level, itshould also be used as the foundation of a roadmap tothe future and the basis for continuous improvement.The roadmap indicates which production and assem-bly capabilities are needed, which services should bedeveloped, who will deliver these capabilities, whenwill they be realised and when they will be used in thenew supply chain. A service portfolio has to contributeto an organisation’s need and supply chain processes,while at the same time positioning the supply chain tomeet existing and future demands and remain compe-titive. In addition, a service portfolio should be used asan instrument that supports to synchronise the mean-ing given to services by the stakeholders involved.

As such, much more information is necessarycoming from internal and external sources to create aservice portfolio and social and governance mechan-isms are necessary to ensure the proper use. In thisrespect, a service portfolio can be better viewed as acollection of tools and instruments instead of acatalogue of services provided by the business networkpartners. All the elements together create a serviceportfolio. The following key elements make up aservice portfolio.

(1) A service catalogue that contains a descriptionof all the existing services using codified servicedata. The service portfolio should includeexisting services and services that will becomeavailable shortly and identify services that needto be developed to support new developments;

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(2) A tool to monitor the performance of services,the risk of break-down and feedback withregard to the need to develop new services;

(3) A tool to identify developments inside andoutside the organisation. Many new servicesthat potentially offer added value are developedby other organisations and may come fromunexpected areas;

(4) A tool to communicate information aboutservices and compositions to stakeholders andthat can be used to synchronise meaning andcreate a shared picture;

(5) Methods to evaluate services and the serviceproviders (e.g. organisations in the businessnetwork). It is often not enough to be able toestimate costs to make the right decisions.Other aspects, such as reliability, continuity,availability, past-performance and trust mayalso be decisive factors. This becomes moreimportant as the competitive position of thesupply chain is dependent on the weakest link;

(6) Feedback mechanisms to evaluate and improvethe supply chain. This enables supply chains tobuild capabilities to remain competitive;

(7) Support from and involvement of multipleorganisations in the decision-making process.By involving organisations from the businessnetwork, tactical knowledge with regard toorganisational and ICT-related assets can bemobilised.

The concept of service portfolios needs to bridgethe internal and external organisational functions,meet current and future demand, enable communica-tion and address potential conflicts of interests. Thereis a genuine risk of organisations focusing on their ownefficiency and concerns while neglecting what is bestfor the supply chain.

3.2. Service portfolio elements

To describe the elements that make up a serviceportfolio at the semantic level, an ontology, a sharedunderstanding of a certain domain, was created. Anontology helps to create a shared understanding of thecomposition, making it possible to identify essentialconcepts and relationships between them and in thisway supporting the pragmatic level. This means thatan ontology operates at a semantic level and is used todescribe the service portfolio elements, while it is usedat a pragmatic level to communicate, to negotiate andto synchronise meaning.

Figure 3 shows an Object-Role Modelling (ORM)model of the proposed ontological service compositionframework. ORM is a conceptual data modelling

technique that can be used not only for the conceptualmodelling of database models, but for a variety ofother modelling purposes as well, such as the model-ling of ontologies (Proper and Weide 1995). In anORM model, ovals represent object types (which arethe counterparts of classes), while boxes representrelationships between object types. These relationshipsare referred to as fact types.

In this figure, the organisation that can deliver someproducts (including components, raw material etc) andwhose information can be accessed using web-servicesoccupies a central position. An organisation hascertain organisational characteristics, which could beits past performance in terms of meeting deadlines, thequality of its products or its size, but also informalaspects like the level of goodwill and trust it generatesin the other organisations. An organisation hasagreements, which could be a contract but alsoinformal agreements, with other organisations. Anagreement always relates to two or more organisations.An organisation can contribute to a supply chain, whilethe supply chain has a certain supply chain performance(which depends on the performance of the individualorganisations).

Organisations deliver a number of web-services.Web-services do not have to be executable web-services, which means that potential services that haveyet to be developed can be included to supportstrategic planning. In this way potential services canbe part of a hypothetical future supply chain, they donot have to be connected to an organisation. Web-services (which are implemented using some kind ofprogramming language) provide some kind of func-tionality, which is described in terms of theirfunctional attributes and non-functional attributes. Aservice can provide multiple functions, for exampleinventory information, product purchase, etc.). Inaddition, web-services have non-functional attributes,such as response time, scalability and reliability. Aweb-service is always provided by an organisation andthe relationship within a supply chain is determinedby four characteristics

(1) Agreements;(2) Organisational characteristics;(3) Functional attributes of the service;(4) Non-functional attributes of the service.

These four aspects can be used to evaluate potentialpartners and look for opportunities. Furthermore, bymonitoring and evaluating the manufacturing chain,this information can be updated.

The reason we did not include the orchestrationin this model is that a service portfolio is designed tosupport the composition rather than the execution.

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It is possible to expand the model presented in thispaper further by including orchestration-relatedaspects.

The service portfolio elements provide the basis forthe description of the information that is needed tocreate a supply chain. The ORM model can betranslated into a semantic language to verbalise theconcepts, relationships and constraints of the ORMmodel.

4. Case study: Manufacturing and assembling

computer systems

4.1. Background

The case study involves a medium-sized company thatmanufactures, assembles and trades computer systemsin a business-to-business market. The case study hasbeen analysed in the past by conducing six semi-structured interviews. Recently, a hypothetical scenariofor the use of service portfolio has been developed

Figure 3. Service portfolio elements.

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based on the available case study description. Thescenario was evaluated during a group session in whicha group of students were asked to play a certainorganisation within the business network. During thesession the students created new compositions, andnegotiated with each other. The company’s mainassembling and manufacturing plant is located in theNetherlands. The company has National Sales Orga-nisations for a number of European countries, includ-ing France, Belgium, the United Kingdom, Germanyand the Netherlands. The company trades with a largenumber of other organisations in order to buy rawmaterial, transport and distribute products. Further-more a large number of other organisations function astrading outlets for selling the products. At the bottomof Figure 4, the physical supply chain is shownschematically. Raw materials are produced and shippedto the manufacturing and assembly plant. End-productsare often transported directly to the customers. Mostorders involve large volumes, which are built based oncustomer orders. For small orders, the decoupling pointlays at the company and a small inventory of computerproducts is kept to ensure fast delivery. As a medium-sized player in the business-to-business market, thecompany competes on the basis of innovation andensuring that the right components are bought,assembled and delivered. As such, managing the supplychain has become a crucially important element that canbe supported through a service portfolio.

The companies in the business network haveadopted SOA and provide access to their applicationsbased on web-service technology. The rectanglescontaining the text ‘services’ in Figure 4 refer to this.Services can be used to look at the raw material,products, shipments or other supplies that are offeredby the companies in the business network. Thecomputer manufacturer has reached an agreementwith most of the companies in the network, making itpossible to access their inventory and to order productsdirectly, which ensures that there are no unnecessarydelays. Furthermore, there are billing and paymentservices.

4.2. Use of service portfolio

Creating a service portfolio starts by collecting theinformation about raw materials, the quality, thereliability of the service providers, etc., in the serviceportfolio. After this information was derived fromthe case study description, the steps depicted inFigure 4 were repeated a number of times in thegroup session.

(1) Supply chain composition: Based on customerneeds and manufacturing, assembling andtransporting capabilities, a new supply chaincan be created. Based on the data, an inter-operable composition is created.

Figure 4. Using a service portfolio to create and improve manufacturing supply chain.

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(2) Supply chain orchestration: The invocation ofthe selected web-services results in a predefinedprocess flow that is carried out by an orches-tration engine. Orchestration engines make itpossible to execute different versions of theprocess, which improves agility.

(3) Evaluation and improvement: Collecting themonitoring data of the physical activities,invoking the services and orchestration resultsin data that can be used to identify and realiseimprovements.

(4) Strategic planning: New developments in theenvironment, for instance new raw materials,including CPUs, memory chips, etc., create aneed to reconfigure the supply chain. Often,this not only results in the selection of otherproducts, but also in a need for other manu-facturing and assembling capabilities.

The cycle described above enhances agility byenabling the creation of a new or improved manufac-turing chain within a short time-frame. In this way, themanufacturing company was able to adapt quickly tochanging circumstances.

4.3. Benefits of service portfolios

The description of the cycle presented above illustratesthat service portfolios enhance both interoperabilityand agility, which was our primary aim. In addition, agroup session was held in which the participants couldlist the advantages of service portfolios. At the start ofthe session, the participants were presented the service

portfolio basics and concept. Thereafter a scenario waspresented in which a new composition should becreated based on data available in the service portfolio.Each participant could create their own compositionand negotiate with other participants about the desiredcomposition. This process was aimed at synchronisingmeaning among the participants about availableservices and the desired composition. By utilisingsuch a session, the participants experienced the use ofthe service portfolio within the given scenario at thepragmatic level. Finally, the participants were asked toevaluate the service portfolio. Although this approachhas limitations in terms of representativeness andgeneralisability, it does provide indications about thepossible advantages.

Table 1 provides a summary of the main advan-tages mentioned by the participants in the case study.The advantages are clustered in three groups related toagility, efficiency and governance. In all of these groupsadvantages related to interoperability can be found.Some of the advantages are related to all of thesegroups. Most of the advantages related to agility andefficiency were expected, as they provided the startingpoint for the introduction of the service portfolioconcept. The advantages related to governance cameas a surprise and underline the need for organisationsto work together in manufacturing supply chains.Paradoxically, in order to compete successfully on aglobal level, competitors often need to trust oneanother and work together in a supply chain. Thisstresses again the need for social processes andmechanisms to create trust and synchronise meaning.For example, component suppliers compete with other

Table 1. Service portfolio advantages.

Cluster Advantages

Agility . Systematic overview of the range of opportunities. Dependencies among individual elements are addressed, which helps determine the costs and overall

performance of supply chain. The ability to discuss alternative chains anywhere/anytime. An emphasis on the creative design process and creation of customer value. Decisions are made in a short time-frame. Creation of executable chains. Scenario-thinking is encouraged, which results in thinking about alternative strategies and the need to

develop new services, find new partners and develop capabilitiesEfficiency . Increased insight into supply chain costs and other performance evaluation criteria

. The design process is very structured and very efficient as it requires limited time

. It is easier to contribute because design software reduces distractions caused by non-verbal communication(anywhere/anytime)

Governance . The explicit ranking of different options can lead to increased support for the decisions that are made. Increased cooperation by keeping the focus on the composition design. The choices that are made can be motivated better. By working on a service portfolio, partners in the business network are involved and committed and clear

responsibilities can be assigned. Turning all participants into designers helps break down boundaries between partners in a business

network

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component supplier in the global market. Nevertheless,components from both suppliers are included in acomputer system and both benefits from an agile andinteroperable chain. Furthermore to be able to use acomponent, the exact functionality, interfaces andlimitations of use should be understood which requirecommunication processes.

A key success factor in using service portfolios isthe ability to bridge the boundaries between theorganisations involved in a business network. Assuch, a service portfolio can be viewed as a governanceinstrument operating at the pragmatic level within abusiness network, as it helps to define responsibilitiesfor improvement and for developing new capabilities.Routines, processes and communication structure usedto define the supply chain strategy and used todetermine improvements are structured around theservice portfolio in our case study. Furthermore, theportfolio helps to determine supply chain responsibil-ities and which agreements with which businessnetwork partners need to be made to remaincompetitive.

Managers need to understand that the serviceportfolio provides a tool to guide short-term as wellas long-term developments and should try to fulfillthese needs and communicate opportunities andlimitations. A service composition supports the crea-tion of agile manufacturing chains and fosters colla-boration among business network partners. A serviceportfolio gives an overview of the services provided bythe organisations in a business network that can beused to create a supply chain. To promote agility, thetools provided by a service portfolio should be used ina straightforward and intuitive fashion, allowingmanagers to create a supply chain faster and moreeasily than would be possible using traditionalapproaches.

5. Conclusions

In recent years, obtaining interoperability at thesyntactical and semantic level has become easier andattention has focused towards the pragmatic level.Lower level interoperability makes it possible to createsupply chains, as it invokes services which provideeasier access to information such as inventory,production capacity, billing and payment. Manyresearch issues have been solved at the technical,syntactic and even semantic level, but many remainopen at the pragmatic level, The question remainswhich services provided by which organisations in thebusiness network should be utilised when creating orreconfiguring a supply chain. To answer this question,we introduced the service portfolio instrument, whichoperates at a pragmatic level, providing an overview of

service providers, services and product characteristicsand can be used to compose and plan the developmentof the supply chain.

The case study discussed in this paper demonstratesthat a service portfolio can improve the agility of abusiness network by enabling the rapid composition ofsupply chain processes, improving efficiency by speed-ing up the formation of supply chains at lower costs,and that it can be used to evaluate supply chains.Finally, organisations work together more effectivelyas they are able to discuss the manufacturing chain andidentify strategic opportunities that will help them staycompetitive.

A service portfolio is more than a kind of semanticcatalogue or ontology of readily available services thatcan be reused to design new supply chain processes. Itis a pragmatic instrument used to support thecomposition and reconfiguration of manufacturingchains. Service portfolios form the basis for developingthe business network and remaining competitive. Aservice portfolio should be viewed as a collection oftools and instruments that can help the governanceof a business network. In conformance with the ideasof the pragmatic web, communication and socialinteraction mechanisms are an important part ofservice portfolios to synchronise the meaning givento concepts by a wide and diverse set of stakeholders.A service portfolio should also include supply chainevaluation metrics, descriptions of the characteristicsof the services and service providers that are required,context information, dependencies between services,monitoring and feedback mechanisms and decisionsupport tools that make it possible to create alternativesupply chains and identify strategic opportunities. Inthis light, service portfolios have a close relationshipwith supply chain strategies, especially those related tosourcing and investment decisions. A service portfoliocan and should provide support for the development ofa growth plan by determining who should providewhich raw material, services and components.

From a virtual organisation perspective, a serviceportfolio is a kind of map of a network of organisa-tions in which supply chains can be created. A serviceportfolio can potentially be used for the reconfigura-tion of resources in agile/virtual organisations. Thisresearch was limited to business network and thepotential use of the services concept and serviceportfolios for agile and virtual organisations needs tobe further researched.

The advantages of the concept of service portfoliowere analysed using a group session which provideslimitations in terms of representativeness and gener-alisability. In our further research we intend to analysemore case studies to derive a set of detailed require-ments and performance measures, which in turn can be

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used to extend and detail the concept of serviceportfolios. A quasi-experiment will be developed toevaluate the advantages and disadvantages in compar-ison with other approaches.

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