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The objective of the case is to study bricks and mortar versus internet-based value chains for acquiring books.  Students should be familiar with the issues and alternative value chain structures and policies.  Book, music, apps, and video downloading have become a very controversial subject.  For example, the Recording Industry Association of America (RIAA) argues that 2.6 billion music files are illegally downloaded each month and this law is needed to identify downloading culprits.  Controversies abound over how to protect intellectual property when downloading music, magazines, and books.

Kindle and iPad, for example, are restructuring industries and their value chains. The e-book revolution is upon us, much like the e-music revolution of past years.  For example, one New England boarding school, Cushing Academy, found that only about 0.15 percent of its library books were circulated.  So, they now are eliminating printed books and use 65 Kindle ebooks in the library.  “It is really to save libraries five, ten, fifteen years down the road,” noted a school library manager.  “What the students are telling us is, ‘We’re not using the print books.  You can keep giving them to us, but they’re just going to collect dust.’ You can search the Web for such information and stories.

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Value chain/process for bricks and mortar (all 5 steps)

1. Suppliers (for raw material)

trees -> paper

ink

authors, editors, designers, marketers

2. Manufacturer

3. Distribution

4. Retail stores

5. Customers

Advantages of having bricks and mortar chain

create more job opportunities for everyone

experience from the customer's perspective is different

easier to control the bricks and mortar chain (easier to catch if people copy our work)

face-to-face with customers

Disadvantages

costly because need to print and pay more people to produce it

license

time-consuming, have to go to physical stores to buy the book

not environmentally friendly, cause have to use more materials to print the book

Process for e-book (only 3 steps)

1. Suppliers

authors, marketing, editors

art design

2. Internet distributors

amazon, publishes, ebooks

3. Customers

novels, textbooks, self help

Advantage of e-books

more accessible and convenient for customers

cheaper

portability (can download multiple e-books on the same device)

improve the reading experience (can highly freely on the device)

Disadvantage

easily accessed by other people if the internet is not protected

cause eye strain

the battery may run out

lacking textile experience

Compare and contrast internet-based value-chain design and structure from customer and management viewpoints

customer viewpoint:

more convenient, require less energy to obtain the book

more customizable (can just download the chapters you want instead of buying the whole book)

more affordable

management viewpoint:

simpler process/procedure (can solely focus on the marketing aspect instead of the printing aspect)

no need to worry about transportation, storage, etc

can track and analyze their users/readers (they can see the customers' demographic and cater similar books to them to sell more)

disadvantages of internet-based value chain

hard to protect the author's intellectual properties (IP)

-> encryption

Q4. what is the role of operations in each of these value chain designs and structures (10)

BRICKS AND MORTAR

1. Design of goods and services

design cover

2. Managing quality

must maintain the quality

3. Process and capacity design

4. Location strategy

5. Layout strategy

6. Human resources and job design

7. Supply chain management

8. Inventory management

9. Scheduling

scheduling delivery trucks and retail store

10. Maintenance

must maintain the printing equipment is under good condition to prevent and defects and delays

E-BOOK

1. Design of goods and services

design cover

2. Managing quality

how good the app interface is

making sure customers can easily download the book

3. Process and capacity design

4. Location strategy

5. Layout strategy

6. Human resources and job design

7. Supply chain management

8. Inventory management

9. Scheduling

10. Maintenance

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Draw the “bricks and mortar” process stages by which hard copy books are created, distributed, and sold in retail stores.  WHAT ARE THE ADVANTAGES AND DISADVANTAGES?

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Draw the process stages for creating and downloading an eBook today. What are the advantages and disadvantages?

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Compare and contrast INTERNET-BASED value chain design and structure from customer and management viewpoints.

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What is the role of operations in each of these value chain designs and structures?

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1. How is the IKEA operations design different from that of most furniture retail operations?

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2. What do you think might be the major problems in running an operation like IKEA?

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1. high volume

high throughput

large retail store

large parking

designed to handle a large number of customers

2. variety

product variety:

small items (utensils, lights)

large items (sofa, tables)

service variety

Q2 challenges

need to keep up with the trend

self-service (customers have to assemble the furniture themselves)

inventory management (ensure customers can always get the furniture they want)(understocked/overstocked)

logistics (sourcing, storage, transportation, inventory)

sustainability (how is ikea going to source its material to reduce its impact on the environment and society)