Database Reference
In-Depth Information
Infosphere
is a highly dense network of apparently invisible intelligent computing nodes
permeating across the world that could be tapped into dynamically for supplementing exist-
ing computing capabilities with additional resources for processing power, Random Access
memory (RAM), data storage, peripherals, etc. Infosphere is the expanded concept of Cloud
Computing (for “Internet of Things (IoT)” see Vivek Kale 2014).
1.2.2.2.3 Economics of Customer Responsiveness
Unlike the case of mass production enterprise that defines average cost per unit in terms of the
constituent fixed and variable costs, customer-responsive enterprise classifies costs into three com-
ponents, namely,
1.
Fixed capacity costs
: Are incurred to acquire or develop facilities, tools, and skills
2.
Scheduled capacity costs
: Are incurred when the acquired facilities, tools, and skills are sched-
uled so that they become available to serve customers
3.
Service delivery costs
: Are the costs incurred when the benefits are actually delivered to the
individual customer
Consequently,
1. The total capacity costs are the combination of both fixed capacity and scheduled capac-
ity costs
2. Total service delivery costs are the sum of total capacity costs and service delivery costs
While fixed capacity costs remain unchanged even in the long term, scheduled capacity costs are
variable costs in the short term, and the service delivery costs are variable costs even in the real term.
For the responsive enterprises, revenues are determined in real time when the organization inter-
acts with the customer. Therefore, for responsive activities, capacity acquisitions, modifications, or
abdications are decided on a long-term basis, capacity is scheduled on a short-term basis, and capac-
ity is committed on a real-term (or real time or immediate term) basis. While the capacity acquisi-
tion costs are based on the long-term trends analysis, the capacity is usually scheduled on a periodic
basis like accounting periods because of the availability of the relevant information on sales, pro-
duction, costs, revenue, and inventory on which the schedule is based. As against this, the capacity
is committed on the basis of real-term operational data available in CRM systems like SAP CRM.
Moreover, the role of inventory changes radically in the process of the enterprise becoming
more customer responsive. In the mass production (i.e., mass marketing) approach, inventory
greatly simplifies the task of managing an offering-based enterprise because it allows the enterprise
to manufacture products and ship finished goods to the marketplace in anticipation of market
demand. It is the key for enabling various functions like purchasing, production, distribution,
and sales to function independently and also seek optimal performance independently. There is no
major emphasis on extensive coordination, planning, and scheduling, as inventory is used to buffer
purchasing, planning, and scheduling. In times of market uncertainty and turbulence, inventory
◾
Desensitizes decision making
◾
Enables longer lead times
◾
Reduces flexibility
◾
Reduces complexity of coordination
