Applying the Findings to IOS Planning

---

Drawing on our discussion of the examples, we can suggest a four-step process for planning for an IOS, as illustrated in Figure 3.

This step-by-step method of spelling out the configuration and impact of IOSs is based on the assumption that real-world inter-organizational systems that we create can also be classified into one of the four IOS categories. Thus, it will be much faster and easier to use the known characteristics of the chosen IOS type as a template to create an IOS plan, rather than starting from the scratch.

To illustrate an example of using the five-step model to plan for an IOS, consider a global cell phone manufacturer that wants to add speed and efficiency to the worldwide operations that presently are not responsive to the challenges of the diverse business environment.

1. Define Key Business Goals - Important goals of this company would probably include expediting the global operations scattered in different sites around the globe, providing tighter control and coordination over the operations, among others. These goals will become the basis for determining not only the type of IOS needed but also the system configuration.

2. Choose the IOS Category - The Purposes column in Table 5 may be reviewed to find the closest IOS category. The IOS type that best matches the stated goals would be operational coordination. This IOS is characterized by focusing on operational rather than strategic support, where the efficiency in day-to-day operations is the target objective.

3. Identify Related Organizations: As shown in Table 5, an IOS of this type is likely to involve firms on a value chain, just as Nike created a system that linked the American headquarters office concentrating on the R&D and marketing functions to the Asian production facilities. Likewise, the cell phone manufacturer may consider firms on its value chain, such as plants, part suppliers, distributors, and other related organizations. Suppose that part suppliers, plants, and distributors are chosen as potential participants in the IOS.

4. Create an IOS Configuration: As we saw in the previous section, the firms on a value chain are interconnected via a vertical linkage. The focal IOS may be configured in the following diagram.

   The horizontal lines interconnecting part suppliers and distributors are shown with dotted lines, because they represent networks, and there is no information flow among the nodes. The individual links involved in this diagram may be examined in the following table.

   Organization #1	Organization #2	Information to Flow	Impact on the Firm
   Part suppliers	Plants	Ordering Shipping Payment	Improved part supply chain
   Plants	Cell phone manufacturer (headquarters’ office)	Production scheduling Inventory levels Demand forecasts	Better production decisions; savings on storage costs
   Cell phone manufacturer	Distributors	Ordering Shipping Payment Demand forecasts	Improved logistics/ distribution

5. Articulate the IOS Impact: The system, when appropriately deployed, is presumed to have a significant impact on the cell manufacturer. The company will have better control and coordination over the activities along the value chain, thereby enabling time and cost savings involved in performing value activities. In addition, the company and its global partners will be able to operate as if they were one company. This means improved responsiveness to customer needs.

---