Coursera KAIST: SCM101

Supply Chain Management

A Learning Perspective
Lecture 3

Professor Bowon Kim

KAIST Business School

2014 Bowon Kim

Learning Capability Basic Definition

What is learning? the process of gaining knowledge

through studying.
First, learning is a process that must be dynamic and continuous, not
just a one-time single isolated event.
Second, it involves accumulating knowledge, which is useful for
further learning and/or solving problems.
Finally, the knowledge generation/accumulation is done through
conscious effort through studying, not just haphazard experiencing.

To define operations learning and to understand how

it is related to SCM, e.g., how learning can be used to
improve supply chain performance.
Learning Capability Dynamic Perspective

Operations learning as the process of:

1. Identifying and understanding the complex cause-and-effect
relationship between critical factors in operations
2. Generating operations knowledge based on that
understanding
3. Applying the knowledge to solving problems in operations to
enhance the operations performance
4. Gathering and analyzing the outcomes of problem solving
5. Systemizing the analysis results to further improve the
capability of identifying and understanding the cause-and-
effect relationship.
Learning Capability An Example
Dynamic learning capability
Quarter Sales Promotion Advertising Index
1 373 19 14 77
2 360 4 6 101
3 333 0 6 95 What is the relationship among the
4 346 7 26 73 variables?
5 579 36 25 65
6 679 54 36 81 Managerial judgment initial decision
7 454 36 7 66
8 237 4 31 105 Sales to be determined by promotion and
9 353 0 6 109 advertising
10 347 0 3 96
11 391 0 37 90 Formalizing the Mental Model
: : : : :
46
47
337
437
24
0
39
50
76
87
Consider the sales data
48 542 0 54 68
What is your initial judgment about the
49 702 0 33 60
50 581 37 24 82
factors that affect the firms sales?
Sales data for the last 50 quarters How confident are you about your
1. Sales: sales revenue in $1,000
2. Promotion: promotion spending in $1,000
judgment?
3. Advertising: advertising spending in $1,000
4. Index: economic index with 100 as neutral; How can you improve your judgment
the larger, the better economic condition, further?
e.g., larger than 100 booming; less than
100 recession
Learning Capability An Example

First judgment
Multiple Regression for Sales Multiple Adjusted StErr of
R-Square
Summary R R-Square Estimate

0.7237 0.5237 0.5034 95.96637444

Degrees of Sum of Mean of

F-Ratio p-Value
ANOVA Table Freedom Squares Squares
Explained 2 475926.4076 237963.2038 25.8388 < 0.0001
Unexplained 47 432848.6161 9209.545023

Standard Confidence Interval 95%

Coefficient t-Value p-Value
Regression Table Error Lower Upper
Constant 294.9870676 27.52932923 10.7154 < 0.0001 239.6052007 350.3689345
Promotion 4.708904632 0.837811439 5.6205 < 0.0001 3.023445417 6.394363847
Advertising 3.049037115 0.820458472 3.7163 0.0005 1.398487568 4.699586662

Do you want to revise your initial model? How? Why?

Learning Capability An Example

Second model

Multiple Regression for Sales Multiple Adjusted StErr of

R-Square
Summary R R-Square Estimate
0.8080 0.6529 0.6302 82.81270053

Degrees of Sum of Mean of

F-Ratio p-Value
ANOVA Table Freedom Squares Squares
Explained 3 593309.6287 197769.8762 28.8381 < 0.0001
Unexplained 46 315465.395 6857.943369

Standard Confidence Interval 95%

Coefficient t-Value p-Value
Regression Table Error Lower Upper
Constant 632.0662747 84.86795857 7.4476 < 0.0001 461.2359344 802.8966149
Promotion 3.76782695 0.757915833 4.9713 < 0.0001 2.242221504 5.293432395
Advertising 2.273280132 0.73241109 3.1038 0.0033 0.799013072 3.747547192
Index -3.597121662 0.86945891 -4.1372 0.0001 -5.347251676 -1.846991647

Can you improve your model further?

Learning Capability An Example

Third model
Multiple Regression for Sales Multiple Adjusted StErr of
R-Square
Summary R R-Square Estimate

0.8863 0.7855 0.7606 67.09012812

Degrees of Sum of Mean of

F-Ratio p-Value
ANOVA Table Freedom Squares Squares
Explained 5 708930.5874 141786.1175 31.5004 < 0.0001
Unexplained 43 193546.6675 4501.085291

Standard Confidence Interval 95%

Coefficient t-Value p-Value
Regression Table Error Lower Upper
Constant 471.1637936 77.7296017 6.0616 < 0.0001 314.4071122 627.9204751
Promotion 4.714463136 0.712798515 6.6140 < 0.0001 3.276967931 6.151958341
Advertising 1.910885614 0.607041942 3.1479 0.0030 0.686668865 3.135102363
Index -2.064495307 0.777940367 -2.6538 0.0111 -3.633361577 -0.495629036
Prev_Promtion -2.456689453 0.696229728 -3.5286 0.0010 -3.860770515 -1.052608392
Prev_Advertising 2.547112972 0.633834218 4.0186 0.0002 1.268864448 3.825361495
Cause and Effect Analysis

How to improve performance?

Little Resources to
Invest in Education and
Equipment
Little Profit

Poor
Performance
Poor Employee
Education
Dilapidated
Equipment

Low Demand

Poor Morale

Poor Quality
Single-loop versus Double-loop Learning

Managerial Problem Solving short-term, symptomatic

Single-loop learning

Strategy
Implementation Reinforcing

Root Causes Symptoms Consequences Fit? Goals

Corrective Rectifying
Measures
Single-loop versus Double-loop Learning

Managerial Problem Solving long-term, fundamental

Double-loop learning

Strategy
Implementation Reinforcing

Root Causes Symptoms Consequences Fit? Goals

Eliminating
Corrective Root Causes
Measures
Single-loop versus Double-loop Learning

Managerial Problem Solving dynamic, integrated

Integrated learning

Strategy
Implementation Reinforcing

Root Causes Symptoms Consequences Fit? Goals

Rectifying
Single-loop N
Corrective Significant?
Measures

EliminatingY
Double-loop
Corrective
Root Causes
Measures
Learning Dynamics Learning Propensity Model

Integrated Learning in Action learning propensity model

Determining Factors System Objectives
- top management - cost reduction
- infrastructure/logistic - lead-time
- product mix - product quality

Reinforce
Determining
Factors
Learning Propensity
- middle managers
learning intention
- induced bias

Perceived Realized
Effectiveness of Effectiveness of
Learning Reinforcing Learning
Mechanism Mechanism
Substantive Learning Cycle
Investment/
Cumulative
Experience

Optimal Dynamics
- managerial attention/resource allocation: focused accumulation of
experience derived from intentional learning/systematized knowledge
- learning-induced bias: internal versus external
Learning Organization for SCM

Meaning
A learning organization is an organization skilled at
creating, acquiring, and transferring knowledge, and at
modifying its behavior to reflect new knowledge and
insights.
Organization learning means the process of improving
actions through better knowledge and understanding.
Learning Organization for SCM

Building blocks for learning organizations

Systematic problem solving
Experimentation with new approaches
Learning from their own experience and past history
Learning from the experiences and best practices of others
Transferring knowledge quickly and efficiently throughout
the organization
Learning Organization for SCM

Stages of Learning
Cognitive: Members of the organization are exposed to new
ideas, expand their knowledge, and begin to think
differently.
Behavioral: Employees begin to internalize new insights
and alter their behavior.
Performance improvement: Changes in behavior lead to
measurable improvements in results, e.g., superior quality,
better delivery, increased market share