Service Supply Chain

Whilst the service sector defines the Australian economy—employing four out five Australians and representing almost 70% of GDP—service chains have historically tended to lag supply chain maturity.

In Australia, the services sector is worth more than $1.66 trillion, employs around 78% of the workforce and represent 18% of Australia’s exports. The largest components of the sector are tourism, education, healthcare and financial services.

Unlike goods produced in a supply chain, services are:

  • Intangible – they can’t be manufactured, touched or picked up
  • Perishable – they can’t be stored away or returned
  • Heterogeneous – human interaction means each service is unique
  • Simultaneously produced and consumed – use of the service generally occurs at the time of delivery
  • Non-transportable – the customer and service delivery system must come together at a point in time

Service chains, in terms of maturity have historically tended to lag supply chain maturity. For example, the investment of forecasting and planning capability for supply chains was a game-changer and this capability is only now emerging in service chains. Such recognition by executives within services organisations is generating a new wave of investment in service chain capability.

Symptoms of a low maturity service chain include forecasting not done at required level of granularity, CVP/EVP not defined or communicated through organisation, typically higher employee turnover and customer churn rates, IT systems do not support optimisation requirements, no forward visibility of expected demand, unable to roster effectively, daily execution very reactive and lagging recruitment: for current needs, not future needs.

GRA views service chain management as an integrated system that must be considered holistically and be supported by a dedicated function within an organisation.

Our Service Chain Excellence framework enables service organisations to approach the service chain management task in an integrated manner. There are 3 key sections: Business Strategy, Target Operating Model and Service Chain Operations.

In a service chain with high maturity, an organisation will have pipeline visibility on service requests (demand) as well as recruitment (supply). This is what we call a Demand Driven Service Chain (DDSC). A Demand Driven Service Chain is able to establish its operations as a competitive advantage through improving service availability, capacity planning & scheduling, routes optimisation, workforce composition (e.g. FTE vs. PPT) and other operational elements.

Further information

GRA Director James Allt-Graham talks with GRA Director Dan Knox about applying traditional supply chain strategies to the service sector.

Read GRA’s whitepaper The Emergence of the Demand-Driven Supply Chain that explains this concept further.

Find out who we have worked with in the Service Chain.


With a focus on both cost reduction and service improvement, we engaged GRA to design and lead a company-wide Procurement Transformation. GRA worked closely with us to design and implement a new operating model and deliver significant improvements in procurement governance, processes and systems, whilst also managing a program delivering multi-million dollar savings.

– David White, Manager Enterprise Procurement, Aurizon

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)