Professor Bowon Kim

KAIST Business School

Supply Chain Management
A Learning Perspective
Lecture 3
Coursera KAIST: SCM101
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
What is the relationship among the
variables?
Managerial judgment initial decision
Sales to be determined by promotion and
advertising
Formalizing the Mental Model
Consider the sales data
What is your initial judgment about the
factors that affect the firms sales?
How confident are you about your
judgment?
How can you improve your judgment
further?
Quarter Sales Promotion Advertising Index
1 373 19 14 77
2 360 4 6 101
3 333 0 6 95
4 346 7 26 73
5 579 36 25 65
6 679 54 36 81
7 454 36 7 66
8 237 4 31 105
9 353 0 6 109
10 347 0 3 96
11 391 0 37 90
: : : : :
46 337 24 39 76
47 437 0 50 87
48 542 0 54 68
49 702 0 33 60
50 581 37 24 82
Sales data for the last 50 quarters
1. Sales: sales revenue in $1,000
2. Promotion: promotion spending in $1,000
3. Advertising: advertising spending in $1,000
4. Index: economic index with 100 as neutral;
the larger, the better economic condition,
e.g., larger than 100 booming; less than
100 recession
Learning Capability An Example
First judgment






Do you want to revise your initial model? How? Why?
Multiple Regression for Sales Multiple Adjusted StErr of
Summary R R-Square Estimate
0.7237 0.5237 0.5034 95.96637444
Degrees of Sum of Mean of
ANOVA Table Freedom Squares Squares
Explained
2 475926.4076 237963.2038 25.8388 < 0.0001
Unexplained
47 432848.6161 9209.545023
Standard
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
R-Square
F-Ratio p-Value
Coefficient t-Value p-Value
Confidence Interval 95%
Learning Capability An Example
Second model







Can you improve your model further?
Multiple Regression for Sales Multiple Adjusted StErr of
Summary R R-Square Estimate
0.8080 0.6529 0.6302 82.81270053
Degrees of Sum of Mean of
ANOVA Table Freedom Squares Squares
Explained
3 593309.6287 197769.8762 28.8381 < 0.0001
Unexplained
46 315465.395 6857.943369
Standard
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
R-Square
F-Ratio p-Value
Coefficient t-Value p-Value
Confidence Interval 95%
Learning Capability An Example
Third model
Multiple Regression for Sales Multiple Adjusted StErr of
Summary R R-Square Estimate
0.8863 0.7855 0.7606 67.09012812
Degrees of Sum of Mean of
ANOVA Table Freedom Squares Squares
Explained
5 708930.5874 141786.1175 31.5004 < 0.0001
Unexplained
43 193546.6675 4501.085291
Standard
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
R-Square
F-Ratio p-Value
Coefficient t-Value p-Value
Confidence Interval 95%
Cause and Effect Analysis
How to improve performance?
Poor
Performance
Low Demand
Poor Quality
Poor Employee
Education
Poor Morale
Little Resources to
Invest in Education and
Equipment
Little Profit
Dilapidated
Equipment
Single-loop versus Double-loop Learning
Managerial Problem Solving short-term, symptomatic
Root Causes Symptoms Consequences Goals Fit?
Strategy
Implementation
Y
Corrective
Measures
N
Single-loop learning
Reinforcing
Rectifying
Single-loop versus Double-loop Learning
Managerial Problem Solving long-term, fundamental
Root Causes Symptoms Consequences Goals Fit?
Strategy
Implementation
Y
Corrective
Measures
N
Double-loop learning
Reinforcing
Eliminating
Root Causes
Single-loop versus Double-loop Learning
Managerial Problem Solving dynamic, integrated
Root Causes Symptoms Consequences Goals Fit?
Strategy
Implementation
Y
Single-loop
Corrective
Measures
N
Integrated learning
Significant?
N
Y
Double-loop
Corrective
Measures
Reinforcing
Rectifying
Eliminating
Root Causes
Learning Dynamics Learning Propensity Model
Integrated Learning in Action learning propensity model
Determining Factors
- top management
- infrastructure/logistic
- product mix
System Objectives
- cost reduction
- lead-time
- product quality
Learning Propensity
- middle managers
learning intention
- induced bias
Perceived
Effectiveness of
Learning
Mechanism
Realized
Effectiveness of
Learning
Mechanism
Optimal Dynamics
- managerial attention/resource allocation: focused accumulation of
experience derived from intentional learning/systematized knowledge
- learning-induced bias: internal versus external
Reinforce
Determining
Factors
Substantive
Investment/
Cumulative
Experience
Reinforcing
Learning Cycle
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