Question

In your words, explain how the operations management strategies (including type of decision or objective) differ for pipline and platform firms?

Answer 1

Pipeline is the traditional form that has been in existence for decades. Shopping malls link customers and merchants, Newspapers create a link between advertisers and subscribers etc. These are classic examples of pipeline. With the advancement in information technology, this model has undergone a shift in transition that does not require the physical infrastructure. A platform is created and this is easily facilitated by Information Technology. Platforms are simple, cheap and act as a great platform to link merchants and customers. It has global reach and can be accessed from anywhere. Platforms also enable to capture data, analyze them and exchange humungous amount of data. This creates value to all stakeholders in the platform. Classic examples of platform businesses are Airbnb, Amazon, etc.

Platforms differ from pipeline businesses greatly in bringing together the merchants and the consumers. Operations management strategies play a crucial role in both these type of businesses. For pipeline businesses, the operations management strategies include procuring raw materials, manufacturing (converting input to valuable output products) and enabling them to reach consumers. The types of decisions are operational and major decisions. There might be strategic decisions due to changes in the business environment. The objective of the pipeline businesses is to ensure that the products or services reach the consumers through physical infrastructure. Examples include decisions on supply chain management, production, marketing, etc.

Platform businesses create a platform to link the merchants and the consumers online with the help of Information Technology. The operations management decisions involve programmed decisions and operational decisions as well. Examples include handling huge amount of data and exchanging them to create value, fulfilling customer orders online that takes just few minutes, updates on shipping and delivery of orders, etc. These decisions can be strategic to gain competitive advantage to be leaders in the platform businesses.

Thus, it is pertinent to say that Information Technology plays a critical role in linking the merchants and consumers and gives a global reach in platform businesses. Operations Management strategies are key to its success and it differs to pipeline businesses in terms of the physical infrastructure and its assets.

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