How the environment influences success: Using data mining and systems thinking in service network reengineering

Service organizations are increasingly undergoing reengineering initiatives. Organizations composed of a network of service points attempt to find the most cost-effective configuration reaching optimal market coverage. Under this paradigm, closing facilities while trying to balance revenue streams and costs can bring unforeseen consequences. Uncovering the potential consequences of these alternative interventions with a systems approach is essential. We advocate that the necessary knowledge to make informed restructuring decisions resides in the data. We use a nonparametric predictive methodology to uncover significant variable relationships to inform restructuring. We discuss an application of system dynamics to explore restructuring decisions at the American Red Cross.