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ROLE AND NATURE OF SERVICES
BBB 3273 | Service Operation Management
Lecturer: Babita [email protected]
Ext:8404
Chapter 1
Role of Services in an Economy& The Nature of Services
McGraw-Hill/IrwinService Management: Operations, Strategy, and Information Technology, 6e
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Service Definitions
Services are deeds, processes, and performances. Valarie Zeithaml & Mary
Jo Bitner
A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.
James Fitzsimmons
1-3
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Definition of Service Firms
Service enterprises are organizations that facilitate
the production and distribution of goods, support
other firms in meeting their goals, and add value to
our personal lives.
James Fitzsimmons
1-4
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
STAGES OF ECONOMIC ACTIVITY
Primary Extractive Agriculture, mining, fishing, forestry
Secondary Goods – processing Manufacturing, processing
Tertiary Domestic – service Restaurant & hotels, barber & beauty shop, laundry & dry cleaning, maintenance & repair
Quaternary
Trade & commerce service
Transportation, retailing, communication, finance & insurance, real estate
Quaternary
Refining and extending human capacities
Health care, education, research, recreation, arts
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Role of Services in an Economy
INFRASTRUCTURE SERVICE· Communications· Transportation· Utilities· Banking
PERSONAL SERVICES
· Healthcare· Restaurants· Hotels
CONSUMER(Self-service)
GOVERNMENT SERVICES· Military· Education· Judicial· Police and fire protection
DISTRIBUTION SERVICES
· Wholesaling · Retailing · Repairing
FINANCIAL SERVICES
· Financing · Leasing · Insurance
MANUFACTURINGServices inside company:
· Finance· Accounting· Legal· R&D and design
BUSINESS SERVICES
· Consulting· Auditing· Advertising· Waste disposal
1-6
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Stages of Economic Development
Pre- Use of Standard dominant Human Unit of of Living Society Game Activity Labor Social Life Measure Structure Technology
Pre- Against Agriculture Raw Extended Sub- Routine Simple hand
Industrial Nature Mining muscle household sistence Traditional tools power Authoritative
Industrial Against Goods Machine Individual Quantity Bureaucratic Machines
fabricated production tending of goods Hierarchical nature Post- Among Services Artistic Community Quality of Inter-
Information industrial Persons Creative life in terms dependent Intellectual health, education, recreation
1-7
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Stages of Economic Development
• Service economy has moved from transactional
nature to experience-based relationship (refer next
slide)
• In experience base we have
– Customer services
– Business services
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Economic Evolution
Economy Agrarian Industrial Service Experience
EconomicOffering
Food Packagedgoods
Commodityservice
Consumer services
Businessservices
Function Extract Make Deliver Stage Co-create
Nature Fungible Tangible Intangible Memorable Effectual
Attribute Natural Standardized Customized Personal Growth
Method of Supply
Stored in bulk
Inventoried Delivered on demand
Revealed over time
Sustained over time
Seller Trader Producer Provider Stager Collaborator
Buyer Market Customer Client Guest Collaborator
Expectation Quantity Features Benefits Sensations Capability1-9
Engaging with consumer in a personal & memorable wayConsumer becomes the co-producer and input to the service process
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Distinctive Characteristics of Services
• Simultaneity: buying and selling happens at one go• Perishability: time-perishable (will die off) capacity• Intangibility: depends on the reputation of the firm
and advertising • Heterogeneity: more than one element has to be
present• Customer Participation in the Service Process:
customer plays an active part in the process
2-10
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
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BBB 3273| SERVICE OPERATION MANAGEMENT
The Service Package
• Supporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane.
• Facilitating Goods: The material consumed by the buyer or items provided by the consumer. Examples are food items, legal documents, golf clubs, medical history.
• Information: Operations data or information that is provided by the customer to enable efficient and customized service. Examples are patient medical records, seats available on a flight, customer preferences, location of customer to dispatch a taxi.
2-11
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
The Service Package (cont.)
• Explicit Services: Benefits readily observable by the
senses. The essential or intrinsic features.
Examples are quality of meal, attitude of the waiter,
on-time departure.
• Implicit Services: Psychological benefits or extrinsic
features which the consumer may sense only
vaguely. Examples are privacy of loan office, security
of a well lighted parking lot.
2-12
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Service Package: Banking
• Supporting FacilityBuilding, machine and people
• Facilitating Goodsmoney, transaction, security, documents
• Informationabout the customers, where the transactions done
• Explicit Servicesimmediate attention given, on-time transaction
• Implicit Servicesquality, privacy (experienced by consumers)
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Challenges For Service Managers
SERVICE FACTORY
AirlinesTruckingHotelsResorts and recreation
SERVICE SHOP
HospitalsAuto repairOther repair services
Capital decisionTechnological changesManaging demandScheduling service delivery
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Challenges For Service Managers
SERVICE SHOP
HospitalsAuto repairOther repair services
Fighting cost increaseMaintain qualityReacting to consumerManaging advancement of peopleManaging flat hierarchy with loose employer- employee relationshipsGaining employee loyalty
PROFESSIONAL SERVICE
DoctorsLawyersAccountantsArchitects
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Challenges For Service Managers
MASS SERVICE
RetailingWholesalingSchoolsRetail banking
PROFESSIONAL SERVICE
DoctorsLawyersAccountantsArchitects
HiringTrainingEmployee welfareScheduling workforceStart-up of new unitsManaging growth
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Challenges For Service Managers
SERVICE SHOP
HospitalsAuto repairOther repair services
MarketingMaking service ‘warm’Attention to physical surroundingManaging rigid hierarchy with the need for standard operating procedure
MASS SERVICE
RetailingWholesalingSchoolsRetail banking
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Services can be classified base on various strategic insights, such as
• Nature of the service act (tangible action and intangible action)
• Relationship with customers and the nature of delivery
• Degree of customization and the judgment involved in meeting customer needs
• Extent of demand fluctuation and demand capacity• Nature of service delivery and service availability
(refer to the text book – page 26 - 29
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
Source of Service Sector Growth
• Information Technology (e.g. Internet)
• Innovation
• Changing Demographics
Aging of the population
Two-income families
Growth in number of single people
Home as sanctuary
1-19
End of Lecture
ALL RIGHTS RESERVEDNo part of this document may be reproduced without written approval from Limkokwing University of Creative Technology Worldwide
FBMG
BBB 3273| SERVICE OPERATION MANAGEMENT
End of Lecture