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Unformatted text preview: Service Operations Management
Yannis Bellos What is a Service? ‘’There is no such thing as a service industry.
There are only industries whose service
components are greater or less than those of
Everybody is in service!’’
(Levitt, 1972) What is a Service? ‘’A service is any activity or benefit that one party
can give to another that is essentially intangible
and does not result in the ownership of
anything. Its production may or may not be tied
to a physical product’’
(Phil Kotler, 1986) Why to talk about Services? Services accounted for 67.8% of U.S GDP in 2006
It is one more way for business to make money!
Firms switch to services Services vs. Products
Customers are co-producers
Intangibility and heterogeneity
Simultaneity and Perishability
Consumer Experience Customers as Co-producers
Low Contact Services
Call centers, check processing center etc
High Contact Services
Doctor’s office, full service restaurant etc
Lack of Transportability
The experience of staying in an ‘’Ice Hotel’’
in Norway means the customer has to visit
the facility in Norway Intangibility and Heterogeneity
It is difficult for the customer to evaluate or
compare services prior to experiencing the
No two customers can be expected to evaluate a
service in the same manner Simultaneity and Perishability
Services are produced and consumed
at the same time
A dining experience is produced while customers
consume the service at the same time
Production capacity is also perishable
An airline seat has no value after the
airplane takes-off Customer Experience Customers consume or re-live the experience
again and again, as they remember the time
when the service was first delivered (e.g. a visit
to Disneyland or a fine dining establishment) Question Does Georgia Tech provide you a service?
(Do the four aforementioned dimensions make sense in this case?) Operational Considerations In Services
Services in general are more labor intensive
It is relatively difficult to measure productivity in
The experimentation and testing of a new service
is conducted in the field Three Alternative Strategies in Services
The “production line” approach The “self-service” approach The “personal attention” approach Service System Design Matrix Customer is Always at the Center!
Strategy Customer System Employees Switching from Products to Services
Why more and more traditional manufacturers
add a service component to their offerings? The Kodak Example MIT Sloan Management Review, 2004 The GM Example MIT Sloan Management Review, 2004 Product Service Systems Using a Taxi Service Buying a Car Product Product Service Systems Using a Taxi Service Buying a Car Product Debate
Suppose you are a decision maker and you want to
decide on how you will enter the transportation
business. Specifically you are interested in
choosing between selling cars and providing
services (Zipcar business model).
What are the most important facts you should take
into account? Sell the Product Option Provide the Service Option Beyond the Service… ...
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- Spring '10