ops mgt 7%20Service%20Operations%20Management

ops mgt 7%20Service%20Operations%20Management - Service...

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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 other industries. 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 service 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 service processes 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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