1. Ch. 4 Product & Service Design
SCM 352 Operations Mgt
Dr. Ron Lembke

2. How are Services Different?
Everyone is an expert on services
What works well for one service provider doesn’t necessarily carry over to another
Quality of work is not quality of service
“Service package” consists of tangible and intangible components
Services are experienced, goods are consumed
Mgmt of service involves mktg, personnel
Service encounters mail, phone, F2F

3. Degree of Customer Contact
More customer contact, harder to standardize and control
Customer influences:
Time of demand
Exact nature of service
Quality (or perceived quality) of service

4. 3 Approaches Which is Best? Production Line Self-Service
Personal attention

5. What do People Want? Amount of friendliness and helpfulness
Speed and convenience of delivery
Price of the service
Variety of services
Quality of tangible goods involved
Unique skills required to provide service
Level of customization

6. Service-System Design Matrix
Degree of customer/server contact
Buffered
Permeable
Reactive
High
core (none)
system (some)
system (much)
Low
Face-to-face
total
customization
Face-to-face
loose specs
Sales
Opportunity
Production
Efficiency
Face-to-face
tight specs
Phone
Contact
Internet &
on-site
technology
Mail contact
Low
High

7. Impact of Life Cycle iTunes CDs DVD Audio Cassettes Records MiniDisc
DAT
8-Tracks
Introduction
Growth
Maturity
Decline

8. Impact of Life Cycle
Records
DAT
Introduction
Growth
Maturity
Decline

9. Applying Behavioral Science
The end is more important to the lasting impression (Colonoscopy)
Segment pleasure, but combine pain
Let the customer control the process
Follow norms & rituals
Compensation for failures: fix bad product, apologize for bad service

10. Restaurant Tipping Introduce self(Sun brunch) 15% 23%
Normal Experiment
Introduce self(Sun brunch) 15% 23%
Smiling (alone in bar) 20% 48%
Waitress 28% 33%
Waiter (upscale lunch) 21% 18%
“…staffing wait positions is among the most important tasks restaurant managers perform.”

11. Modular Components
Take advantage of modules: parts or products previously prepared
Restaurants: prepared ingredients, assembled to order
Suppliers can develop new, interesting products to use more quickly, cheaply
Variety is gained by different combinations of same components

12. Mass Customization Highly customized
Integrate design, processes, supply network
Supply components cheaply to production points
Fast, responsive production, quick delivery
Higher weight, lower value

13. Fail-Safing “poka-yokes” – Japanese for “avoid mistakes”
Not possible to do things the wrong way
Indented trays for surgeons
ATMs beep so you don’t forget your card
Pagers at restaurants for when table ready
Airplane bathroom locks turn on lights
Height bars at amusement parks

19. Blueprinting
Fancy word for making a flow chart “line of visibility” separates what customers can see from what they can’t Flow chart “back office” and “front office” activities separately.

20. Sustainability = Long Run Profitability

21. What does it mean?
sus·tain: Middle English sustenen, from Anglo-French sustein-, stem of sustenir, from Latin sustinēre to hold up, sustain, from sub-, sus- up + tenēre to hold, Date: 13th century 1 : to give support or relief to 2 : to supply with sustenance : nourish 3 : keep up, prolong 4 : to support the weight of : to carry or withstand (weight or pressure)

22. Triple Bottom Line

23. Corporate Social Responsibility
GE – Frank Mantero, Director Corporate Citizenship Programs
Audited, like financial statements
40% of value based on reputation
It’s not “giving” back – it’s a partnership
Wal-Mart
Sustainable Supply Chain
“We’re making money at this”

24. Corporate Reporting

27. This is Not New
Frank Capra, 1958

28. Global Weirding
In the US, it’s a political issue, so there must be two sides?
CO2
280 ppm for human history
Last 250 years up to 384 ppm – where we are now
Milankovich Cycles (pp 117-8):
Earth’s orbit not circular, 100,000 year cycle
Tilted axis shifts: 40,000 year cycle
Plane of orbit relative to sun: 21,000 year cycle
Seems unlikely

29. Atmospheric CO2 ppm Mauna Loa Observatory
Data: National Oceanic and Atmospheric Administration
Graph: Ron Lembke, 1/12/2010

30. Climate Models We’re at 384 ppm 450 ppm would be 2°C increase
550 ppm would lead to 3° C increase
Used to be target
Pests not killed by freezes
Ice sheets melting faster than predicted
Oceans more acidic than thought
350? Really hard

31. Rupert Murdoch News Corp. owns Fox.
“Climate change poses clear, catastrophic threats” and that “We may not agree on the extent, but we certainly can’t afford the risk of inaction.”
Rupert Murdoch, May 9, 2007
James Murdoch, heir apparent
“Thanks to friendships with Al Gore and Bill Clinton, he has developed deep green instincts,”
London Telegraph
Wife Kathryn Hufschmid works for Clinton Climate Initiative

32. Sun sends UV? Infrared – show on spectrum

33. CO2 collects in Troposphere
Ozone O3 layer – absorbs ultraviolet radiation from sun