Presentation on theme: "Service Businesses and Services zA service business is fundamentally different than a manufacturing business zServices provide competitive advantages for."— Presentation transcript:
Service Businesses and Services zA service business is fundamentally different than a manufacturing business zServices provide competitive advantages for a manufacturer
The unified services theory zWith services, the customer provides significant inputs into the production process. zWith manufacturing, groups of customers may contribute ideas to the design of the product, however, individual customers’ only part in the actual process is to select and consume the output.
zNearly all other managerial themes unique to services are founded in this distinction.
Defining by customer content zWith services, an effective means of understanding, analyzing, and comparing processes is on the basis of customer content. zThere are three general types of customer inputs into service processes: the customer’s self, the customer’s belongings, and/or the customer’s information.
The Unit of Analysis zWith services, the unit of analysis is a process segment. A process segment is a sequence of steps of production. When processes are dissected into smaller segments, the presence or absence of service principles becomes more pronounced.
Simultaneous production and consumption zWith services, production (making the service “product”) and consumption often occurs simultaneously, making the exact timing of production a critical issue.
Time-perishable capacity zWith services, capacity is usually time- perishable, meaning that capacity without corresponding demand is lost forever. This is true even though the service product is often not perishable.
Customers in inventory zThe idea of being unable to inventory services is a common misconception. The correct concept is that it is impractical to inventory service production. With services, keeping work-in-progress inventory will enrage the customer. We rarely keep finished goods inventory. Managers do not hide poor management practice under inventory as can happen in manufacturing.
Difficulty in maintaining quality zWith services, quality measurement tends to be subjective and difficult to scale. The standards by which quality is defined are often ambiguous. These unique specifications of quality, coupled with labor-intensiveness and inconsistent customer inputs, make it difficult to provide consistent quality.
Services add value zUsing services to add value to manufactured products zProducts are often bundles of goods and services
Customer Value Proposition zPrice zFeatures zQuality zDelivery zService bundle
Emerging Trends zShift in focus from material to immaterial Ô Time Ô Location Ô Mass customization zGood service not enough Ô Need to delight the customer zCustomer loyalty
Why Services are Important to Mfg zCompetitive advantage zVery profitable zIncreased revenues Ô Growth markets Ô Large part of product life cycle
Window blinds, shades, etc zBlind man, 3-day blinds, e.g. Ô wide variety Ô Custom Ô More expensive zWalMart, K-mart, e.g. Ô Limited selection Ô Little customization Ô Lower cost