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CHAPTER SEVENTEEN

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CHAPTER SEVENTEEN

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    1. 17-1

    2. CHAPTER SEVENTEEN Services Purchasing

    3. Goods Versus Services Spend

    4. Dollars Spent for Purchase of Services

    5. 17-5 Reasons for Lack of Purchasing Involvement in Service Acquisition Complexity of specifying service needs and analyzing potential service provides means that the user has greater expertise than purchasing The buying of services involves more of a personal relationship between the supplier and user. Many services in the past have been available only in a regulated environment, in which price and service-delivery was essentially the same for all suppliers

    6. 17-6 What Makes Services Different? Intangible Cannot touch it Perishable no inventories Heterogeneous: The “service package” high levels of customization Customer participation in the production process Simultaneous production and consumption Difficult to measure quality

    7. A Framework for Analyzing Services Value of the service high, medium low Pareto/ABC analysis Degree of repetitiveness repetitive versus unique Degree of tangibility Low versus high Direction of the service Directed towards people or assets

    8. 17-8 A Framework for Analyzing Services Production of the service People, equipment or people and equipment Skill level of people Nature of demand Continuous, periodic or discrete Nature of service delivery Location, time Degree of standardization Standard or customized Skills required for the service

    9. 17-9 The Acquisition Process for Services Need recognition and specification Key questions: Why is this service necessary? What is important about this service? What represents good value? How is quality defined for the service? How is the service produced? How do we know we received what we expected? Developing the statement of work (SOW): Describes the needs and becomes the basis of the contract

    10. 17-10 The Acquisition Process for Services Analysis of supply alternatives sourcing, pricing, other terms and conditions, source options and make or buy Purchase agreement Short versus long term; standard versus custom Service level agreement (SLA): means, method, organization, processes and material requirements Pricing structure Special provisions

    11. 17-11 The Acquisition Process for Services Contract administration Follow-up Quality control Payment Records maintenance Supplier management and evaluation

    12. Service Quality Evaluation Reliability: Ability to perform the promised service dependably and accurately Responsiveness: Willingness to help customers and provide prompt service Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence Empathy: Caring, individualized attention the firm provides its customers Tangibles: Physical facilities, equipment and appearance of personnel

    13. 17-13 Process for Obtaining Results in Service Acquisition Do the people now in the purchasing department have the skills needed for purchasing services? Do they have the time? Can they make the time? Obtain data on what services are bought by whom and dollar amount. Take one area at a time. Establish the team: user(s) possibly finance, quality and purchasing

    14. 17-14 Process for Obtaining Results in Service Acquisition Determine if the buying service satisfies the user and represents effective spending. Purchasing should ensure the use of a logical process and arrive at the contract or agreement. All parties must agree on the specification Explain why any changes are required in supplier, specification, price, terms, etc., to users and senior management Do not interfere with effective service acquisition activities handle by other departments

    15. 17-15 Summary of Service Characteristics and Acquisition Process Implications

    16. 17-16 Summary of Service Characteristics and Acquisition Process Implications

    17. 17-17 Summary of Service Characteristics and Acquisition Process Implications

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