Service Engineering R&D Projects and Recent Service Research Topics in Japan

1. Service Engineering R&D Projects and Recent Service Research Topics in Japan Aug. 26, 2011 Takashi Okuma Center for Service Research, AIST

2. Importance of Services Industries in Japan ◆The share of tertiary industries in the economy is over 70%. ◆The share of services sectors in economy is over 40%. “Services Sectors (in narrow sense)” Healthcare, aged care, … Logistics, Services to individuals, Services to businesses, … Real GDP About 40% 73.0% Tertiary Industries Secondary Industries 27.0% Primary Industries 2008 “Others” Finance and insurance Real estate Electricity, gas, water … Telecommunications … … About 30%

3. Necessity for productivity improvement in services sector ○At a time when the labor force is shrinking because of the falling birthrate and the aging population, productivity improvement is important. However, labor productivity in Japanese services sector is lower than that of other countries. ○Productivity improvement contributes to raise the pay standards. Comparison of labor productivity in Japan with that of US (EUKLEMS) Relation between the pay standards and productivity improvement The level of labor productivity in US Companies that decreased productivity Companies that increased productivity Services industries reduced pay standards increased pay standards retail wholesale manufacturing construction electricity and gas restaurants and hotels finance and insurance communications transportation services to individuals METI focuses on policies for productivity improvement

4. The whole image of Service Innovation Policy for METI ○ To improve “productivity”, it is important that not only “reducing costs” that focuses on denominator but also “developing higher-value-added service” that focuses on numerator. Developing higher-value-added service Nominal GDP Productivity = (# of workers) x (working hours) Reducing costs Concrete Action Items for Service Innovation • Service Engineering R&D project • Service business improvement standard framework based on best practices analysis • Japanese Customer Satisfaction Index (JCSI) • Service quality certification system • Supporting overseas development • and so on…

5. R&D Project for Service Engineering Importance and problems • R&D is important for innovation. • Few companies invest in R&D in service sector because… • ・SMEs cannot spend much money and time to get outputs, • ・the investment effect is not clear. • →National R&D projects that allow SMEs in services sectors to improve their productivity and to realize innovation are really important. ◆Ratio of SMEs is over 98% and increasing. retail wholesale services real estate manufacturing construction transportation restaurants and hotels IT and Communications

6. METI’s R&D Project for Service Engineering Goal & Outcomes • Development of service engineering technologies that can be easily used by SMEs in services sectors using actual service fields. • Methods for demand forecasting that respond to diverse customers • Skill education support system based on motion analysis of working staff • Service process visualization system • →To improve SMEs’ productivities directly, we would like to spread these technologies widely. • →To encourage R&D investment, we would like to make the effect clear by the project outcomes.

7. METI’s R&D Project for Service Engineering Budget • 2007(Feasibility Study) • Tokyo University : \50,000,000 • Tokyo Institute of Technology : \36,000,000 • 2008 : • CfSR, AIST : \380,000,000 • 2009 • CfSR, AIST : \350,000,000 • 2010 • CfSR, AIST : \243,000,000 • 2011 • CfSR, AIST : \190,000,000 • Tokyo University : \20,000,000 • Waseda University : \ 16,000,000

8. Examples of METI projects Details are shown later [Problem in restaurant services] Because of high turnover rate, effective education of skills for services is required. However, skilled worker cannot explain explicitly how they serve nicely. [Problem in retail services] As lifestyle of customers becomes diverse, demand forecasting becomes really difficult. Diverse customers Lifestyle questionnaire ID-POSdata Large scale complex data Visualization tool Action and motion history data Automatic classify algorithm Skill education system based on analyzed motion data Food-conscious Healthy appetizers Juice, tea Healthy dairy [Problem in healthcare services] A lot of specialists is concerned in service process, it is difficult to grasp all of the process. Emphasize family life Vegetables for cooking Breads, jelly,.. Fruits salad Purchase probability Active life Snacks Fish, fruits,.. Vegetables for salad Bargain-hunting Western breakfast Japanese breakfast Tofu andseason Firm-character Milk, water High-proteins foods bargain Quick buying Private Brand Daily use Meats Lifestyle category Ready meals Fruits Customer model Products category Automatic demand forecasting system based on computational probability model Service process visualization tools for redesigning the process

9. METI’s Substantiation Projects for Service Engineering • 2007 : about \10,000,000 x 5 projects • Kyushu University ( IC card for transportation & local shopping street ) • AIST ( Reservation system for golf company ) • Sappro City University ( SNS for Zoo ) • Actsystem, Co., Ltd. ( GPS based Taxi tracking system ) • Nippon Care Supply, Co., Ltd. ( Aged person activity tele-sensing system ) • 2008 : about \10,000,000 x 5 projects • Kinden Corporation ( Sensing systems for hospital ) • Rio Corporation ( Easy advertisement movie maker for local shopping street ) • Tokyo Institute of Technology ( Car sales simulator ) • University of Miyazaki (Information Sharing for medical site) • Miyagi University ( Healthcare support system ) • 2009 : about \10,000,000 x 5 projects • Tokyo Metropolitan University (Human resource matching system for a temporary personnel service ) • Telemarketing Japan Inc. ( Evaluation and education system for call centers ) • Gifu Pref. Institute of Human Life Technology (customer oriented furniture design support system) • Kozo Keikaku Engineering Inc. ( Shop layout design support system ) • Eagle Bus Co., Ltd. ( Bus route optimization system based on GIS)

10. JST/RISTEX (funded by MEXT)“S³FIRE : Service Science, Solutions and Foundation Integrated REsearch Program” (2010～) http://www.ristex.jp/servicescience/EN/index.html

11. Human Resource Development Projects for Service Innovation by MEXT (2007 ～ 2008) • 2007 • TouhokuUniversity • University of Tsukuba • Tokyo Institute of Technology • Kyoto University • Bunri University of Hospitality • Meiji University • 2008 • Shiga University • Kyoto University • Kobe University • Japan Advanced Institute of Science and Technology • Keio University • Waseda University • Kansai University

12. Industrial Human Rsource Development Support Program by METI (2009～2010) University of Tsukuba 2009\14,000,000 2010\13,000,000 Kyoto University 2009 \14,000,000 2010 \11,000,000 Waseda University 2009 \11,000,000 2010 \8,000,000

13. Application area for Service Engineering Financial / Insurance Services Environmental / Maintenance Services Medical / Welfare Services Society Tourism / Entertainment Services Educational Services BtoB Services coverage Organization Retail / Wholesale Services Content Services Restaurant / Hotel Services Individual Labor-intensive Capital-intensive

14. Service Engineering (AIST approach) - 13 - New operation(with implicit experiences) Explicit documentation Operation (with implicit experiences) Values Operation(with documents) IT system implemen- -tation Operation(with documents) IT systems IT systems Scientific & engineering methods General modules Understanding Modeling &Simulation Sensing • Service Engineering: Innovative technologies on observation, analysis and modeling of service providers, receptors and service process to improve productivity of service business. • Scientific and engineering methods are applied to a part of service business that is covered by implicit institution and personal experiences. • Those methods are distributed as general technological modules

15. Strategy of Technical Development - 14 - Outcomes Observation of service providers, receptors and service process Methods to understand services using interviews, questionnaires and physical measurements are established (CCE: Cognitive Chrono-Ethnography) Understanding Selection of effective measurement items of service providers, receptors and service process through actual services Integrated sensing technologies (e.g. environmental sensing, wearable sensing, web sensing, virtual sensing) Sensing Analysis of large-scale data of service providers, receptors and service process Modeling technologies for large scale data of services (BN: Bayesian networks) Modeling Design Simulation technologies of receptor's behavior in services Service Process CAD of behaviors of service providers, receptors in service process to aid service design Simulation Improvement of values and efficiency Application of new service design through actual services Optimization technologies for service process Validation

16. Hierarchical Structure of Services - 15 - Customer Satisfaction Service site Providing layer Employee Satisfaction Service recommendationtechnologies Understanding methods & Sensing technologies Social Satisfaction Collaborating aids among staffs/providers Modeling technologies of large-scale data Supporting layer Collaborating aids among institutes Understanding methods for daily living Collaboration layer

17. Ex.1) Technology for customer analysis Purchasing behavior analysis based on customer / merchandise category mining → analysis for layout and value of merchandise Analysis Example (CO-OP Kobe) Price range for each customer segment Customer segment component ratio for each shop Enable to grasp the tendency of relation between merchandise and customer segment.

18. Ex.2) Technologies for demand forecast Optimization of stock and worker’s attendance based on demand forecast An example on a Japanese Restaurant (Ganko food service) Forecast of customer numbers E-menu with questionnaire 来店動機 商品の満足度 Enable to forecast of customer number and sales for each day and for each customer segment. (from 70 to 90% prediction accuracy)

19. Ex.3) Technologies for employee action analysis Visualization results of number of customer and worker’s flow line Workers’ behavior sensing and visualization → Support for Quality Control, Improvement of working environment Difference of working area between worker’s role Visualization results of flow lines of a leader and a helper Enable to measure and visualize activity of people at indoor environment

20. Ex.4) Technology for subjective investigation Cognitive Chrono-Ethnography → Interview method based on cognitive science 視線カメラ 心拍・加速度 計測装置 マイク HDD

21. Ex.5) Technology for supporting tourist area Measurement of customers’ activity through the purchasing using IC card that can be used in the whole ONSEN area. Visualization results of tourist Number of tourist for each time range

22. Service Research Projects in Japan launched around 2007, aimed to support service innovation and improve productivity, begin to release some good technologies and applied examples. Joint research projects that use ‘real service fields’ are really important for service research. International collaboration projects for service research will increase because of globalization and ICT. Conclusion