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OPSM 405 Service Management

Ko ç Un iversity. OPSM 405 Service Management. Class 1: Introduction: What is a service?. Zeynep Aksin zaksin @ku.edu.tr. What is a service?. Go to Migros, buy minced meat, onions, parsley, bread, etc and make some kofte-ekmek at home

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OPSM 405 Service Management

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  1. Koç University OPSM 405 Service Management Class 1: Introduction: What is a service? Zeynep Aksin zaksin@ku.edu.tr

  2. What is a service? • Go to Migros, buy minced meat, onions, parsley, bread, etc and make some kofte-ekmek at home • Rather than buying the ingredients, buy ready made Pinar kofte and bread at Migros • Have pigastro deliver the kofte-ekmek to your dorm room • Go to Koz kebap in Zekeriyakoy and eat your kofte-ekmek there

  3. What are the trends? Some recent events: • SBS runs multi-language call center for Toshiba in Istanbul • All business services of Citigroup performed through one of their 3 shared service centers around the globe • PC manufacturers like IBM, Compaq earn more from the add-on services they sell than actual PC sales • People market, sell and buy experiences. Marketing firms that focus on experience marketing. • Technology enabled new conveniences.

  4. Service characteristics • What is a service? • anything that is not manufacturing, agriculture .. • perishable • intangible • something you can’t drop on your foot

  5. Services in economic thought: Adam Smith “…The labor of some of the most respectable orders in society is, like that of menial servants, unproductive of any value, and does not fix or realize itself in any permanent subject, or vendible commodity, which endures after that labor is past, … The sovereign, for example, with all the officers both of justice or war who serve him, the whole army and navy, are unproductive laborers … Their service, how honorable, how useful, or how necessary soever, produces nothing for which an equal quantity of service can afterwards be procured … In the same class must be ranked … churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera singers, opera dancers, etc… the work of all of them perishes in the very instant of its production. “

  6. Services in economic development • Pre-industrialization • Industrialization • Post-industrialization

  7. Extraction Mining the earth, under the ocean Extracting gases from atmosphere Biological Agricultural Animal and fish Tangible-output conversion custom Batch Continuous process Intangible-output conversion Consulting Movies Radio broadcasting Physical examinations Day-care centers Public administration Hybrid conversion systems Restaurants Book publishing Barber shop Automobile repair Surgery Types of productive systems

  8. Services .. • .. lead to some desired transformation or improvement in the condition of the consuming unit • …are provided to customers and cannot be produced independently of them • …are produced, distributed and consumed simultaneously

  9. Services and service processes (Lovelock) Inputs TANGIBLE INTANGIBLE CUSTOMER ASSETS

  10. Service characteristics • Intangibility • Simultaneity • Perishability • Heterogeneity

  11. Service characteristics = challenges • Intangibility • Search qualities • Experience qualities • Credence qualities • How do you measure? • How do you signal quality?

  12. Service characteristics = challenges • Simultaneity • Production • Distribution, consumption • Focus on customer contact • Co-production • Quality control implies process control

  13. Service characteristics = challenges • Heterogeneity • The service provider • The customer • The surroundings • Standard quality control tools won’t work

  14. Service characteristics = challenges • Perishability • Everything is in the performance • HRM • Capacity management

  15. Where is the customer? Service Design Marketing Production Co-production Quality Assurance Measurement

  16. Classifying services:High customer contact • Potential operating efficiency= f(1- customer contact time / service creation time) (Chase) • implies a decoupling of the technical core in a process to achieve efficiency • addresses many of the challenges: quality, capacity and demand management, human resource management

  17. Types of contact • constant physical contact hairdresser • constant communication contact hot line • sporadic physical contact doctor • sporadic communication contact consulting • physical @ end of process dry cleaner • communication @ end of process stock broker

  18. Implications for operations • Need to identify the decoupling point in processes: this point is not stationary! • Contact reduction strategies: ATMs, call centers, reservation systems • Contact enhancement strategies: consistent work hours, well trained service personnel, good queue discipline • Classical efficiency improvement in low contact services: can use tools from manufacturing

  19. Course overview design & positioning process design; capacity & demand managing & measuring quality & performance Putting it together: IT HR

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