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Services Operations Management
Prof Pradeep Pai, Lecture 1
1SERVICES IS NOT SERVITUDE
Clark – Fisher Hypothesis As nations becomes industrialized there is a shift
in employment from one sector of the economy to the other.
As productivity improves in one sector the labor force moves into other sector.
When such shifts occurs, the level of a country’s industrialization can be gauged.
In USA, today the services employ 8 out of 10 workers. In India the services employ around 5 out of 10 workers.
Pre-Industrial --- Industrial --- Post Industrial society
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Products v/s Services Products – Push Innovations, Services – Pull
Innovations Success of Service depends on the customers
participation. Consumer Service Experience is designed on five
principles, Theme the experience Harmonize impressions with positive cues Eliminate negative cues Mix in memorabilia Engage all five senses
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Comparison of Service andManufacturing Considerations
Manufacturing/Distribution
Service/Retail
Cost Focus Revenue focus
Transportation modes/costs Demographics: age,income,etc
Energy availability, costs Population/drawing area
Labor cost/availability/skills Competition
Building/leasing costs Traffic volume/patterns, Customer access/parking
Distinctive Characteristics of Services
Customer Participation in Service Process Simultaneity Perishability Intangibility Heterogeneity Non-ownership characteristic of Services –
Service industries share their resources by allocating customers the usage
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A note on Ardalan Heuristics
Service Location
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Ardalan Heuristic Need a matrix of distances or costs from each
customer location to every other location Demand at each location Weight – give higher weight to more important
customers – their pain of traveling a longer distance is costly & should be reduced.
Only consider locating where customers are Identify the one best place to locate at, then
the second one to add, then the third, etc. For large problems, not a bad assumption at
all.