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.