Chapter 12 Flashcards
Differences of supply chain in the service industry
- Tangibility of the end product (services are not tangible)
- Involvement of the customer: customers are more directly involved
- Assessment of quality: quality is hard to measure and assessed differently in the service industry
- Labor content: much higher ratio of labor to materials in the service industry
- Facility Location considerations: services are largely provided very near where customers are located and impacted by location decisions
Types of services
- Pure services: few or no tangible products to customers (massage, consulting, storage facilities, movies)
- End Product Services: which offer tangible components along with the service component (restaurants, takeout food, bank teller)
- State Utility Services: directly involve things owned by the customer (water, power, broadband, car repair, dry cleaning)
Difference between goods and services
- Services cannot be inventoried, services are produced and consumed simultaneously
- Services are often unique to the customers
- Services have high customer interaction
- Services need to be timely
- Services are decentralized
Service Productivity
Improving service productivity is challenging due to:
1. Demand unpredictability
2. High labor content
3. Individually customized services
4. Lack of adequate skills
Local versus Global Services
Local Services normally limited to specific geographic area such as:
- Dry Cleaning
- Auto Repair
- Post office
Global Services transcend geographic areas such as:
- Telecommunications
- Travel Services
- Financial Services
Global Services are increasing all over the world, the challenges of managing them are:
identifying global customers, trade, social, and cultural practices, labor, facilities, and infrastructure support vary by country, legal and political issues, laws may restrict foreign competitors, domestic competitors and economic climate
Cost Leadership
Lowest cost service provider, requires large capital investment in state-of-the-art equipment and significant efforts to control and reduce costs
ex. auto diagnostics software, route planning to reduce windshield replacement time
Differentiation
Unique service created based on customer input and feedback
ex. weekend car servicing at hyundai, ford, being different from another local dealer
Focus
serves a narrow niche better than other firms
ex. grocery shopping for you, mechanic specializing in mercedes or porsche repair
Bundle of Service Attributes
bundling services can deliver more than expected services and benefits to enhance customers satisfaction
Explicit Services
availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel (ATM, safe deposit boxes, car loans, notary services)
Implicit Services
attitude of the servers, atmosphere, waiting time, status, privacy, security, and convenience
Implicit and Explicit Services are supported by:
facilities and equipment: location, layout, architectural appropriateness, equipment, decoration
facilitating goods: tangible elements that are used or consumed by the customer or the service provider along with the service provided
Service Location Strategy
- make it easy for customers to find the facility/store, close to highly populated areas
- once they arrive, make it easy to find what they want, or to find what you want them to find
ex. drop/pick up clothes at dry cleaners on way to work
Service Layout Strategy
- layouts designed to reduce distance traveled within the store
- departmental layouts to maximize closeness desirability
ex. doctors office waiting room, service center at car dealership, cosmetics store within department store
Facilitating Goods
services may require the use of facilitating goods (products) that are tangible elements used or consumed by the customer or the service provider along with the service provided
ex. cash & coins, pharmaceuticals, food, medical equipment
- these items need to be purchased, transported, recieved, inventoried and replenished in order to provide the service activity
Service Response Logistics primary activities
- Service Capacity
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Service Capacity
service capacity can be expressed as the number of customers per day, per shift, per hour, per month, or per year, the company’s service system is designed to serve
- number of customers the service provider can service at any one time
- the planned capacity for the service
Service Capacity Planning Challenges
- customer arrivals fluctuate and service demands vary
- customers are participants in the service and the level of congestion has an impact on percieved quality
- idle capacity is a reality for services
- inability to control demand results in capacity measured in terms of inputs
Service Capacity Utilization
Capacity Utilization= actual customers served per period/capacity
Level Demand Strategy
capacity remains constant regardless of demand
Chase Demand Strategy
capacity varies with demand
Demand Exceeds Capacity what happens:
- Turns customers away (lose business)
- Make them wait until the service is available
- Increase service capacity
