Topic 09 Service Supply Relationship.pptx

Topic 09 Service Supply Relationship

1. Topic 09: Service Supply Relationship SERVICE MANAGEMENT

2. Course Objectives Contrast the supply chain for physical goods with service supply relationships. Describe the role played by an omnichannel supply chain in e-commerce. Identify the sources of value in a service supply relationship. Discuss the managerial implications of bidirectional relationships. Identify the three factors that drive profitability for a professional service firm. Classify a business service based on the focus of the service and its importance to the buyer. Discuss the managerial considerations to be addressed in outsourcing services.

3. Supply Chain Management

4. Network Model Supply Chain is a network of value-adding material processing stages, including suppliers, manufacturing, distribution, retailing, and recycling, all connected with the flow of material and inventory stocks. Concerns for environmental sustainability have awakened manufacturers to the need for product-life-cycle management. A significant benefit from supply chain coordination is utilization of downstream information. A “bullwhip effect” results in which a small change in retail orders is magnified as we move back up the supply chain to the distributor and finally to the manufacturer.

5. Managing Uncertainty Supply Chain for Physical Goods Managing a supply chain would be straightforward except for the uncertainty arising from three sources: supplier delivery performance, manufacturing reliability, and customer demand.

6. Omnichannel Supply Chain Omnichannel supply chains allow customers to browse, buy, and return goods through various channels instead of being limited to the traditional in-store experience. Omnichannel Supply Chain

7. Impact of COVID-19 on Supply Chain Design The Impact of Supply Chain Management at Walmart and Procter & Gamble

8. Service Supply Relationships

9. Customer-Supplier Duality The nature of services creates a customer–supplier duality that results in service supply relationships rather than the supply chain found in manufactured goods that depicts a physical object passed from one entity to another. Services can be considered as acting on people’s minds, bodies, belongings, and information Omnichannel Supply Chain

10. Customer-Supplier Duality Expected Supply-Chain Transformation Following COVID-19

11. Customer-Supplier Duality Single-Level Bidirectional Service Supply Relationships Two-Level Bidirectional Service Supply Relationships

12. Service Supply Relationships Are Hubs, Not Chains Hubs are more desirable than chains because there are fewer opportunities for delays and information can be shared more easily Service Capacity Is Analogous to Inventory For goods supply chains, inventory is used to buffer the variations in final customer demand and allow full utilization of productive capacity. For services, the customer-supplied inputs are generally random occurrences with expectations of immediate processing. Customer–Supplied Inputs Vary in Quality Customer inputs can be incomplete, not well described, or withhold information.

13. Service Supply Bidirectional Relationships Service Supply Relationships Are Hubs, Not Chains

14. Managing Service Relationships

15. Managing Service Relationships Impact of Service Relationship Management on Home Health Care A well-managed service relationship for mobile workers shown in the “after” column as compared to the traditional approach shown in the “before” column.

16. Bidirectional Optimization Bidirectional optimization implies the possibility of doing what is best from the customer’s perspective while doing the best for the service enterprise. Direct customer involvement facilitates bidirectional optimization, a simultaneous optimization of both supply and demand for the service. Service relationship management uses forecasting data to construct an initial daily plan for each worker.

17. Productive Capacity A primary consideration of productive capacity for mobile workers is the amount of time spent between jobs, which correlates with the distance between jobs. Transfer is an approach to make knowledge available to customers so that value can be transferred with very low cost. Replacement is a strategy of substituting technology for human resources. Embellishment of customer skills to enable self-service is a third strategy to enhance the productive capacity of the home health care system.

18. Perishability Management of perishability is the approach used in service relationship management to minimize the negative impact of idle time on the productive capacity of the distributed service workforce For the mobile workforce, managing perishability has two foci. The first is a time allocation system that offers time windows to customers based on “best use” of workers. . In service relationship management systems that use dynamic schedule optimization software, schedules are constructed and revised up until the very last possible moment before dispatch of a worker to a job. Service systems with no communication infrastructure are limited to creating a fixed schedule for each mobile worker at the beginning of the workday.

19. Social Media in Services

20. Characteristics of social media that are useful to service firms include: A wide reach that is decentralized, less hierarchical, and has multiple points of production and consumption. Easy access that generally is available to the public at little or no cost. Ease of use that does not require specialized skills and training, or requires only modest reinterpretation of existing skills. Immediacy that allows instantaneous responses. Flexibility that allows information to be altered almost instantaneously by comments or editing Effective use of social media and their marketing potential requires a deep understanding of where the customers are, what they are searching for, and what problems they have. One of the most important things that firms can do in social media is to provide resources and information about their services.

21. Social Media as a Competitive Strategy Five strategies to move offline operations online to succeed in social media–based competition: Tune-up reminders: Customers can benefit from regular tune-up reminders related to the service Cookie-cutter presence in cyberspace: The more open channels of communication a firm offers, the better the service is perceived by customers Lead generation : Firms can develop relationships outside of their services that will lead to referrals Customer education: a firm can educate its customers about a “lifestyle” that indirectly aligns with its service offerings. Start online, finish offline: a customer might pose a question online that involves sensitive information

22. Social Media and Customer Convenience Service firms now use the term consumer-generated media (CGM) to refer to the power of social media–based promotions. Examples: Banks accept check deposits when customers snap a photo of a check on their smartphone and send it to the bank. Airlines send boarding passes to passengers’ smartphones Flip.to utilizes social media during this stage of the buying cycle to understand consumer behavior and capitalize on customer engagement.

23. Social Media for Organizing and Co-creation of Value Using social media to enable connections across a geographically dispersed organization promotes learning and fosters creativity. Companies are using social networks to solve problems, share information, and even use customers in product design. Social media are here to stay. The economics of social media has created a new field called “ socialnomics ” Service firms find it necessary to use the social media for branding, recruiting, building awareness, information sharing, networking, and most importantly, for listening to the customers.

24. Professional Service Firms

25. Attributes of Professional Services Professional services describes a service delivered by knowledge workers and has four distinguishing features. The work involves a high level of specialization and customization. The frequency and importance of face-to-face interactions with customers, often referred to as clients, require special attention. Professional services are delivered by highly educated professional people who represent the assets of the firm. The true professional commands a body of knowledge that operates on four levels of increasing importance

26. Service Consulting The market for consulting in the service sector is growing steadily. Service consulting is sought when a firm faces challenges or opportunities that it cannot handle with its internal capabilities. The effectiveness of service consulting typically relies upon improving the efficiency of the firm’s operations and its ability to maintain a steady flow of business. A typical consulting firm can be thought of as a pyramid, with four levels named “finders,” “minders,” “binders,” and “grinders.”

27. Service Consulting Stages in a Consulting Engagement

28. Operational Characteristics Professional service firms often are organized as partnerships instead of corporations. The economic success of a partnership is measured by profit-per-partner, which is driven by three factors: margin, productivity, and leverage as shown in the relationship below: Margins often are the most-utilized factor in measuring the profitability of departments within a professional services firm. Margin is equal to the percent of profit for each dollar of fees charged This ratio is affected by many factors, including the productivity and leverage

29. Operational Characteristics Productivity can be broken down further into two factors that affect the short- and long-term success of the firm: realized fee-per-hour (value) and utilization of professional staff, as shown below. Utilization is the ratio of the number of hours billed to the number of possible billable hours. Several strategies are used to maximize utilization by matching capacity with demand. First, firms find ways to schedule future work into a backlog. A second fact that affects utilization is the importance of nonbillable activities.

30. Operational Characteristics Leverage is the ratio of the number of professional staff members to the number of partners, an essential factor in determining the profit-per-partner. Managing the leverage of a firm involves matching the skill level of the professional staff to the requirements of the contract or project. We will look at three common categories of projects: Brains projects involve solving client problems that are at the forefront of professional or technical knowledge Grey hair projects also require a high level of skill and customization, but they involve less creativity and innovation than brains projects Procedure projects involve a well-recognized and standardized project, such as conducting an audit.

31. Outsourcing Services

32. There are three kinds of transaction costs: Profitability Tactics Search costs are incurred in finding a capable supplier. Bargaining costs are associated with reaching an acceptable agreement with the other party and drawing up a contract. Enforcement costs are incurred in making sure the other party sticks to the terms of the contract, and taking legal action if it does not.

33. Benefits and Risks of Outsourcing Services There are many reasons to outsource a service activity rather than perform the task. Allows the firm to focus on its core competence. Decreases costs by purchasing from an outside source rather than performing in-house. Provides access to latest technology without investment. Leverages benefits from a supplier who has economies of scale. Outsourcing should be undertaken with caution because of the following considerations: Loss of direct control over quality. Jeopardizes employee loyalty because of job-loss fears. Exposure to data security and customer privacy issues. Dependence on one supplier compromises future negotiation leverage. Additional coordination expense and delays. Atrophy of in-house capability to perform outsourced service.

34. Benefits and Risks of Outsourcing Services The most important outsourcing challenge is supplier selection and performance evaluation Outsourcing is complicated also by the need to satisfy a larger number of affected personnel. Outsourcing Process

35. Classification of Business Services Business services often are classified according to degree of tangibility Differentiating services on the basis of tangibility does indicate the potential level of difficulty faced by the purchaser, but the degree of tangibility fails to provide the purchaser with sufficient information to assist in the service purchase decision. The degree of service tangibility will be an attribute to be considered when purchasing service in each of these categories. The importance of the service is considered either high or low depending upon the relationship of the service to the firm’s core business activity. Considering a service as low in importance is a relative viewpoint, however.

36. Managerial Considerations with Service Outsourcing Taxonomy for Outsourcing Business Services

37. Managerial Considerations with Service Outsourcing Outsourcing Considerations