Operations Management textbook notes
* Services are deeds, processes and performances. Interactions between customers and service employees and physical resources. * Roles of services in economy: financial services, manufacturing, distribution services, personal services, government, business, infrastructure * Services are not peripheral activities but rather an integral part of society
* Stage of economic Activity:
1) Quinary- extending human potential (health, education , research) 2) Quaternary- trade and commerce (transportation, com, finance, govt) 3) Teritary- domestic services- restaurants, hotels, laundry 4) Secondary- manufacturing, processing
5) Primary- agriculture, mining
* Clark Fisher Hypothesis: classification of economies by noting the activity of the majority of the workforce.
* PREINDUSTRIAL SOCIETY: productivity is low and bears little evidence of technology. Social life revolves around the extended household, a lot unemployment. Tradition , routine, authority * INDUSTRIAL SOCIETY: production of goods, make more with less. Life is machine paced. Standard of living measured by Quantity of good. Bureaucracy and hierarchy * POST INDUSTRIAL: quality of life, services such as health ,education and recreation. Information is key source. * The consumer service experience is adding value by engaging and connecting with the customer in a personal and memorable way.
* BUSINESS SERVICE EXPERIENCE: value is derived form the coproduction or relationships that we see in a consultancy engagement. This service has three dimensions: 1) CO-CREATION OF VALUE: customer is input to service process and is a co-producer of the value extracted from the relationship 2) RELATIONSHIPS: this relation is a source of innovation and differentiation . long term relations u can tailor needs to customer 3) SERVICE CAPABILITY: able to meet fluctuations in demands while retaining quality of service. Quality of service is measured from customers eyes * Service sector growth is fueled by advances in info technology, innovation and changing demographics that creates new demands.
* Push Theory of Innovation: product development model is driven by technology and engineering * Service innovation can arise from exploiting info available from other activities. * As we emerge into the new era, an experience economy is emerging to satisfy rising expectations for services. * NEW EXPERIENCE ECONOMY- stage of economic evolution in which added value is created by engaging and connecting with the customers in a personal and memorable way. * PULL THEORY OF INNOVATION- service innovations driven by customer needs PUSH THEORY OF INNOVATION- product innovations that originate in scientific labs
In services we must distinguish between inputs and resources. Input is customer, resources are the facilitating goods, employee labour and capital at command of service manager -cusomters only deal with the front office of the service facility
Distinctive characteristics of service operations
1) Customer participation in the service process
Customers can play an active role in process. They clean up after eating in fast food 2) Simultaneity
Services are created and consumed simultaneously, cannot store inventory. Services are open systems with full impact of demand 3) Perishability
Service is pershaible commodity because it cannot be stored. Full utilization of service capacity becomes a management challenge, customer demands show variation, demand is a time perishable capacity and managers have three basic options: 1) Smooth demand by- reservations/appt
2) Adjust service capacity
3) Allow customers to wait
Services are ideas and concepts and cannot be put on patent. Franchising has been the mode to secure market share Customers reply on the reputation of the service
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