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SSeerrvviiccee:: TThhee NNeeww FFrroonnttiieerr 
WWeellccoommee ttoo 
SSeerrvviiccee MMaannaaggeemmeenntt 
PPrrooffeessssoorr DDrreeww RRoosseenn
LLeeaarrnniinngg OObbjjeeccttiivveess 
DDeessccrriibbee tthhee cceennttrraall rroollee ooff sseerrvviicceess iinn aann eeccoonnoommyy.. 
TToo eexxpplloorree tthhee ddiiffffeerreenncceess bbeettwweeeenn mmaannuuffaaccttuurriinngg aanndd 
sseerrvviicceess.. 
EExxpplloorree tthhee rroollee ooff sseerrvviicceess wwiitthhiinn mmaannuuffaaccttuurriinngg aanndd 
mmaannuuffaaccttuurriinngg’’ss rreelliiaannccee oonn sseerrvviicceess.. 
UUnnddeerrssttaannddiinngg sseerrvviiccee mmaannaaggeemmeenntt//sseerrvviiccee ooppeerraattiioonnss 
DDeessccrriibbee aanndd ccoonnttrraasstt tthhee ffeeaattuurreess ooff tthhee nneeww eexxppeerriieennccee 
eeccoonnoommyy wwiitthh tthhaatt ooff pprreevviioouuss eeccoonnoommiieess..
IInntteerraaccttiivvee RRoollee ooff SSeerrvviicceess
SSeerrvviiccee DDeeffiinniittiioonnss 
AA SSeerrvviiccee iiss aa TTiimmee--ppeerriisshhaabbllee, IInnttaannggiibbllee 
EExxppeerriieennccee PPeerrffoorrmmeedd ffoorr aa CCuussttoommeerr 
AAccttiinngg iinn tthhee RRoollee ooff aa CCoopprroodduucceerr.. 
JJaammeess FFiittzzssiimmmmoonnss 
SSeerrvviicceess aarree ddeeeeddss, pprroocceesssseess, aanndd 
ppeerrffoorrmmaanncceess.. 
VVaallaarriiee ZZeeiitthhaammll  MMaarryy JJoo BBiittnneerr
DDeeffiinniittiioonn ooff SSeerrvviiccee FFiirrmmss 
SSeerrvviiccee EEnntteerrpprriisseess aarree OOrrggaanniizzaattiioonnss tthhaatt 
FFaacciilliittaattee tthhee PPrroodduuccttiioonn aanndd DDiissttrriibbuuttiioonn ooff 
GGooooddss, SSuuppppoorrtt OOtthheerr FFiirrmmss iinn MMeeeettiinngg 
TThheeiirr GGooaallss, aanndd AAdddd VVaalluuee ttoo OOuurr PPeerrssoonnaall 
LLiivveess.. 
JJaammeess FFiittzzssiimmmmoonnss
SSttaaggeess ooff EEccoonnoommiicc 
DDeevveellooppmmeenntt 
FFeeaattuurreess 
PPrree-- UUssee ooff SSttaannddaarrdd 
ddoommiinnaanntt hhuummaann UUnniitt ooff ooff lliivviinngg 
SSoocciieettyy GGaammee aaccttiivviittyy llaabboorr ssoocciiaall lliiffee mmeeaassuurree SSttrruuccttuurree TTeecchhnnoollooggyy 
PPrree-- AAggaaiinnsstt AAggrriiccuullttuurree RRaaww EExxtteennddeedd SSuubb-- RRoouuttiinnee SSiimmppllee hhaanndd 
IInndduussttrriiaall NNaattuurree MMiinniinngg mmuussccllee hhoouusseehhoolldd ssiisstteennccee TTrraaddiittiioonnaall ttoooollss 
ppoowweerr AAuutthhoorriittaattiivvee 
IInndduussttrriiaall AAggaaiinnsstt GGooooddss MMaacchhiinnee IInnddiivviidduuaall QQuuaannttiittyy BBuurreeaauuccrraattiicc MMaacchhiinneess 
ffaabbrriiccaatteedd pprroodduuccttiioonn tteennddiinngg ooff ggooooddss HHiieerraarrcchhiiccaall 
nnaattuurree 
PPoosstt-- AAmmoonngg SSeerrvviicceess AArrttiissttiicc CCoommmmuunniittyy QQuuaalliittyy ooff IInntteerr-- IInnffoorrmmaattiioonn 
iinndduussttrriiaall PPeerrssoonnss CCrreeaattiivvee lliiffee iinn tteerrmmss ddeeppeennddeenntt 
IInntteelllleeccttuuaall ooff hheeaalltthh, GGlloobbaall 
eedduuccaattiioonn, 
rreeccrreeaattiioonn
The Service Revolution 
“There are no such things as service 
industries. There are only industries 
whose service components are greater 
or less then those of other industries. 
Everybody is in service”! 
Theodore Levitt
Global Employment, % Share
Percent Employment in Service 
Jobs, by Nation, 1983-1997
Growth In Employment 
Global Private Sector Services, 1980-1997, %
Services as % of GDP
SSeerrvviicceess DDeeffiinneedd 
SSeerrvviiccee IInndduussttrryy 
CCuussttoommeerr SSeerrvviiccee 
FFiieelldd SSeerrvviiccee
Why Services Are Important 
 Increased Competition 
 Manufacturing Support 
 Makes Economic Sense
“When the quality and price of competing 
products are similar or nearly identical, 
service activities can ‘differentiate’ 
undifferentiated products in the mind of 
the customer” 
Glaskowsky et al.
Relative Importance of 
Service Activities 
Relative Importance 
of Marketing Variables 
Product 
Price 
Service 
Sales Effort 
TOTAL 
All Industries 
All Manufacturing 
Chemicals  
Plastics Mfg. 
Food Mfg. 
36 
23 
23 
18 
100 
38 
24 
20 
18 
100 
38 
26 
18 
18 
100 
36 
27 
15 
22 
100 
Electronics Mfg. 
Paper Mfg. 
All Other 
Manufacturing 
48 
14 
22 
16 
100 
29 
26 
24 
21 
100 
38 
25 
22 
15 
100 
All Merchandising 
Consumer Goods 
Merchandising 
Industrial Goods 
Merchandising 
30 
22 
27 
21 
100 
31 
23 
23 
23 
100 
28 
17 
39 
16 
100 
National Council of Physical 
Distribution Management
PPaarraalllleell PPrroodduucctt//SSeerrvviiccee DDeessiiggnn 
Product 
Concept 
Product 
Design 
Product 
Delivery 
Service 
Concept 
Service 
Design 
Service 
Delivery
Suppliers 
Tier 2 
Suppliers 
Tier 1 
Manufacturing 
Inbound Logistics 
Operations 
Outbound Logistics 
C 
UST 
O 
ME 
RS 
Distributors 
Retailers 
The Supply Chain 
Information
Manufacturin 
g 
Service Industries 
Communications, Transportation, 
Utilities, Health Care, Banking, etc. 
Service 
Intermediary 
Commercial 
Services User 
(Self-Service) 
Consumer 
(Self-Service) 
R  D 
Product 
Design 
Distribution 
Services 
Wholesaling 
Retailing 
Repairing 
Private Business Services 
Supporting Manufacturing, 
Accounting, Legal, Consulting, 
Software, Maintenance 
Government Support Services 
Waste Disposal Services, Road Maintenance, 
Education, Health Support, Standards, 
Police and Fire Protection, etc. 
Services Inside the 
Company--Design, 
Legal, Accounting 
Advertising, etc.
SSeerrvviiccee aanndd PPrrooffiittaabbiilliittyy 
 RReedduucceedd ooppeerraattiinngg eexxppeennsseess 
 CCoommppeettiittiivvee ddiiffffeerreennttiiaattiioonn 
 IInnccrreeaasseedd qquuaalliittyy 
 IInnccrreeaasseedd eeffffiicciieennccyy 
 IInnccrreeaasseedd rreessppoonnssiivveenneessss 
 IInnccrreeaasseedd mmaarrkkeett SShhaarree 
 IInnccrreeaasseedd ccuussttoommeerr llooyyaallttyy
Contributors to Market Share 
Market 
Share 
Time 
Market Share 
Due to 
Service Activities 
Market Share 
Due to 
Captive Markets 
Market Share 
Due to 
Product Features
Satisfaction and Loyalty 
zone of affection 
zone of indifference 
zone of defection 
1 2 3 4 5 
100% 
80% 
60% 
40% 
20% 
Very 
dissatisfied 
Dissatisfied Neutral Satisfied Very 
satisfied 
Loyalty (Retention) 
Satisfaction 
terrorist 
apostle
TThhee NNeeww EExxppeerriieennccee EEccoonnoommyy 
Economy Agrarian Industrial Service Experience 
Function Extract Make Deliver Stage 
Nature Fungible Tangible Intangible Memorable 
Attribute Natural Standardized Customized Personal 
Method of 
Stored in 
Inventoried Delivered 
Revealed 
supply 
bulk 
on demand 
over time 
Seller Trader Manufacturer Provider Stager 
Buyer Market User Client Guest
The FFoouurr RReeaallmmss ooff aann EExxppeerriieennccee 
Customer Participation 
Passive Active 
Environmental 
Absorption Entertainment 
(Movie) 
Education 
(Language) 
Relationship Immersion Esthetic 
(Tourist) 
Escapist 
(Skydiving)
EExxppeerriieennccee DDeessiiggnn PPrriinncciipplleess 
 TThheemmee tthhee EExxppeerriieennccee ((FFoorruumm sshhooppss)) 
 HHaarrmmoonniizzee IImmpprreessssiioonnss wwiitthh PPoossiittiivvee CCuueess 
((FFoorrtt LLaauuddeerrddaallee aaiirrppoorrtt ppaarrkkiinngg ggaarraaggee)) 
 EElliimmiinnaattee NNeeggaattiivvee CCuueess 
((CCiinneemmaarrkk ttaallkkiinngg ttrraasshh ccoonnttaaiinneerrss)) 
 MMiixx iinn MMeemmoorraabbiilliiaa ((HHaarrdd RRoocckk TT-sshhiirrttss)) 
 EEnnggaaggee aallll FFiivvee SSeennsseess ((MMiisstt iinn RRaaiinnffoorreesstt))
RRoollee ooff tthhee SSeerrvviiccee MMaannaaggeerr 
 EEnnttrreepprreenneeuurriiaall IInnnnoovvaattiioonn 
 CCaappiittaalliizziinngg oonn SSoocciiaall TTrreennddss 
 MMaannaaggeemmeenntt CChhaalllleennggeess 
EEccoonnoommiieess ooff SSccaallee ((MMRRII ssccaannnneerr)) 
EEccoonnoommiieess ooff SSccooppee((CCoonnvveenniieennccee ssttoorree)) 
CCoommpplleexxiittyy ((YYiieelldd MMaannaaggeemmeenntt)) 
BBoouunnddaarryy CCrroossssiinngg ((BBaannkk vvss BBrrookkeerraaggee)) 
IInntteerrnnaattiioonnaall 
CCoommppeettiittiivveenneessss((DDiivveerrssiittyy))
Profits are the result of attention to 
quality and customer satisfaction, 
while the reverse is rarely true. 
Edwards Deming
DDiissccuussssiioonn TTooppiiccss 
 IIss iitt ppoossssiibbllee ffoorr aann eeccoonnoommyy ttoo bbee bbaasseedd 
eennttiirreellyy oonn sseerrvviicceess?? 
 SSppeeccuullaattee oonn tthhee eeffffeecctt tthhaatt tthhee IInntteerrnneett wwiillll 
hhaavvee oonn tthhee ddeelliivveerryy ooff sseerrvviicceess.. 
 WWhhaatt iiss tthhee vvaalluuee ooff sseellff-sseerrvviiccee iinn aann 
eeccoonnoommyy?? WWhhaatt aarree tthhee iimmpplliiccaattiioonnss?? 
 CCoommmmeenntt oonn tthhee rroollee tthhaatt mmaarrkkeettiinngg ppllaayyss 
iinn tthhee sseerrvviiccee iinnnnoovvaattiioonn pprroocceessss.. 
 IIlllluussttrraattee hhooww tthhee ttyyppee ooff wwoorrkk hhee oorr sshhee 
ddooeess iinnfflluueenncceess aa ppeerrssoonnss lliiffeessttyyllee..

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Service econmy

  • 1. SSeerrvviiccee:: TThhee NNeeww FFrroonnttiieerr WWeellccoommee ttoo SSeerrvviiccee MMaannaaggeemmeenntt PPrrooffeessssoorr DDrreeww RRoosseenn
  • 2. LLeeaarrnniinngg OObbjjeeccttiivveess DDeessccrriibbee tthhee cceennttrraall rroollee ooff sseerrvviicceess iinn aann eeccoonnoommyy.. TToo eexxpplloorree tthhee ddiiffffeerreenncceess bbeettwweeeenn mmaannuuffaaccttuurriinngg aanndd sseerrvviicceess.. EExxpplloorree tthhee rroollee ooff sseerrvviicceess wwiitthhiinn mmaannuuffaaccttuurriinngg aanndd mmaannuuffaaccttuurriinngg’’ss rreelliiaannccee oonn sseerrvviicceess.. UUnnddeerrssttaannddiinngg sseerrvviiccee mmaannaaggeemmeenntt//sseerrvviiccee ooppeerraattiioonnss DDeessccrriibbee aanndd ccoonnttrraasstt tthhee ffeeaattuurreess ooff tthhee nneeww eexxppeerriieennccee eeccoonnoommyy wwiitthh tthhaatt ooff pprreevviioouuss eeccoonnoommiieess..
  • 4. SSeerrvviiccee DDeeffiinniittiioonnss AA SSeerrvviiccee iiss aa TTiimmee--ppeerriisshhaabbllee, IInnttaannggiibbllee EExxppeerriieennccee PPeerrffoorrmmeedd ffoorr aa CCuussttoommeerr AAccttiinngg iinn tthhee RRoollee ooff aa CCoopprroodduucceerr.. JJaammeess FFiittzzssiimmmmoonnss SSeerrvviicceess aarree ddeeeeddss, pprroocceesssseess, aanndd ppeerrffoorrmmaanncceess.. VVaallaarriiee ZZeeiitthhaammll MMaarryy JJoo BBiittnneerr
  • 5. DDeeffiinniittiioonn ooff SSeerrvviiccee FFiirrmmss SSeerrvviiccee EEnntteerrpprriisseess aarree OOrrggaanniizzaattiioonnss tthhaatt FFaacciilliittaattee tthhee PPrroodduuccttiioonn aanndd DDiissttrriibbuuttiioonn ooff GGooooddss, SSuuppppoorrtt OOtthheerr FFiirrmmss iinn MMeeeettiinngg TThheeiirr GGooaallss, aanndd AAdddd VVaalluuee ttoo OOuurr PPeerrssoonnaall LLiivveess.. JJaammeess FFiittzzssiimmmmoonnss
  • 6. SSttaaggeess ooff EEccoonnoommiicc DDeevveellooppmmeenntt FFeeaattuurreess PPrree-- UUssee ooff SSttaannddaarrdd ddoommiinnaanntt hhuummaann UUnniitt ooff ooff lliivviinngg SSoocciieettyy GGaammee aaccttiivviittyy llaabboorr ssoocciiaall lliiffee mmeeaassuurree SSttrruuccttuurree TTeecchhnnoollooggyy PPrree-- AAggaaiinnsstt AAggrriiccuullttuurree RRaaww EExxtteennddeedd SSuubb-- RRoouuttiinnee SSiimmppllee hhaanndd IInndduussttrriiaall NNaattuurree MMiinniinngg mmuussccllee hhoouusseehhoolldd ssiisstteennccee TTrraaddiittiioonnaall ttoooollss ppoowweerr AAuutthhoorriittaattiivvee IInndduussttrriiaall AAggaaiinnsstt GGooooddss MMaacchhiinnee IInnddiivviidduuaall QQuuaannttiittyy BBuurreeaauuccrraattiicc MMaacchhiinneess ffaabbrriiccaatteedd pprroodduuccttiioonn tteennddiinngg ooff ggooooddss HHiieerraarrcchhiiccaall nnaattuurree PPoosstt-- AAmmoonngg SSeerrvviicceess AArrttiissttiicc CCoommmmuunniittyy QQuuaalliittyy ooff IInntteerr-- IInnffoorrmmaattiioonn iinndduussttrriiaall PPeerrssoonnss CCrreeaattiivvee lliiffee iinn tteerrmmss ddeeppeennddeenntt IInntteelllleeccttuuaall ooff hheeaalltthh, GGlloobbaall eedduuccaattiioonn, rreeccrreeaattiioonn
  • 7. The Service Revolution “There are no such things as service industries. There are only industries whose service components are greater or less then those of other industries. Everybody is in service”! Theodore Levitt
  • 9. Percent Employment in Service Jobs, by Nation, 1983-1997
  • 10. Growth In Employment Global Private Sector Services, 1980-1997, %
  • 11. Services as % of GDP
  • 12. SSeerrvviicceess DDeeffiinneedd SSeerrvviiccee IInndduussttrryy CCuussttoommeerr SSeerrvviiccee FFiieelldd SSeerrvviiccee
  • 13. Why Services Are Important Increased Competition Manufacturing Support Makes Economic Sense
  • 14. “When the quality and price of competing products are similar or nearly identical, service activities can ‘differentiate’ undifferentiated products in the mind of the customer” Glaskowsky et al.
  • 15. Relative Importance of Service Activities Relative Importance of Marketing Variables Product Price Service Sales Effort TOTAL All Industries All Manufacturing Chemicals Plastics Mfg. Food Mfg. 36 23 23 18 100 38 24 20 18 100 38 26 18 18 100 36 27 15 22 100 Electronics Mfg. Paper Mfg. All Other Manufacturing 48 14 22 16 100 29 26 24 21 100 38 25 22 15 100 All Merchandising Consumer Goods Merchandising Industrial Goods Merchandising 30 22 27 21 100 31 23 23 23 100 28 17 39 16 100 National Council of Physical Distribution Management
  • 16. PPaarraalllleell PPrroodduucctt//SSeerrvviiccee DDeessiiggnn Product Concept Product Design Product Delivery Service Concept Service Design Service Delivery
  • 17. Suppliers Tier 2 Suppliers Tier 1 Manufacturing Inbound Logistics Operations Outbound Logistics C UST O ME RS Distributors Retailers The Supply Chain Information
  • 18. Manufacturin g Service Industries Communications, Transportation, Utilities, Health Care, Banking, etc. Service Intermediary Commercial Services User (Self-Service) Consumer (Self-Service) R D Product Design Distribution Services Wholesaling Retailing Repairing Private Business Services Supporting Manufacturing, Accounting, Legal, Consulting, Software, Maintenance Government Support Services Waste Disposal Services, Road Maintenance, Education, Health Support, Standards, Police and Fire Protection, etc. Services Inside the Company--Design, Legal, Accounting Advertising, etc.
  • 19. SSeerrvviiccee aanndd PPrrooffiittaabbiilliittyy RReedduucceedd ooppeerraattiinngg eexxppeennsseess CCoommppeettiittiivvee ddiiffffeerreennttiiaattiioonn IInnccrreeaasseedd qquuaalliittyy IInnccrreeaasseedd eeffffiicciieennccyy IInnccrreeaasseedd rreessppoonnssiivveenneessss IInnccrreeaasseedd mmaarrkkeett SShhaarree IInnccrreeaasseedd ccuussttoommeerr llooyyaallttyy
  • 20. Contributors to Market Share Market Share Time Market Share Due to Service Activities Market Share Due to Captive Markets Market Share Due to Product Features
  • 21. Satisfaction and Loyalty zone of affection zone of indifference zone of defection 1 2 3 4 5 100% 80% 60% 40% 20% Very dissatisfied Dissatisfied Neutral Satisfied Very satisfied Loyalty (Retention) Satisfaction terrorist apostle
  • 22. TThhee NNeeww EExxppeerriieennccee EEccoonnoommyy Economy Agrarian Industrial Service Experience Function Extract Make Deliver Stage Nature Fungible Tangible Intangible Memorable Attribute Natural Standardized Customized Personal Method of Stored in Inventoried Delivered Revealed supply bulk on demand over time Seller Trader Manufacturer Provider Stager Buyer Market User Client Guest
  • 23. The FFoouurr RReeaallmmss ooff aann EExxppeerriieennccee Customer Participation Passive Active Environmental Absorption Entertainment (Movie) Education (Language) Relationship Immersion Esthetic (Tourist) Escapist (Skydiving)
  • 24. EExxppeerriieennccee DDeessiiggnn PPrriinncciipplleess TThheemmee tthhee EExxppeerriieennccee ((FFoorruumm sshhooppss)) HHaarrmmoonniizzee IImmpprreessssiioonnss wwiitthh PPoossiittiivvee CCuueess ((FFoorrtt LLaauuddeerrddaallee aaiirrppoorrtt ppaarrkkiinngg ggaarraaggee)) EElliimmiinnaattee NNeeggaattiivvee CCuueess ((CCiinneemmaarrkk ttaallkkiinngg ttrraasshh ccoonnttaaiinneerrss)) MMiixx iinn MMeemmoorraabbiilliiaa ((HHaarrdd RRoocckk TT-sshhiirrttss)) EEnnggaaggee aallll FFiivvee SSeennsseess ((MMiisstt iinn RRaaiinnffoorreesstt))
  • 25. RRoollee ooff tthhee SSeerrvviiccee MMaannaaggeerr EEnnttrreepprreenneeuurriiaall IInnnnoovvaattiioonn CCaappiittaalliizziinngg oonn SSoocciiaall TTrreennddss MMaannaaggeemmeenntt CChhaalllleennggeess EEccoonnoommiieess ooff SSccaallee ((MMRRII ssccaannnneerr)) EEccoonnoommiieess ooff SSccooppee((CCoonnvveenniieennccee ssttoorree)) CCoommpplleexxiittyy ((YYiieelldd MMaannaaggeemmeenntt)) BBoouunnddaarryy CCrroossssiinngg ((BBaannkk vvss BBrrookkeerraaggee)) IInntteerrnnaattiioonnaall CCoommppeettiittiivveenneessss((DDiivveerrssiittyy))
  • 26. Profits are the result of attention to quality and customer satisfaction, while the reverse is rarely true. Edwards Deming
  • 27. DDiissccuussssiioonn TTooppiiccss IIss iitt ppoossssiibbllee ffoorr aann eeccoonnoommyy ttoo bbee bbaasseedd eennttiirreellyy oonn sseerrvviicceess?? SSppeeccuullaattee oonn tthhee eeffffeecctt tthhaatt tthhee IInntteerrnneett wwiillll hhaavvee oonn tthhee ddeelliivveerryy ooff sseerrvviicceess.. WWhhaatt iiss tthhee vvaalluuee ooff sseellff-sseerrvviiccee iinn aann eeccoonnoommyy?? WWhhaatt aarree tthhee iimmpplliiccaattiioonnss?? CCoommmmeenntt oonn tthhee rroollee tthhaatt mmaarrkkeettiinngg ppllaayyss iinn tthhee sseerrvviiccee iinnnnoovvaattiioonn pprroocceessss.. IIlllluussttrraattee hhooww tthhee ttyyppee ooff wwoorrkk hhee oorr sshhee ddooeess iinnfflluueenncceess aa ppeerrssoonnss lliiffeessttyyllee..

Notas del editor

  1. The Question to ask yourselves IS How much of a service company are you??? You/You/YOU/YOu/YOU/YOU/YOU/----------- We all are involved in the service sector No one is immune from it’s effects AND shouldn't be (thats why you are here) As manufacturing becomes more automated streamlining operations outsourcing more functions----service is growing Recent studies show that ; **The service component of a typical manufacturer is growing rapidly 30-70% of value Added are attributable to service functions 70% of total costs----WHY do we still push for shop floor improvements as world economies/businesses evolves preindustrial industrial post industrial a new combination of labor/capital/organization is taking place fewer employees etc.. A few stats
  2. 1st glance data may be disturbing /BUT manufacturing Peeked ~~1950 and has been declining ever since WHY/ we are being more productive and efficient a different mix, BUT with this new mix there is an INCREASE reliance on Services as the #;s show!!! Acct/Finance/transportation/healthcare/P.M. etc ( all of these activities that we do not concentrate on) AS well as pure services
  3. No country is immune from the growth in the service sector Some more then others Whats causing this Italy/Japan are flat UK way up
  4. All services have shown dramatic increases especially legal and business!!!! Business services= What services does your firm outsource!!!! Sears has Integrated backward and forward into insurance and finance--- Service Master (1.4 billion in revenues) 3.5 billion Guilders--- By lowering Manufacturing costs by managing complete equipment and plant maintenance, It will also design—layout, operate your facility (while sharing in the revenues!!!) Johnson Controls---Engineering/Plant design/operations ----
  5. The US is not alone in our increasing reliance and importance of services WE do lead the charge But we lead most other stats as well US =72%Germany 57% while MFG GDP is falling US = 23%>20% Britain and Canada This change is not only Domestic BUT________> GDP—Gross Domestic product The value of all production within a country A SINGLE CATEGORY FINANCE IS ALMOST AS LARGE AS ALL MANUFCTURING
  6. Definition is Ambiguous at best APICS E&R Newsletter June 1996/Vol 2/Jim Pope not in APICS dictionary 3 uses: 1. One where no final goods inventory exists (maybe raw/wip) but no finished goods inv. PRODUCED AND CONSUMED AT THE SAME TIME 2. Cust. Service--relationship during delivery time/price/quality 3. Field--relationship after delivery warranty service/parts avail/follow-up **any function that does not directly contribute to the production of the product. Defined as what it’s not US Gov’t defines it as a residual non-farming, non-manufacturing employment so whats IBM what about General Motors In: BCBS out: Financial(gmac) must begin to think as ourselves as not just a manufacturer but a SERVICE ORG. and accept there new VIEW Massive Hidden Service sector Pre & Post services--- Acct/legal/utilities/health care/waste disposal/maintenance PROBLEM AREA How measured: --product/process design --R&D --Mkt. Research --Acct/Data Analysis *** captured as Mfg. Costs if preformed WITHIN mfg. Concerns *** Captured as services if preformed EXTERNLY
  7. The ability to differenate an undifferanted product/commodity etc. Mfg. Cannot exist without the functions services provide 3. Customers want to be treated well and do repeat business with the firms that emphasize quality 4. The life blood of any company is repeat business Service recovery etc. customer loyalty create apostles for your firm Increased relationships between Mfg. And service functions 5. President of Hienkien has been quoted as saying: “we are just a Marketing company with a production facility as a service” richard Wagnor President of GM--- we just manufacture vechiles so we can finance them
  8. Your ability to SERVICE your customers will be the key between Success and Failure Whats counts most is the SERVICE built into the product way it is designed/delivered billed/bundled explained and installed repaired/renewed SERVICE is not A competitive edge it is THE competitive edge
  9. SERVICE ranks right alongside price in perceived importance by industrial customers Profitability & Market share
  10. If Services have this much input Design In service systems from the beginning Only when we begin to put service on the same level as Mfg will we begin to see the gains in productivity that have long alluded us!!
  11. ---Managing the numerous service functions within the supply chain ---At every stage ----At every level Especially Information Service IS a major Organizational function along the supply chain----^^
  12. Components of SERVICE Interactions Among Manufacturing and Service Activities Purchaser of automated equipment requires more then delivery -installation services -application aids -parts/ post purchase repair maintaence etc. WITH this increasing interdependencies it is now time to give the level of attention to SERVICE functions that has always been reserved formanufacturing Sectors of economy’s are becoming increasingly interdependent
  13. A service focus will lead to pro=actively managing the service function as a profit center because it will generate future revenues as the product becomes a commodity. Differentiation and Lower costs Improved transportation /Materials handling CAN/WILL cut costs as effectively as cutting direct labor or material inputs CAD and MFG software can increase quality and Reduce costs as easily as can new equipment Product Quality once the compeitive Advantage is now just the Ante’ Service is not A competitive edge IT IS THE Competitive edge Improved transportation ands materials handling can cut costs as effectively as cutting direct labor or materials. In most mfg. industries service costs out way direct labor costs by a factor of 3-10 to 1, YET we only look at labor and cautiously look at service functions planning/Q.C./Distribution accounting /Transportation/Advertising inventory/Design
  14. A Service focus will not only reduce current operating expenses and thereby exert considerable leverage on profits, IT will increase customer satisfaction which will increase long-term profitability ---drives customer loyality WHy become service driven!!! 1. To differentiate your company from it’s competitors 2. To build Market Share & customer loyality Over the long-run you can’t maintain market share with unique features alone----your competitors will catch you!!! Only through service and loyal customers will you increase market share. Also: you can’t build market share by cutting price or cutting quality, studies show that in the long run that approach is doomed for failure Service profit chain-----^^^ It is now obvious that a service focus will not only reduce current operating expenses & thereby exert a considerable amount of leverage on profits, but will increase customer satisfaction which will increase market share----which will in turn Increase long-term profitability Lost market share mauy be regained through service---
  15. Profit growth is stimulated by loyalty A score of 5 is 6X more likly Loyalty is a direct result of satisfactionto repurchase then a score of 4 Satisfaction is driven by valueneed to create Apostles!!! To max Profits we need to go beyond being #1 or #2 in our Industry which has been the holy grail for nearly 2 decades * New measures show that Customer Loyality may be a more important determinat of profit Studies show that a 5% increase in loyality can produce Profit increases fron 25 to 85% Quality of Market (measures in terms of customer loyalty) deserves as much attention as Quantity of shareDepth of relationship So what drives loyality??? Service and customer service = satisfaction