Relative Importance of Services and Goods in Personal Consumption Expenditure

80 70 60 50 40 30 20 10 0

Cons.non dur. goods

services

Cons. dur. goods

19 50 19 75 19 80 19 55 19 60 19 65 19 70

19 45

US Employment % Share of Services In 1850 .15% In 1992.75% US Export Share of Services In 1970.30% In 1992.69%

Classification of Service Systems

1. Stagnant Personal Services 2. Substitutable Personal Services 3. Progressive Services 4. Explosive Services

1. Stagnant Personal Services

Direct contact between customer and service provider. Examples  Physiotherapy Training  Teaching  Hair styling Difference in operations systems may be ambience  Quality of communication  Using various aids  Providing choices.to increase value

2. Substitutable Personal Services

These are similar to (1) but are being substituted by the use of advanced technology Examples Washing Machine Electronic Security E-Mail Telephone answering Teaching through TV etc. But generally different. Partial and experience is

3. Progressive Services
These have two components of cost. These can be termed Hardware Cost (Little Labor) Software Cost( Lot of Labor) Examples: Computation Services TV Programme Production Progressively HC Costs reduces SC cost Increases (Taking a long range view - Important)

4. Explosive Services
Very Little contact between customer and Service provider Example : Modern Telephone Services Technology is the key Similar to telephone services Reservations Banking Shopping (E-Commerce) All are likely to have explosive growth in productivity - commensurate with technological advances.

Operations Strategies for a Service Firm

Strategy Example Medical Care Preventive and Health Education And Training Only Laboratories The Strategies and Operations Issues will be Different Multi- specialty Clinics p Competitive Edge No Readymade Solutions

Providing Value in Service Operations

Performance Quality Time Flexibility Customization Convenience Courtesy Comfort Different Dimensions In Different Situations (Reliability Dependability) Cost

Service Industry- Operation Issues

Products Tangible Can be produced to inventory for offthe-shelf availability. Minimal contact with ultimate customer Complex, interrelated, processing. Services Intangible and perishable consumed in the process of their production. Availability achieved by keeping productive systems open for services. High contact with clients or customers. Simple processing.

Demand on system variable on weekly, Demand commonly variable on hourly, monthly and seasonal basis. daily and weekly basis. Markets served by productive systems are regional, national and international. Large units that can take advantage of economies of scale Location of system is in relations to regional, national and international markets Markets served by productive system are usually local. Relatively small units to serve local markets Location dependent on location of local customers, clients and users

 Services as a part of the product (Installation, commissioning, maintenance contract) Products as a part of service (Spare parts in an automobile service station. Medicines in a hospital etc.)

Operations in Service Systems managing the key issues

1. Define your business and fix boundaries.

2. Identify key Operations Issues / Concerns.

3. Explain

your

strategy

and

methodology

to

address these issues .

Operations Issues and Strategies

Think Future Business Definition Value Consideration Key Operations Innovate Issues 1. Hotel 2. Restaurant 3. Beauty Clinic Composite 4. Tailoring Firm 5. Departmental Stores 6. Automobile Service Station 7. Multi Specialty Clinic 8. Health Care (Preventive Etc.) Clinic 9. Take Away Food 10. Travel Reservation 11. General Maintenance Service

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