Welcome to Service Operations Management

1
Welcome to Service Operations Management

• Douglas M. Stewart, Ph.D.Associate Professor of
  Operations ManagementAnderson Schools of
  ManagementUniversity of New Mexico

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The Role of Services in an Economy
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Learning Objectives

• Describe the central role of services in an
  economy.
• Discuss the evolution of an economy from an
  agrarian society to a service society.
• Describe and contrast the features of the new
  experience economy with that of previous
  economies.
• Describe the features of the new service economy
• Discuss the role of service managers with respect
  to innovation, social trends, and management
  challenges.

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Interactive Role of Services
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Service Definitions

• A Service is a Time-perishable, Intangible
  Experience Performed for a Customer Acting in the
  Role of a Coproducer.
• - James Fitzsimmons
• Services are deeds, processes, and
  performances.
• - Valarie Zeithaml Mary Jo Bitner

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Definition of Service Firms

• Service Enterprises are Organizations that
  Facilitate the Production and Distribution of
  Goods, Support Other Firms in Meeting Their
  Goals, and Add Value to Our Personal Lives.
• - James Fitzsimmons

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Stages of Economic Development

• 
  Features
• Pre-
  Use of
  Standard
• dominant
  human Unit of of living
  
• Society Game activity
  labor social life measure
  Structure Technology
• Pre- Against Agriculture Raw
  Extended Sub- Routine
  Simple hand
• Industrial Nature Mining
  muscle household sistence
  Traditional tools
• 
  power
  Authoritative
• Industrial Against Goods
  Machine Individual Quantity
  Bureaucratic Machines
• fabricated production
  tending of goods
  Hierarchical
• nature
• Post- Among Services
  Artistic Community Quality of Inter-
  Information
• industrial Persons
  Creative life in terms
  dependent
• 
  Intellectual of
  health, Global
• 
  
  education,
• 
  
  recreation
  

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Trends in U.S. Employment by Sector

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Percent Service Employment for Selected
Industrialized Nations
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Distribution of GDP in the US Economy
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The New Experience Economy
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The Four Realms of an Experience
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Growing Experience Intensity
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Experience Design Principles

• Theme the Experience (Forum shops)
• Harmonize Impressions with Positive Cues(OHare
  airport parking garage)
• Eliminate Negative Cues(Cinemark talking trash
  containers)
• Mix in Memorabilia (Hard Rock T-shirts)
• Engage all Five Senses (Mist in Rainforest)

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Role of the Service Manager

• Entrepreneurial Innovation
• Push theory (e.g. Post-it)Pull theory (e.g. Cash
  Management)Services derived from products (Video
  Rental)Information driven servicesDifficulty of
  testing service prototypes
• Capitalizing on Social Trends
• Aging of the populationTwo-income
  familiesGrowth in number of single peopleHome
  as sanctuary

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Management Challenges

• Economies of Scale (MRI scanner)
• Economies of Scope(Convenience store)
• Complexity (Yield Management)
• Boundary Crossing (Bank vs Brokerage)
• International Competitiveness(Diversity)

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Discussion Topics

• Illustrate how the type of work he or she does
  influences a persons lifestyle.
• Is it possible for an economy to be based
  entirely on services?
• Speculate on the effect that the Internet will
  have on the delivery of services.
• What is the value of self-service in an economy?
• Comment on the role that marketing plays in the
  service innovation process.

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Interactive Class Exercise

• Break into small groups. Each group is to
  identify service firms that should be listed in
  the Fortune 100 and place them in rank order of
  annual revenue.