PowerPoint Presentation

Ch. 4 Product & Service Design

SCM 352 Operations MgtDr. Ron Lembke

1

How are Services Different?Everyone is an expert on servicesWhat works well for one service provider doesnt necessarily carry over to another Quality of work is not quality of serviceService package consists of tangible and intangible componentsServices are experienced, goods are consumedMgmt of service involves mktg, personnelService encounters mail, phone, F2F

2

Degree of Customer ContactMore customer contact, harder to standardize and controlCustomer influences:Time of demandExact nature of serviceQuality (or perceived quality) of service

3

3 ApproachesWhich is Best?Production LineSelf-ServicePersonal attention

4

What do People Want?Amount of friendliness and helpfulnessSpeed and convenience of deliveryPrice of the serviceVariety of servicesQuality of tangible goods involvedUnique skills required to provide serviceLevel of customization

5

Service-System Design MatrixMail contactFace-to-faceloose specsFace-to-facetight specs

PhoneContactFace-to-facetotalcustomization

Buffered core (none)

Permeable system (some)

Reactivesystem (much)

HighLowHighLowDegree of customer/server contactInternet & on-sitetechnology

SalesOpportunity

ProductionEfficiency

6

Impact of Life Cycle

CassettesRecordsiTunes8-TracksCDsDATMiniDiscIntroductionGrowthMaturity

Decline

DVDAudio

Impact of Life CycleRecordsDATIntroductionGrowthMaturity

Decline

Applying Behavioral ScienceThe end is more important to the lasting impression (Colonoscopy)Segment pleasure, but combine painLet the customer control the processFollow norms & ritualsCompensation for failures: fix bad product, apologize for bad service

9

Restaurant TippingNormalExperimentIntroduce self(Sun brunch)15%23%Smiling (alone in bar)20%48%Waitress28%33%Waiter (upscale lunch)21%18%staffing wait positions is among the most important tasks restaurant managers perform.

10

Modular Components Take advantage of modules: parts or products previously preparedRestaurants: prepared ingredients, assembled to orderSuppliers can develop new, interesting products to use more quickly, cheaply Variety is gained by different combinations of same components

Mass CustomizationHighly customizedIntegrate design, processes, supply networkSupply components cheaply to production pointsFast, responsive production, quick deliveryHigher weight, lower value

Fail-Safingpoka-yokes Japanese for avoid mistakesNot possible to do things the wrong wayIndented trays for surgeonsATMs beep so you dont forget your cardPagers at restaurants for when table readyAirplane bathroom locks turn on lightsHeight bars at amusement parks

13

14

15

16

17

18

BlueprintingFancy word for making a flow chartline of visibility separates what customers can see from what they cantFlow chart back office and front office activities separately.

19

Sustainability = Long RunProfitability

What does it mean?sustain: Middle English sustenen, from Anglo-French sustein-, stem of sustenir, from Latin sustinre to hold up, sustain, from sub-, sus- up + tenre to hold, Date: 13th century1 : to give support or relief to2 : to supply with sustenance : nourish3 : keep up, prolong4 : to support the weight of : to carry or withstand (weight or pressure)

Triple Bottom Line

Corporate Social ResponsibilityGE Frank Mantero, Director Corporate Citizenship ProgramsAudited, like financial statements40% of value based on reputationIts not giving back its a partnershipWal-Mart Sustainable Supply ChainWere making money at this

23

Corporate Reporting

24

This is Not New

Frank Capra, 1958

Global WeirdingIn the US, its a political issue, so there must be two sides?CO2280 ppm for human historyLast 250 years up to 384 ppm where we are nowMilankovich Cycles (pp 117-8):Earths orbit not circular, 100,000 year cycleTilted axis shifts: 40,000 year cyclePlane of orbit relative to sun: 21,000 year cycleSeems unlikely

Atmospheric CO2 ppm Mauna Loa ObservatoryData: National Oceanic and Atmospheric AdministrationGraph: Ron Lembke, 1/12/2010

Climate ModelsWere at 384 ppm450 ppm would be 2C increase550 ppm would lead to 3 C increaseUsed to be targetPests not killed by freezesIce sheets melting faster than predictedOceans more acidic than thought350? Really hard

Rupert MurdochNews Corp. owns Fox.Climate change poses clear, catastrophic threats and that We may not agree on the extent, but we certainly cant afford the risk of inaction.Rupert Murdoch, May 9, 2007James Murdoch, heir apparentThanks to friendships with Al Gore and Bill Clinton, he has developed deep green instincts, London TelegraphWife Kathryn Hufschmid works for Clinton Climate Initiative

Sun sends UV? Infrared show on spectrum

CO2 collects in TroposphereOzone O3 layer absorbs ultraviolet radiation from sun