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8/10/2019 Services operation management
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Chapter5Technology in Services
5
Service Management (5e)Operations, Strategy, Information Technology
By
Fitzsimmons and Fitzsimmons
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Learning Objectives
Discuss the of technology in the service encounter.
Describe the emergence of self-service.
Place an example of service automation in its propercategory.
Describe different Internet business models.
Understand the importance of scalability to e-commercesuccess.
Discuss the managerial issues associated with the adoption
of new technology.
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Role of Technology in the Service Encounter
Technology Technology Technology
Technology Technology
Customer Customer ServerServer
Server Server
Server
CustomerCustomer
Customer
D. Technology-Mediated
Service Encounter
E. Technology-Generated
Service Encounter
A. Technology-Free
Service Encounter
B. Technology-Assisted
Service Encounter
C. Technology-Facilitated
Service Encounter
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Evolution of Self-service
Service Industry Human Contact Machine Assisted
Service
Electronic Service
Banking Teller ATM Online banking
Grocery Checkout clerk Self-checkout station Online order/ pickup
Airlines Ticket agent Check-in kiosk Print boarding pass
Restaurants Wait person Vending machine Online order/ delivery
Movie theater Ticket sale Kiosk ticketing Pay-for-view
Book store Information clerk Stock-availability terminal Online shopping
Education Teacher Computer tutorial Distance learning
Gambling Poker dealer Computer poker Online poker
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Self-service Technologies (SST)
Does customer adoption of self-service follow a predictablepattern?
How do we measure self-service quality (e.g., ease of use,enjoyment, and/or control)?
What is the optimal mix of SST and personal service for aservice delivery system?
How do we achieve continuous improvement when usingSST?
What are the limits of self-service given the loss of humaninteraction?
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Fixed-sequence (F) A machine that repetitively performs successive steps in a given operation
according to a predetermined sequence, condition, and position, and whose
set information cannot be changed easily. Example, automatic parking lot
gate
Variable-sequence (V) A machine that is the same as a fixed-sequence robot but whose set
information can be changed easily. Example, ATM machine
Playback (P) A machine that can produce operations from memory that were originally
executed under human control. Example, answering machine
Classification of Service Automation
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Continued..
Numerical controlled (N) A machine that can perform a given task according to a sequence, conditions,
and a position as commanded by stored instructions that can be
reprogrammed easily. Example, animated characters at an amusement park
Intelligent (I) A machine with sensory perception devices, such as visual or tactile
receptors, that can detect changes in the work environment or task by itself
and has its own decision-making abilities. Example, autopilot for a
commercial plane
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Continued..
Expert system (E) A computer program that uses an inference engine (i.e decision rule) and a
knowledge base (i.e. information on a particular subject) to diagnose
problems. Example, maintenance troubleshooting for elevator repair
Totally automated system (T) A system of machines and computers that performs all the physical and
intellectual tasks that are required to produce or deliver a service. Example,
electronic funds transfer
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Purpose of Web-site
A retail channel (Amazon.com)
These firms sell exclusively through the Internet
Supplemental channel (Barnes & Nobel)
Buy in-store or on-line
Technical support (Dell Computer)
Embellish existing service (HBS Press)
Cases that you can get on-line instead of typically being mailed
Order processing (Delta Airline)
Electronic tickets
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Continued..
Convey information (Kelly Blue Book)
Communicate with membership (POMS.org)
To play games (Treeloot.com)
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Technology Convergence Enabling
E-Business
Internet
Global telephone system
Communications standard TCP/IP
(Transfer Control Protocol/Internet Protocol)
Addressing system of URLs
Personal computers and cable TV
Customer databases
Sound and graphics
User-friendly free browser
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Internet Models
Internet access providers Firms such as America online provide access to World Wide Web and email
service.
Portal
They provide a variety of service that include information searching, news,white and yellow pages, etc.Example google, Yahoo.
Information content Use Internet to provide news, example The New York Times
Online Retailers Example, Amazon.com
Transaction enablers Stock trading
Market makersonline auction, example ebay
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E-Business Models
(Weill & Vitale, Place to Space, HBS Press, 2001)
Content Provider:
Provides content (information, digital products, and services). Example,
Reuters, a British news agency
Direct to Customer:
Provides goods or services directly to the customer. Example, Dell
Full-Service Provider:
Provides a full range of services in one domain. Example, financial, health,
industrial, chemical) directly and via allies. Example, General Electric Supply.
Intermediary:
Brings together buyers and suppliers by concentrating information. Example,
eBay
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Continued..
Shared Infrastructure: Brings together multiple competitors to cooperate by sharing common IT
infrastructure. Example, SABRE reservations system
Value Net Integrator:
Coordinates activities across the value net by gathering, synthesizing, anddistributing information. Example, 7-Eleven Japan
Virtual Community: Creates and facilitates an online community of people with a common
interest, enabling interaction and service provision. Example, Monster.com,
the job placement firm.
Whole-of-Enterprise: Provides a firmwide single point of contact, consolidating all services provided
by a large multiunit organization. Example, U.S. federal Government
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Economics of E-Business
Sources of Revenue:
Transaction fees
Information and advice
Fees for services and commissions
Advertising and listing fees
Ownership
Customer relationship
Customer data
Customer transaction
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Electronic and Traditional Services
table 5.3, pp. 114Features Electronic Traditional
Encounter Screen-to-face Face-to-face
Availability Anytime Working hours
Access From anywhere Travel to location
Market Area Worldwide Local
Ambiance Electronic
interface
Physical
environmentPayment Credit card Cash or check
Differentiation Convenience Personalization
Privacy Anonymity Social interaction
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Grocery Shopping Comparison
table 5.4, pp. 114
On-lineShopping
TraditionalShopping
Advantages ConvenienceSaves timeLess impulsebuying
See new itemsMemory triggerProduct samplingSocial interaction
Disadvantages Forget itemsLess controlNeed computerDelivery fee
Time consumingWaiting linesCarry groceriesImpulse buying
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Service Product Dimensions
Electronic services are intangible
Heterogeneity due to different perceptions of customers
(depends on your speed of connection, your computers
ability, your level of knowledge)
Simultaneous delivery and consumption of electronic
services
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Service Process Dimensions
Service processes can be categorized by Degree of customer contact and interaction
Degree of labor intensity
Degree of customization
Electronic services differ from traditional service Customer contact
Customization
Labor intensity
To provide electronic service a firm has On-line part, where the customer interacts (like front-office)
Of-line part, which helps on-line part to happen (like back-office)
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Economics of Scalability
Table 5.5, pp. 116Dimensions High Scalability Low
E-commerce
continuum
Selling
information
(E-service)
Selling value-
added service
Selling
services with
goods
Selling goods
(E-commerce)
Information vs.
Goods Content
Information
dominates
Information with
some service
Goods with support
services
Goods dominate
Degree ofCustomer Content Self-service Call centerbackup Call center support Call center orderprocessing
Standardization vs.
Customization
Mass distribution Some
personalization
Limited
customization
Fill individual orders
Shipping and
Handling Costs
Digital asset Mailing Shipping Shipping, order
fulfillment, and
warehousing
After-sales service None Answer questions Remote
maintenance
Returns possible
Example Service Used car prices Online travel
agent
Computer support Online retailer
Example Firm Kbb.com Biztravel.com Everdream.com Amazon.com
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Challenges of Adopting New Technology
Customer education of the use of technology
Customer acceptance
Employee training
Integration with existing technology
Industry standards
Managing change
Adoptionof New Technology in Services
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Continued..
Managing the New Technology Adoption Process
Japanese model vs American model of introducing change
Ten step process with concern for employees and customers
Orientation and education
Technology opportunity analysis Application requirements analysis
Functional specifications
Design specifications
Implementation planning
Equipment selection and control commitments
Implementation
Testing of technology
Review of results
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Topics for Discussion
1. Can an Internet service encounter be a memorable
experience?
2. How does the economics of scalability explain the failure of
Living.com, an online furniture retailer?
3. What are the characteristics of early adopters of self-
service?
4. How can we design for self-recovery when self-service
failure occurs?