Introduction to Introduction to the Field the Field
Introduction to the Field Introduction to the Field
Strategic Planning
Missionand VisionMission
and Vision
CorporateStrategy
CorporateStrategy
OperationsStrategy
OperationsStrategy
MarketingStrategy
MarketingStrategy
FinancialStrategyFinancialStrategy
Voice of theVoice of theBusinessBusiness
Voice of theVoice of theBusinessBusiness
Voice of theVoice of the
CustomerCustomerVoice of theVoice of the
CustomerCustomer
What Operations Management……
• What is operations?– A function or system that transforms inputs into
outputs of greater value
• What is operations management?– Design, operation, and improvement of
productive systems
• What is a transformation process?– A series of activities along a value chain
extending from supplier to customer
Transformation Process
• Physical: as in manufacturing operations
• Locational: as in transportation or warehouse operations
• Exchange: as in retail operations
• Physiological: as in health care
• Psychological: as in entertainment
• Informational: as in communication
Operations as a Transformation Process
INPUT •Material•Machines•Labor•Management•Capital
TRANSFORMATIONPROCESS
OUTPUT •Goods•Services
Feedback & Requirements
Positioning the Firm
• Cost• Quality• Speed• Flexibility
Positioning the Firm: Cost
• Waste elimination• Examination of cost structure
– looking at the entire cost structure for reduction potential
• Lean production– providing low costs through disciplined
operations
Positioning the Firm: Speed
• Fast moves, fast adaptations, tight linkages• Internet - conditioned customers to expect
immediate responses
• Service organizations - always competed on speed (McDonald’s, LensCrafters, and Federal Express)
• Manufacturers - time-based competition: build-to-order production and efficient supply chains
• Fashion industry - two-week design-to-rack lead time of Spanish retailer, Zara
Positioning the Firm: Quality
• Minimizing defect rates or conforming to design specifications; please the customer
• Ritz-Carlton - one customer at a time– Service system is designed to “move heaven
and earth” to satisfy customer– Every employee is empowered to satisfy a
guest’s wish – Teams at all levels set objectives and devise
quality action plans– Each hotel has a quality leader
Positioning the Firm: Flexibility
• Ability to adjust to changes in product mix, production volume, or design
• Astra Honda Motor (AHM)– Production capacity 3,5 million units per year– mass customization: the mass production of
customized parts
% Perubahan Pekerjaan 2004-2009
5.96%
10.13%
13.96%
-8.26%
1.55%
14.21%
8.52%
31.96%29.44%
-20%
-10%
0%
10%
20%
30%
40%
Industri
% P
erub
ahan
Pertanian, Kehutanan, Perburuan dan PerikananPertambangan dan PenggalianIndustri PengolahanListrik, Gas, dan AirBangunanPerdagangan Besar, Eceran, Rumah Makan, dan HotelAngkutan, Pergudangan dan Komunikasi Keuangan, Asuransi, Usaha Persewaan Bangunan, Tanah, dan Jasa PerusahaanJasa Kemasyarakatan, Sosial dan Perorangan
5.96%
10.13%
13.96%
-8.26%
1.55%
14.21%
8.52%
31.96%29.44%
-20%
-10%
0%
10%
20%
30%
40%
Industri
% P
erub
ahan
Pertanian, Kehutanan, Perburuan dan PerikananPertambangan dan PenggalianIndustri PengolahanListrik, Gas, dan AirBangunanPerdagangan Besar, Eceran, Rumah Makan, dan HotelAngkutan, Pergudangan dan Komunikasi Keuangan, Asuransi, Usaha Persewaan Bangunan, Tanah, dan Jasa PerusahaanJasa Kemasyarakatan, Sosial dan Perorangan
Sumber: Survei Angkatan Kerja Nasional 2004, 2005, 2006, 2007, 2008 and 2009
Indonesian household spending makes way for growth of non-food sector
Businesses in non-food segments will benefit from the shift in consumer expenditure patterns: Businesses in a wide range of non-food sectors including communications and household goods and services will see an increase in business. The education sector will also grow as more people are taking post-graduate degrees in order to advance their careers and more parents are sending their children to good schools. Indonesian people will also spend more on transport, leisure and recreation and hotels and catering.
http://www.euromonitor.com/Indonesian_household_spending_makes_way_for_growth_of_non_food_sector
Author: An Hodgson, Date published: 6 Dec 2007
What is a Service and What is a Good?• “If you drop it on your foot, it won’t hurt
you.” (Good or service?)
The Goods-Services Continuum
• “Services never include goods and goods never include services.” (True or false?)
Proportion of Goods & Services in Purchase Bundle
Goods Services
100% 75 50 25 0 25 50 75 100%
Self-service gasoline…………….
Personal computer……………
Office copier………………….
Fast-food restaurant…………
Gourmet restaurant…………
Auto repair……………………
Airline flight…………………….
Haircut………………………….
Goods versus ServicesGoods versus Services
Can be resold Can be inventoried Some aspects of quality
measurable Selling is distinct from
production Product is transportable Site of facility important for cost Often easy to automate Revenue generated primarily
from tangible product
Reselling unusual Difficult to inventory Quality difficult to measure Selling is part of service Provider, not product is
transportable Site of facility important for
customer contact Often difficult to automate Revenue generated primarily
from intangible service.
Good Service
Something to remember!
Customer conduct transactions directly with the service provider, most often in person
Customer must rely on the reputation of the service firm.
Customer can play an active part in the process.
Service can’t be inspected before delivery.
You can’t make happy guests with unhappy employess.
In the service business, ………
Service Definitions“Services are economic activities that produce time, place, form, or psychological utility for the consumer”
(Robert G. Murdick, Barry Render, & Roberta S. Russel)
“Services are deeds, processes, and performances”(Valarie Zeithaml & Mary Jo
Bitner)
“A Service is a Time-perishable, Intangible Experience Performed for a Customer Acting in the Role of a Coproducer” (James Fitzsimmons)
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)
The Service PackageSupporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane.Facilitating Goods: The material purchased or consumed by the buyer or items provided by the consumer. Examples are food items, auto parts, legal documents, golf clubs.Information: Data of information that is provided by the customer to enable efficient and customized service. Examples patient medical records, customer preferences from prior visit.Explicit Services: Benefits readily observable by the senses. The essential or intrinsic features. Examples are quality of meal, attitude of the waiter, on-time departure.Implicit Services: Psychological benefits or extrinsic features which the consumer may sense only vaguely. Examples are privacy of loan office, security of a well lighted parking lot.
Unique Characteristics of Services
IntangibilityIntangibility: creative advertising, no patient protection, importance of reputation
PerishabilityPerishability: cannot inventory, opportunity loss of idle capacity, need to match supply with demand
HeterogeneityHeterogeneity: customer participation in delivery process results in variability
SimultaneitySimultaneity: opportunities for personal selling, interaction creates customer perceptions of quality
Customer Participation in the Service ProcessCustomer Participation in the Service Process:: attention to facility design but opportunities for co-production
The Service Process Matrix
Degree of Interaction and Customization
Low High
Services Factory: Service Shop:
Degree of Labor Intensity
Low
Airlines Hospitals
Trucking Auto repair
Hotels Other repair services
Resort & Recreation
High
Mass Service: Professional Service:
Retailing Doctors
Wholesaling Lawyers
Schools Accountants
Retails Aspects of Com- Architects
mercial Banking
Challenges for Service manager
Service Factory
Service Shop
Mass Service
Professional Service
Low Labor Intensity:• Capital decisions• Technological advance• Managing demand peaks/off-peaks• Scheduling service delivery
High Labor Intensity:• Hiring• Training & Method of development• Employee’s welfare• Scheduling workforce
High Interaction/Customization:• Fighting cost increases• Maintain quality• Response to customer interactions• Gaining employee loyalty
Low Interaction/Customization:• Marketing• Making service “warm”• Attentions to physical surroundings• Maintaining SOP
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
The New Experience Economy
Economy Agrarian Industrial Service Experience
Function Extract Make Deliver Stage
Nature Fungible Tangible Intangible Memorable
Attribute Natural Standardized Customized Personal
Method of supply
Stored in bulk Inventoried Delivered on
demandRevealed over
time
Seller Trader Manufacturer Provider Stager
Buyer Market User Client Guest
The Four Realms of an Experience
Customer Participation Passive Active
Absorption Entertainment
(Movie) Education (Language)
Environmental Relationship
Immersion Esthetic (Tourist)
Escapist (Skydiving)
Customer Participation Passive Active
Absorption Entertainment
(Movie) Education (Language)
Environmental Relationship
Immersion Esthetic (Tourist)
Escapist (Skydiving)
Service Process Orientation
Customer as Co-producerFront and Back Office PerspectivesService Profit Chain Focus on Internal and External CustomersQuality (perceptions vs expectations) Focus on Both Efficiency and Effectiveness Use IT as Productivity Enabler for Both Internal and External Customers
Strategic Service Classification (Relationship with Customers)Strategic Service Classification (Relationship with Customers)
Type of Relationship between Service Organization and Its Customers
Nature of
Service Delivery “Membership” relationship No formal relationship
Insurance Radio station
Telephone subscription Police protection
Continuous delivery College enrollment Lighthouse
of service Banking Public Highway
American Automobile association
Long-distance phone calls Restaurant
Theater series subscription Mail service
Discrete transactions Commuter ticket or transit pass Toll highway
Sam’s Wholesale Club Movie theater
Egghead computer software Public transportation
Strategic Service Classification (Method of Service Delivery)Strategic Service Classification (Method of Service Delivery)
Availability of Service OutletsNature of Interaction between Customer and Service Organization Single site Multiple site Customer goes to Theater Bus serviceservice organization Barbershop Fast-food chain
Service organization Lawn care service Mail deliverycomes to customer Pest control service AAA emergency repairs Taxi
Customer and serviceorganization transact at Credit card company Broadcast network arm’s length (mail or Local TV station Telephone companyelectronic communications)
Dimensions of Service Quality
Time and timeliness: How long a customer must wait for service, and if it is completed on time. For example, is an overnight package delivered overnight? Completeness: Is everything the customer asked for provided? For example, is a mail order from a catalog company complete when delivered? Courtesy: How customers are treated by employees. For example, are catalog phone operators at Lands' End nice and are their voices pleasant? Consistency: Is the same level of service provided to each customer each time? Is your newspaper delivered on time every morning? Accessibility and convenience: How easy it is to obtain the service. For example, when you call Lands' End or L. L. Bean does the service representative answer quickly? Accuracy: Is the service performed right every time? Is your bank or credit card statement correct every month? Responsiveness: How well the company reacts to unusual situations, which can happen frequently in a service company. For example, how well a telephone operator at L.L. Bean is able to respond to a customer's questions about a catalog item not fully described in the catalog.
Open Systems View of Service Operations
Service Process Consumer Evaluation
Consumer arrivals Consumer participant departures Criteria
(input) Consumer-Provider ( output) Measurement
interface
Control Monitor
Customer demand Service operations manager Service personnel
Production function:
Perceived needs Alter Monitor and control process Schedule Empowerment
Location demand Marketing function: supply Training
Interact with consumers Attitudes
Control demand
Modify as necessary
Define standard
Service package
Supporting facility
Communicate Facilitating goods Basis of
by advertising Explicit services selection
Implicit services