Services Operations

Management
Prof Pradeep Pai,
Lecture 1

SERVICES IS NOT SERVITUDE

1

Clark Fisher Hypothesis

As nations becomes industrialized there is a shift in

employment from one sector of the economy to
the other.
As productivity improves in one sector the labor
force moves into other sector.
When such shifts occurs, the level of a countrys
industrialization can be gauged.
In USA, today the services employ 8 out of 10
workers. In India the services employ around 5 out
of 10 workers.
Pre-Industrial --- Industrial --- Post Industrial society
2

Products v/s Services

Products Push Innovations, Services Pull

Innovations
Success of Service depends on the customers
participation.
Consumer Service Experience is designed on five
principles,
Theme the experience
Harmonize impressions with positive cues
Eliminate negative cues
Mix in memorabilia
Engage all five senses
3

Comparison of Service and

Manufacturing
Considerations
Manufacturing/Distributio Service/Retail
n
Cost Focus

Revenue focus

Transportation modes/costs

Demographics:
age,income,etc

Energy availability, costs

Population/drawing area

Labor cost/availability/skills

Competition

Building/leasing costs

Traffic volume/patterns,
Customer access/parking
4

Distinctive Characteristics
of Services

Customer Participation in Service Process

Simultaneity
Perishability
Intangibility
Heterogeneity
Non-ownership characteristic of Services
Service industries share their resources by
allocating customers the usage

A note on Ardalan
Heuristics
Service Location

Ardalan Heuristic

Need a matrix of distances or costs from each

customer location to every other location
Demand at each location
Weight give higher weight to more important
customers their pain of traveling a longer
distance is costly & should be reduced.
Only consider locating where customers are
Identify the one best place to locate at, then
the second one to add, then the third, etc.
For large problems, not a bad assumption at
all.
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