Service Operations Management

Introduction

Manufacturing, service and agriculture are the major economic activities in any country. In
India, manufacturing and services together constitute nearly 75% of the GDP. Moreover, in
recent years the growth in GDP is primarily due to the growth in these sectors of the
economy. During the last ten years, the share of services in the GDP has grown steadily from
about 40% to about 51%. The Union Government began taxing three services in 1994-95.
This has grown steadily and as of 2004-05 the number of services taxed has gone up to 71.
All these indicate the growing importance of services in the Indian economy and the need to
apply management practices to plan and control operations in the service sector.

Service organisations respond to the requirements of customers to satisfy some needs and
leave certain experiences in the minds of the customer through a service delivery system.
This course addresses the strategic and operational aspects of managing service systems. In
addition to discussing the design and operational control of service operations, specific issues
pertaining to certain sectors of the service industry are also addressed.

Session-wise course outline

Module A. Introduction to Service Operations

1. Understanding Services Economy

Global trends in Services Sector; Changing paradigms in Competitiveness of services;
Services Manufacturing Continuum

Readings:

Bitran, G. and Lojo, M. (1993), A framework for analysing service operations,
European Management Journal, 11 (3), 271 282.
Nambisan, S. (2001), Why service businesses are not product businesses, MIT
Sloan Management Review, Summer 2001, 72 80.

2. Role of services in manufacturing firms

Recent trends in manufacturing, increased role of services in manufacturing

Readings

Sawhney, M., Balasubramanian, S. and Krishnan, V.V. (2004), Creating growth
with services, MIT Sloan Management Review, Winter 2004, 34 43.

Module B. Service Strategy

3. Developing an overall vision for the service system

Case: Arvind Eye Hospitals


2

Readings

Heskett, J.L. (1991), Lessons in the service sector in The Service Management
Course: Cases & Reading, Free Press, 47 64.
Shah, J. and Murty, L.S. (2005), Compassionate high quality health care at low
cost: The Arvind Model, IIMB Management Review, 16 (3), 31 43.

4. Developing a service strategy

Case: Benihana of Tokyo

Readings

Schneider, B. and Bowen, D.E., (1999), Understanding customer delight and
outrage, Sloan Management Review, Fall 1999 35 45.
Fitzsimmons, J.A. and Fitzsimmons, M.J. (2006), Service Strategy, Chapter 3 in
Service Management, Mc Graw Hill International Edition, 37 58.

5. Service Positioning & Implications for Service Delivery Design

Degree of customer contact, divergence, customization; Service blue printing

Readings

Metters, R. and Vargas, V., (2000), A typology of decoupling strategies in mixed
services, Journal of Operations Management, 18, 663 682.
Fitzsimmons, J.A. and Fitzsimmons, M.J. (2006), New Service Development,
Chapter 4 in Service Management, Mc Graw Hill International Edition, 77 96.
Ravichandran, N, and Bahuguna, D, (2006), Rule bound government agency to
customer centric service facility: Can Indian passport offices make the leap?, IIMB
Management Review, 18 (1), 59 66.

6. Service Enhancement using Internet

Case: ITC eChoupal

Readings

Rolfe, J., Gregor, S. and Menzies, D., (2003), Reasons why farmers in Australia
adopt the Internet, Electronic Commerce Research and Applications, 2 (1), 27 41.
Banker, R.D. and Mitra, S. (2006), Procurement models in the agricultural supply
chain: A case study of online coffee auctions in India, (Forthcoming) Electronic
Commerce Research and Applications.

7. Pricing strategies in Services

Readings



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Hoffman, K.D., Turley, L.W. and Kelley S.W. (2002), Pricing of retail services,
Journal of Business Research, 55, 1015 1023.
Shoemaker, S. (2003), The future of pricing in services Journal of Revenue and
Pricing Management, 2(3), 271 279.
Varian, H.R. (1996). Differential pricing and efficiency, First Monday, 1 (2).

8. Performance issues in service systems

Case: Starbucks: Delivering Customer Service

Readings

Barber, F. and Strack, R., (2005), The surprising economics of people business,
Harvard Business Review, June 2005.
Berman, B., (2005), How to delight your customers, California Management
Review, 48 (1), 129 151.
Fleming, J.H., Coffman, C. and Harter, J.K., (2005), Managing your human
sigma, Harvard Business Review, Jul. Aug. 2005.

Module C. Design of service delivery design

9. Capacity issues in service systems

Notion of capacity, Capacity build up strategies
Capacity Vs System Performance

Readings

Bitran, G. and Mondschein, S., (1997), Managing the tug-of-war between supply
and demand in the service industries, European Management Journal, 15 (5), 523
536.
Fitzsimmons, J.A. and Fitzsimmons, M.J. (2006), Managing Capacity &
Demand, Chapter 12 in Service Management, Mc Graw Hill International Edition,
351 370.

10. Mid Term Exam


11. Queueing Theory Applications in Service Systems

Basic queueing systems will not be discussed; More useful models will be dealt with.

Readings

Treville, S, Smith, I., Rolli, A. and Arnold, V., (2006), Applying operations
management logic and tools to save lives: A case study of the world health
organizations global drug facility, Journal of Operations Management, 24 (4), 397
406.


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Fitzsimmons, J.A. and Fitzsimmons, M.J. (2006), Capacity Planning & Queueing
Models, Chapter 14 in Service Management, Mc Graw Hill International Edition,
443 463.

12. Simulation as a tool for design of services

Use of simulation software for modeling
Nature of design issues addressed using simulation

Readings

Harrel, C., Ghosh, B.K. and Bowden, R. (2000), Modeling Service Systems
Chapter 13 in Simulation using PROMODEL, Mc Graw Hill, 321 337.
Angelis, V.D., Felici, G. and Impellaso, P. (2003), Integrating simulation and
optimisation in healthcare management, European Journal of Operational Research,
150, 101 114.

13. Simulation Applications in Service System Design

Case: Ambulance Services RK Mutt

Readings

Fujiwara, D. and Makjamoren, T. and Gupta, K.K. (1987), Ambulance
deployment analysis: A case study of Bangkok, European Journal of Operational
Research, 31, 9 18.
Spear, J., (2005), Fixing healthcare from the inside, today, Harvard Business
Review, Sep. 2005.

14. The services supply chain

Case: Dubbawallahs of Mumbai (A)

Readings

Ellram, L.M., Tate, W.L. and Billington, C. (2004), Understanding and Managing
the Services Supply Chain Journal of Supply Chain Management: A Global Review
of Purchasing & Supply, 40 (4), p17-32.


Module D. Application Domain in Services

15. Services Management in IT/ITES Sectors

Off-shoring/Outsourcing Strategic dimension & Competitive advantage

Case: Wipro Technologies: The Factory Model

Readings



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Karmarkar, U. (2004), Will you survive the service revolution?, Harvard Business
Review, 82 (6), 101 107.

16. Services Management in IT/ITES Sectors

Capacity Management Issues
Models for Manpower Planning

Allen, S. and Chandrasekhar, A. (2000), Outsourcing Services: The contract is just
the beginning, Business Horizons, March April, 2000, 25 34.

17. Risk & Security issues in Financial Services Sector: Role of technology

Guest Speaker: To be identified

18. Services Management in financial services

Case: Personal Finance Limited

Readings

Leek, S., Turnbull, P.W. and Naude, P. (2004), A comparison of manufacturers
and financial services suppliers and buyers use of relationship management
methods, Industrial Marketing Management, 33, 241 249.

19. Term Paper Presentations

20. Term Paper Presentations & Conclusions

Evaluation

Mid Term : 30 points
End Term : 30 points
Term Paper : 20 points
Case Analysis : 20 points

Total : 100 points


Group Work

The students will assign themselves into groups of five and work on the assignments and the
term paper. All submissions are due at the beginning of the class in which the respective
cases are scheduled. Each group will analyse two cases and make a submission for
evaluation. Similarly, each group will write a term paper and make a submission for
evaluation at the end of the term.