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28-09-2018 | 1

Purchasing and Supply Chain

Management

Week 41: P&SCM in Services

Video 41.1 Services

Prof. dr. Taco van der Vaart

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Learning goals for week 41

By the end of week 41, you should be able to:
› Explain service characteristics and their implications
for SCM
› Explain the implications of service characteristics for
service purchasing and the purchasing process
› Explain and apply various ways to integrate goods and
services
› Explain the sustainability challenge in service supply chain
management and purchasing
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Services sectors as % of GDP

Country Agricultural Industrial Services

World 6.4% 30.0% 63.0%
Angola 10.2% 61.4% 28.4%
Indonesia 13.7% 41.0% 45.4%
China 7.9% 40.5% 51.6%
Turkey 6.8% 32.3% 60.7%

Wikipedia, 2017
India 15.4% 23.0% 61.5%
Russia 4.7% 32.4% 62.3%
Germany 0.7% 30.7% 68.6%
Netherlands 1.6% 17.9% 70.2%
United States 0.7% 20.2% 79.2%
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What are services?

Large number of definitions. Services are…

• … a (series of) activity(ies) of more or less

intangible nature that normally take place in
interaction with the customer, provided as a
solution to customer problems (Gronroos, 1990)
• …economic activities from which customers
obtain value but normally do not take ownership of
physical elements involved (Lovelock and Wright, 2007)
• …a value co-producing configuration of people,
technology and other systems and information
(Spohrer et al., 2007)
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General service characteristics

Services are often said to be characterized by IHIP:
› Intangibility: cannot touch services (some more than
others: restaurant vs. Skype)
› Heterogeneity: Services are hard to standardize
because provided by human beings to human beings
› Inseparability: Production and delivery take place
(partly) simultaneously
› Perishability: inability to store services

Impact on purchasing?
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Types of services
› Pure services ßà Pure commodity
goods
§ Product-service combinations

› B2C ßà B2B

› Professional ßà Mass services

Impact on purchasing?
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Impact on purchasing
› Purchasing process (book, p. 34)
§ Specifying
§ Selecting
§ Contracting
§ Ordering
§ Expediting
§ Evaluating
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Examples of impact
Characteristic Influence Phase influenced

Intangibility Difficult to specify the service Specify

Difficult to define quality Specify, contract,

evaluate
Heterogeneity Difficult to standardize output Evaluate

Difficult to control and evaluate Evaluate

quality
Inseparability Difficult to demonstrate service and Select, evaluate
quality

Perishability Cannot store what you buy (Expedite)

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Short summary
› Importance of services

› Types of services

› Service characteristics

› Impact on purchasing
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Prof. Dr. Taco van der Vaart

Professor of Supply Chain Management

j.t.van.der.vaart@rug.nl
+31 (0)50 36 37060 (37020)
www.rug.nl/staff/j.t.van.der.vaart/index