SERVICE SUPPLY Week 9

RELATIONSHIPS
SUPPLY CHAIN FOR
PHYSICAL GOODS
Suppliers

Recycling/Remanufacturing

Process and Customer

Product Manufacturing Distribution Retailing Customer
Service
Design

Material transfer Information transfer

CUSTOMER-SUPPLIER
DUALITY IN SERVICE
SUPPLY RELATIONSHIPS
(HUBS) Supplier

Service Service
Provider Customer
Design

Material transfer Information transfer

SINGLE-LEVEL BIDIRECTIONAL
SERVICE SUPPLY
RELATIONSHIP
Service Customer >Input Service
Category -Supplier Output> Provider

Minds Student >Mind Professor

Knowledge>
Bodies Patient >Tooth Dentist
Filling>
Belongings Investor >Money Bank
Interest>
Information Client >Documents Tax Preparer
1040>
TWO-LEVEL BIDIRECTIONAL
SERVICE SUPPLY
RELATIONSHIP
Service Customer >Input Service >Input Provider’s
Category -Supplier Output> Provider Output> Supplier

Minds Patient >Disturbed Therapist >Prescription Pharmacy

Treated> Drugs>

Bodies Patient >Blood Physician >Sample Lab

Diagnosis> Test Result>

Belongings Driver >Car Garage >Engine Machine

Repaired> Rebuilt> Shop

Information Home >Property Mortgage >Location Title

Buyer Loan> Company Clear Title> Search
 SOURCES OF VALUE IN
SERVICE SUPPLY
RELATIONSHIPS
Bi-directional Optimization
Managing Productive Capacity
- Transfer: make knowledge available (e.g. web
based FAQ database)
- Replacement: substitute technology for server
(e.g. digital blood pressure device)
- Embellishment: enable self-service by teaching
(e.g. change surgical dressing)
Management of Perishability
Perishability (tidak tahan lama) Jasa tidak tahan lama dan
tidak dapat disimpan. Kursi pesawat yang kosong, kamar hotel
yang tidak dihuni, atau kapasitas jalur telepon yang tidak
dimanfaatkan akan berlalu atau hilang begitu saja karena tidak
bisa disimpan
EXAMPLE
 IMPACT OF SERVICE SUPPLY
RELATIONSHIPS
Element or Link Before
Channel Structure Functional silos
Service Recipient Passive
Channel Integration Vertical (own the channel to
integrate)
Flow of Service Available waiting for demand
Flow of Information Pull: manual reporting of
(upstream) demand data results in
delayed management
response.
Flow of Information Little or no knowledge of
(downstream) resource deployment
Business Processes Predominantly in-house;
locally optimized for
efficiency
Demand Management Limited to use of
appointments and
reservations.
After
Process orientation
Active as a co-producer
Virtual (IT and other
mechanism permit integration
without ownership)
Activated upon demand
Push: high level of connectivity
and transparency with fast or
instantaneous access to most
recent demand data.
Real-time tracking and
dispatching
In-house for key processes,
others out-sourced for
flexibility; integrated and
synchronized to match supply
with demand
Proactive involving customer in
scheduling to achieve bi-
directional optimization
 IMPACT OF SERVICE SUPPLY
RELATIONSHIPS
Element or Link Before After
Capacity Management Limited to use of part-time Creative use of cross-trained
employees employees, outsourcing, and
customer self-service.
Facilitating Goods High; in anticipation of Lower; owing to process
demand transparency
Service Delivery Inflexible; standardized and Flexible; personable with
impersonal customization possible.
Routing and scheduling Static; fixed daily schedules Dynamic; based on system
connectivity and process
visibility
New Service Design Marketing initiatives based on Virtual value chain design with
firm's perception of customer customer data base information
needs driving new services
Pricing Fixed Variable; yield management
promotes off-peak demand and
avoid idle capacity
International Focus on domestic market Global reach with Internet
Operations
OUTSOURCING SERVICES
Benefits
- allows the firm to focus on its core competence
- service is cheaper to outsource than perform in-house
- provides access to latest technology
- leverage benefits of supplier economy of scale
Risks
- loss of direct control of quality
- jeopardizes employee loyalty
- exposure to data security and customer privacy
- dependence on one supplier compromises future
negotiation leverage
- additional coordination expense and delays
- atrophy of in-house capability to perform service
OUTSOURCING PROCESS
Need Identification Information Search Vendor Selection
Problem Definition References Experience Cost
"Do-versus-Buy" Analysis Personal Contact Reputation Location
Involve Interested Parties Recommendations References Size
Specification Development Trade Directory

Performance Evaluation
Identify Evaluator Meet Deadlines
Quality of Work Flexibility
Communication Dependability
 TAXONOMY FOR
OUTSOURCING BUSINESS
SERVICES
Importance of Service
Low High
Facility Support: Equipment Support:
Property -Laundry -Repairs
-Janitorial -Maintenance
Focus -Waste disposal -Product testing
Employee Support: Employee Development:
of People -Food service -Training
-Plant security -Education
-Temporary personnel -Medical care
Service Facilitator: Professional:
Process -Bookkeeping -Advertising
-Travel booking -Public relations
-Packaged software -Legal
 OUTSOURCING
CONSIDERATIONS
Focus on Property
Facility Support Service

• Low cost
• Identify responsible party to evaluate performance
• Precise specifications can be written
Equipment Support Service

• Experience and reputation of vendor

• Availability of vendor for emergency response
• Designate person to make service call and to
check that service is satisfactory
 OUTSOURCING
CONSIDERATIONS
Focus on People

Employee Support Service

• Contact vendor clients for references

• Specifications prepared with end user input
• Evaluate performance on a periodic basis

Employee Development Service

• Experience with particular industry important

• Involve high levels of management in vendor
identification and selection
• Contact vendor clients for references
• Use employees to evaluate vendor performance
 OUTSOURCING
CONSIDERATIONS
Focus on Process

Facilitator Service
• Knowledge of alternate vendors important
• Involve end user in vendor identification
• References or third party evaluations useful
• Have user write detailed specifications
Professional Service

• Involve high level management in vendor

identification and selection
• Reputation and experience very important
• Performance evaluation by top management