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    Service Supply Relationships

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    Abhimanyu Arjun
    This document discusses service supply relationships and outsourcing services. It contrasts physical goods supply chains with customer-supplier relationships for services. Managing service supply relationships is challenging due to the bidirectional nature of services. Business services are classified based on the focus of the service and its importance. Outsourcing services provides benefits like reduced costs and access to expertise, but also risks like loss of control. The document provides guidance on evaluating and selecting service providers based on the type and importance of the outsourced service.

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    Service Supply Relationships

    Uploaded by

    Abhimanyu Arjun
    62 views18 pages
    This document discusses service supply relationships and outsourcing services. It contrasts physical goods supply chains with customer-supplier relationships for services. Managing service supply relationships is challenging due to the bidirectional nature of services. Business services are classified based on the focus of the service and its importance. Outsourcing services provides benefits like reduced costs and access to expertise, but also risks like loss of control. The document provides guidance on evaluating and selecting service providers based on the type and importance of the outsourced service.

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    supply chain

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    Supply 15

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    This document discusses service supply relationships and outsourcing services. It contrasts physical goods supply chains with customer-supplier relationships for services. Managing service supply relationships is challenging due to the bidirectional nature of services. Business services are classified based on the focus of the service and its importance. Outsourcing services provides benefits like reduced costs and access to expertise, but also risks like loss of control. The document provides guidance on evaluating and selecting service providers based on the type and importance of the outsourced service.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    62 views18 pages

    Service Supply Relationships

    Uploaded by

    Abhimanyu Arjun
    This document discusses service supply relationships and outsourcing services. It contrasts physical goods supply chains with customer-supplier relationships for services. Managing service supply relationships is challenging due to the bidirectional nature of services. Business services are classified based on the focus of the service and its importance. Outsourcing services provides benefits like reduced costs and access to expertise, but also risks like loss of control. The document provides guidance on evaluating and selecting service providers based on the type and importance of the outsourced service.

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    Service Supply Relationships

    Learning Objectives
    Contrast the supply chain for physical goods with the
    customer-supplier duality of services.
    Discuss the challenge of managing service supply
    relationships.
    Classify business services based on the focus of the
    service and its importance to the outsourcing
    organization.
    Discuss the managerial considerations to be
    addressed in outsourcing services.
    Discuss the challenges of delivering services in the
    field.
    Prepare a delivery route using the Clarke-Wright
    algorithm.
    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 Providers
    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
    Impact of Service Supply Relationships
    Element or Link Before After
    Channel Structure Functional silos Process orientation
    Service Recipient Passive Active as a co-producer
    Channel Integration Vertical (own the channel to Virtual (IT and other
    integrate) mechanism permit integration
    without ownership)
    Flow of Service Available waiting for demand Activated upon demand
    Flow of Information Pull: manual reporting of Push: high level of connectivity
    (upstream) demand data results in and transparency with fast or
    delayed management instantaneous access to most
    response. recent demand data.
    Flow of Information Little or no knowledge of Real-time tracking and
    (downstream) resource deployment dispatching
    Business Processes Predominantly in-house; In-house for key processes,
    locally optimized for others out-sourced for
    efficiency flexibility; integrated and
    synchronized to match supply
    with demand
    Demand Management Limited to use of Proactive involving customer in
    appointments and scheduling to achieve bi-
    reservations. 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
    Topics for Discussion
    What are some possible disadvantages
    associated with the product postponement
    strategy?
    Discuss the similarities and differences in the
    product postponement strategy used by
    Hewlett-Packard and Taco Bell?
    Discuss the implication of service outsourcing
    on employees, stockholders, customers, and
    host country economy when a firm
    outsources a call center overseas.
    Interactive Exercise

    The class divides into small groups and


    members come up with examples of
    multilevel bidirectional service
    relationships (i.e, service supplier
    relationships with three or more levels).
    Be prepared to argue why such service
    relationships are so rare.
    Peapod Smart Shopping for Busy People

    1. Where are opportunities for


    bidirectional optimization at Peapod?
    2. How can Peapod manage service
    perishability?
    3. How can Peapod manage productive
    capacity?
    4. Suggest reasons why Peapod has not
    yet become profitable.

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