Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Service Operations
Management 2017

Sushil Kumar, PhD

IIM Lucknow

What we wish to do..

Understanding the Services

Issues in Service Designing

Managing Service Operations

Real Life Problems from Service Organizations

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Dr. Sushil 1
Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Evaluation
Quizzes: 2/3
Assignments: Case written analysis and preparation
Class case participation
Term Paper/Project on a mutually selected service (Team)

Mid Term Examination: 25%

Quizzes : 15%
Assignments/Class Participation : 5%

Term End Examination: 35%

Quizzes/Assignments/Class Participation/Project : 20%

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References and Requirements

Textbook:
Fitzsimmons and Fitzsimmons, Service Management:
Operations, Strategy, and Information Technology, 7th
(Indian) Ed., McGraw Hill Edu., 2017.
Reference Book:
Metters, Metters, Pullman and Walton, Successful Service
Operations Management, 2nd Ed., Thomson Publishers.,
2012.
Requirements:
You would be required to prepare and discuss cases and
readings as a class participant, and also to work on a service
project.

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Operations Management
Operations:
Creation, Production, Delivery, and Service of the goods/
services provided by an organization through value-adding
transformation of a set of inputs into a set of outputs for internal/
external customers.
Operations Management:
Managing the activities and resources required to design,
perform and improve the Operations carried out by the
organization.
Design, operation, and improvement of the systems that create
and deliver the firms primary products and services

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Operations Management
Salient Aspects
A systematic approach using scientific tools & techniques
and solution methodologies to analyze problems
Addressing several issues varying in terms of time horizon,
nature of decisions
Addressing design & operational control issues in the
transformation process
Focusing on keeping costs to the minimum
Developing a set of measures to assess performance of the
system

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Dr. Sushil 3
Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Operations Management
The management of the Production function
within any Organization. Whether it produces
GOODS or SERVICES.

TYPES OF ORGANIZATION:
1. Manufacturing The output is tangible product
Example: Automobile Industry, chemical Industry,
Electrical Appliance Company etc.
2. Non Manufacturing The output is intangible product.
Example: Bank; Hospital; Restaurant, Parking lot;
Barber Shop; etc.
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What is a Transformation Process?

A transformation process is defined as a

user of resources to transform inputs into
some desired outputs

Trans-
Input Output
formation

Resources

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Transformations
Physical Manufacturing

Locational Transportation

Exchange Retailing

Storage Warehousing

Physiological Health care

Informational Telecommunications

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Operations Management
Functions
Design of Operations Operational Control of Operations

Design issues in Operations Management lay down overall

constraints under which the operations system functions.
Operational Control issues focuses on optimizing the use of
available resources in the short-term while delivering goods and
services as per plan.

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

What is a Service and What is a Good?

If you drop it on your foot, it wont hurt you.
(Good or service?)

Services never include goods and goods

never include services. (True or false?)

These differences are beginning to fade

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Service Manufacturing
Continuum
Pure Product Pure Service

Ayurvedic Healing Treatment

Legal/Tax Consulting
Cyber Caf Telephone Booths
Emergency Maintenance Services
Facilities Maintenance
High quality restaurant meal
Fast food in a eat out joint
Customised durable goods
Fast moving commodities
Vending Machines
Adopted from Hill, T., Operations Management (Palgrave Macmillan), 2nd Edition, pp 14.
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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Differential Economic Growth Rates

GDP
Trillion 1990 2000 2010 2020
USA 4.8 8.1 11.8 13.5
China 0.3 1.0 4.2 9.9
Japan 2.5 3.9 4.1 4.8
Germany 1.4 1.6 2.7 3.2
UK 0.8 1.2 1.8 2.1
Brazil 0.4 0.5 1.4 2.3
India 0.3 0.4 1.1 2.4
Russia 0.4 0.2 1.3 2.0

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World GDP Ranking

2011
2000

2014 2015

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Demographic Shifts
Median Age 10 25.3 34.1 40.0 36.7 44.2 21.2
Total Population (million)

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Operational Management Service Industries in India

1. Banks
2. Mutual Fund Financial Institutions
3. Insurance (LIC, Pearless, New India Insurance)
4. Hospitals
5. Railways
6. Shipping Corporation of India
7. Air Lines (Private & National)
8. Road Transport (BEST, TCI, etc.)
9. Tourist Corporations (TCI, Thomas Cook, Govt. Tourism etc.)
10. Municipal Corporations
11. Hotel & Restaurants
12. Educational (Universities & Institutions)
13. Post & Telegraphs
14. CPWD
15. Construction (Builders)
16. Food & Fertilizers (Storing & Distribution)

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Service Sector in India

Information Technology and IT Enabled Services

Tourism
Media
Health
Retailing
Education
Real Estate

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Manufacturing & Service

Similarities & Differences
Manufacturing Organizations Service Organizations
Differences
Physical durable product Intangible, perishable product
Output can be inventoried Output cant be inventoried
Low customer contact High customer contact
Long response time Short response time
Regional, national, Intl. markets Local markets
Large facilities Small facilities
Capital intensive Labour intensive
Quality easily measured Quality not easily measured
Similarities
Is concerned about quality, productivity & timely response to its customers
Must make choices about capacity, location, layout
Has suppliers to deal with
Has to plan its operations, schedules and resources
Balance capacity with demand by a careful choice of resources
Has to make an estimate of demand

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Contribution of Service Sector

The services sector is the key driver of Indias economic
growth
It contributed around 66.1 per cent of its Gross Value
Added growth in 2015-16.
The services sector is expected to grow at 8.8 per cent..
(estimates of the Central Statistics Office)
The share of service sector in Indias GDP is expected
to reach 62 per cent by FY 2020.

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Contribution of Service Sector

The Indian services sector has attracted the highest amount
of FDI equity inflows in the period 2000-2016, amounting
to about US$ 58.345 billion
(financial, banking, insurance, non-financial/business,
outsourcing, research and development, courier and
technical test analysis)
It is about 17.99 per cent of the total foreign inflows,
according to the Department of Industrial Policy and
Promotion (DIPP).

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Dr. Sushil 10
Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Core Services Performance Objectives

Quality

Operations
Flexibility Speed
Management

Price (or cost

Reduction)

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How to Run a Successful Service

Operation?
Quality Service?
Low Cost?
Fast Delivery?
Better Selection?

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Four Dimensions of Performance

Trade-offs

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What Can Ops Management Do to Help?

1st Use: Overcome Inefficiencies

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Service: Its the Details that Count

Getting passengers on a
plane quickly can greatly
affect an airlines cost.

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2nd Use: Help Making Operational Trade-Offs

Responsiveness
High

Very short waiting times,

Comes at the expense of
Frequent operator idle time

Trade-
off Long waiting times,
yet operators are almost
fully utilized
Low

Low labor High labor Labor Productivity

productivity productivity

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Dr. Sushil 13
Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Call center of Deutsche Bundesbahn

Goal: 80% of incoming calls wait less than 20 seconds
Starting point: 30% of incoming calls wait less than 20
seconds
Problem: Must decide staffing levels of call centers and
understand impact on efficiency
Solution: Provides tools to support strategic trade-offs

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3rd Use: Evaluate Proposed Redesigns/New

Technologies

Example:
What will happen if we develop / purchase technology X?
Better technologies are always (?) nice to have, but will they pay?

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

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Issues
Effectively consolidating the operations resulting from
mergers
Developing flexible supply chains to enable mass
customization of products and services
Managing global supplier, production and distribution
networks
Achieving the Service Factory
Enhancing value added services

Making efficient use of Internet technology

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Healthcare in India

The most important services in the Indian

economy has been health and education. They are
one of the largest and most challenging sectors
and hold a key to the country's overall progress.
A strong and well-defined healthcare sector helps
to build a healthy and productive workforce as
well as stabilize population.

http://business.gov.in/Industry_services/services_sector.php

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Trends Impacting Healthcare in India

Public-Private Partnership: Search for an Ingenious Model in India
PPPs would usher in private sector expertise along with
efficiencies in operation and maintenance, thus leading to
improved healthcare service delivery to the masses.
PPP in healthcare delivery can facilitate the creation of new
capacity as well as improve efficiency in the existing facilities.

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Trends Impacting Healthcare in India

Single Speciality Delivery Models: Single Speciality to Single
Procedural Hospitals
The growing number of speciality centres and hospitals signals a
move towards maturity of the healthcare industry with an
increasing complexity of business.
These speciality centres have been spurred by rising affordability
and healthcare awareness.

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

Trends Impacting Healthcare in India

Diagnostic Centres: Unbundling from the Traditional Setting
Diagnostic test results impact more than 70 per cent of healthcare
decisions and thus form an essential element in the delivery of
healthcare services.
The Indian market for diagnostics is worth US$ 2 billion, and
constitutes 4 per cent of the overall healthcare delivery market.
Currently the marketplace has several hundred smaller players
with a handful of organised players who have a good presence in
the metros.

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IT/ITeS
The millennium bug gave birth to an industry that
employs millions of people..
We were ready for it.infrastructure
connectivity,

Services, better servicesinnovations???

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

The Present:IT/ITeS
USD 110 billion in annual export revenue in
FY2016.
Nasscom In spite of the dip the rate of growth
will be consistent. IT-BPM sector will have an 8 to
10 percent growth in FY 2017.

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The Change:IT/ITeS
No longer IoT now..
Drifting towards IoE - internet of Everything.
No longer only computerization..
Its all about understanding somebodys needs and
creating appropriate solutions.
Social, Mobility, Analytics, Cloud
(SMAC creates an ecosystem that allows a business to
improve its operations and get closer to the customer with
minimal overhead and maximum reach)

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Lect 0: Introduction to the course SOM SOM 2017, IIM Lucknow

The Possibilities:IT/ITeS
Staring at USD 350 billion export revenue in 2025???
Digital technology..
More Automation..
RPA (Robotic Process Automation)
Artificial Intelligence
Watson is here
https://www.ibm.com/watson/

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