Management of Service Operations Management of Service Operations Professor Ron Sedlock Welcome to

Learning Objectives (Chap 1) 1. Describe the central role of services in an economy. 2. Discuss the evolution of an economy from an agrarian society to a service society. 3. Describe the features of preindustrial, industrial, and postindustrial societies. 4. Describe the features of the new service economy

Service Definitions A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. James Fitzsimmons James Fitzsimmons

Role of Services in an Economy

Trends in U.S. Employment by Sector

Stages of Economic Development Pre- Use of Standard Pre- Use of Standard dominant human Unit of of living dominant human Unit of of living Society Game activity labor social life measure Structure Technology Society Game activity labor social life measure Structure Technology Pre- Against Agriculture Raw Extended Sub- Routine Simple hand Pre- Against Agriculture Raw Extended Sub- Routine Simple hand Industrial Nature Mining muscle household sistence Traditional tools Industrial Nature Mining muscle household sistence Traditional tools power Authoritative power Authoritative Industrial Against Goods Machine Individual Quantity Bureaucratic Machines Industrial Against Goods Machine Individual Quantity Bureaucratic Machines fabricated production tending of goods Hierarchical fabricated production tending of goods Hierarchical nature nature Post- Among Services Artistic Community Quality of Inter- Information Post- Among Services Artistic Community Quality of Inter- Information industrial Persons Creative life in terms dependent industrial Persons Creative life in terms dependent Intellectual of health, Global Intellectual of health, Global education, education, recreation recreation

The New Experience Economy

The Four Realms of an Experience

Experience Design Principles Theme the Experience (Forum shops) Theme the Experience (Forum shops) Harmonize Impressions with Positive Cues (O’Hare airport parking garage) Harmonize Impressions with Positive Cues (O’Hare airport parking garage) Eliminate Negative Cues (Cinemark talking trash containers) Eliminate Negative Cues (Cinemark talking trash containers) Mix in Memorabilia (Hard Rock T-shirts) Mix in Memorabilia (Hard Rock T-shirts) Engage all Five Senses (Mist in Rainforest) Engage all Five Senses (Mist in Rainforest)

Source of Service Sector Growth Innovation Push theory (e.g. Post-it) Pull theory (e.g. Cash Management) Services derived from products (Video Rental) Information driven services Difficulty of testing service prototypes Innovation Push theory (e.g. Post-it) Pull theory (e.g. Cash Management) Services derived from products (Video Rental) Information driven services Difficulty of testing service prototypes Social Trends Aging of the population Two-income families Growth in number of single people Home as sanctuary Social Trends Aging of the population Two-income families Growth in number of single people Home as sanctuary

Discussion Topics Illustrate how the type of work he or she does influences a person’s lifestyle. For example, contrast a farmer, a factory worker, and a school teacher. Illustrate how the type of work he or she does influences a person’s lifestyle. For example, contrast a farmer, a factory worker, and a school teacher. Is it possible for an economy to be based entirely on services? Is it possible for an economy to be based entirely on services? What is the value of self-service in an economy? What is the value of self-service in an economy? How does trade barriers affect a nation’s economy? How does trade barriers affect a nation’s economy?