1. ISM 270 Service Engineering and Management

2. ISM 270: Service Engineering and Management  Focus on Operations Decisions in the Service Industry  Open to students with an undergraduate engineering/science degree  Learn analytical tools and software for decision making  Featuring guest lectures from industry practitioners  Text: Fitzsimmons & Fitzsimmons ‘Service Management’ Operations, Strategy, Information Technology

3. Topics covered  The nature of service enterprises  Strategy for new service development Technology in services  Quality in service encounters  Forecasting demand  Managing service capacity  Supply chains in services  Globalization and outsourcing

4. ISM 270: Details  6 – 9pm, Tuesday evenings  January 9 – March 13 (Winter) 2007  UCSC Silicon Valley Center  Instructor: Kevin Ross kross@soe.ucsc.edu kross@soe.ucsc.edu  Teaching Assistant: Geoff Ryder gryder@gmail.com gryder@gmail.com

5. Who is here?  My background  Brief introductions, student survey

6. Logistics  Class website  Readings  Text book  Office hours 5-6pm before class, or by appointment 5-6pm before class, or by appointment

7. Class Plan  Allotted class time = 3 hours  Average adult attention span = 20 minutes  …  Lecture / visitor / lab / split

8. Computer issues  Who has a laptop?  Web access  Finding research papers  Excel, solver, …

9. Please…  Bring: Paper, pen, laptop, … Paper, pen, laptop, … Opinions Opinions Questions Questions Interesting articles, stories, anecdotes Interesting articles, stories, anecdotes  Provide feedback!!!  Make every effort to keep up with readings etc.

10. Schedule DateCHTopicLabGuest 1Jan91, 2, 3Introduction The nature of service enterprises Metrics used in services 2Jan 163, 4Strategy for new service development Simulation project Paul Maglio IBM Research 3Jan 235Technology in services Web program ming Alan Karp HP Labs 4Jan 306, 7, 8, 9 Quality in service encounters Service process control Michael (Max) Maximilien, IBM Almaden Research Center

11. Schedule DateCHTopicLabGuest 5Feb 610Project Management Statistics homework Michael (Max) Maximilien, IBM Almaden Research Center (part 2) 6Feb 1311Forecasting demand Vijay Mehrotra San Francisco State Univesity 7Feb 2012, 13, 14 Managing service capacity Dave Nielson StrikeIron.com

12. Schedule DateCHTopicLabGuest 8Feb 27Littlefield Technolo gies Service Management Game Challenge Simulation Challenge Littlefield Technologies 9March 615, 16Supply chains in services Nick Bambos Stanford University 10March 13 17Globalization and outsourcing Project presentations

13. Assessment AssessmentValue Due Date Homework30%Weekly Project 1 20% Feb 5 Littlefield Project 10% Feb 26 Final Project 40% March 13

14. Text Chapter 1: Role of Services in an Economy Text Chapter 1: Role of Services in an Economy Service Management Professor James Fitzsimmons University of Texas at Austin

15. Chapter 1 Learning Objectives  Describe the central role of services in an economy.  Discuss the evolution of an economy from an agrarian society to a service society.  Describe the features of preindustrial, industrial, and postindustrial societies.  Describe the features of the new service economy

16. Definitions  What are services?  Service enterprises?

17. Service Definitions Services are deeds, processes, and performances. Services are deeds, processes, and performances. Valarie Zeithaml & Mary Jo Bitner 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

18. Definition of Service Firms Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives. Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives. James Fitzsimmons James Fitzsimmons

19. Role of Services in an Economy

20. Percent Service Employment for Selected Nations Country 1980 1987 19932000 United States 67.1 71.0 74.374.2 Canada 67.2 70.8 74.874.1 Israel 63.3 66.0 68.0 73.9 Japan 54.5 58.8 59.972.7 France 56.9 63.6 66.470.8 Italy 48.7 57.7 60.2 62.8 Brazil 46.2 50.0 51.9 56.5 China 13.1 17.8 21.2 40.6

21. Trends in U.S. Employment by Sector

22. Stages of Economic Development Pre- Use of Standard dominant human Unit of of living Society Game activity labor social life measure Structure Technology Pre- Pre- Industrial Industrial Post- Post- Industrial Industrial

23. Stages of Economic Development Pre- Use of Standard dominant human Unit of of living 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

24. The New Experience Economy

25. The Four Realms of an Experience

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

27. Source of Service Sector Growth  Innovation Push theory (e.g. Post-it) Product looking for a problem Product looking for a problem  Pull theory (e.g. Cash Management) Need drives innovation Need drives innovation  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

28. Discussion Topics  Describe the work that you do from a service perspective  Illustrate how the type of work you do influences a person’s lifestyle.

29. Quiz Question  Name the top 10 USA companies by revenue in 2006  How many would you describe as service companies?

30. Example Service Innovation: Disney World  Link Link

31. Data Envelopment Analysis (DEA)  Method for evaluating efficiency of similar venues/products  Incorporates inputs and outputs – not just one dimensional  Uses LINEAR PROGRAMMING (LP)

32. Sample LP: Product Mix Problem  How much beer and ale to produce from three scarce resources: 480 pounds of corn 480 pounds of corn 160 ounces of hops 160 ounces of hops 1190 pounds of malt 1190 pounds of malt  A barrel of ale consumes 5 pounds of corn, 4 ounces of hops, 35 pounds of malt  A barrel of beer consumes 15 pounds of corn, 4 ounces of hops and 20 pounds of malt  Profits are $13 per barrel of ale, $23 for beer

33. Key terms of LP  Variables  Parameters  Objective function  Constraints

34. DEA summary of terms  Define variables E_k = efficiency of unit k E_k = efficiency of unit k u_j= coefficient for output j (relative decrease in efficiency per unit reduction of output value) u_j= coefficient for output j (relative decrease in efficiency per unit reduction of output value) v_i = coefficient for input i (relative increase in efficiency per unit decrease of input value) v_i = coefficient for input i (relative increase in efficiency per unit decrease of input value) O_jk = observed ouput j units generated by service unit k during one time period O_jk = observed ouput j units generated by service unit k during one time period I_ik = no. units input used by service unit k during one period I_ik = no. units input used by service unit k during one period  Note: k=1..K = service unit counter k=1..K = service unit counter j=1..M = output counter j=1..M = output counter i=1..N = input counter i=1..N = input counter

35. DEA Objective and constraints Evaluating unit e Trick = Rescaling to get linear equations

36. Example from Text: Burger Palace  Small, artificial example for illustration!  Page 68  Excel formulation Excel formulation Excel formulation

37. Service Portal: Strikeiron  Link to website Link to website Link to website

38. Homework: Week 1  Link Link