Will you Survive the Services Revolution?
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Will you Survive the Services Revolution?

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The service component of manufacturing organizations is becoming increasingly more important.

The service component of manufacturing organizations is becoming increasingly more important.

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    Will you Survive the Services Revolution? Will you Survive the Services Revolution? Presentation Transcript

    • Will You Survive the Services Revolution? Ref: Uday Karmarkar/ UCLA
    • Learning Objectives Understand types of different Service Businesses Choose the right Strategy for a type of Service Business 2
    • Focus on the outer rings. The Total Product Concept generic expected augmented potential A Levitt Rings B 3
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    • The “O” Words Off-shoring Outsourcing Why and how are they growing? 8
    • What is the Revolution? Think of it as industrialization of services. Driven by: Globalization Automation 9
    • Logic Why use a travel agent, when you can… a. Book your own flight b. Reserve a hotel room c. Rent a car on line Self Service! 10
    • What happened to the manufacturing sector? 1900: local shed >>> large scale mass production  1950: 34 % of all jobs - in mfg in USA  2003: 12 % all jobs in mfg  2000–2003: 2 mn US jobs lost to offshoring , outsourcing & global competition 11
    • What happened to mfg firms during Industrialization? Survivors Losers (Used new strategies) Strugglers (entrenched) IBM Zenith GM GE American Motors Xerox INTEL RCA Service firms are now subject to similar fate! 12
    • Drivers of Change - Technology Information Highway Moore’s Law Metcalfe’s Law Wireless Theory of Increasing Returns 13
    • Information Assembly Line Information can be standardized, picked, packed & shipped - all similar to manufacturing processes. Wipro adapted Toyota lean manufacturing techniques for software projects 14
    • Trends in Industrialized Information More Efficient Less Expensive More Highly Automated Example: Filing of US citizen tax returns in India ------------------------------ Cost of logistics & storage low. Only labour & intellectual property matter 15
    • What’s happening in Diagnostic Imaging Industry? From this To this Hospital Scan Trailer Scan Film to Radiologist Report Audio/ Written Electronic Diagnostics Store Film & Report Doctor 16
    • Phases in Outsourcing Yesterday Data Entry Credit Card Processing Today Tomorrow Business Services: IT, Market Research ++ Engineering Publishing Fin Services + Admin: Accounting, Tax Returns + From Bricklayer to Architect 17
    • How should we look at services? Simple Process Complex Process Customized Service Standard Service 18
    • Simple Process/ Tailored Service Examples Strategies Retail Sales Web Design Travel & tourism Tech. Support Automation Self Service End-to-end service Captive offshoring Selective outsourcing 19
    • Simple Process/ Standardized Service Examples Strategies  Retail Banking Data Management Telemarketing Billing Off shoring Outsourcing Globalization One stop shop End-to-end service 20
    • Complex Process/ Bespoke Service Examples Strategies  Personal Finance Planning Expert Medical Diagnosis Relationship Marketing Engineering Design Insourcing Onshoring Deintegration Decoupling Selective Automation Selective outsourcing 21
    • Complex Process/ Standardized Service Examples Strategies  Credit Analysis Tech Research Content Management Software Development Tax Prep Routine Medical Diag Captive offshoring Inhouse automation Selective outsourcing Globalization 22
    • Critical Questions 1. What is the potential consequence of reorganizing our business proposition? 2. How would a redesign of our service affect different players in the information chain? 3. Is there an opportunity for us to become involved in a new area? 4. How can we remain relevant and competitive in a transformed industry? 23
    • Critical Questions 1. What is the potential consequence of reorganizing our business proposition? 2. How would a redesign of our service affect different players in the information chain? 3. Is there an opportunity for us to become involved in a new area? 4. How can we remain relevant and competitive in a transformed industry? 24
    • Focus Manufacturing: mastering the supply chain Service: mastering end-to-end information chain 25
    • Technology is shifting the balance of power in the information chain GATHER*ORGANIZE*SELECT*SYNTHESIZE*DISTRIBUTE Creative Destruction is the name of the game! 26
    • Information today can be standardized, built to order, assembled from components, picked, packed, stored and shipped. 27
    • Reconnecting to the customer Customer Behaviour  Edmunds: publishing to interactive car buyer site Demographics  Wells Fargo On Line Banking: hispanic community Keeping the ball in play  Dell call centres. From India back to the USA End-to-end personalized service  Virgin Atlantic Airways: complimentary limo; drive through check-in 28
    • Technology to anticipate customer needs Concierge Services: shopping, laundry, yardwork, home repair Financial Services: complete financial supermarket Hotels: Remember newspaper, pillow, wine, snacks preferences of returning customers 29
    • Instead of competing over links in the chain, service companies should compete for the chain itself The customer doesn’t want a ¼” drill. He wants a ¼” hole. 30
    • Delivery to Screen Customers expect anywhere, anytime access to information. PDAs, phones, TVs, PCs PRE-SALES * ORDER TO DELIVERY * POST DELIVERY 31
    • The “R” Words  Realign strategy ---------------- Psychology/ Strategy  Redesign processes------------ Physiology/ Systems  Restructure organizations ----- Anatomy/ Structure 32
    • Examples Realign-Thompson from legal paper publishing to electronic publishing of legal, tax, accounting info Redesign-Indymac Bank : electronic banking, on line mortgage factory: infocredit analysis-underwriting-approvalclosing Restructure-online banking, ATM have replaced bank tellers 33
    • New Agenda  Learning organization  New skills  Change management 34
    • Trail blazers • SEARCH • BOOKS • AUCTION • BANK ++ • COURIER: Merryl Lynch • SUPPLY CHAIN (insourcing) • Toshiba laptops • Papa Johns Pizza 35
    • Further Reading… The World is Flat A brief History of the globalized world in the 21st Century By: Thomas Friedman/ Penguin 36
    • Learning Objectives: Understand types of different Service Businesses Choose the right Strategy for a type of Service Business 37