Learning Objectives • Discuss the role of the customer in service process innovation. • Place an example of service automation in its proper category. • Discuss the managerial issues associated with the adoption of new technology. • Discuss the competitive roles of information. • Explain the virtual value chain concept. • Discuss the limits in the use of information.
Technological Innovation in Services • Challenges of Adopting New Technology The Process is the Product Back Office vs Front Office Changes Need for Standardization • Managing the New Technology Adoption Process
Classification of Service Automation • Fixed-sequence (F) - parking lot gate • Variable-sequence (V) - ATM • Playback (P) - answering machine • Numerical controlled (N) - animation • Intelligent (I) - autopilot • Expert system (E) - medical diagnosis • Totally automated system (T) - EFT
Examples of Automation in Services Wholesale and retail trade, 23.1%* F Dry cleaner’s conveyor V Point-of-sale electronic terminal F Newspaper dispenser I Self-serve grocery checkout V Automatic car wash T Automated distribution warehouse V Automatic window washers T Automated security systems V Optical supermarket T Telemarketing Utilities an government services, 17.9%* F Automated one-person garbage trucks I Airborne warning and control systems V Mail-sorting machine I Doppler radar V Optical mail scanner T Electric power-generating plants N IRS Form 1040EZ reader T Electric computer-originated mail
Examples of Automation in Services (cont.) Health care services, 7.6%* F Electronic beepers I Automated medication-delivery systems F Pacemakers I Electronic ambulance-dispatching systems V CAT and MRI scanners I Medical information systems V Fetal monitors Restaurants and food services, 6.0%* F Assembly-line and rotating-service V Automatic french fryer cafeterias F Vending machine
Examples of Automation in Services (cont.) Financial services, 4.9%* F Pneumatic delivery systems V MasterCard II --the electronic checkbook V Automated trust portfolio analysis E Stock trading V Automated teller machines T Electronic funds transfer systems V IBM 3890 encoded-check processor Transportation services, 4.9%* F Automatic tollbooth I France’s TGV trains I Air traffic control systems I Ship navigation systems I Autopilots T Space shuttle I Bay Area Rapid Transportation system Communication and electronic services, 2.2%* V Collating copying machines T Teleconference phone, Picturephone V Two-way cable television T Telephone switching systems P Telephone answering machines
Competitive Role of Information in Services Strategic Focus Competitive Use of Information On-line Off-line (Real time) (Analysis) Creation of barriers to entry: Data base asset: External Reservation system Selling information (Customer) Frequent user club Development of services Switching costs Micromarketing Revenue generation: Productivity enhancement: Internal Yield management Inventory status (Operations) Point of sale Data envelopment Expert systems analysis (DEA)
The Virtual Value Chain • Stages in Physical Value Chain(Inbound logistics, Production process, Outbound logistics, Marketing/Sales) • Marketplace vs Marketspace • Creating New Markets Using Information (Gather, Organize, Select, Synthesize, and Distribute) • Exploiting the Virtual Value Chain (Example of USAA).
Limits in the Use of Information • Anticompetitive (Barrier to entry) • Fairness (Yield mangement) • Invasion of Privacy (Micro-marketing) • Data Security (Medical records) • Reliability (Credit report)
Mrs. Fields Strategic Use of Information Strategic Focus Competitive Use of Information On-line Off-line (Real time) (Analysis) Creation of barriers to entry: Data base asset: External (Customer) Revenue generation: Productivity enhancement: Internal (Operations)
Mrs. Fields Management Information System • Advantages • Disadvantages
Mrs. Fields Questions • How might the MIS contribute to a reported 100% turnover of store managers? • Will the MIS support or inhibit the growth of outlets (domestic and overseas)?