SERVICE CHAIN
By
Amardeep Ukrande
Amrita Tripathi
Apurva Kulkarni
Rucha Vaidya
Yashasvi Sanghavi
An Introduction..
A
service chain is often superimposed on the
core Finished Goods supply chains of many
companies.
While defining a service chain, we take view of
CUSTOMER, i.e. All services have customers as
primary suppliers of inputs.
It majorly seeks to provide after-sales services,
such as installation, maintenance, repairs,
upgrades, etc. to the customers.
Characteristics
Most service-intensive supply chains require
larger inventories and tighter integration with
field service and third parties.
They also must accommodate inconsistent
and uncertain demand by establishing more
advanced information and product flows.
Moreover, all processes must be coordinated
across numerous service locations with large
numbers of parts and multiple levels in the
supply chain.
Drivers to establish an EFFICIENT
service chain
Reduce
high service costs, i.e. by integrating the
service and products supply chain.
Reduce total inventory costs ,i.e. reducing
Inventory levels of service parts.
Optimised Customer service or parts/service
quality
Increasing service revenue.
Improved forecasting.
Improve customer satisfaction levels.
Minimize technician visits - if they have the right
part in hand, they can fix the problem on the first
visit.
force effectiveness
Technician enablement
Service chain optimizes
the
E-learning
Activity scheduling
following..
Service strategy and
offerings
Go-to-market strategy
Service portfolio
management
Spare parts
management
Parts supply management
Inventory management
Parts demand
management
Fulfilment operations &
logistics
Service billing
Returns, repairs, and
Customer
management
Order management &
availability
Channel & partner
management
Customer insight record.
Technical
documentation
Types of services:
Services that act on peoples :
1) Minds
E.g. education, entertainment, psychology
2) Bodies
E.g. transportation, lodging, funeral services
3) Belongings
E.g. landscaping, dry cleaning, repair
4) Information
E.g. insurance, investments, legal services
HUBS
Advantages of having short
HUBS
Service chains tend to be short (hubs) leading to
reduced complexity
Easier sharing of information
Provides individualized service for the customer
and
Cost-effective service for the service enterprise.
Acts as an agent for the customer when dealing
with outside service providers for outsourced
services.
Customer-Supplier Duality in
Service Supply Relationships
(Hubs)
Customer-Supplier Duality
The
idea is that customers are the suppliers for
the service organizations.
The customers are bringing inputs to the service
organization to be processed.
Bi-directional
Supply Chain
Production flow is bi-directional, meaning the
production goes not only from suppliers to
customers, but from customers to suppliers.
Types of Service Supply Chains
i) Single Layer Bidirectional Supply
Chain:
It means there is only one service provider
serving to customers directly.
Types of Service Supply Chains
ii) Two Level Bi-directional Supply
Chain:
It happens when the service provider employs
another service provider to assist with the
processing of customer inputs.
Types of Service Supply Chains
iii) Third type of service supply
chain
The
customer provides inputs to the service
provider and the service provider processes the
inputs and delivers them to a separate entity.
E.g. postal delivery.
Practical Implications
Bi-directional
supply chains are generally
short & consist of three stages:
- Transfer of customer inputs to service provider
- Processing by the service provider
- Transfer of processed output back to the
customer
Service
providers do not usually pay for
inputs coming from customers-suppliers
- Customers are not paid for bringing in inputs
- They will receive the inputs back after they are
processed
- They pay for the added value to their inputs.
Practical Implications
Bi-directional
supply chains are mostly JIT
- Service providers cannot regulate the inputs from
the customer-suppliers, they come at a time of
demand
- Customer expects their inputs to be processed
immediately or in a short amount of time
Bi-directional
supply chains have implicit
expectations for value added
- Value added by service providers can be easily
monitored by the customers
- Can simplify by demonstrating the real added
values, customers can see the changes made
- It can complicate because some customers have
unrealistic value adding expectations
Implications for Management
Most
of the production cannot begin until the
customer supplies the inputs
Service
outputs tend to be heterogeneous,
meaning not every service will be the exact
same for each customer.
Services
tend to be labor intensive; customers
often prefer personal treatment of their inputs,
even with significant advances in technology.
Service
based.
location decisions tend to be customer
Outsourcing
Outsourcingis
the process
ofcontracting out abusiness process,
which an organization may have
previously performed internally to an
independent organization, where the
process is purchased as a service
Outsourcing
Benefits
Allows
the firm to focus
on its core competence.
Service is cheaper to
outsource than perform
in-house.
Provides access to
latest technology.
Leverage benefits of
supplier economy of
scale.
Risks
Loss
of direct control of
quality.
Jeopardizes employee loyalty
Exposure to data security
and customer privacy.
Dependence on one supplier
compromises future
negotiation leverage.
Additional coordination.
Expense and delays.
Atrophy of in-house
capability to perform service.
Outsourcing process
Outsourcing considerations
Focus on property
Facility
support service
Low cost
Identify responsible party to evaluate performance
Precise specifications can be written
Equipment
support service
Experience & reputation of vender
Availability of vender for emergency response
Designate a person to make service call and to
check that if service is satisfactory.
Outsourcing considerations
Focus on people
Employee
support service
Contact vender clients for references.
Specifications prepared with end user inputs.
Evaluate performance on periodic basis
Employee
development service
Experience with particular industry important
Involve high level of management in vender
identification and selection
Contact vender clients for references.
Use employees to evaluate vender performance
Outsourcing considerations
Focus on process
Facilitator
service
Knowledge of alternate venders is important.
Involve end-user in vender identification.
Reference or third party evaluation is useful.
Have user written detailed specifications.
Professional
service
Involve high level of management in vender
identification and selection.
Reputation & experience are very important.
Performance evaluation by top management.
Spare Parts Chain
Spare
part/service part-
It is aninterchangeable partthat is kept in an inventory
and used for the repair or replacement of failed parts
Service
parts management-
Process of planning and aligning service parts inventories,
resources, and processes to ensure optimal customer
service and response with minimal risk and cost.
Spare Parts Chain
Repair/Replace
Service
center
Objective of Service Parts
management
Satisfy
customers by providing the necessary
parts, at the users location, for a reasonable price,
in usable condition, at the proper time
Item
Place
Price
Qualit
y
Time
Classification Of Spare Parts
Repairabl
e
Parts that are worthy of
repair, usually by virtue of
economic consideration of
their repair cost
Consuma
ble
Parts that are not repairable,
are considered consumable
parts
Scrapped when they are
found to have failed
Repair Cycle
Repairable parts are either repaired by local
maintenance capabilities, or sent out for repair by
repair providers
Repair of
Total time a part spends being repaired is known as
repairable
the repair cycle time
Parts are scrapped directly, and a replacement must
be obtained from a supplier
Replenish Time taken by a supplier to provide a replacement
ment
part is thelead time
Performance metricscan be used to evaluate the
effectiveness of the repair cycle. Key performance
Performan metrics include repair turn-around time, ready rate
ce metric
&fill rate etc.
Benefits
Cost-effectiveness
Customer satisfaction
Reduce downtime
