The Services Supply Chain

In recent decades, services have become extremely important in the world economies. The service economy has always been the driving force of economic growth of every developed nation. Indeed, the transformation of industrialized economies from a manufacturing base to a service orientation is a continuing phenomenon. The swift expansion of the service industries over the last decades has enhanced the need for creative innovations and increased service productivity to accelerate economic growth Service SCM has been defined in a way that differentiates it from a traditional SCM manufacturing centric focus. Service SCM as: the management of information, processes, capacity, service performance and funds from the earliest supplier to the ultimate customer. An important message in SCM is that a differentiation of tasks should take place. Such a differentiation can, for example, be practiced through different types of relationships with customers, as well as suppliers. The service SCM framework portrays seven service processes: 1. Information flow (e.g. demand estimation and information sharing). 2. Capacity and skills management (e.g. investments in organisational processes, assets and staff). 3. Customer relationship management (CRM) (e.g. customer segmentation and relationship management). 4. Supplier relationship management (SRM) (e.g. supplier identification, supplier selection, supplier segmentation and relationship management). 5. Service delivery management (e.g. making promises to customers, enabling service providers). 6. Cash flow (e.g. flow of payments between parties). 7. Demand management (e.g. forecasting customer requirements) The service supply chain is a wide concept that covers businesses dealing with things such as the supply of spare parts, third-party providers, finance, insurance, retail and governmental services.). The above description of service SCM outlined seven service SCM processes. Service SCM aims to deliver the required service in the most costeffective way. Differentiation is an important determinant in developing different types of relationships with customers, as well as suppliers, through CRM and SRM. Some customers demand special services requiring a special setup to make tailor-made solutions and to fulfil flexibility and lead-time requirements. Other customers may be satisfied with standard services. On the supply side, there may be arm's length relationships based on market prices for commodity products and more strategic
Rohit Gothwal Himanshu Kumar

partnerships based on trust with some suppliers in which sensitive information about demand, low product variety, long product life cycles and a predominant cost focus. Key Success Factors in Service: One key success factor in manufacturing is to reduce inventories and associated costs, and it can be met by introducing techniques such as Just-in- time and Vendor Managed Inventories. What is the equivalent objective(s) in Service Chain Management? Unique features, attributed to services, have been identied and summarized below: Services are intangible. They cannot be seen, felt, tasted or touched in the same manner as tangible goods. The customer usually bases its judgment on peripheral cues and experiences. Services are heterogeneous. No two customers or employees are precisely alike. Human interaction makes dening quality a challenge and it may vary from one customer to the next. Services are simultaneously produced and consumed. Mass production is difcult. Customer satisfaction is in real time with the customer observing and participating in the process. Services are perishable. They cannot be saved, stored, resold or returned. More importantly, they cannot be inventoried. A service company may use inventory management.

Goal and Objective: Efciently matching supply with demand is a key success factor for services and should particularly focus on the two following goals:
Minimisation of waiting time for customers

Minimisation of idle time for resources But it is not all about minimising hard and measurable targets that makes the dif- ference here. Services are human-centric and issues arising from intangibility, het- erogeneity and simultaneous production and consumption also need to be taken into account too. Addressing these areas is that leads to superior efciency and quality, and this is expressed by the further goals: Maximisation of performance for employees and other resources Maximisation of experience for customers The four objectives outlined above, Waiting, Idling, Performing and Experience represent a set of meaningful and widely applicable key success factors for services which can be detailed by organisations and management into appropriate measures and scorecards when applied to specic contexts.
Rohit Gothwal Himanshu Kumar