BA 302 - Services

BA 302 - Services

Postindustrial (post 1950) US:

1950 - now: from 50% to 80% of the US workforce in services.

Does not count 'services' rendered in extraction and goods production; e.g.,

Accounting & marketing dept.,

Legal,

Janitorial services (in-house),

Sales,

Etc.

Long term: factory floor production and extraction jobs are shrinking portion of the work force / GNP.

Problem: What caused this / made this possible?

One major factor: productivity: output / input (hint: good to remember; but make sure you can always figure it out!)

Metters et al. productivity examples:

≈1800: 80% of US population required to feed 100%; 2004: 2% (and export).

US factory output doubled in last 30 years; manufacturing job force % 1950≈37.5%; 2004≈15% (Fig. 1.1, p.3).

How did productivity in extraction and goods production increase so much?

Mechanization & new technologies; e.g., steam engine, electric loom.

Better (smarter processes):

Division of labor --> specialization, local optimization.

Outsourcing.

Doctors no longer making house calls.

Hair dresser/barber & oil change appointments.

Multiple clerk/teller multiple/single line: grocery store vs. bank teller or airline check-in)

Better (smarter use) of new technologies: e.g.,

Steam engine vs. electric motor.

Self check-in for flights.

Web-based digital libraries or Web-based product brokering.

In short:

Use new technologies to change production processes.

Use new technologies to offload cost on the customer!!

Dematerialization (see ch. 4: sustainability): replacement of information-bearing physical goods and services with electronic ones:

E-tickets.

E-books.

E-catalogs.

Type-setting.

E-filing taxes.

Inventory maintenance with Radio Frequency IDentification (RFID).

Etc.

Problem: Notice anything special about the dematerialization examples?

Better information / intelligence:

Earlier.

More frequent.

More precise.

More accurate.

Problem: can you have it both ways?

Business Intelligence; gleaning information from data.

Overall: productivity increases through process improvements supported by better technology and better information.

Metters et al.:

80% of US work force is in services.

Productivity increases in services are much less than in nonservices:

Solow, R. (1987) "We see computers everywhere except in the productivity statistics."

Roach, S. (1987) America's White-collar Productivity Dilemma;

Cap. investments per information worker up.

Number of information workers up.

Output per information worker down (6.6%).

"We have in essence isolated America's productivity shortfall and shown it to be concentrated in that portion of the economy that is the largest employer of white-collar workers and the most heavily endowed with high tech capital."

==> Great potential for process / information improvement in services.

A word on 'classifications:'

Metters et al. Fig. 1.2 (p. 9): Customer contact model: classification along a single dimension: degree of contact.

Metters et al. Fig. 1.3 (p. 9): Service Process Matrix: classification along two dimensions:

Degree of interaction & customization.

Degree of labor intensity.

Note that these are 'models:' i.e. simplifications of reality which:

Help us understand the complexity of the world without having to deal with each and every little detail of it.

Help us order the world.

Help us communicate about the world.

Help us study the world.

However:

All models are wrong... to some extent.

Some models are better than others.

The goodness or 'fit' of a model sometimes depends on its purpose.