Service Operations Management

Asian Paints
Pooja B
R
B007

Saket
Jain
B030

Presented by Group 4
Soham
Kadam
B033

Mayank
Kishore
B039

Apoorva
Kushwah
a
B040

Nirmit
Mehta
B042

Pawan
Kumar
Pandey
B049

Rational for Extension from Products to Services

It is difficult for an engineer who has designed a multimillion dollar piece of equipment to get excited about a
contract worth $10,000 for cleaning it

Economic
Typically,
higher
margins in
services than
products
Resistant to
economic
downturns to
some extent

But, only some

manufacturers
WHY
have
?
successfully
extended to

Customer
They thinkCompetitiv
providing service is not their core
competency
e
They are
demanding
Advantage
more services

Much more
difficult
to
Business model
changes
from Transactional to
replicate
Relationship based

Failure in implementation e.g. Lakme Beauty Salon, HLL Surf

Excel Laundry Wash

Challenges in transitioning from Products to Services

Intangibility - Engaged in creating a product which they cannot see
but only feel

Brand
Operations
Positioning
Manageme
nt

Variability - Highly characterized by variations

Difficult to create brand differentiation

Consistency - Challenge of consistency in experience
Establishing competitive position in the mind of the consumer
Subjectivity - Difficult to measure processes
Brand personality is a reflection of companys values and culture
Perishability - Challenge to recreate services continuously as
there is
no Inventory
Brand building requires bottom-up
approach
and whole company
involvement
Standardization - Challenge to standardize as directly involves
customer interaction

Service v Product in Paint Industry

Service in Paint Industry

Product in Paint Industry

Customer participates

Customer does not participate

Experience for the customer

Commodity for the customer

Varies from customer to

customer

Standardized process

Direct interaction of customers

with company salesforce

No direct interaction with

company executives

Recreated to order

Made to stock

Price varies for different

customers

Price is fixed

Asian Paints
One of the most iconic brands of India
Chalked out a rural marketing strategy to counter
multinationals
Leveraged distribution, logistics, technology and
product innovation to stay ahead
Offered the customers highest choices of shades and
types of paints
It was the first company to set up turnkey paint
contracting service

Home Solutions
An end to end solution model
delivering quality and convenience

Currently on offer in
13 cities
Painters are trained & supervised by the
Home Solutions team

In 1998, the company realised that customers were looking

for a turnkey contract
Customers had little knowledge about the total paint cycle
Asian Paints itself had control only on the selling cycle of
the process
Hence, the company took on the garb of a consultant and
got involved in the entire cycle

Moment of Truth
Points in time when the customer comes in contact with the service
production/delivery system, he forms an impression of the service received. These
moments are termed as Moments of Truth.
Customer
contacts Home
Solutions
He manages &
supervises the
work till it is
completed

The work is
handed over to
Relationship
Associate

Cycle of Service for Home Solu

Sales Associate
visits and
evaluates the
surfaces to be
painted

Customer
finalises the sales
order makes
payment for the
same

Let down for customers

Premium Brand

Despite 10-15 % premium, the service was not

exhaustive

Paint Inspectors

Relationship Associate was often the same

friendly contractor

Asian Paints Expert

Implications
Customers began
suspecting the
credentials of Asian
paints

Customers refused to accept same standards

from Home Solutions as they had from
contractors

The company was

hard put to justify the
premium

Dissatisfaction among
customers

Delivering an Effective Service

Investment in skill development of contractors. Trained contractor will be
able to serve the customers at Moment of Truth.
Easy mechanism for customers to provide feedback about the contractors
and resolution in case of any issue.
Asian Paints should develop a variety of maintenance plans post warranty
period.

Communication on how the service is exclusive and its benefits.

Discussed Topic- Lecture 7 & 8

Forecasting Demand for

Services

Forecasting Demand for Services

Forecasti
ng
Techniqu
es
Subjectiv
e Models

Delphi
Method

CrossImpact
Analysis

TimeSeries
Models

Causal
Models

Historica
l Analogy

Regressi
on Model

Econome
tric
Model

Exponent
ial
Smoothi
ng
Trend
Adjustme
nt

N-Period
Moving
Average

Seasonal
Adjustme
nt

Subjective Models

Delphi
Method

A technological forecasting method that uses a group

of experts to arrive at a consensus about the future

Cross-Impact
Analysis

A technological forecasting method that assumes

some future event is related to an earlier event with
an estimated probability-p

Historical
Analogy

A technological forecasting method that assumes that

the introduction and the growth pattern of a new
service will mimic the pattern of a similar concept for
which data are available

Delphi Method
Consensus of expert
opinions

Labour Intensive Process

Forecasting through
qualitative data

Very Expensive & Time

consuming method

Input from persons with

expert knowledge

Practical only for longterm forecasting

Causal Models

Regression
Model
Medium & Long-Term
Forecasts

Econometric
Model
Long-Term Forecasts

A relationship between the factor being

forecasted, which is described as a
dependent variable (or Y), and the factors
that determine the value of Y, which are
designated as the independent variables
(or Xi)
A set of simultaneous equations expressing
a dependent variable in terms of several
different independent variables

Time Series Models

Simple
Exponential
Smoothing

Smooths out blips in the data by giving progressively less

weight to older data & feeding back the forecast error to
correct the previous smoothed value

Exponential
SmoothingSeasonal

Trend in a set of data is the average rate at which the

observed values change from one period to the next over
time. The changes created by the trend can be treated by
using as a smoothing constant
Seasonal effects on a set of data is accounted for by first
removing the seasonality from the data, then smooth
those data and finally put back the seasonality to
determine a forecast

N-Period Moving
Average Model

A simple time series forecast formed by adding together

the most recent data and dividing by the number of
observations

Exponential
Smoothing- Trend

CASE HIGHLIGHTS
Oak Hollow is an
organisation that offers
multidisciplinary
diagnostic services.
The organisation is
working in a highly
competitive environment
It is in an vulnerable
financial position and
wants to forecast the
expected patient load in
next year as well as
manpower load & annual

QUESTIONS
1. Forecasting expected
patient load in year
2005

Case
2. Forecasting the annual
assignment
expense and the total
manpower required for
Oak Hollow in the year
2005
Microsoft Excel
Worksheet

Data Envelopment Analysis (DEA)

DEA is a linear programming model that attempts to maximize
the service units efficiency, expressed as a ratios of outputs to
inputs
Compare a particular units efficiency with the performance of a
group of similar service units that are delivering the same
service
Objective Function:
Constrains:

Example: Burger chain has established six units in

different cities.

LPP Equations:
Equation: Max (S1) = U1 * 100
Subjected to
U1*100-V1*2-V2*200<=0;
V2*150<=0;
U1*100-V1*4-V2*100<=0;
V2*100<=0;
U1*100-V1*8-V2*80<=0;
V2*50<=0;

U1*100-V1*4U1*100-V1*6U1*100-V1*10-

Service unit S1, S3 & S6 have efficiency rating of 1, i.e. efficient where
as S2, S4 & S5 are in- efficient.
For S4:
For each unit decrease in labor hour result in efficiency increase by
0.0555. Hence to become efficient they have to increase their efficiency
by 0.111 points. This can be achieved by reducing labor hour by 2
(S4 will become identical to S3), or by reducing material used by $16.57
(.111/.0067).
For S2 & S5 :
Similarly efficiency rating of 1, for service unit S2 & S5 can be achieved
by reducing labor hour and material usage by 1 hour& $ 51.07 and 1.74
hour & $ 14.56

The inefficiency of 14.3%

is due to the excess labor
usage of 0.57 hours, and
excess material usage
worth $21.43

The inefficiency of 11.1%

is due to the excess labor
usage of 0.667 hours, and
excess material usage
worth $11.11

The inefficiency of 9.9% is

due to the excess labor
usage of 0.73 hours, and
excess material usage
worth $7.27

Strategic Planning
Based on the inefficiencies that have
been calculated above for service
stations S2, S4 and S6, and their
profitability, an attempt can be made
to further decide the course of action
to consider the units as
Underperforming potential stars
Problem branches
Candidates for divestiture