An important theoretical and practical problem in the analysis of service activities is the issue of structuring the service sector, as well as the classification of services and service activities. Below we will touch on some aspects of their classification division.
The development of classification criteria is aimed at identifying and selecting the most important typological characteristics of services and service activities, which can help in dividing them into component units (directions, varieties, groups). It is important that these qualities are not random or insignificant, but reflect the essential properties of the service, allowing the formation of the most important typological units based on a variety of real services. For example, a criterion such as “degree of mass” allows us to divide all services into two types: mass and non-mass. In turn, among non-mass services, based on various criteria, a number of additional group-forming units can be distinguished (elite, exclusive services, etc.).
The development of classification criteria is of no small importance, because in different countries there are now many, sometimes difficult to compare, approaches to creating classification schemes, which makes it extremely difficult to analyze service activities even in one country. The criteria for classification in scientific analysis can be especially numerous. After all, researchers often develop classification criteria to solve purely theoretical problems, not always taking into account practical requirements that facilitate the grouping of service activities.
The practice of intra-industry relations in the service sector, as well as state and interstate relations, require the use of generally accepted classification approaches and schemes that could be relatively easily operated in the process of economic relations.
It is especially important to agree on the division of services according to content and functional criteria, i.e. according to the most significant characteristics of service activities related to the nature of work, the scope of application of services, their purpose, etc. This is not an easy task, since in the modern world new types of services are constantly multiplying; services are becoming increasingly complex in nature and functional purpose.
There are two aspects to be seen in the fact that different countries around the world use different national classification models. On the one hand, these models make it possible to display various, sometimes hidden, non-obvious characteristics of service activities, thereby demonstrating a wide range of adaptive capabilities of a modern service in relation to a changing world. On the other hand, incomparable models make it difficult to benchmark services internationally.
The task of developing uniform criteria and classification schemes for services still remains an unresolved problem in the world. Most often, classification work is carried out in certain countries on the basis of established traditions of collecting government statistics or solving problems facing society in a specific situation. As an example, we give a service classification model adopted at North American continent, which, of course, reflects the historical practice of developing service activities in the USA and Canada. This model is based on content-functional criteria and includes the following large areas of service activity, which can be considered its most important areas*:
♦ transport (railway, aviation, freight, motor transport, etc.);
♦ communications (telephone, telegraph, radio, etc.);
♦ public services (electricity, water and gas supply, etc.);
♦ mass activities (wholesale and retail trade);
♦ financing, insurance, including work with real estate;
♦ direct service (hotels, services of a personal nature, consultations on organizing mass entrepreneurship, car repairs, repairs of various items, movie rentals, entertainment and recreation, etc.);
♦ other types of services.
In world practice, ways are being sought to overcome the difficulties associated with discrepancies and incomparability of classification schemes of analysis adopted in different regions and countries of the world. Thus, there is an appeal to the analysis of services that in developed countries taken into account by statistical authorities, which allows the use of comparable statistical data regarding these services for comparative study. These are the services:
♦ business services;
♦ communication services;
♦ construction and engineering services;
♦ distribution services;
♦ general educational services;
♦ financial services, including insurance;
♦ health and social services;
♦ tourism and travel; leisure services;
♦ transport services;
♦ other services.
Let us point out the use in interstate practice of a number of developed countries of a classification based on two interrelated criteria: the type of services and the scope of their application.
Table 2Types of services in different areas of application
The most important functions of distribution logistics are:
in planning, organizing and managing transport and moving processes in the logistics system in the post-production period;
inventory management;
receiving orders for the supply of products and their efficient processing;
picking, packaging and performing a number of other logistics operations to prepare commodity flows for generation;
organizing rational shipment;
delivery management and control over the implementation of transport and movement operations in logistics chains;
planning, organizing and managing logistics services.
Distribution activities require significant costs (expenses) for their implementation. The bulk of these costs are associated with the implementation of key logistics operations: warehousing, processing, transportation, forwarding, preparing products for production consumption, collecting, storing, processing and issuing information about orders, inventories, deliveries, etc. These costs, in their economic content, partially coincide with the costs arising in the production process, but are largely caused by transport and storage costs, costs of packaging and containers, as well as costs associated with the importation of goods and their shipment to consumers, and other components of distribution costs . Total logistics costs at the local level are determined (and planned) based on sales amounts, in value terms per unit mass of finished products intended for sale, or as a percentage of the cost of net products.
The fundamental difference between distribution logistics and traditional marketing and sales methods is:
in subordinating the process of managing material and information flows to the goals and objectives of marketing;
systemic relationship between the distribution process and production and procurement processes (in terms of material flow management);
systemic interconnection of all functions within the distribution itself.
8.2. Distribution logistics tasks
Distribution logistics covers the entire range of tasks for managing material flow in the “supplier-consumer” area, starting from the moment the implementation task is set and ending with the moment the delivered product leaves the supplier’s sphere of attention. At the same time, the main share is occupied by the tasks of managing material flows, which are solved in the process of promoting finished products to the consumer.
The solution to emerging problems of distribution logistics at each level is different.
In the process of solving distribution logistics problems, it is necessary to find answers to the following questions:
^ through which channel to bring the products to the consumer;
^ how to package products;
^ what route to send;
^ is a network of warehouses needed on the way from supplier to consumer;
^ what level of service to provide, etc.
Taking into account the specifics of the enterprise and the goals set, problems are solved at the micro and macro levels. Enterprise level Logistics solves the following problems:
planning the implementation process;
organizing the receipt and processing of orders;
organizing a network of warehouses;
choosing the type of packaging, deciding on packaging, organizing operations immediately preceding shipment;
organizing the shipment of products;
organizing delivery and transportation control;
organization of post-sales service.
At the macro level, the tasks of distribution logistics include:
selection of material flow distribution scheme;
determining the optimal number of distribution centers (warehouses) in the serviced area;
determining the optimal location of the distribution center (warehouse) in the serviced area.
To solve the problems of optimizing distribution, it is necessary to ensure control over all parts of the cargo movement system. When choosing the optimal distribution scheme, you should take into account the entire chain of cargo passage to the final consumer: minimum delivery times, maximum level of service, maximum level of profit, minimum costs.
The main indicator of successful activity is the profit received, and the main areas of activity for increasing profits are considered to be activities related to:
with the creation of a unified transport and warehouse system (fast delivery to the consumer);
economic unification of production and sales;
development of optimal storage and replenishment schemes, etc.
To successfully run a business, an enterprise must resolve the following questions: to what extent the costs associated with reducing the time of goods movement are compensated by an increase in revenue from increased sales volume; can the company tolerate a decrease in the level of customer service while simultaneously increasing the volume of supplies; how expedient it is to store goods at the place of production or directly at the sales market, etc.
8.3. Functions of supplier distribution logistics and buyer purchasing logistics.
Let's consider the process of managing material flow in the area between two enterprises, one of which is a supplier of goods, and the other is a wholesale buyer. From the position of the first enterprise, material flow management should be carried out using the method of distribution logistics, and from the position of the second, the same flow is managed by purchasing logistics methods.
This contradiction is resolved in the sales contract, which specifies the point at which this flow is managed by the supplier and uses purchasing logistics methods.
The International Chamber of Commerce has developed a system of standard basic conditions for the delivery of goods - Incoterms, which determines this point. In Incoterms, basic terms are grouped into four distinct categories:
— the moment the risk of loss and damage passes from the seller to the buyer;
— the moment at which transportation costs are borne by the seller, and after that by the buyer.
Let's consider the basic terms of delivery.
First group E contains one term EXW - ex works. When this condition is included in the purchase and sale agreement, the seller bears minimal risks of losses and minimal transportation costs, since he provides the goods to the buyer on his own territory (factory warehouse) (Fig. 8.1).
Second group F includes the terms FCA (free carrierat - free carrier), FAS (free alongside - free along the side of the vessel), FOB (free op board - free on board). Under free carrier and free on board conditions, the seller pays all costs associated with the goods until loading is completed, and the buyer pays the underlying transportation. In this case, the term “free on board” is used for transportation by sea and river transport, and “free carrier” is used for delivery by any type of transport. If the term “free along side the ship” is used, the seller does not pay for loading. In this group of terms, the risk of loss and damage passes at the point of transfer of goods from the seller to the buyer (Fig. 8.2).
In this case, the terms CFR and CIF are used for transportation by sea and river transport, and the rest - for transportation by any type of transport.
Fourth group D includes the terms: DAF (delivered at frontier) - delivery to the border; DES (delivered ex ship) - delivery from a ship; DEQ (delivered ex quay) - delivery from the quay; DDP (delivered duty paid) - delivery with payment of duty; DDU (delivered duty unpaid) - delivery without payment of duty. The first term means that the transfer of risks and the distribution of costs between the seller and the buyer occurs at an agreed location (Fig. 8.4).
8.4. Logistics channels and distribution chains
The movement of material flows can be considered as movement that comes from various sources - the source of raw materials, production or distribution center. In all cases, the ultimate goal of the movement of material flow is to reach the consumer directly. At all stages of the movement of material flow within logistics, its production consumption occurs. Only at the final stage, which completes the logistics chain, does the material flow enter the sphere of non-productive consumption.
Manufacturing consumption- this is the current use of a social product for production needs as means and objects of labor.
Non-productive consumption- this is the current use of the social product for personal consumption and consumption of the population in institutions and non-production enterprises.
The supplier and consumer of the material flow in the general case represent two micrologistics systems connected by the so-called logistics channel, or otherwise - the distribution channel. Logistics channel- this is a partially ordered set of different intermediaries that carry out the transfer of material flow from a specific manufacturer to its consumers.
The set is partially ordered until the choice of specific participants in the process of promoting the material flow from supplier to consumer is made. After this, the logistics channel is transformed into a supply chain. Making a fundamental decision to sell products through an agency firm and, thus, refusing to work directly with the consumer serves as a choice of distribution channel.
The choice of a specific agency company, a specific carrier, a specific insurer, etc. - this is the choice of the supply chain. Logistics chain is a linearly ordered set
participants in the logistics process who carry out logistics operations to bring external material flow from one logistics system to another.
The supplier and consumer are connected by a distribution channel.
After specific participants in the product promotion process (from supplier to consumer) are selected from many different intermediaries, the distribution channel can be called a distribution chain.
Distribution channels have different structures. In a logistics system with direct links, distribution channels do not contain any wholesale intermediary firms. In flexible systems, such channels are present, and the ability to select a logistics distribution channel serves as a reserve for increasing the efficiency of logistics processes.
The product can go directly to the end consumer.
The initial cost of the goods in this case will be the lowest, since intermediaries will be excluded from the chain and the cost of the goods will increase only due to the costs of delivering the goods.
A wide range is formed by a wholesaler specializing in this area and located in the place where consumption is concentrated. This intermediary specializes in providing maximum service to the end consumer. The distribution channel through two wholesalers (at the place of production and at the place of consumption) will provide the greatest service to the consumer, but at the same time the cost of the product will be the highest. The most profitable distribution (for the consumer) is directly through the distribution center at the point of consumption.
8.5. Product distribution channels
Distribution channel- is a collection of organizations or individuals that assume or help transfer to other organizations and individuals the ownership of a specific product or service on the way from producer to consumer.
The use of distribution channels brings certain benefits to manufacturers:
reduction in the volume of work on distribution of products;
financial savings on product distribution;
selling products in more efficient ways;
ensuring wide availability of goods.
A distribution channel is the path along which goods move from the producer to the consumer. The selected channels directly affect the speed, time, efficiency of movement and safety of products during delivery. The distribution channel of goods can be characterized by the number of component levels.
The channel level is an intermediary who works to bring the product and ownership of it closer to the end consumer. The length of the channel is determined by the number of intermediate levels between the producer and the consumer.
The distribution channels shown in Fig. 8.8, consist of an independent manufacturer and one or more independent intermediaries. Each channel participant represents a separate enterprise that tries to extract maximum profit. At the same time, none of the channel participants has complete or sufficient control over the activities of the other participants, i.e. All enterprises operate separately and are not organized into a system. Such distribution channels are called horizontal.
Experts also identify vertical distribution channels, consisting of a manufacturer and one or more intermediaries operating as a single system. One of the channel members, as a rule, is the owner of the remaining companies or provides them with certain privileges.
8.6. Distribution channel structure
Under channel structure the number of levels and the specific composition of channel participants is understood. When determining the composition of participants, it is necessary to determine the type of intermediaries.
Intermediaries can be classified according to a combination of two characteristics:
1) on whose behalf the intermediary works;
2) at whose expense the intermediary conducts its operations.
It is possible to distinguish five types of intermediaries.
1. Dealers are wholesale (less often retail) intermediaries who conduct transactions on their own behalf and at their own expense. The goods are purchased by them under a supply agreement, and the dealer becomes the owner of the product.
2. Distributors are wholesale and retail intermediaries acting on behalf of the manufacturer, but at their own expense. The manufacturer grants the distributor the right to sell its products in a certain territory for a certain period. The distributor does not own the products. According to the agreement, he only acquires the right to sell.
3. Commission agents are intermediaries who act on their own behalf and at the expense of the manufacturer. The manufacturer remains the owner of the product until it is transferred and paid for by the end consumer.
The supply agreement with the buyer is concluded on behalf of the commission agent. But at the same time, the risk of accidental damage to the goods lies with the manufacturer, to whom the commission agent is responsible.
4. Agents are intermediaries acting as a representative of another person (principal). For his services, the agent receives remuneration both according to tariffs and according to an agreement with the principal.
5. Brokers are intermediaries in concluding transactions, bringing together counterparties. Unlike agents, brokers do not have a contractual relationship with any of the parties to the transaction.
8.7. Construction of a distribution system
When constructing a logistics distribution system, the following sequence for selecting the optimal distribution option is used:
study of market conditions and determination of strategic goals of the distribution system;
determining the predicted amount of material flow passing through the distribution system;
drawing up a forecast of the required amount of reserves for the system as a whole and in individual sections of the material supply chain;
analysis of the transport network of the service region, drawing up a diagram of material flows within the distribution system;
study of various options for the movement of the distribution system;
assessment of logistics costs for each option;
implementation of one of the developed options selected for implementation.
In order to choose one from many options, it is necessary to establish a selection criterion, and then evaluate each of the options according to this criterion. Such a criterion, as a rule, is the minimum of the given costs, i.e. costs reduced to a single measurement. The value of the given costs is determined by the formula
For implementation, the version of the distribution system that ensures the minimum value of the reduced (annual) costs is adopted.
A necessary condition for the possibility of choosing a distribution channel, as well as optimizing the entire logistics process, is the presence of a large number of intermediaries on the market.
The use of intermediary services for many enterprises is a necessary condition for the successful promotion of goods. To solve the problem of what is more profitable in this case: to use the services of intermediaries or to go to the consumer independently, each enterprise must independently, i.e. all the pros and cons of a particular distribution system should be taken into account. The services of an intermediary are in demand if their cost is lower than the own costs of performing any work.
Formally, this relationship can be represented as follows:
Optimization of the distribution channel, and then the distribution chain, is possible only if there is a large number of enterprises on the product market that act as intermediaries.
When considering the concept of strategic cost management, there are three basic elements:
1) value chains;
2) strategic positioning;
3) cost-generating factors.
At the stage of considering the value chain, it is necessary to identify the main areas of distribution. The process of organizing management accounting focuses on the processes occurring within the enterprise: procurement, administrative expenses, material flow. The key point in the existing mechanism is to obtain maximum income by maximizing the difference between purchases and sales. An integrated logistics approach using value chains focuses on all participants in production and supply chains. From a strategic point of view, distribution chains and associated cost accounting allow us to identify five areas of interaction efficiency:
1) communication with suppliers;
2) communication with consumers;
3) unity of technological connections within one division;
4) connections between departments within the enterprise;
5) connections between enterprises operating in a single logistics network.
The second basic element of the logistics system is strategic positioning. The role of analysis and focus of cost management will depend on which path the enterprise chooses. This could be cost leadership or product differentiation. As a rule, this problem is deeply and comprehensively considered within the framework of strategic management. Let us only note that the chosen strategy will significantly influence the formation of a logistics cost accounting system and the configuration of the information system.
When considering the third element - the cost-generating factor - it must be divided into strategic structural and functional factors.
Strategic structural factors include:
scale of distribution - volumes of investment in various functional areas of the logistics system;
range - vertical and horizontal integration;
experience;
technologies used at each stage of the cost chain;
complexity - breadth of product range.
Functional factors include:
continuous improvement of processes and workforce;
integrated quality management (TQM);
optimal loading of capacities;
effective plant planning;
efficiency of the project or calculation;
Using relationships with suppliers or customers from a cost chain perspective.
The activation of each of these factors or their groups can have a significant impact on the magnitude and dynamics of costs. A special and priority role belongs to one of the noted functional factors - quality.
Quality, as a critical element of strategic cost management, should be viewed as an end-to-end function that spans the entire value chain from supplier to consumer.
8.8. The relationship between logistics and marketing
Marketing is a scientific direction that contributes to achieving the company's goals through the most complete satisfaction of customer needs, thus, marketing and distribution logistics are closely interrelated. Marketing was in demand due to difficulties encountered in the sale of goods in an earlier period than logistics, which complements and develops marketing by linking the consumer, transport and supplier into a single system. Marketing monitors and
determines the emerging demand, i.e. answers the questions: what product is needed, where, when, in what quantity and of what quality.
Logistics ensures the physical promotion of in-demand goods to the consumer.
In table 8.1 presents a comparative description of marketing and logistics.
Generally recognized differences between the process of providing services and the production process:
a) client participation in the process of providing the service;
b) combining the stages of satisfying the customer’s need for a product;
c) services cannot be stored;
d) demand for services is variable;
e) intangibility of the service process for the client;
f) it is difficult to assess the quality of the service;
g) it is difficult to assess the effectiveness of service provision.
A. Client participation in the service provision process
In accordance with the definition of a business process79, any activity within its boundaries is aimed at the client or consumer of the process. In industrial production, the product passes into the hands of the client. A service, by definition, is a process. When providing a service aimed at satisfying the client, the client is forced to be involved in the process. This is the most important difference between processes related to services and production processes (Fig. 40).
Thus, when providing services, staff are in closer contact with the client than in production, which requires them to have not only professional technological competencies, but also communication skills. As a result, the service is designed taking into account the impact of the process of its provision on the client.
Many companies can achieve success by manipulating the degree of involvement of the customer in the business process and his role in it. Thus, at one time, self-service retail stores entered the markets. In them, compared to the traditional technology of the salesperson behind the counter, the service provision area is narrowed and the production area is expanded, in which the client acts as a sales floor employee, selecting, sorting, packaging and transporting goods.
Excluding the client from the service process makes the production part of the process more efficient. Therefore, in modern business there is a tendency to distance the client from the service process through the introduction of correspondence or remote service using telecommunications (for example, accepting orders via the Internet and by e-mail, remote monitoring of the patient’s condition, etc.), using automatic machines (for example, exchange currency, accepting payments, etc.).
b. Combining the stages of satisfying the need for a product
Another important difference between services and the production process can be noted. Any business can be considered at the stages of producing a result, its implementation and consumption. For production processes, these stages are separated from each other, since the client as such, carrying out the consumption process, is not a participant in the process of producing the result. When providing services, these stages may coincide in time and space, or alternate1. Examples of this are given in table. 9.
Table 9
Examples of a combination of various stages of service production An example of an organization Stage of service provision production sales consumption Restaurant + + + Atelier + + Store + + 1 Fel A.V. Decree. op. 128 In the process of consuming most services, in contrast to the consumption of material products, clients are located directly at the place where they are provided: in an office, a restaurant hall, a surgical operating room, a train compartment, etc. (depending on the industry). In the production sector, work with goods is concentrated in the divisions of the processing subsystem of the operating system. In the service sector, activities to provide them are present in all divisions of the organizational structure, including the supporting and managing subsystems.
V. Services cannot be stored
Services, being a process of satisfying a client's needs, cannot be warehoused or pre-stocked. This limits the flexibility of the service delivery process itself and places special emphasis on capacity planning. In production, during periods of decline in demand, it is possible to accumulate stocks of finished goods for their sale during periods of increased demand and thus maintain a relatively stable level of capacity utilization and personnel employment. This is implemented using the strategy of fixing production capacity, which was discussed in paragraph 2.3.7 (see Fig. 22).
In the service sector, with rare exceptions, it is necessary to satisfy demand as it arises. Strategies of fixing production capacity and following production with demand (see Fig. 21 and Fig. 22) can be applied, but operating systems operating models that are different from the models discussed in paragraph 2.2.1 when describing production processes should be used. In all these models (see Fig. 13 - Fig. 16), goods inventories play a key role, as indicated by the names of the models: with input and output stocks, with output stocks, with input stocks, without stocks.
In the absence of the possibility of creating a stock of services, operating system organization models become 1: 1.
First-class service model. 2.
"Cheap" service model. 3.
The "ineffective service" model. 1)
The premium service model creates excess capacity so that every customer can receive service at the point of contact (Figure 41). Resource redundancy causes periodic downtime of equipment, waste of materials, and unemployed personnel. As a result, the cost and price of the service increases. The name "first-class" service is associated not with the client's assessment of the quality of the service, but with the high-end market segment in which this model is most often used.
rice. 41. “First-class” service model 2)
The low-cost service model deliberately limits the amount of available production capacity. Clients are forced to stand in line waiting for service (Fig. 42). This model is successfully used in the market of exclusive services, as well as in the economy-minus segment market. Insufficient capacity allows you to reduce the cost base and freely manipulate the price level.
rice. 42. “Cheap” service model
The model creates the opportunity to “store” not the service, but customers in a queue (including a pre-registration system). The idea of influencing demand is used in order to balance it with available production capacity (see paragraph 2.3.7). This influence can be carried out by manipulating the length of the queue 130 or using a system of discounts or markups during periods of recession or increase in demand.
3) The “ineffective” service model is the most common in business. When using it, in some periods of time there is excess production capacity, in some periods there are customers in line (Fig. 43). The apparent inefficiency of the model is associated with seasonal fluctuations in demand for services (by day, week, month, season), leading to periodic downtime of production facilities or customers standing idle in line.
in line
rice. 43. Model of “ineffective” service
d. Demand for services is variable
All demand is variable, but demand for services is characterized by large, complex and rapid fluctuations. The impact of fluctuations in demand for services and therefore on capacity requirements in service operating systems is much greater than in a manufacturing system. This is explained by three reasons1: 1)
services are not subject to storage; 2)
clients are involved in the process of providing services; each has different needs, different levels of personal experience and may require different amounts of contact; 3)
The length of the service cycle depends on customer behavior. 1)
Due to the fact that services cannot be stored, the quality of service largely depends on fluctuations in demand. When using all models of operation of service operating systems (see Fig. 41 - Fig. 43), attention should be paid to the ability to respond to short-term changes in demand. For example, when operating retail floors, turning on or off the cash register in the service system allows you to regulate the length of customer queues. Current adjustments to the service delivery process require special staff training. 2)
Client participation in the service provision process leads to the possibility of deviation of the service time for each client from the recommended one, which causes fluctuations in production capacity utilization and staff employment. 3)
The client’s behavior during the service process can be influenced by a variety of organizational, technical, climatic, demographic, economic, political and other factors. This affects both short-term and long-term demand changes, including seasonal variations. All these fluctuations are, in principle, predictable.
When providing services, to achieve maximum process efficiency, 70% of production capacity should be ensured.
Such capacity “is sufficient to ensure that service channels are constantly busy and have sufficient time for individual customer service, and at the same time allows for a certain reserve of capacity so that managing the process of providing services does not pose any special problems for management personnel”80. The specified capacity utilization rate depends on the service sector. Where the degree of uncertainty and the significance of service provision are high, capacity utilization below 70% is recommended. Providing services with good predictability of workload or without direct contact with clients makes it possible to plan activities so that production capacity is used closer to the 100% mark. These recommendations correspond to the operation of single-type production operating systems (see section 3.1.3).
d. Intangibility of the service process for the client
The material results of any activity are tangible. The process of providing a service is characterized by intangibility for the client.
To make the service more tangible for the client, when designing a service, you should pay attention to the material, tangible environment of the service: the location of the office, its design, clothing, speech, appearance of the staff, smells, etc., which should enable the client to correctly understand what kind of service he needs render.
The intangibility of a service can cause the following problems1: 1.
It is difficult to develop a service specification because clients may have different understandings of the “correct” delivery of a service. 2.
Gaining a thorough understanding of customer needs is important but very difficult. 3.
It is difficult to assess the quality and efficiency of service provision.
e. It is difficult to assess the quality of the service
Due to the intangibility and involvement of the client in the process of providing the service, it is quite difficult to evaluate it by the management of the organization providing it. The quality of the service is determined by the client, but its perception depends not only on the quality of the developed service process and the quality of the staff. The quality of the client’s needs, as well as his ability to perceive the service, are also significant.
The most common methods for assessing the quality of a service are questionnaires and interviews with clients. During the survey, clients rate each service according to the proposed scales. The purpose of the survey is to obtain information from the company about what factors are most important to consumers of its services.
Since the production and consumption processes coincide when providing a service, the quality of the service cannot be checked in advance, as well as guaranteeing that errors made during the service process will be recorded and corrected before the client discovers them. To achieve the required service quality, the service must be carefully designed, staff trained, and positive relationships developed with customers. The situation is complicated by the inherent intangibility of the service and the associated lack of service specification.
and. It is difficult to evaluate the effectiveness of service provision
The client’s participation in the process of providing the service, the combination of the stages of production and consumption of the service, fluctuations in demand for the service and the inability to use inventories when performing the service lead to frequent deviations of the costs of providing the service from the planned size. It is difficult to objectively evaluate the results of a service based on data obtained from customer surveys. As a result, it is difficult to clearly assess the effectiveness of the service.
To ensure the efficiency of activities when providing a service, it is often necessary to overestimate its labor intensity. Indeed, the higher the degree of interaction with the consumer, the higher the degree of individualization of the service and the higher the labor intensity of the process of its provision. At the same time, ensuring high economic efficiency is quite problematic.
TEST QUESTIONS 1.
Which of the differences between the process of providing a service and the production process are of a strategic nature? 2.
What staff skills do you think are most important when delivering a service? 3.
What is the difference between the production and service business process diagrams? 4.
Express your opinion about the possibility, feasibility or necessity of manipulating the degree of contact with the client in the process of providing the service. 5.
Although a service as a process cannot be stored, it is possible to stock up in advance on the resources or products needed to provide the service. Is there a contradiction here? What exactly cannot be stored in the service? 6.
Why are some words in quotation marks in the names of models for organizing an operating system when providing services? What is the convention here? 7.
Which segments of external clients are targeted by each operating system organization model when providing services? 8.
Is it possible to jointly use different operating system organization models when providing services? If yes, which ones exactly? 9.
Explain how you understood that a service is an intangible object?
10. What quality assessment methods can you offer when working with services? 5.3.
types of SERVICES in BUSINESS
As noted in paragraph 2.1, from the point of view of the operating system of a business, the difference between the economic division of industries into industry and services can be leveled out. At the same time, it is customary to talk about services in a different, non-operational sense. For example, they identify the main (basic) services that consumers receive along with products (compliance with technology rules, taking into account specific consumer requirements, timely delivery and competitive price)81.
Value-added services are additional services that the consumer agrees to pay for. They are included in the price of the product. Services of this type are divided into four groups82: 1)
informational services; 2)
escort services; 3)
pre-sales services; 4)
after-sales service. 1)
Information support ensures the provision of comprehensive information regarding the technical characteristics of the product, its parameters and cost to both internal (for example, employees involved in scientific, technical and design development) and external clients. 2)
Support services are provided by the manufacturing company and include consultations with specialists during installation and commissioning of the purchased product. 3)
Pre-sales service includes a set of activities that help improve the effectiveness of marketing activities and increase sales volumes (for example, conducting demonstrations of equipment operation, ironing clothes, etc.). 4)
After-sales service allows you to exchange, replace, repair sold goods, replenish their availability in retail spaces, etc.
Providing value-adding services gives a company two main advantages: a strong competitive position in the market and a positive connection with the client83.
Some industries require mandatory communication with external clients. They belong to the service sector. These are, for example, banking, transport, medical and legal services, trading enterprises, and catering enterprises.
All business organizations have services provided to internal clients. In the company's operating system, divisions of the processing subsystem are internal clients of divisions of the supporting subsystem. The clients of the management subsystem are employees of the entire organization.
In any organization, contacts with internal or external customers can be viewed from an operational perspective as services. At the same time, there is a certain connection between them. Representatives of the processing subsystem of the operating system, being internal clients of the supporting subsystem, provide services to external clients (Fig. 44). External
Divisions
providing
subsystems
Internal client - divisions of the processing subsystem Fig. 44. Communication between internal and external clients of the organization
CHECK QUESTIONS 1.
What criteria for classifying services can you offer in addition to those discussed in the manual? 2.
How do pre-sales and after-sales services contribute to the development of a company's strategic advantages? 3.
Give examples of the strategic importance of information services. 4.
Why does strengthening relationships with customers enhance a company's competitive position in the market? 5.
Explain the relationship between internal and external customers of the organization.
2.3.1. Concept and scope of application
distribution logistics
Distribution logistics concept
Distribution logistics is a set of interrelated functions implemented in the process of distributing material flow between various wholesale buyers, i.e. in the process of wholesale sales of goods.
The main goal of distribution logistics is to ensure that the right goods are delivered to the right place, at the right time, at minimal cost.
Unlike marketing, which is engaged in identifying and stimulating demand, distribution logistics is designed to satisfy the demand generated by marketing at minimal cost. In this case, it is necessary to proceed from the objectives of satisfying the basic needs of the consumer of the product, which include the following: timely delivery of goods, the ability to satisfy emergency needs of the customer, careful handling of goods during loading and unloading operations, the manufacturer’s readiness to quickly replace defective products and maintain a certain level of inventory.
Areas of application of distribution logistics
There are two approaches to defining distribution logistics functions. The first covers a set of operations for the shipment of finished products from the supplier’s warehouse. The second one is wider. In this case, it is considered that distribution logistics implements the entire process of circulation of material products, starting from the moment it leaves the production line until the moment it reaches the consumer’s warehouse. It should be borne in mind that distribution problems are solved at the level of micro- and macrologistics.
The following tasks are solved at the micro level:
- planning the implementation process;
- selection of product packaging, packaging and canning;
- organization of product shipment;
- control over transportation to the place of consumption and delivery of products to the consumer;
- organization of after-sales service.
At the macro level, the tasks of distribution logistics include:
- choosing a material flow distribution scheme;
- formation of distribution channels;
- placement of distribution centers.
2.3.2. Product distribution channels
Distribution channel and its functions
The supplier and consumer of goods represent two micrologistics systems connected to each other by a logistics channel or distribution channel.
Distribution channel is a collection of organizations or individuals who take over or help transfer to another the ownership of a particular good or service along the way from producer to consumer. Logistics channel an ordered set of different intermediaries that carry out the transfer of material flow from a specific manufacturer to the consumer.
The use of distribution channels brings certain benefits to the manufacturer, as it ensures the sale of products in the most effective ways, allows them to bring products to target markets, and saves distribution costs.
The organizations or individuals that make up the channel perform a number of functions. During the period of concluding transactions collection of information necessary to ensure the movement of goods through the channel, taking on risks associated with the functioning of the channel. During the period of completion of transactions organization of goods distribution (transportation and warehousing), finding and using financial resources to ensure the movement of goods through the channel, taking on risks associated with the functioning of the channel.
The distribution process itself is carried out through the implementation of the following types of work: processing orders, warehousing products and maintaining inventories, transporting goods to places of consumption.
Order processing includes: receiving an order from a consumer, sending information about the order to interested departments of the enterprise, making a decision on the production of products. If the goods needed by the consumer are in stock, they are shipped. If goods are not in stock, an order for their production is transferred to production.
Warehousing. After the production process is completed, the company is forced to store the goods until they are shipped. This is due to the fact that production and consumption cycles rarely coincide.
An enterprise can choose different forms of storage of finished products:
- some of the goods can be stored in the enterprise’s warehouse, some in warehouses in areas where the products are consumed;
- all manufactured products can be stored in the enterprise’s warehouses;
- an enterprise can rent space in public warehouses;
- long-term storage warehouses or transit warehouses can be used to store goods.
Maintaining inventory. To ensure uninterrupted provision of the consumer with the goods he needs, the manufacturing enterprise creates inventories of inventory items that are stored in the enterprise’s warehouses or in consumption areas. Inventories are maintained at the level required by special standards.
The final stage of the implementation process is transportation goods to the place of consumption and delivery to the consumer on the terms stipulated by the agreement (contract).
Distribution channel structure
Distribution channels have different structures, which can be characterized by the number of levels that make up the channel.
Channel level this is an intermediary who carries out the work of bringing the product and the owner’s rights to it closer to the end consumer.
In systems with direct links, there are no wholesale intermediary firms within the channels. In flexible or layered systems such intermediaries exist. In Fig. 2.3.1 shows examples of channels with different construction schemes.
Rice. 2.3.1. Schemes for constructing distribution channels
When forming a distribution channel, the decision on the structure of the channel comes first, i.e. about the number of levels and the specific composition of channel members. When identifying possible options for distribution channels, it is necessary to determine the type of intermediaries used. Their classification takes into account two criteria: on whose behalf the intermediary works and at whose expense he conducts his operations.
There are four types of intermediaries.
- Dealers wholesale, less often retail, intermediaries who conduct transactions on their own behalf and at their own expense. They purchase goods under a supply agreement, become the owners of the goods after paying for delivery, and sell these goods to consumers.
- Distributors wholesale and retail intermediaries conducting operations on behalf of the manufacturer and at their own expense. The manufacturer grants the distributor the right to sell its products in a certain territory and for a certain time. The distributor does not own the products. Under the agreement, he acquires the right to sell it.
- Commission agents wholesale and retail intermediaries conducting operations on their own behalf and at the expense of the manufacturer. The commission agent is not the owner of the product. For services rendered, he is paid a fee in the form of a percentage of the transaction amount.
- Brokers intermediaries in concluding transactions, bringing together counterparties. Brokers do not own the products and do not manage the products. They act on the basis of instructions and facilitate the completion of the transaction. Rewards are paid only for products sold.
After a selection of specific participants in the process of moving material flow from supplier to consumer has been made from many different intermediaries, the logistics channel is transformed into a supply chain.
2.3.3. Forms of bringing goods to consumers
A variety of forms of bringing goods to the consumer
The forms of bringing a product to the consumer are determined primarily by the nature of the product itself, the place and conditions of its production, consumption and transport capabilities.
Direct connections via the door-to-door system, in which goods are delivered from the supplier to the consumer, bypassing warehouses and storage facilities. This form is used when a large batch of products is purchased or unique products are purchased. It allows you to minimize transport costs and costs for intermediate storage of goods. Direct connections are effective only when serving nearby consumers.
In cases where consumers are located far from suppliers or in several regions, it applies delivery of goods through warehouses (centers) of supplier companies. Sales agents, accepting an order for the supply of products, send it not to the central sales office, from where it is forwarded to one of the company's enterprises, but directly to the nearest distribution center.
The next form of bringing goods to consumers is using the services of wholesale intermediaries. Suppliers resort to the services of wholesale enterprises when selling products for industrial and technical purposes. This form is used mainly for the purpose of expanding sales markets and reducing costs, if necessary, organizing an additional channel for the sale of the same product in different markets, when goods of standard quality are supplied in large quantities, etc.
In recent years, this form of relationship between wholesale intermediaries and industrial enterprises has become widespread, when the former are assigned maintenance operations for equipment located at the consumer. In this case, manufacturing enterprises are freed from the need to have personnel to perform such operations. Industrial equipment, raw materials and semi-finished products can be sold through commodity exchanges, using brokers and agents.
Distribution center location
The choice of the optimal option for locating a distribution center is carried out in the case when there are several consumers of the material flow in the serviced area.
When choosing a distribution center location option, the following sequence of actions is applied:
- market conditions are studied and a forecast of the amount of material flow passing through the logistics system is developed;
- a system for supplying goods to consumers is being developed;
- diagrams for the distribution of material flows within the logistics system are drawn up;
- the choice of option for locating a distribution center is carried out according to the criterion of minimum reduced costs. The given costs are determined by the following formula:
Where Z P reduced costs for the option;
S E annual operating costs of the center;
S T annual transportation costs;
TO capital investments in the construction of a distribution center;
T payback period for capital investments.
Review questions
- The concept of production logistics.
- Material flow management functions in production.
- Features of constructing a funnel-shaped model of a logistics system.
- Rules of priorities in order fulfillment.
- Comparative characteristics of push and pull systems in materials flow management.
- The relationship between organization and management of material flows in production.
- Spatial structure of the logistics system and its determining factors.
- Order fulfillment cycle structure.
- The concept of the form of organization of material flows.
- Basic forms of organization of material flows.
- Material flow management system.
- The concept of distribution logistics.
- Problems solved by distribution logistics at the micro and macro levels.
- Concept and functions of a distribution channel.
- The procedure for determining the location of the distribution center.
TOPIC 4. Peculiarities of production in the service sector.
Characteristics of services.
As stated above, manufacturing activity can be considered as the process of converting materials into a finished product and the ability to deliver that product to the customer. An important feature of this process is that the buyer does not participate in the manufacturing process of the product and the finished product can be kept in stock until consumption (dispatch).
Service An activity, benefit, or satisfaction that is sold separately or offered concurrently with the sale of goods.
The service sector, from the point of view of production management, has a number of important characteristics.
Firstly, the consumer is usually present in the production process, i.e. There is more intense contact or interaction with the consumer than in industrial production.
Secondly, in the service sector, a higher degree of product customization is required in accordance with consumer requirements.
Thirdly, work in the service sector is much more labor-intensive than in industry.
These three features make the process of managing service operations more challenging from an efficiency standpoint.
The higher the degree of interaction with the consumer, the higher the degree of individualization of products, the more labor-intensive the process, the more difficult it is to ensure its high economic efficiency.
It is these characteristics that distinguish the service sector from industrial production in terms of operational activities.
Let's consider the specific features of services that allow you to maneuver the quality of reducing or increasing it for various categories of consumers.
Buyer participation.
In any service activity, the buyer is, to one degree or another, participants in this process (for example, transport services, supermarket, etc.)
When organizing activities, it is necessary to take into account the needs and abilities of clients. If this is not done, they immediately get the impression of poor quality of service. A customer who can't find sugar in a supermarket or can't make out the notices at a train station may, of course, be to blame, but will nevertheless turn into a dissatisfied customer and will not hesitate to tell a dozen others about his dissatisfaction. Since the cost of acquiring a new customer can be more than 5 times higher than the cost of retaining an old one, the importance of customer satisfaction becomes self-evident.
In the personal service industry, such as a retail store, hair salon, restaurant, hospital, personal interaction and environment play a major role in customer satisfaction. Again, what is most important is not the actual condition, but the buyer's perception of them.
The main differences brought about by the presence of a buyer are: firstly, the quality of the service cannot be verified in advance, since its production and consumption occur simultaneously; secondly, it is very likely that the buyer may be unprepared and unpredictable.
Services cannot be stored.
Since production and consumption occurred simultaneously, it was impossible to store services. If a bank employee who can serve 20 customers per hour has no customers between 10 and 11 a.m., he will not be able to serve 40 people between 11 and 12 a.m. The “productive capacity” of a service is something that is not constant, volatile, because if the service does not work, it is lost.
Demand for services is variable.
Any demand is variable; however, demand for services is subject to large, complex and rapid fluctuations. The demand for all services is seasonal (changes more or less equally throughout the year), in addition, there are also shorter-term cycles (public transport, restaurants, entertainment).
All these fluctuations are predictable. However, the challenge is to meet demand during peak hours or days while avoiding ineffective idle capacity at other times. It is impossible to create a stock.
Intangibility of the service component.
The intangibility of the service component of any transaction is characterized by the following problems:
1. It is usually difficult to create a clear specification, and with it an agreement on the exact nature of the service. People have different understandings of the “correctness” of providing services. Some customers want the salesperson to approach them immediately in a self-service store, while others find this annoying (intrusiveness). Maximum waiting time is usually used as an indicator when designing services. However, it is impossible to fully take into account this problem (for example, waiting in a hospital).
2. Some people like to be greeted by service personnel, while others do not accept it, considering such a greeting artificial and overly obsequious. In general, achieving a complete understanding of the customer's needs is important, but very difficult.
3. Customers tend to emphasize the tangible elements of the transaction in their feedback, which can lead to unbalanced perceptions of service quality.
4. It is quite difficult to evaluate service activities. There is a tendency to value what can be valued instead of what actually matters.
Measuring customer waiting time is relatively simple, but it is difficult to ensure that this indicator really plays an important role.
These issues give rise to two major challenges in service design that are not obvious, or at least much less significant, in the design of tangible products (efficiency and quality)
Service efficiency.
Because the buyer is involved in production, the design of the service activity and the design of the service itself become inseparable. The critical moment of any activity is the optimal utilization of capacity, and therefore production costs. Wide and rapid fluctuations in demand, as well as the use of finished goods inventories as shock absorbers, make the task of developing an effective service very, very difficult.
Quality of service.
It is difficult to determine quality without clear specification (standardization) of a product or service. The inherent high degree of intangibility of services makes clear standardization almost impossible. Moreover, the perception of the same service by the supplier and the buyer may differ significantly. Adding to the complexity is the tendency of customers to criticize only the material elements of the service, regardless of whether it is the essence or something else.
Since the customer is part of the process, traditional quality control methods are not acceptable. It is impossible to guarantee the quality of a service before it is provided. The presence of a quality inspector affects quality and is a nuisance for both the employee and the customer.
Today, service issues are viewed from the same perspective as quality issues: the customer is the central element of all decisions and actions of every service organization.
The service philosophy can be represented as a service triangle:
Figure 4.1. Customer Service Philosophy
The customer is at the center of the service system. Viewing service in this way reinforces the general truth that the service organization exists to serve the customer, and the system and personnel exist to enable the process of service delivery.
The role of operations in the service triangle is paramount. Operations determine the structure of service systems (procedures, equipment, premises) and management of the work of service personnel.
Types of service systems
In the industrial sphere, in contrast to the service sphere, there are certain terms for classifying production operations (for example, serial production, continuous, etc.), when used in the production process, they immediately reveal the essence of the process. These definitions are also used to describe the service process, however, in order to distinguish between those in the service, the consumer (client) of the service is included in the production system, additional information is needed. Such information, which distinguishes the production function of one service system from another, is the establishment of a degree of control with the customer during the service delivery process. The definition of “contact with a service consumer” reflects the physical presence of the client in the system. Service Delivery displays the workflow used to provide a particular service.
“Degree of contact” can be generally represented as the percentage of time that a client must be in the service system to the total time that the entire process of servicing him takes. The longer the duration of contact between the service system and the service consumer, the higher the degree of interaction between them during the provision of this service.
Based on this concept, it can be concluded that service systems with a high degree of customer contact are much more difficult to manage than systems with a low level of customer contact.
In the first type of system, the client has a strong influence on the duration of service, the composition of the service and its actual or expected quality.
Table 4.1.
The influence of the client's presence during the provision of services
|
Characteristics of the service enterprise |
System with a high degree of contact with clients (bank branch) |
Low customer contact system (check processing center) |
|
Service point location |
The service must be located in close proximity to the service consumer. |
Service is predominantly carried out closer to transport hubs and sources of labor. |
|
Space planning |
Must take into account clients' psychological and physical requirements and perceptions. |
The main criterion is to ensure maximum labor productivity. |
|
Determined by the environment and the physical presence of the client. |
The client is absent. A service can be defined by fewer elements. |
|
|
Staff skills |
In addition to professional skills, the main element of service is direct work with the client, so the staff must undergo special training. |
Only professional skills. |
|
Service quality control |
The client's presence is controlled and subject to change. |
The quality standard can be precisely set. |
As can be seen from the table, the presence of a client during the provision of a service affects absolutely all the characteristics that must be taken into account during the presence of a service company.
Technologies in the service sector
There are three main technologies for providing services:
1. Production lines (for example, post office, McDonalds);
2. Self-service (this technology is widely known when using vending machines, self-service gas stations);
3. Individual approach technology.
Service development.
When designing service organizations, it is necessary to remember: it is impossible to create a stock of services.
In the service sector, with rare exceptions, it is necessary to satisfy demand as it arises. In this regard, the criterion of throughput in customer service is a matter of paramount importance (hotel, restaurant). Thus, one of the most important questions when designing a service enterprise is: what should the throughput (power) be? Excessive capacity leads to increased costs, and insufficient capacity leads to loss of customers.
You can “keep” customers by lining them up or using a pre-booking system. Queuing models are used. These models allow us to more accurately answer questions such as how many employees should work on the bank floor.
The service strategy begins with the choice of operational focus, i.e. with the establishment of priorities that are achieved, on the basis of which the company will compete in the market. These priorities include:
1. respectful treatment of clients;
2. high speed and ease of service provision;
3. price of the service;
4. variety of services (“buy everything at once”);
5. quality of materials used in the provision of services;
6. unique skills that shape the level of service offering, such as developing hairstyles, performing brain surgery, etc.
Achieving a competitive advantage in the service industry requires integration of service marketing with the service delivery process.
The main directions for solving problems of service activities.
The first direction is the industrialization of the service, when the emphasis is on efficiency and contact with customers is reduced, and the maximum possible part of the work is transferred to the “workshop”.
The second direction is based on identifying those characteristics of service that constitute its quality.
Industrialization in service development.
Industrialization in service development involves three approaches:
1. Remove the buyer from the process as long as possible and apply industrial process design strategies to the part of the process in which the buyer does not participate.
2. If the presence of the buyer is unavoidable, use him as labor.
3. Increase staffing flexibility to match capacity to demand.
Office/workshop approach. This approach attempts to identify the minimum acceptable degree of buyer involvement and assign the appropriate activity to the “office.” All other activities are hidden from the eyes of the client in the “workshop”, where traditional (industrial) principles of production organization can be applied (for example, the meat section in a supermarket and, for comparison, a regular butcher shop). The separation between office and workshop improves efficiency, but the costs in terms of maintaining the service, deteriorating staff skills and reduced job satisfaction can be high.
The "customer as labor" approach. The entire concept of self-service is based on using customers as labor. In this case, “production capacity” exactly follows demand. Often, a strict division into an office and a workshop is used. Disadvantages: It is often impossible to get advice and assistance to an inexperienced client.
The flexible workforce approach involves widespread use of part-time work. This allows companies to vary their capacity based on demand, rather than maintaining an excess workforce at off-peak times. This type of work organization creates problems.
Quality of service
Quality, measured by customer satisfaction in terms of customer retention, is generally highly dependent on the intangible elements of the service. From this point of view, most actions taken to increase productivity through “industrialization” come at the expense of service quality.
In the service industry, the biggest cost is quality assurance, both the cost of service itself and the cost of error.
An important aspect in determining customer perceived service quality is the degree of customer trust. Service will be considered poor when the customer finds himself in a state of uncertainty, either because he does not know how to behave or because he perceives uncertainty and a lack of coordination from the service provider himself. The internal consistency of the service delivery system is important in achieving high quality by maximizing customer trust and confidence.
Figure 4.2. Service provision system.
The figure shows 4 interconnected elements; service personnel, service management, the service itself and the duration of the process of providing it.
Consistency is achieved by matching each of these elements to customer needs, and by agreement between service personnel and management regarding the nature of the needs and how to achieve them.
In order to ensure that the service is provided in the required quality and with sufficient efficiency, it is necessary to follow the procedure of the following steps:
1. Make sure that the service concept is clearly stated with all the details.
2. Imagine the image that the service concept will project onto the market. This is necessary to understand consumer expectations from the service. No matter how good a service is, it will be considered bad if it does not meet these expectations.
