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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
The ultimate instructional guide to achieving success in the service sector
Already responsible for employing the bulk of the U.S. workforce, service-providing industries continue to increase their economic dominance. Because of this fact, these companies are looking for talented new service systems engineers to take on strategic and operational challenges. This instructional guide supplies essential tools for career seekers in the service field, including techniques on how to apply scientific, engineering, and business management principles effectively to integrate technology into the workplace. This book provides:
- Broad-based concepts, skills, and capabilities in twelve categories, which form the "Three-Decker Leadership Architecture," including creative thinking and innovations in services, knowledge management, and globalization
- Materials supplemented and enhanced by a large number of case studies and examples
- Skills for successful service engineering and management to create strategic differentiation and operational excellence for service organizations
- Focused training on becoming a systems engineer, a critically needed position that, according to a 2009 Moneyline article on the best jobs in America, ranks at the top of the list
Service Systems Management and Engineering is not only a valuable addition to a college classroom, but also an extremely handy reference for industry leaders looking to explore the possibilities presented by the expanding service economy, allowing them to better target strategies for greater achievement.
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Table of Contents
Cover
Title
Copyright
Dedication
Preface
INTRODUCTION
SERVICE COMPANY OBJECTIVES
THE SYSTEM-INTEGRATIVE VIEW
T-PROFESSIONALS
SSME-12 SKILLS
UNIQUE STRATEGY OF TEXT DESIGN
REFERENCES
Acknowledgments
Chapter 1: Introduction
1.1 INTRODUCTION
1.2 SERVICES VERSUS PRODUCTS
1.3 SERVICE SECTORS
1.4 SYSTEM-INTEGRATIVE VIEW OF SERVICE ENTERPRISES
1.5 SERVICE SYSTEMS ENGINEERING
1.6 SKILL SETS FOR SERVICE SYSTEMS PROFESSIONALS
1.7 ROLES OF TECHNOLOGISTS VERSUS MANAGERS/LEADERS
1.8 PREPARATION OF SERVICE SYSTEMS ENGINEERS/LEADERS
1.9 CHALLENGES IN THE NEW MILLENNIUM
1.10 CONCLUSIONS
1.11 REFERENCES
1.12 APPENDICES
1.13 QUESTIONS
PART I: The Functions of Engineering Management
Chapter 2: Planning
2.1 INTRODUCTION
2.2 NEW BUSINESS TECHNOLOGY TRENDS
2.3 TYPES OF PLANNING
2.4 STRATEGIC PLANNING
2.5 PARTICIPANTS IN THE PLANNING PROCESS
2.6 PLANNING ROLES OF ENGINEERING MANAGERS
2.7 TOOLS FOR PLANNING
2.8 PLANNING ACTIVITIES
2.9 SOME SPECIFIC ADVICE ON PLANNING
2.10 PLANNING IN THE HEALTHCARE INDUSTRY
2.11 CONCLUSIONS
2.12 REFERENCES
2.13 QUESTIONS
Chapter 3: Organizing
3.1 INTRODUCTION
3.2 THE CONCEPT OF STRUCTURE FOLLOWING STRATEGY
3.3 ACTIVITIES OF ORGANIZING
3.4 ORGANIZING ONE’S OWN WORKPLACE FOR PRODUCTIVITY
3.5 DEVELOPING ORGANIZATIONAL STRUCTURE
3.6 ENHANCING CORPORATE PERFORMANCE BY ORGANIZING—EXAMPLES
3.7 CROSS-FUNCTIONAL TEAMS
3.8 DELEGATING
3.9 ESTABLISHING WORKING RELATIONSHIPS
3.10 INFORMAL ORGANIZATIONS
3.11 CONCLUSIONS
3.12 REFERENCES
3.13 APPENDIX—DEFINITIONS
3.14 QUESTIONS
Chapter 4: Leading
4.1 INTRODUCTION
4.2 LEADING ACTIVITIES
4.3 DECIDING
4.4 COMMUNICATING
4.5 MOTIVATING
4.6 SELECTING ENGINEERING EMPLOYEES
4.7 DEVELOPING PEOPLE
4.8 SPECIAL TOPICS ON LEADING
4.9 CONCLUSIONS
4.10 REFERENCES
4.11 APPENDICES
4.12 QUESTIONS
Chapter 5: Controlling
5.1 INTRODUCTION
5.2 SETTING PERFORMANCE STANDARDS
5.3 BENCHMARKING
5.4 TALENT MANAGEMENT
5.5 MEANS OF CONTROL
5.6 GENERAL COMMENTS
5.7 CONTROL OF MANAGEMENT TIME
5.8 CONTROL OF PERSONNEL
5.9 CONTROL OF BUSINESS RELATIONSHIPS
5.10 CONTROL OF PROJECTS
5.11 CONTROL OF QUALITY
5.12 CONTROL OF KNOWLEDGE
5.13 CONCLUSIONS
5.14 REFERENCES
5.15 QUESTIONS
PART II: Business Fundamental for Service Systems Engineers and Leaders
Chapter 6: Cost Accounting and Control
6.1 INTRODUCTION
6.2 SERVICE/PRODUCT COSTING
6.3 APPLICATION OF ABC IN VARIOUS SERVICE SECTORS
6.4 APPLICATION OF ABC IN THE MANUFACTURING SECTOR
6.5 TARGET COSTING
6.6 RISK ANALYSIS AND COST ESTIMATION UNDER UNCERTAINTY
6.7 MANAGEMENT OF OVERHEAD COSTS
6.8 MISCELLANEOUS TOPICS
6.9 CONCLUSIONS
6.10 REFERENCES
6.11 APPENDICES
6.12 QUESTIONS
Chapter 7: Financial Accounting and Management for Service Systems Engineers
7.1 INTRODUCTION
7.2 FINANCIAL ACCOUNTING PRINCIPLES
7.3 KEY FINANCIAL STATEMENTS
7.4 FUNDAMENTALS OF FINANCIAL ANALYSIS
7.5 BALANCED SCORECARD
7.6 CAPITAL FORMATION
7.7 CAPITAL ASSETS VALUATION
7.8 CONCLUSIONS
7.9 REFERENCES
7.10 APPENDICES
7.11 QUESTIONS
Chapter 8: Marketing Management for Service Systems Engineers
8.1 INTRODUCTION
8.2 THE FUNCTION OF MARKETING
8.3 MARKET FORECAST—FOUR-STEP PROCESS
8.4 MARKET SEGMENTATION
8.5 MARKETING MIX (SEVEN PS)
8.6 CUSTOMERS
8.7 OTHER FACTORS AFFECTING MARKETING SUCCESS
8.8 CONCLUSIONS
8.9 REFERENCES
8.10 APPENDICES
8.11 QUESTIONS
PART III: SSME Leadership in the New Millennium
Chapter 9: Service Systems Management and Engineering Leaders
9.1 INTRODUCTION
9.2 NEW COMPETENCY MODEL FOR SERVICE LEADERS
9.3 TOTAL LEADERSHIP
9.4 LEADING CHANGE
9.5 LEADERSHIP STYLES, QUALITIES, AND ATTRIBUTES
9.6 LEADERS AND MANAGERS
9.7 FACTORS AFFECTING THE PROMOTION TO MANAGER
9.8 LEADERSHIP SKILLS FOR THE TWENTY-FIRST CENTURY
9.9 UNIQUE CONTRIBUTIONS EXPECTED OF SSME LEADERS
9.10 CAREER STRATEGIES FOR THE TWENTY-FIRST CENTURY
9.11 “TAKE CHARGE” TO “GET SUCCESS” FORMULAE
9.12 CONCLUSIONS
9.13 REFERENCES
9.14 APPENDICES
9.15 QUESTIONS
Chapter 10: Ethics in Service Systems Management and Engineering
10.1 INTRODUCTION
10.2 ETHICS IN THE WORKPLACE
10.3 GUIDELINES FOR MAKING TOUGH ETHICAL DECISIONS
10.4 CORPORATE ETHICS PROGRAMS
10.5 AFFIRMATIVE ACTION AND WORKFORCE DIVERSITY
10.6 GLOBAL ISSUES OF ETHICS
10.7 PHILOSOPHICAL APPROACH OF ADDRESSING ETHICS ISSUES
10.8 CONCLUSIONS
10.9 REFERENCES
10.10 QUESTIONS
Chapter 11: Knowledge Management
11.1 INTRODUCTION
11.2 BASICS OF KNOWLEDGE MANAGEMENT (KM)
11.3 MANAGEMENT OF KM PROGRAMS
11.4 KNOWLEDGE MANAGEMENT PRACTICES IN SERVICE AND MANUFACTURING SECTORS
11.5 NEW FRONTIERS OF KNOWLEDGE MANAGEMENT
11.6 CONCLUSIONS
11.7 REFERENCES
11.8 QUESTIONS
Chapter 12: Innovations in Services
12.1 INTRODUCTION
12.2 CREATIVITY AND CREATIVE THINKING STRATEGIES
12.3 FUNDAMENTALS OF INNOVATION
12.4 INNOVATION MANAGEMENT
12.5 SELECTED INNOVATION PRACTICES IN THE SERVICE SECTORS
12.6 CONCLUSIONS
12.7 REFERENCES
12.8 APPENDICES
12.9 QUESTIONS
Chapter 13: Operational Excellence—Lean Six Sigma, Web-Based Applications, and SOA
13.1 INTRODUCTION
13.2 THE NEW REVOLUTION IN PRODUCTIVITY
13.3 LEAN SIX SIGMA FOR SERVICES—THE SERVICE MODEL
13.4 INTERNET-BASED APPLICATIONS FOR SERVICE MANAGEMENT
13.5 WEB SERVICES
13.6 SERVICE-ORIENTED ARCHITECTURE (SOA)
13.7 CONCLUSIONS
13.8 REFERENCES
13.9 QUESTIONS
Chapter 14: Globalization
14.1 INTRODUCTION
14.2 GLOBAL TRADE AND COMMERCE
14.3 THE GREAT PHILOSOPHICAL DEBATE ABOUT GLOBALIZATION
14.4 NEW OPPORTUNITIES OFFERED BY GLOBALIZATION
14.5 PREPARATION FOR GLOBALIZATION
14.6 PAST PRACTICES RELATED TO GLOBALIZATION
14.7 DEVELOPING GLOBAL STRATEGIES FOR SERVICE BUSINESSES
14.8 FUTURE TRENDS
14.9 THE GLOBAL CHALLENGES AHEAD
14.10 CONCLUSIONS
14.11 SUMMARY REMARKS FOR THE TEXT
14.12 REFERENCES
14.13 QUESTIONS
Appendix: Selected Cases Relevant to Service Systems Management and Engineering
REFERENCES
Index
End User License Agreement
List of Illustrations
Chapter 1: Introduction
Figure 1.1 Roles of services in an economy. (Adapted from Guile & Guinn, 1988).
Figure 1.2 Service characteristics.
Figure 1.3 Service customization versus labor intensity. (Adapted from Fitzsimmerman et al. 2008)
Figure 1.4 Services versus products.
Figure 1.5 U.S. employment trend.
Figure 1.6 Projected percentage change in U.S. employment by sector, 2008–2018 (Bartsch 2009).
Figure 1.7 Systems view about a service enterprise.
Figure 1.8 Systems view from a service enterprise.
Figure 1.9 T Personality.
Figure 1.10 Engineers/scientists in management.
Figure 1.11 Three-decker leadership-building architecture.
Chapter 2: Planning
Figure 2.1 Strategic insights in three circles. (Adapted from Urbany and Davies, 2007)
Figure 2.2 Seven steps to integrate strategic planning with implementation. (Adapted from Kaplan & Noton, 2008)
Figure 2.3 Scenario-planning process. (Adapted from Garvin and Levesque, 2006)
Chapter 3: Organizing
Figure 3.1 Coordinators between front- and back-office workers.
Figure 3.2 Options available for positioning services in the marketplace.
Figure 3.3 Functional organization.
Figure 3.4 Discipline-based organization.
Figure 3.5 Product/service organization.
Figure 3.6 Region-based organization.
Figure 3.7 Matrix organization.
Figure 3.8 Team organization.
Figure 3.9 Network (weblike) organization.
Figure 3.10 Service profit chain model.
Figure 3.11 Annual revenue of AES Corporation.
Figure 3.12 Delegation matrix.
Figure 3.13 Roles assignment example.
Chapter 4: Leading
Figure 4.1 Roles and responsibilities.
Figure 4.2 Linear programming problem.
Figure 4.3 Corporate transformational changes. (Kotter, 2007)
Chapter 5: Controlling
Figure 5.1 The Pareto principle.
Figure 5.2 Supervision curve.
Figure 5.3 Industrial average problems with new cars.
Figure 5.4 Applying systems principles to improve service quality.
Figure 5.5A Block flow diagram for hospital emergency room operation.
Figure 5.5B Block flow diagram for hospital emergency room operation.
Chapter 6: Cost Accounting and Control
Figure 6.1 Block-flow diagram for implementing ABC.
Figure 6.2 Complexity and scope of costing system versus required development efforts.
Figure 6.3 Representation of risks.
Figure 6.4 Cumulative distribution functions.
Figure 6.5 Triangular distribution function.
Figure 6.6 Normal distribution function.
Figure 6.7 Beta distribution function.
Figure 6.8 Poisson distribution function.
Figure 6.9 Total capital cost represented in a probability density function.
Figure 6.10 Total capital cost presented in a cumulative distribution function.
Figure 6.11 Project control and tracking.
Figure 6.12 Coefficient of variation.
Figure 6.13 Decision tree analysis.
Figure 6.A1 Timeline convention.
Figure 6.A2 Conversion of a triangular probability density function to its cumulative descending function.
Figure 6.A3 Cumulative descending distribution function of a cost component.
Chapter 7: Financial Accounting and Management for Service Systems Engineers
Figure 7.1 Security market line.
Figure 7.2 Optimum leverage.
Figure 7.3 Project NPV versus debt percentage.
Figure 7.A1 T-account.
Figure 7.A2 T-Accounts with additional details.
Figure 7.A3 Risk curves.
Chapter 8: Marketing Management for Service Systems Engineers
Figure 8.1 Marketing interaction.
Figure 8.2 Sales orientation.
Figure 8.3 Marketing orientation.
Figure 8.4 Marketing process.
Figure 8.5 Marketing effectiveness diagram.
Figure 8.6 Service value versus knowledge/technology.
Figure 8.7 Marketing mix.
Figure 8.8 Segmentation flow diagram.
Figure 8.9 Flower of Service model. (Adapted from Lovelock & Wirtz 2006)
Figure 8.10 Perceptual map.
Figure 8.11 Service life cycle.
Figure 8.12 Product (service) portfolio.
Figure 8.13 Brand pyramid.
Figure 8.14 Brand classes. (Adapted from Berry & Settman, 2007)
Figure 8.15 Model of building brand equity. (Adapted from Berry & Settman, 2007)
Figure 8.16 Experience curve.
Figure 8.17 Price–quality relationships.
Figure 8.18 Processes of setting service price.
Figure 8.19 Target pricing.
Figure 8.20 Marketing communications.
Figure 8.21 Up-shift of the service demand curve.
Figure 8.22 Pull strategy.
Figure 8.23 The Push strategy.
Figure 8.24 Modes of communications enhanced by the Internet. (Adapted from Zimmerman, 2000)
Figure 8.25 Distribution channels.
Figure 8.26 Organizational effectiveness.
Chapter 9: Service Systems Management and Engineering Leaders
Figure 9.1 Options to gain supports from followers.
Figure 9.2 Leadership styles.
Figure 9.3 Managerial competencies.
Figure 9.4 Ranking of patents awards, 2008.
Figure 9.5 Product development process.
Chapter 10: Ethics in Service Systems Management and Engineering
Figure 10.1 Stakeholders of a company.
Figure 10.2 The ethical leader’s decision tree (Bagley 2003).
Figure 10.3 Undergraduate admission at University of Michigan.
Figure 10.4 Carbon dioxide emission by countries. (Source: U.S. Department of Energy, 2006)
Figure 10.5 Corruption-based ranking of countries. (Adapted from Transparency International, Berlin Germany)
Figure 10.6 Decision tree for global ethics problems.
Chapter 11: Knowledge Management
Figure 11.1 Source of wisdom.
Figure 11.2 The creation of tacit and explicit knowledge.
Figure 11.3 Monitoring the communities of practice.
Figure 11.4 Expertise search and retrieval system. (Adapted from Idinopoulos & Kempler, 2003)
Figure 11.5 Accenture’s knowledge management system. (Adapted from Meister & Davenport, 2005)
Figure 11.6 Ernst & Young’s knowledge management system. (Adapted from Chad and Gavin, 1997)
Figure 11.7 Elements of knowledge management system at DaimlerChrysler. (Adapted from Rutstad & Coughlan, 2001)
Figure 11.8 Sample design of a knowledge management system.
Chapter 12: Innovations in Services
Figure 12.1 The creative process. (Adapted from Amablile, 1998)
Figure 12.2 Components of individual creativity. (Amabile 1998.)
Figure 12.3 Deep-learning questions. (Chang 2006.)
Figure 12.4 Divergent and convergent thinking processes.
Figure 12.5 Creative process leading to innovation.
Figure 12.6 Conventional thinking patterns.
Figure 12.7 Modified model of thinking strategies.
Figure 12.8 Systematic search for analogies. (Adapted from Herstatt, et al. 2005.)
Figure 12.9 System-mapping diagram.
Figure 12.10 Generation of new ideas.
Figure 12.11 Iterative routine to generate innovative service ideas.
Figure 12.12 Stage-gate process.
Figure 12.13 Service consumption patterns and benefits. (Adapted and modified from Berry et al. 2006)
Figure 12.14 Customer value dimensions.
Figure 12.15 Overshoot and disruptive innovations.
Figure 12.A1 Process of improving customer value
Figure 12.A2 Collaborating teams.
Figure 12.A3 Hierarchy of customer value.
Chapter 13: Operational Excellence—Lean Six Sigma, Web-Based Applications, and SOA
Figure 13.1 Service elements.
Figure 13.2 Disintermediation.
Figure 13.3 Dell model.
Figure 13.4 Brokerage model.
Figure 13.5 Informediary model.
Figure 13.6 Affiliate model.
Figure 13.7 Structural elements of an SOA. (Adapted from Krafig et al. 2005)
Figure 13.8 An SOA for airlines. (Adapted from Krafig et al. 2005)
Chapter 14: Globalization
Figure 14.1 Current concentration of major MNES.
Figure 14.2 GDP forecasts for G6 and BRIC nations. (Adapted from Wilson and Parashothaman, 2003.)
Figure 14.3 Ownership of Nestlé.
Figure 14.4 Major Change in U.S. household wealth.
Figure 14.5 The concept of continuous mobility.
Figure 14.6 Loss of manufacturing jobs in the U.S. workforce. (U.S. Department of Labor.)
Figure 14.7 U.S. manufacturing productivity. (U.S. Bureau of Labor Statistics; Federal Research Board.) (Resource: Federal Reserve Bank of Chicago, October 2007.)
Figure 14.8 Service jobs. (Adapted from Schwartz, 2003)
Figure 14.9 U.S. engineering and science graduates as percentage of the five-country total. (National Science Foundation, 2004)
Figure 14.10 Steady-ascent strategy—adding value in time.
Figure 14.11 Six-dimensional challenges.
Figure 14.12 Three-decker leadership-building architecture.
Figure 14.13 Emphasis on strategic differentiation and operational excellence.
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e1
Service Systems Management and Engineering
Creating Strategic Differentiation and Operational Excellence
C. M. Chang
The State University of New York at Buffalo
Copyright © 2010 by John Wiley & Sons, Inc. All rights reserved
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and the author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Library of Congress Cataloging-in-Publication Data:
Chang, Ching M.
Service systems management and engineering : creating strategic differentiation and operational excellence / Ching M. Chang.
p. cm.
Includes index.
ISBN 978-0-470-42332-5 (cloth)
1. Systems engineering. 2. Management information systems. 3. Service industries—Information technology—Management. I. Title.
TA168.C39 2010
658—dc22
2009045962
Dedicated to my loving family, wife Birdie Shiao-Ching, son Andrew Liang Ping, son Nelson Liang An, daughter-in-law Michele Ming Xiu, and grandson Spencer Bo-Jun.
Preface
INTRODUCTION
The U.S. government is forecasting significant growth rates for the U.S. service sectors over the next few decades. According to the U.S. Bureau of Labor Statistics, in 2008 service-providing industries made up 77.2 percent of total employment in the United States. This percentage is projected to increase to 78.96 percent by 2018, including the impact of the general economic recession of 2007 to 2009. It asserts that the overall growth of the service sectors is to continue its upward trend going forward.
Service systems engineering, which employs scientific and engineering principles to add value to service sectors, is a relatively new field, A specific case of service systems engineering is the efficient application of computer-IT-related technologies and the proper management of teams, projects, and processes involved in achieving productivity, time-to-market, convenience, and value-added benefits to customers.
Services require a higher degree of customization and are less amendable to mass production than products. NSF has initiated a large-scale research program to support new research activities in the emerging field of service systems engineering. It is quite likely that, in view of the significant manpower demand projected for the service sectors, schools will also start to participate in training future systems engineers for the service sectors.
The service company objectives, systems view of service enterprises, T-professionals, SSME-12 skills, and unique strategy of text design will be discussed next.
SERVICE COMPANY OBJECTIVES
Companies in the service sector need to pursue both strategic differentiation and operational excellence in order to enlarge and sustain long-term profitability.
Strategic differentiation is essential for companies to create and maintain market competitiveness in the form of differentiable service packages. Market competitiveness must be built on service innovations as well as on customer orientation. Service systems engineers need to become well versed in creating innovations that are both desired and required by customers. Specific thinking strategies are discussed in Chapter 12, “Innovations in Services,” to promote the generation of new ideas and concepts in service environments. Besides training in creative thinking, students need to be exposed to marketing management, financial analysis, and cost accounting so that they can make strategic choices in order to realize long-term competitive advantages in the marketplace and attain sustainable profitability for their employers.
Operational excellence is also important, as service-providing employers need to develop, produce, distribute, and support their service packages at low cost, high efficiency, and competitive speed. Systems engineers need to learn methods to cut waste, streamline operations, and invigorate productivity of their operations. They need to be exposed to engineering management principles related to planning, organizing, leading, and controlling. Tools advanced in industrial engineering, such as Lean Six Sigma, value stream mapping, DMAIC methodology, 5 S, optimization, and others can be readily applied to add value to service organizations. In addition, service companies can also achieve cost savings and productivity enhancement by using software modules based on Service-Oriented Architecture (SOA) to perform its noncore activities, as well as utilizing Web-based enabler programs.
For systems engineers to contribute effectively to the important corporate goals of achieving strategic differentiation and operation excellence, they need to exercise their leadership skills in envisioning the future. They would benefit greatly from being exposed to the current “best practices” in the service industries. Many of these “best practices” will be introduced throughout the text. The motto to be instilled in graduates is “constantly searching out best practices and then superseding them.” Successful systems engineers and leaders must also be able to “think globally and act locally.”
THE SYSTEM-INTEGRATIVE VIEW
When educating future service leaders, we agree with Gosling and Mintzberg (2004) that we need to focus on wisdom, as well as knowledge, in order to emphasize the capacity to combine knowledge from different sources and apply this knowledge judiciously. Educators need to emphasize the systems view, including thoughtful reflection and exposure to alternative ways of thinking in order to augment their students’ understanding of the world.
Systems approach—the study of and reactions to the interconnectivity and interactions between functionally related components of a complex enterprise system—applies well to today’s service systems. According to Norton (2000), systems engineering should be a required course in every business school and executive program as today’s business needs are met through a management framework.
By taking a system-integrative view, knowledge workers would be able to see a panoramic view of the forest; mountains beyond and blue sky above, instead of only the individual trees. These workers would recognize the components in a system, the roles played by them, the interactions between them, and the synergy produced that adds value above and beyond the sum of the individual parts.
This conceptual framework is supported by Section 1106 of the National Competitiveness Investment Act, which Congress passed on August 2, 2007 (U.S. Congress HR 2272-2007). In this section, service science is defined as:
Curricula, training, and research programs that are designed to teach individuals to apply scientific, engineering, and management disciplines that integrate elements of computer science, operations research, industrial engineering, business strategy, management sciences, and social and legal sciences, in order to encourage innovation in how organizations create value for customers and shareholders that could not be achieved through such disciplines working in isolation.
Clearly embodied in this definition are the concepts of (1) systems engineering perspectives, (2) application orientation, instead of only focusing on academic research, (3) integrating multiple knowledge domains to bring about innovations, and (4) value creation emphasis to benefit customers and stakeholders.
From the perspective of the service enterprises, it is evident that they are indeed complex business systems, composed of a number of discrete and multidisciplinary components that interact with one another. Systems thinking is of critical importance (Boardman and Sauser 2008). Service leaders of tomorrow need to adopt a systems view about their enterprises, so that attention is paid to all functional units in order to assure success in the marketplace. Figure 1.7 illustrates some typical functional units in a service enterprise.
Science is a very important component in this business system. Science enables great contributions in the form of new types of services, new ways of delivering services, and new ways of supporting customers. Spohrer and Maglio (2010) offer a comprehensive discussion on several aspects of service science. However, science is just one of many contributors to the success of a service enterprise. Thus, we prefer to call SSME Service Systems, Management and Engineering (as opposed to Service Science, Management and Engineering) to recognize the important roles that a variety of other disciplines contribute to the success of this business system.
It is known that certain academic programs are said to have failed to impart useful skills, prepare effective leaders, instill norms of ethical behaviors, and lead graduates to good corporate jobs, because of their misplaced emphasis on academic rigor of scientific research (Schoemaker 2008), instead of focusing on the graduates’ competency and understanding of the important drivers of business performance (Bennis and O’Toole 2005). We believe that educating future service leaders with a systems view, which is valid from both academic and relevance standpoints, would avoid falling into the same trap.
According to Chesbrough and Spohrer (2006), universities should develop curricula and advocate research that is focused on (1) business models, (2) productivity, (3) quality of life, and (4) competition and innovations through services. Universities should adopt a multidisciplinary approach involving disciplines such as business, engineering, information technology, computer science, and the social sciences. The research required to meet these goals must be mission oriented and application focused.
The rapidly changing environment of today’s global economy calls for people capable of holistic thinking, balancing analysis and intuition, living with ambiguity, and practicing strategic flexibility. The skills and capabilities the students of today acquire need to be practical and relevant.
For SSME graduates, relevance is far more important than scientific rigor, so that they are prepared to deal with the messy ambiguities of the real world. This text emphasizes this practical relevance.
T-PROFESSIONALS
As suggested by Maglio et al. (2006), knowledge workers in services should have an in-depth understanding of a particular field (e.g., business, engineering, computer science, psychology, or anthropology), the vertical part of the T. They also need to have a fundamental understanding of service economy issues, core disciplines that interact with their core knowledge to solve world problems, and the ability to see applications across industries for their knowledge (the horizontal part of the T). In addition, they need to possess broad perspectives and collaborative skills to manage teams, projects, programs, and interact with other professionals. The specific objective of this text is to prepare service engineers to acquire the horizontal part of the T-personality.
The aim of this text is to enable service systems engineers to become much more valuable to service industries by emphasizing broadened perspectives and the knowledge and skills required to strengthen the horizontal part of the T. This text has the potential for educating service systems engineers of any technical background (e.g., industrial engineering, business consulting, information/computation, health science, and other fields). Furthermore, the proposed text could be used by professionals with technological specialty trainings to intensify their marketability and potential value to service enterprises.
Knowledge workers in service sectors must be ready to contribute in two specific ways: strategic differentiation and operational excellence. Both are important, as indicated by Chang (2007):
T-shaped professionals need to be capable of creating strategic differentiation and operational excellence for their service employers. Strategic differentiation emphasizes the creation of novel service packages that lead to increased sales revenues. It involves strategy formulation, marketing, design, innovation and supply chains management. Operational excellence, on the other hand, focuses on achieving short-term improvements in processes that leads to lowered cost of services sold. It emphasizes productivity, measurements, quality, operations, human resource management, engineering and computing. T-shape professionals are thus required to become familiar with the principles and methodologies of visioning the future and leading cross-functional teams to bring about breakthrough innovations needed in the marketplace, as well as, applying proven engineering technologies and other tools to achieve gains in productivity, efficiency, quality and cost.
This text, along with a number of engineering/technological courses, provides the preparation needed to accomplish these goals.
SSME-12 SKILLS
A key strategy of this text is to address the skills and capabilities deemed essential to service system engineers. SSME-12 skills are composed of two groups of skills and capabilities. The first group was suggested by Sorby et al. (2006), comprising twenty-four specific skills important to B.S. engineers in the service industry. These twenty-four skills may be organized into the following six categories:
Management of service systems
Operations of service systems
Service processes
Business management
Analytical skills
Interpersonal skills
In a 2009 report, the Carnegie Foundation for the Advancement of Teaching emphasized critical thinking, problem solving, teamwork, and a multidisciplinary approach. Choudaha (2008) suggested a list of required skills and attitudes for master’s degree graduates, based on an online Delphi study. This list includes integration, collaboration, adaptability, critical thinking, interpersonal competence, problem solving, system conceptualization, and diversity orientation. Some of these skills are similar to those identified by Sorby et al. (2006).
For service systems engineers at the master’s degree level, I have added the following six groups of skills and capabilities to round out the twelve skill sets:
Knowledge management
Creativity and innovations in services
Financial and cost analysis and management
Marketing management
Ethics and integrity
Global orientation (thinking globally and acting locally)
These twelve categories of skills and capabilities constitute the SSME-12 skills, which, in turn, fully encompass the eleven attributes specified by National Academy of Engineering to be important for Engineers of 2020:
Strong analytical skills
Practical Ingenuity
Creativity
Communication
Business and management
Leadership
High ethical standards
Professionalism
Dynamism
Agility, resilience, and flexibility
Life-long learning
This text is focused on training students in the SSME-12 skills by using a set of systematically assembled and properly designed class examples, class problems, application notes, specific assignments, and supplemental readings. Many of these skills and capabilities will be illustrated in the text. Business cases and best practices are used throughout to further promote the intellectual exchanges between instructors and students. The objective is to make sure that the students will not only be able to think strategically, make decisions rationally, and execute effectively, but also keep up with innovations in learning. This new text is expected to be of general use to all service systems engineers, regardless of the specific service sectors they elect to enter.
UNIQUE STRATEGY OF TEXT DESIGN
The primary objective of this text is to ready readers to contribute toward the needs of service sector companies in strategic differentiation and operational excellence. The text is designed to prepare students to lead service systems teams, projects, technologies, or programs in a knowledge economy within competitive global environments.
The preparation of this text follows the proven Three-Decker Leadership-Building Architecture of our awarding winning text: C. M. Chang, Engineering Management: Challenges in the New Millennium (Upper Saddle River, NJ: Prentice Hall, 2005), which has been adopted by more than twenty U.S. universities and numerous international schools, as well as being translated into the Korean language.
The new chapters in this text include: “Introduction to SSME,” “Innovations in Services,” “Knowledge Management,” and “Operational Excellence.” Other chapters such as “Globalization,” “Service Systems Engineers as Leader,” “Ethics,” and “Marketing Management” have been significantly revised to include service-based examples, problems, and business cases.
A large number of service-related business cases are contained in the text-end Appendix. These cases cover various service sectors and address diversified SSME issues. They represent a useful extension of the exercise problems listed at the end of each chapter.
By using a set of systematically assembled and properly designed class examples, class problems, application notes, specific assignments, and supplemental readings, selected skills and capabilities are incorporated in the relevant chapters.
This book is organized in three parts. Part I reviews the functions of engineering management. Chapters 2 through 5 are entitled “Planning,” “Organizing,” “Leading,” and “Controlling.” Part II covers the business management fundamentals, Chapters 6 through 8, which include “Cost Accounting and Control,” “Financial Accounting and Management,” and “Marketing Management.” Part III addresses the service leadership in the new millennium and contains Chapters 9 through 14: “Service Systems Engineers as Managers and Leaders,” “Ethics,” “Knowledge Management,” “Innovations in Services,” “Operational Excellence,” and “Globalization.” The text-end Appendix includes more than thirty selected business cases. Figure 1.11 illustrates the current Three-Decker Leadership-Building Architecture, which forms the basis of this text design.
This book is suitable for use as a text for two 3-credit graduate courses in 15-week semesters, when selected business cases are added. It may also be used as text for one 3-credit graduate course in a 15-week semester in the absence of case studies, as well as for an elective course at the senior undergraduate level. It could be part of the required core courses in a typical master’s degree program centered on service systems management and engineering (SSME), which needs to be effective yet flexible, as the service industry is composed of numerous divergent sectors, such as professional and business consulting, transportation, distribution and logistics, healthcare, IT services, financial services, entertainment, education, government, and others. A sample curriculum for such a master’s degree program might include the following three-credit courses:
Required courses: SSME-1 and SSME-2 (based on this text).
Four more required courses form the core, and are selected from the following: (a) Six Sigma Quality in Services, (b) Supply Chain Management and Global Operations, (c) Services-Oriented Architecture and Web Services, (d) Data Mining in Services, (e) Innovations in Services, (f) Project Management, (g) E-commerce Technology, (h) Technical Communications, and (i) others.
Three elective courses are to be selected from a broader list of service sector–specific courses in order to better customize the degree program to the needs of individual students: (a) Critical Issues in Healthcare, (b) Linear Programming and Optimization, (c) Process Simulation and Control, (d) Advanced Marketing, (e) Consumer Behavior, (f) Knowledge Management, (g) Operations Management, (h) Logistics, (i) Stochastic Methods, and (j) others.
One capstone project, which is to emphasize the application of SSME course knowledge and skills to add measurable value to a service organization.
This curriculum, designed in the spirit of the T-personality, not only enables graduates to understand the requirements necessary to be successful within any given service enterprise but also imparts the necessary technological background for the actual implementation of this learning.
In summary, this text aims to equip the future service systems engineers and leaders of tomorrow with the necessary knowledge and skills to achieve strategic differentiation and operational excellence in the growing service sector market.
REFERENCES
Bennis, Warren G., and James O’Toole. 2005. “How Business Schools Lost Their Way.” Harvard Business Review (May).
Boardman, John and Brian Sauser. 2008. Systems Thinking: Coping with 21st Century Problems. Boca Raton, FL: CRC Press.
Choudaha, Rahul. 2008. “Competency-based Curriculum for a Master’s Program in Service Science Management and Engineering: An Online Delphi Study.” Doctoral Dissertation, University of Denver, Denver, Colorado.
Chesbrough H., and Jim Spohrer. 2006. “A Research Manifesto for Service Science.” Communications of the ACM 49 (7): 35–41.
Chang, C. M. 2007. “Contributed Comments to IBM-Cambridge Symposium entitled “Succeeding through Service Innovation.” ” July 2007, University of Cambridge, Cambridge, England. URL: /www.ifm.eng.cam.ac.uk/ssme/comments/business.html#carl-chang
Gosling, Jonathan, and Henry Mintzberg. 2004. “The Education of Practicing Managers,” MIT Sloan Management Review 45 (4): (Summer).
Heftly, Bill, and Wendy Murphy, eds. 2008. “Systems Engineering.” In Service Science Management and Engineering—Education for the 21st Century. New York: Springer.
Maglio, P. P., S. Srnivasan, J. T. Kreulin, and J. Spohrer. 2006. “Service Systems, Service Scientists, SSME and Innovation.” Communications of the ACM 49 (7): 81–85.
Norton, David P. 2000. “Is Management Finally Ready for the Systems Approach?” Harvard Business School Balance Scorecard Report, Article Reprint No. B0009E.
Schoemaker, Paul J. H. 2008. “The Future Challenges of Business: Rethinking Management Education.” California Management Review 50 (3): (Spring).
Sorby, Sheryl A., Leonard J. Bohmann, Tom Drummer, Jim Frendewey, Dana Johnson, Kris Mattlia, John Sutherland, and Robert Warrington. 2008. Defining a Curriculum for Service. Houghton: Michigan Technological University.
Spohrer, Jim and P. P. Maglio. 2010. “Service Science: Toward a Smarter Planet,” Chapter 1 in Salvendy, Gavriel and Waldemar Karwowski (Eds), Introduction to Service Engineering. John Wiley (January).
Acknowledgments
It is indeed a pleasure to acknowledge the invitation extended to me in 1987 by Dr. George Lee, then dean of the School of Engineering and Applied Sciences of the State University of New York and current SUNY Distinguished Professor, to design and teach two graduate courses on engineering management. The course notes developed at that time and updated regularly ever since have been built on a design model containing three parts: (1) engineering management fundamentals (planning, organizing, leading and controlling), (2) business management fundamentals (cost accounting, financial accounting and management, and marketing management) and (3) engineering leadership in the new millennium (engineers as leaders, Web-based tools, ethics, globalization, and challenges in the new millennium). With the energetic support of Dr. George Lee, as well as his successor, Dr. Mark Karwan, current Praxair Professor in Operations Research, I have been able to test-teach this “Three-Decker Leadership-Building Architecture” continuously since 1987. I am deeply indebted to both Dr. George Lee and Dr. Mark Karwan for their constant support and encouragement over the years.
I want also to express my appreciation for an excellent opportunity to serve as a member of a departmental committee, which was charged to design a new master’s degree program in service systems engineering (SSE) during the period of November 2006 to August 2007. For a short period of time in 2007, I also served as the director of this new master’s degree program. Because of these activities, I was highly motivated to scan, collect, and study a vast amount of service, engineering, and business literature, which subsequently enabled me to modify quite a few sections in the first two parts and new service-centered chapters to the third part of this Three-Decker Leadership-Building Architecture. These new chapters include Chapter 9, “Service Systems Engineers as Managers and Leaders,” Chapter 11, “Knowledge Management,” Chapter 12, “Innovations in Services,” and Chapter 13, “Operational Excellence.” During the ensuring semesters, I was able to test-teach all these new and modified chapters.
Various example problems in the current text came from the test problems and business cases used in two graduate courses I taught on engineering management for SSE. The combinatorial, heuristic and normatively guided method of producing innovative ideas was tested in about twenty team projects, each of which was conducted in multiple rounds with graduate students as team participants. During the same period of time, I directed all capstone projects of all students enrolled in this master’s degree program in SSE. Many of these capstone projects, which were sponsored by industrial firms, contributed to the discussions contained in the current text. I appreciate the valuable inputs many of the SSE graduate students have made, which have enhanced the usefulness of this text enormously.
Finally, I wish to acknowledge the extraordinary support of the John Wiley team, led by Robert L. Argentieri, and assisted by Daniel Magers, Nancy Cintron, William/Cheryl Ferguson, Brian Roach, Jeffrey Faust, and Victor Aranjo. Their dedication and commitment have been invaluable toward the completion and success of this text. I also wish to express my appreciation for the able assistance offered by Andrea Strudensky.
C. M. Chang, Ph.D., MBA, PE
State University of New York at Buffalo
Buffalo, New York
Chapter 1Introduction
1.1 INTRODUCTION
Services represent by far the largest contributor to the U.S. economy. Based on data published by U.S. Bureau of Labor Statistics, services and the total employment in the service sectors make up over 75 percent of the U.S. gross domestic product (GDP). As well, up until the year 2018, 96 percent of all 15.3 million new jobs are expected to come from the service sectors. Accordingly, the importance of services to the U.S. economy is clearly self-evident (Bartsch 2009). In fact, systems engineers are ranked at the very top of the list of “Best Jobs in America,” with a 45% growth over a ten-year period, according to a Moneyline article (Anonymous 2009).
This chapter provides the definition and characteristics of services in contrast to products. Following this explanation, service sectors in the United States are introduced. A systems view of service enterprises is presented and the principles of service systems engineering are delineated. The skills and capabilities deemed essential to service systems engineers and leaders are then discussed, including how this text will help future graduates acquire the T-personality to meet the challenges of the new millennium. Conclusions are then presented.
1.2 SERVICES VERSUS PRODUCTS
Services are defined as “combinations of deeds, processes, and/or performances provided to customers in exchange relationships among organizations and individuals” (Zeithami et al. 2006). Services have seven key characteristics:
Provider and recipients are in direct face-to-face contact—based on the service roles, self-selected by the providers to prefer for such direct contact.
In service sectors, the merits of quality and productivity are not well defined (e.g., no physical parameters as existed in the goods sector)—raising issues related to whether cognitive science, organization, and engineering systems are more prominent in service delivery, productivity, and quality.
Although the physical assets depreciate over time and use in goods sector, key assets are generally reusable in the service sector. These service assets may actually increase in value. Examples are organization and human resources that derive from knowledge bases and skills realized in service interactions.
In the goods sector, equipment is usually newly designed and hence protected by intellectual rights. In services, equipment in application is often purchased and nonprotectable.
Services focus on knowledge-based understanding of technology and on how to use technology.
For service organizations, the keys to success are to adapt, utilize, and incorporate technological processes and equipment.
The right strategy of management of technology for services needs to take these factors into account.
Services are activities that cause a transformation of the state of an entity (e.g., a person, product, business, and region/nation) in a manner that is mutually shaped by its provider and the client. The transformation of the state of a person can be accomplished by services related to foods, healthcare, leisure, hospitality, travel, financial/investment advisement, banking, legal, education, entertainment, mail/package delivery, and others. The transformation of the state of a product is made possible by the design, operations, and maintenance services rendered. The transformation of the state of a business is the result of pursuing management consulting, outsourcing, e-procurement, marketing research, mergers and acquisitions, and others such corporate activities. The transformation of the state of a region/nation requires consulting advice and analysis related to regional/national economic advancement strategy, taxation policy, and other such macroscopic issues.
Services activities are becoming increasingly more diversified. Individual services are relatively simple, although they may require customization and a significant back-office support (e.g., database, knowledge management, analysis, forecasting, etc.) to assure quality and a timely delivery. Product services are also relatively straightforward, as product specifications, performance standards, quality control, installation guidelines, and maintenance procedures require good communication and understanding between providers and users. Business services are complex; some may involve intensive negotiation, work process alignment, quality assurance, team collaboration, and service coproduction. Regional and national services are even more complex, as they may affect policy, custom regulations, export permits, local business practices, logistics, distribution, and other such issues.
Services play an important role in an economy, as illustrated in Fig. 1.1 (Guile and Quinn 1988).
Services may also be classified into either front-stage or back-stage activities, depending on how close/remote the activities involved are to/from the customers. Front-stage activities are those in which provider and client interact directly. Customization leads to high value and high profit, whereas standardization tends to diminish profit margins. Back-stage activities do not directly involve customers and are mostly related to the efficient production of the services.
Services have a varying degree of front- and back-stage activities, which, in turn, have a varying degree of client interaction intensity. Figure 1.2 illustrates these specific characteristics of services. Services are also known to require different levels of labor intensity and degrees of customization, as depicted in Fig. 1.3. Table 1.1 illustrates a number of examples for the front- and back-stage activities involved in services.
Figure 1.1Roles of services in an economy. (Adapted from Guile & Guinn, 1988).
Figure 1.2 Service characteristics.
Figure 1.3Service customization versus labor intensity. (Adapted from Fitzsimmerman et al. 2008)
Table 1.1 Front- and Back-Stage Service Activities
Number
Service Sectors
Front Stage
Back Stage
1
Health care
Working with patients
Setting up and maintaining facilities
2
Education
Delivering lectures
Setting up and maintaining educational facilities
3
Retail
Sales experience
Logistics
4
Professional
Assessment and consultation
Research, data analysis, interpretation, knowledge creation, insights preservation
5
Information
Presenting and delivering
Gathering, sensing, and organizing
6
Communications
Billing
Setting up infrastructure
7
Transportation
Transport experience
Maintaining the fleet
8
Utilities
Delivering, billing, and support
Setting up and maintaining infrastructure
Services may also be classified as high technology and low technology. Flipping hamburgers and sweeping floors are low-tech service activities, whereas conducting an e-market transaction and offering an engineering consultation service are high-tech activities. Technology-intensive services have at least five special features (Tien and Berg 2003):
Information-driven
. The creation, management, and sharing of information is crucial to the design, production, and delivery of services.
Customer-centric
