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Tuesday, April 12, 2011

Business Model - Industrialization of Service

Moving ahead from our last business model blog on Dis-intermediation. We move into this new blog on industrialization of Service.

A look around us is enough to get us to the fact that, all individuals differ in their tastes, interest etc. And when you are in services sector this becomes a major challenge! The varying taste of the customers could create so much of variety that it gets hard to handle. This is the case with the hospitality industry. This gets stark contrast form the manufacturing industry where almost everything is standardized - to the extent of how much time an employee gets to fit the screw in your car!. Can the two worlds be mixed together?

The likes of McDonalds today have been able to scale globally with their attempts in this direction. They have consciously limited their menu and made available a promise of delivery at the quickest. The employees of McD have a strict time frame for the time they need to prepare a burger! Right from making the pattice, getting the bun etc. In fact even smiling on delivering the burger is part of the process! Today we find this model in most of the hotels on the road side, but my guess no one could match the McD to their industrialization of the service.

With the reduction in the number of items on the menu, they have created a trade-off on the kind of people who would walk in and the time commitment. With this, they have moved from the general standard of the hospitality industry which is typically prepared to order (modified build to order) to a limited set of options (build to stock). We will deal more about these term and their usage when we being our discussion on operations management.

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