TRM - 서비스경쟁력향상 필요이유와 방법_SERI
- 09-06
- 1,070 회
- 0 건
Process Innovation for Improved Service Competitiveness
By Choi Bong
I. Competitive Service
Korea’s service industry is becoming increasingly vital, accounting for about a half of
its GDP. It hires more than 60% of total workforce, a sign of growing economic maturity.
In the more mature economies of the US, UK, Japan and Germany, the service
industry’s share is over 70% of GDP.
Some manufacturing companies take advantage of the power of service to improve
their competitiveness. Giant manufacturing companies like aerospace technology firm
Honeywell, power and automation technology group ABB, medical equipment
manufacturer Siemens, and jet engine manufacturer General Electric (GE) have all
created new business opportunities by strengthening their after-sales service.
However, Korean companies in general, have inadequate idea on the need for
providing better service to their clients. To assess their level of competitiveness in
services, Samsung Economic Research Institute surveyed 757 subscribers to our
website ww.seri.org, hoping to see how Korean chief executive officers regard this
matter. The result showed that 98% of respondents affirmed the critical importance of
service as a factor determining a company’s competitiveness. But 56% of respondents
also said their companies’ service competitiveness was no better than that of
competitors. When asked why they hesitate strengthening their service
competitivenes, 33% replied that they lacked information on how to improve their
service, even though they recognized its need. Thus many Koreans companies
appeared unable to improve service competitiveness because they had no idea
how to improve it.
Because service production and service consumption go together, Korean
companies must make more efforts to innovate service process in order to strengthen
their competitiveness in the service area. This report focuses on how they can
achieve this goal by way of process innovation.
II. Service Process Innovation
This report divides service process innovation strategies into four types based on
types of business (manufacturing vs. service) and the target of process innovation
(existing process vs. newly designed process).
Type I
Product manufacturers can find new revenue sources by fostering the existing service
sector into profit-generating business. After a thorough analysis of consumers’ needs,
Hankook Tire launched the concept of comprehensive tire maintenance service and
set up a franchise network named ‘T-Station’ where consumers can not only buy tires
but also have their old tires maintained and repaired. Hospitals can rent magnetic
resonance image (MRI) equipment from GE by paying for maintenance cost and rental
fee to GE. Computer maker IBM has successfully turned itself from a manufacturer
into service provider.
As seen from these examples, manufacturers need to understand consumer needs
and product life cycle and analyze how extensively they can foster the service sector
into new profit-generating businesses from a long-term perspective. After that, they
can set up effective strategies to nurture their service into new business.
Type II
Strengthening the existing services can be a good strategy for manufacturing
companies to improve their service competitiveness. This is a strategy to improve
competitiveness of their existing product lines by improving service. Those choosing
this strategy should differentiate themselves from competitors by providing quality
service which can win consumer support. For example, they can overcome the
limitation of time and space by applying Internet and information technology to their
service process innovation.
Samsung Electronics, Korea’s leading electronics maker, introduced a new
after-sales service system under which computer experts deal with problems of
computers located at consumers’ homes through their remote control program called
‘Magic Doctor.’ The new service allows the company to cut cost and save customers
time. OTIS Elevator Company goes one step further. The microprocessors built inside
elevators detect problems and alert the elevator maker. With the help of
microprocessors, OTIS can dispatch mechanics to deal with problems even before
users recognize them.
The manufacturing companies need to introduce the so-called ‘end-to-end’ service
and provide after-sales service until customers throw their products away. They must
continuously analyze, evaluate, and improve their service process.
Type III
Service companies can create new value-added services and foster them into
profit-generating business. Companies belonging to Type III (service companies
designing new service process) should grasp hidden needs of consumers and
release brand new services ahead of competitors.
Search engine Google has released a series of unprecedented services such as
Google Maps, Google Earth and Google Desktop which consumers hardly dreamed of. E-Mart, one of Korea’s biggest retailers, enabled consumers to shop on the Internet.
Through that online shopping service, it has lured double-income families and the
handicapped. As of July 2006, its online shopping business grew 66% from a year ago.
Service companies desiring new business opportunities need to keep a closer eye on
the market trend and make a good use of information technology.
Type IV
Service companies belonging to Type IV (service companies wanting to improve the
existing service process) can strengthen their quality competitiveness by innovating
service process. Korea’s Military Manpower Administration and Scottsdale Healthcare’s Osborn Hospital in the US are prime examples of successful process innovator.
The former improved its physical checkup process for draftees.
Similarly, Scottsdale Healthcare’s Osborn Hospital in Arizona improved its service
process in its emergency room. After seeing that many people requiring emergency
treatment being turned away, the hospital introduced Six Sigma methodology to
improve emergency service processes. It produced time-saving processes.
Six Sigma methodology raised the level of satisfaction of patients, thus bringing more
revenues to the hospital.
As consumer expectations for better service increase, service companies should
spare no efforts towards that goal. They need to mobilize more resources to recruit
and train workers because service quality can be different depending on who delivers it.
III. Conclusion
As consumer demand for high-quality service increase, companies by perforce face
the war for better service. That being the case, they need to improve their service
competitiveness. They must first abandon the conventional wisdom that service
processes are harder to master than manufacturing processes. They can start by
collecting and analyzing data on service process.
One effective solution for improving the process innovation is to employ Six Sigma
methodology to cut defects and cost. Since it was first employed by Motorola to
reduce product defects, the methodology has grown to an integrated management
innovation strategy to enhance corporate competitiveness. It suggests a systematic
roadmap that can be used for improving and designing process innovation.
Companies standardize their project execution process and diagnose performance of
each process by using the Six Sigma tools. Companies that need new service
process design can choose DFSS, or Design For Six Sigma, which designs or
re-designs service from the ground level up. Those companies attempting to improve
their existing service process can resort to the 5-stage DMAIC tool, consisting of
Define, Measure, Analyze, Improve and Control.
Case 1
Samsung Fire and Marine Insurance introduced this DFSS methodology to its
insurance service. It contacted 350 policy holders who refused to renew and by
insurance, and listened to their complaints. After redesigning its insurance service
process based on customer opinions, their renewal rate increased.
Case 2
The Bank of America also used DMAIC methodology to make lending processes more
effective. After thoroughly analyzing each lending process, its departments were
recognized to maximize on efficiency. Using the Six Sigma tool cuts time from loan
application to approval by no less than 70%.
By Choi Bong
I. Competitive Service
Korea’s service industry is becoming increasingly vital, accounting for about a half of
its GDP. It hires more than 60% of total workforce, a sign of growing economic maturity.
In the more mature economies of the US, UK, Japan and Germany, the service
industry’s share is over 70% of GDP.
Some manufacturing companies take advantage of the power of service to improve
their competitiveness. Giant manufacturing companies like aerospace technology firm
Honeywell, power and automation technology group ABB, medical equipment
manufacturer Siemens, and jet engine manufacturer General Electric (GE) have all
created new business opportunities by strengthening their after-sales service.
However, Korean companies in general, have inadequate idea on the need for
providing better service to their clients. To assess their level of competitiveness in
services, Samsung Economic Research Institute surveyed 757 subscribers to our
website ww.seri.org, hoping to see how Korean chief executive officers regard this
matter. The result showed that 98% of respondents affirmed the critical importance of
service as a factor determining a company’s competitiveness. But 56% of respondents
also said their companies’ service competitiveness was no better than that of
competitors. When asked why they hesitate strengthening their service
competitivenes, 33% replied that they lacked information on how to improve their
service, even though they recognized its need. Thus many Koreans companies
appeared unable to improve service competitiveness because they had no idea
how to improve it.
Because service production and service consumption go together, Korean
companies must make more efforts to innovate service process in order to strengthen
their competitiveness in the service area. This report focuses on how they can
achieve this goal by way of process innovation.
II. Service Process Innovation
This report divides service process innovation strategies into four types based on
types of business (manufacturing vs. service) and the target of process innovation
(existing process vs. newly designed process).
Type I
Product manufacturers can find new revenue sources by fostering the existing service
sector into profit-generating business. After a thorough analysis of consumers’ needs,
Hankook Tire launched the concept of comprehensive tire maintenance service and
set up a franchise network named ‘T-Station’ where consumers can not only buy tires
but also have their old tires maintained and repaired. Hospitals can rent magnetic
resonance image (MRI) equipment from GE by paying for maintenance cost and rental
fee to GE. Computer maker IBM has successfully turned itself from a manufacturer
into service provider.
As seen from these examples, manufacturers need to understand consumer needs
and product life cycle and analyze how extensively they can foster the service sector
into new profit-generating businesses from a long-term perspective. After that, they
can set up effective strategies to nurture their service into new business.
Type II
Strengthening the existing services can be a good strategy for manufacturing
companies to improve their service competitiveness. This is a strategy to improve
competitiveness of their existing product lines by improving service. Those choosing
this strategy should differentiate themselves from competitors by providing quality
service which can win consumer support. For example, they can overcome the
limitation of time and space by applying Internet and information technology to their
service process innovation.
Samsung Electronics, Korea’s leading electronics maker, introduced a new
after-sales service system under which computer experts deal with problems of
computers located at consumers’ homes through their remote control program called
‘Magic Doctor.’ The new service allows the company to cut cost and save customers
time. OTIS Elevator Company goes one step further. The microprocessors built inside
elevators detect problems and alert the elevator maker. With the help of
microprocessors, OTIS can dispatch mechanics to deal with problems even before
users recognize them.
The manufacturing companies need to introduce the so-called ‘end-to-end’ service
and provide after-sales service until customers throw their products away. They must
continuously analyze, evaluate, and improve their service process.
Type III
Service companies can create new value-added services and foster them into
profit-generating business. Companies belonging to Type III (service companies
designing new service process) should grasp hidden needs of consumers and
release brand new services ahead of competitors.
Search engine Google has released a series of unprecedented services such as
Google Maps, Google Earth and Google Desktop which consumers hardly dreamed of. E-Mart, one of Korea’s biggest retailers, enabled consumers to shop on the Internet.
Through that online shopping service, it has lured double-income families and the
handicapped. As of July 2006, its online shopping business grew 66% from a year ago.
Service companies desiring new business opportunities need to keep a closer eye on
the market trend and make a good use of information technology.
Type IV
Service companies belonging to Type IV (service companies wanting to improve the
existing service process) can strengthen their quality competitiveness by innovating
service process. Korea’s Military Manpower Administration and Scottsdale Healthcare’s Osborn Hospital in the US are prime examples of successful process innovator.
The former improved its physical checkup process for draftees.
Similarly, Scottsdale Healthcare’s Osborn Hospital in Arizona improved its service
process in its emergency room. After seeing that many people requiring emergency
treatment being turned away, the hospital introduced Six Sigma methodology to
improve emergency service processes. It produced time-saving processes.
Six Sigma methodology raised the level of satisfaction of patients, thus bringing more
revenues to the hospital.
As consumer expectations for better service increase, service companies should
spare no efforts towards that goal. They need to mobilize more resources to recruit
and train workers because service quality can be different depending on who delivers it.
III. Conclusion
As consumer demand for high-quality service increase, companies by perforce face
the war for better service. That being the case, they need to improve their service
competitiveness. They must first abandon the conventional wisdom that service
processes are harder to master than manufacturing processes. They can start by
collecting and analyzing data on service process.
One effective solution for improving the process innovation is to employ Six Sigma
methodology to cut defects and cost. Since it was first employed by Motorola to
reduce product defects, the methodology has grown to an integrated management
innovation strategy to enhance corporate competitiveness. It suggests a systematic
roadmap that can be used for improving and designing process innovation.
Companies standardize their project execution process and diagnose performance of
each process by using the Six Sigma tools. Companies that need new service
process design can choose DFSS, or Design For Six Sigma, which designs or
re-designs service from the ground level up. Those companies attempting to improve
their existing service process can resort to the 5-stage DMAIC tool, consisting of
Define, Measure, Analyze, Improve and Control.
Case 1
Samsung Fire and Marine Insurance introduced this DFSS methodology to its
insurance service. It contacted 350 policy holders who refused to renew and by
insurance, and listened to their complaints. After redesigning its insurance service
process based on customer opinions, their renewal rate increased.
Case 2
The Bank of America also used DMAIC methodology to make lending processes more
effective. After thoroughly analyzing each lending process, its departments were
recognized to maximize on efficiency. Using the Six Sigma tool cuts time from loan
application to approval by no less than 70%.
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