Lecture 4A: Buying Business Services

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Questions and Answers

What is the main reason why services are becoming increasingly important in business?

Because they are easier to produce than goods

Because they are cheaper than goods

Because they are becoming a larger part of the value proposition (correct)

Because they are less tangible than goods

What is an example of a service that influences the customer's perception of the quality of the service provided by the railway company?

Catering services

Security services

Cleaning services (correct)

Ticketing services

What percentage of CEOs stated that they were worried about how professional services were contracted in their respective companies?

30%

70% (correct)

90%

50%

What is a characteristic of services according to the definition?

They can be offered in combination with tangible goods Signup and view all the answers

What is an example of a service that may be provided in combination with a tangible good?

Maintenance services Signup and view all the answers

Why is purchasing services becoming more professional?

Because there are many improvement possibilities Signup and view all the answers

Why is professionalizing service buying challenging?

Because it requires close collaboration with internal experts Signup and view all the answers

What is a unique challenge when specifying services?

Their specifications take much more time to determine than for goods Signup and view all the answers

Why are internal experts valuable in service buying?

Because they have a high level of expertise Signup and view all the answers

What makes it difficult to decide on objective selection criteria for services?

Because the quality of services is embedded in human expertise Signup and view all the answers

What is a key benefit of teaming up with internal customers for service buyers?

Improving relationships with service providers Signup and view all the answers

What is a business critical service?

A part of the company's value proposition to its customers Signup and view all the answers

What is the purpose of specifying the scope of work for service providers?

To define the scope of work for service providers Signup and view all the answers

What type of specification focuses on what goes into the service?

Input specification Signup and view all the answers

What is the purpose of checking supplier references and experiences of other customers?

To select the best service provider Signup and view all the answers

What is the importance of the post-contractual stage in services?

It determines the success of the contract Signup and view all the answers

What is the purpose of agreements on access to company information?

To ensure confidentiality Signup and view all the answers

What is the importance of key performance indicators (KPIs) in services?

They help to evaluate the quality of the service Signup and view all the answers

What happens during the pre-contractual stage of the purchasing process for services?

The scope of work is specified Signup and view all the answers

What is the purpose of periodic assessment and evaluation by the buyer?

To evaluate the quality of the service Signup and view all the answers

What is the importance of differentiating between the person who supervises the quality of services and the person who monitors the follow-up?

It helps to ensure successful service delivery Signup and view all the answers

Study Notes

The Increasing Importance of Services

Services are becoming increasingly important, with more and more activities being purchased.
The share of purchased services in the value proposition is increasing.
Example: railway companies outsourcing cleaning services to external providers, which affects the traveler's perception of the service quality.

Services vs. Goods

Services are intangible, consisting of a series of activities that take place in the interaction between customer and supplier employees, and/or physical resources and systems.
Services can be offered in combination with tangible goods.
Examples: investment goods with maintenance services, equipment with technical support.

Classification of Services

Facility services: cleaning, contract catering, security, building maintenance.
Financial services: banking, leasing, salary administration, insurance.
Professional services: legal, management consultancy, risk management, information and communication tech services.
Transportation and distribution services: warehousing, value-added logistics, transport services.
Human resource services: training, recruitment, hiring temporary personnel, marketing services.

Classifying Services: Business Critical vs. Non-Business Critical

Business critical services are part of the company's value proposition to its customers.
Examples: technical support, maintenance services.

Purchasing Process for Services

Pre-contractual stage: specifying, selecting, contracting services.
Specifying: defining the scope of work for service providers, which can be done in three ways:
- Input specification: focusing on resources and capacities used by the service provider.
- Process (throughput) specification: agreeing on activities performed by the service provider.
- Output/result specification: buyer explicitly states the expected results.

Selecting Service Providers

Buyers need to check supplier references, experiences, and reputation.
Screening involves checking certificates, diplomas, and positive references provided by other customers.

Contracting Services

Agreements on access to company information may be necessary.
Key performance indicators (KPIs) need to be agreed upon.
Periodic assessment and evaluation by the buyer are essential.

Post-Contractual Stage

The interaction between the buying organization and the supplier determines the success of the contract.
It is important to differentiate between the person who supervises the quality of services and the person who monitors the follow-up.

Involvement of Purchasing in Contracting Services

The buyer of the service needs to team up with the internal customer.
The company's expert plays an important role in valuing relationships with service providers.
Buyers value objectivity.

Conclusion

The number of services involved is increasing and becoming more important for companies.
Professionalizing service buying is challenging due to the spread of service expenditures throughout the company.
Buying services requires specific expertise and close collaboration with internal experts.

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Description

This quiz covers the increasing importance of services in business, differences between goods and services, classification of services, and the role of purchasing in contracting services. Learn about the growing trend of outsourcing activities and the share of purchased services in the value proposition.