Estimating value in service systems: A case study of a repair service system

The economic structure of service systems has steadily increased in complexity recent years. This is due not only to specialization in direct material production and services offered, but also in the ownership and management of resources, the role of intangible assets such as process knowledge, and the context in which goods and services are consumed. This increase in complexity represents both a challenge and an opportunity in a service-oriented economy. In this paper, we offer a descriptive structure for the analysis of this complexity which combines graph theory and network flows with economic tools. Our analysis is based on publicly observable information and can be used to analyze service systems in terms of the value they deliver, how they deliver it, and how value can be discovered and increased. We show how this analysis can be applied (in the example of a car manufacturer and its service system for suppliers and dealerships) to improve customer satisfaction and provide options and analysis models for outsourcing decision makers. © Copyright 2008 by International Business Machines Corporation.