Overview Service Operations Management Douglas M' Stewart, Ph'D'

1
OverviewService Operations ManagementDouglas M.
Stewart, Ph.D.
2
Announcements

• Dont forget to submit a group peer evaluation
  form.
• There will be assigned seating for the final
  exam.
• Format of the Final Exam
• 4 Qualitative Questions (two questions choose
  one)
• 4 Quantitative Questions (similar to quizzes)

3
Chapters of Little Importance

• Chapter 1 The Service Economy
• Chapter 17 Forecasting (Not covered)

4
Chapter 2 Nature of Services

• The Service Package
• Supporting Facility
• Facilitating Goods
• Information
• Explicit Services
• Implicit Services
• Unique Characteristics of Services
• Intangibility
• Perishability
• Heterogeneity
• Simultaneity
• Customer Participation in the Service Process

5
Chapter 2 Continued

• Service Process Orientation
• Customer as Coproducer
• Front and Back Office Perspectives
• Service Profit Chain Focus on Internal and
  External Customers
• Quality (perceptions vs expectations)
• Focus on Both Efficiency and Effectiveness
• Use IT as Productivity Enabler for Both Internal
  and External Customers

6
Chapter 3 Service Strategy

• Strategic Service Vision
• Target Market Segments
• Service Concepts
• Operating Strategy
• Service Delivery System
• Service Design Elements
• Structural Delivery system (front back
  office) Facility design (aesthetics,
  layout) Location (competition, site
  characteristics) Capacity planning (number of
  servers)
• Managerial Service encounter (culture,
  empowerment) Quality (measurement,
  guarantee) Managing capacity and demand
  (queues) Information (data collection, resource)

7
Chapter 3 - Continued

• Competitive Service Strategies
• Overall Cost Leadership
• Differentiation
• Focus
• Service Purchase Decision
• Service Qualifier
• Service Winner
• Service Loser.

8
Chapter 4 New Service Development

• Strategic Positioning Through Process Structure
• Degree of Complexity
• Degree of Divergence
• Generic Approaches to Service Design
• Production-line
• Customer as Coproducer
• Customer Contact
• Information Empowerment

9
Service Blueprint of Luxury Hotel
10
Chapter 5 Technology in Services

• E-Business Models(Weill Vitale, Place to
  Space, HBS Press, 2001)
• Content Provider Reuters
• Direct to Customer Dell
• Full-Service Provider GE Supply Co.
• Intermediary eBay
• Shared Infrastructure SABRE
• Value Net Integrator Seven-Eleven Japan
• Virtual Community Monster.com
• Whole-of-Enterprise Government

11
Chapter 5 - Continued

• Economics of E-Business
• Sources of Revenue- Transaction fees-
  Information and advice- Fees for services and
  commissions- Advertising and listing fees
• Ownership- Customer relationship- Customer
  data- Customer transaction
• Economics of Scalability
• Information vs goods content of service package
• Degree of customer contact
• Standardization vs customization
• Shipping and handling costs
• Cost of after sales service

12
Chapter 6 Service Quality

• Moments of Truth
• Unconditional Service Guarantee
• Customer Feedback and Number of People Told Based
  on Level of Dissatisfaction
• Service Recovery Approaches
• Case-by-case
• Systematic response
• Early intervention
• Substitute service
• Dimensions of Service Quality
• Reliability
• Responsiveness
• Assurance
• Empathy
• Tangibles

13
Gaps in Service Quality
Word -of-mouth communications
Personal needs
Past experience
Customer
Expected service
GAP 5
Perceived service
External communications to consumers
Service delivery (including pre- and
post-contacts)
GAP 3
GAP 1
GAP 4
Translation of perceptions into service quality
specifications
GAP 2
Provider
Management perceptions of consumer expectations
14
Chapter 8 Service Encounter

• Contact Personnel
• Selection 1. Abstract Questioning 2.
  Situational Vignette 3. Role Playing
• Training Unrealistic customer expectations Unexp
  ected service failure

15
The Service Encounter Triad
Service Organization
Efficiency versus satisfaction
Efficiency versus autonomy
Customer
Contact Personnel
Perceived control
16
Difficult Interactions with Customers

• Unrealistic customer expectations Unexpected
  service failure
• 1. Unreasonable demands 1.
  Unavailable service
• 2. Demands against policies 2. Slow
  performance
• 3. Unacceptable treatment of 3.
  Unacceptable service
• employees
• 4. Drunkenness
  
• 5. Breaking of societal norms
• 6. Special-needs customers
• Use scripts to train for proper response

17
Experiential Services

• Trends and Changes
• Products to Transformations
• Dimensions of Experience

Entertainment
Education
Active Participation
Passive Participation
Escapist
Esthetic
Immersion
18
Experiential Services (cont.)

• Services as destinations
• More experiential content
• Multiple foci
• Extended stay
• Dynamic Activities
• Delivering the Experience
• Affect, narrative, ritual, staging
• Theatre as a business model
• Scripts, actors, audience, stage, backstage

19
Chapter 9 Supporting Facility

• Servicescapes
• Ambient Conditions
• Spatial Layout and Functionality
• Signs, Symbols, and Artifacts
• Math The Line Balancing Problem
• Math Layout Problem

20
Chapter 10 Facility Location

• Breaking the Rules
• Competitive Clustering (Among Competitors) (e.g.
  Auto Dealers, Motels)
• Saturation Marketing (Same Firm) (e.g. An Bon
  Pain, Ice Cream Vendors)
• Marketing Intermediaries (e.g. Credit Cards,
  HMO)
• Substitute Electronic Media for
  Transportation (e.g. telecommuting, e-Commerce)
• Facility Location
• Math Cross Median Approach
• Math Huff Model

21
Site Selection Considerations

• 1. Access
  4. Parking
• Convenient to freeway exit and
  Adequate off-street parking
• entrance ramps
  5. Expansion
• Served by public transportation
  Room for expansion
• 2. Visibility
  6. Environment
• Set back from street
  Immediate surroundings should
• Sign placement
  complement the service
• 3. Traffic
  7. Competition
• Traffic volume on street that may
  Location of competitors
• Indicate potential impulse buying
  8. Government
• Traffic congestion that could be a
  Zoning restrictions
• hindrance (e.g.., fire stations)
  Taxes

22
Chapter 11 Managing Capacity and Demand

• Yield Management
• Relatively Fixed Capacity
• Ability to Segment Markets
• Perishable Inventory
• Product Sold in Advance
• Fluctuating Demand
• Low Marginal Sales Cost and High Capacity Change
  Cost

23
Strategies for Matching Supply and Demand for
Services

DEMAND STRATEGIES
SUPPLY STRATEGIES
Partitioning demand
Increasing customer participation
Developing complementary services
Sharing capacity
Establishing price incentives
Scheduling work shifts
Cross- training employees
Developing reservation systems
Creating adjustable capacity
Promoting off-peak demand
Using part-time employees
Yield management
24
Chapter 18 Managing Facilitating Goods

• The difference between Periodic and Perpetual
  inventory systems.
• Process
• Safety Stock

25
Chapter 12 Waiting Lines

• Psychology of Waiting
• That Old Empty Feeling Unoccupied time goes
  slowly
• A Foot in the Door Pre-service waits seem
  longer that in-service waits
• The Light at the End of the Tunnel Reduce
  anxiety with attention
• Excuse Me, But I Was First Social justice with
  FCFS queue discipline
• They Also Serve, Who Sit and Wait Avoids idle
  service capacity

26
Chapter 16 Queuing and Capacity Planning

• Relationship of Capacity Planning in Services to
  Queuing
• Math - M/M/1 Queuing Model
• Math - M/M/2 Queuing Model

27
Chapter 15 Managing Service Projects

• Math - Drawing the Arrow Diagram
• Math - Solving for the Critical Path
• Math - Probabilistic Time Estimates
• Math - Crashing the Project

28
Chapter 13 Service Supply Relationships

• Service Supply Chains as By-Directional
• Service Supply Chains as Hubs

29
Taxonomy for Purchasing Business Services
30
Chapter 14 Growth and Globalization

• Franchising
• Benefits to the Franchisee Management
  Training Brand Name National Advertising Acquis
  ition of Proven Business Economics of Scale
• Issues for the Franchisor Franchisee
  Autonomy Franchise Contract Conflict Resolution

31
Expansion Strategies
Single Service
Multiservice
Focused service Clustered
service Single Dental practice
Stanford University Location
Retail Store Mayo Clinic
Family restaurant USAA
Insurance Focused
network Diversified network Multisite
Federal Express Nations Bank
McDonalds
American Express Red
Roof Inns Arthur Andersen
32
Ill See You On the Slopes!