Product Design and Process Selection: Services

Based on slides for Chase Acquilano and Jacobs, Operations Management, McGraw-Hill

Types of Services

Facilities-based servicesYou go to the service providerExamples??

Field-based services The service provider comes to youExamples??

Internal servicesEmployees as customers

What opportunities exist to transform facilities based into field based?

Service Strategy: Focus and Performance Priorities

Treatment of the customerSpeed and convenience of service

deliveryPriceVarietyQuality of the tangible goods Unique skills that constitute the service

offeringExamples of companies??

Example: Hotel Services

Example: Hotel Services Departments

Question --

Based on the two videos – and your own experiences -- what are some of the operational issues that hotel managers face?

What are some suggestions you might have for hotels to facilitate better allocation of resources and more effective problem solving?

High & Low Contact Systems

Design Decision High Contact Low Contact

Facility location Near customer Near resources

Facility layout Accommodate customer Focus on effi ciency

Product design Environment & product Fewer attributes

Process design Production aff ects customer Customer rarely involved

Scheduling Accommodate customer Focus on completion date

Production Planning Cannot smooth production Can smooth and backlog

Worker skills I nteracts with public Technical skills only

Quality Control Variable - eye of the beholder Measurable & fi xed

Time standards I nherently loose Tight

Wage payment Time-based Output-based

Capacity planning Match peak demand Average demand

Contrasting Service Designs

Automated Approach The production line approach The self-service approach The personal attention

approach Group Exercise: Select an

example of each; identify operations management issues and ways to improve the service experience.

None High

High Automated

Production Line

Self Service

LowPersonal Attention

High Low

Low High

Low High

Low High

Customer Contact

Sales Opportunity

Scheduling Complexity

Labor Skill

Efficiency

Volume

Characteristics of a Well-Designed Service System

1. Each element of the system is consistent with the operating focus of the firm.

2. Is user-friendly.

3. Is robust

4. Structured so that consistent performance by its people & systems is easily maintained.

5. Provides effective links

between back & front

office -- nothing falls

between the cracks.

6. Manages the evidence of

service quality in so that

customers see the value

of the service provided.

7. Is cost-effective.

Demand and Capacity Management

Demand Management

Vary pricesVary promotionChange lead times

(e.g., backorders)Examples??

Capacity Management

Vary staffingChange equipment

& processesRedesign the product

for faster processingExamples??

CustomerArrivals

Servers

Waiting Line

Servicing System

Exit

Queuing

Example of Queues: Phone Systems

Suggestions for Managing Queues

Determine the acceptable waiting timeuse as upper limit

Distract and entertainManage expectations Segment customers

triageUse demand management Keep “idle” resources out of sight

even if they’re working