Service Operations Management

Fundamentally, there are no differencesbetween service and manufacturingoperations! Both are concerned with:EfficiencyEffectivenessQualityCost

Effectiveness Right prescription Right advice Service availabilityEfficiency No. of servers Use of resourcesQuality Training Error prevention Continuous ImprovementCost Inventory management Tradeoffs Purchasing

Service Operations Management Selected IssuesNew service developmentManaging service experiencesFront-office/Back-officeAnalyzing processesService qualityYield managementInventory managementWaiting time management

New Service DevelopmentService BlueprintingFocus on moments of truthServicescapesUtility-based Service DesignPerceived utility to customerRelative importance of Dimensions of Service Quality

Service BlueprintingSource: Metters, King-Metters, Pullman, & Walton, p. 84

Utility-based Service DesignSource: Metters, King-Metters, Pullman, & Walton, p. 88

Dimensions of Service QualityReliabilityResponsivenessAssuranceEmpathyTangiblesParasuraman, et al., 1985ACSI Site:http://www.theacsi.org/index.php?option=com_content&task=view&id=15&Itemid=172

Managing Service ExperiencesCustomer EngagementContextTime

Service BlueprintingFocus on moments of truth

Front-office/Back-officeFront-office work requires customer presence.Back-office work does not require customer presence.Decoupling: separating work into high-contact/low-contact jobs.Ultimate = outsourcing/offshoring

Analyzing ProcessesProcess flow diagrams (flow charts)Process communicationFocusing mgt. attention on customerDetermining what to work on

Process Simulation

Service QualityDefining service quality is more difficult than defining manufacturing quality.Expectation vs PerceptionExpectation vs Performance

Gaps in Service QualitySource: Metters, King-Metters, Pullman, & Walton, p. 186

Developing a Culture of Service QualityHire the right people.Educate and train them well.Allow them to fix anything.Recognize and reward them regularly.Tell them everything, every day.

Service RecoveryMeasure the costsListen closely for complaintsAnticipate needs for recoveryAct fastTrain employeesEmpower front lineClose the loop

Yield ManagementPurpose is to sell the right capacity to the right customer at the right price.

OverbookingDifferential pricingCapacity allocation

Inventory ManagementService vs ManufacturingSetup/Ordering costs highNumber of products higherLimited shelf spaceLost sales vs backordersProduct substitutionDemand variance higherInformation accuracy (complication of customers)

Waiting Time Management

Waiting lines are pervasive in servicesThe problem is importantLack of management intuition about waiting lines

15/30 Waiting Time Rule in hospital ER

ReferencesFitzsimmons & Fitzsimmons (1998). Service Management 2ed., Irwin/McGraw-Hill.Metters, King-Metters, Pullman, Walton (2006). Successful Service Operations Management 2ed., Thomson.Nelson. (2005). BaldrigeJust What the Doctor Ordered. Quality Progress.Sower, Duffy, Kohers, et al. (2001). The Dimensions of Service Quality for Hospitals Health Care Management Review.

MGT 568 Service Management & MarketingMGT 568 is a team-taught course available as a graduate elective.