Operations Management

Iba Almajzoub
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Product Design & Process Selection Product Design & Process Selection - - Services Services
Operations Management
For Competitive Advantage
Lecture 6
Operations Management
Iba Almajzoub
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Product Design and process Selection
Services
Service Generalizations
Service Strategy: Focus & Advantage
Service-System Design Matrix
Service Blueprinting
Service Fail-safing
Characteristics of a Well-Designed Service
Delivery System
Operations Management
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Service Generalizations
1. Everyone is an expert on services.
2. Services are personal.
3. Quality of work is not quality of service.
4. Most services contain a mix of tangible and
intangible attributes.
Operations Management
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Service Generalizations (Continued)
5. High-contact services are experienced,
whereas goods are consumed.
6. Effective management of services requires
an understanding of marketing and
personnel, as well as operations.
7. Services often take the form of cycles of
encounters involving face-to-face, phone,
internet, electromechanical, and/or mail
interactions.
Operations Management
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Service Businesses
Management of organizations whose
primary business requires interaction with
the customer to produce the service
(Includes service providers like banks,
airlines, law offices) has two major types:
- Facilities-based services
- Customer must go to the service facility
- Field-based services
- Production/consumption of service take place in
customers environment
Operations Management
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Internal Services
Internal Supplier
Internal Supplier
Internal
Customer
External
Customer
Management of services required to support
activities of the larger organization, Includes
data processing, accounting, engineering,
maintenance
Operations Management
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The Service Triangle
The
Customer
The Service
Strategy
The
People
The
Systems
Operations Management
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Classification of Service: Level of Contact
High Degree of Customer Contact
Customer is involved in the process
Usually more difficult to control
More difficult to reduce
Customer affects time of demand, nature of
service
Low Degree of Customer Contact
Customer has less involvement in the
process
Operations Management
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Designing Service Organizations
Services cannot be stored
Demand must be met as it arises
Capacity is dominant issue
If too much, excess costs (Discount fares,
specials)
If not enough, lost sales (Specials)
Operations Management
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Elements of Service Organization Design
Identification of target market
Who is your customer?
Service concept
How do you differentiate your service in the
market?
Service strategy
What is your service package and operating
focus?
Service delivery system
What are the actual processes, staff, and
facilities by which the services are created?
Operations Management
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Service Strategy: Focus and Advantage
Performance Priorities
Treatment of the customer
Speed and convenience of service delivery
Price
Variety
Quality of the tangible goods
Unique skills that constitute the service offering
Operations Management
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12
Service-System Design Matrix
Mail contact
Face-to-face
loose specs
Face-to-face
tight specs
Phone
Contact
Face-to-face
total
customization
Buffered
core (none)
Permeable
system (some)
Reactive
system (much)
High
Low High
Low
Degree of customer/server contact
Internet &
on-site
technology
Sales
Opportunity
Production
Efficiency
Operations Management
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Service Blueprinting: Steps
1. Identify processes
2. Isolate fail points
3. Establish a time frame
4. Analyze profitability
Operations Management
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Example of Service Blueprinting
Brush
shoes
Apply
polish
Fail
point
Buff
Collect
payment
Clean
shoes Materials
(e.g., polish, cloth)
Select and
purchase
supplies
Standard
execution time
2 minutes
Total acceptable
execution time
5 minutes
30
secs
30
secs
45
secs
15
secs
Wrong
color wax
Seen by
customer 45
secs
Line of
visibility
Not seen by
customer but
necessary to
performance
Operations Management
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Service Recovery (Just in case)
A real-time response to a service failure.
Blueprinting can guide recovery planning
(fail points).
Recovery planning involves training front-line
workers to respond to such situations as
overbooking, lost luggage, or a bad meal.
Operations Management
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Service Fail-safing
Poka-Yokes (A Proactive Approach)
Keeping a
mistake from
becoming a
service defect.
Task
Tangibles Treatment
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Three Contrasting Service Designs
The production line approach
- Treat service delivery as a manufacturing
process
- Example: McDonalds restaurants
The self-service approach
- Involve the customer in production of the
service
- Examples are ATMs and self-service gas
stations
The personal attention approach
- Anything to satisfy the customer
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What is a Good Service Guarantee?
Unconditional (No hidden clauses)
Meaningful to the customer
The payoff fully covers customer
dissatisfaction
Easy to understand and communicate
For customers and
For employees
Painless to invoke
Given proactively (practical)
Operations Management
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Characteristics of a Well-Designed
Service System
1. Each element of the service system is
consistent with the operating focus of the firm.
2. It is user-friendly.
- The customer can interact with it easily
3. It is robust.
- Cope with variations in demand and resources
4. It is structured so that consistent performance
by its people and systems is easily maintained.
Operations Management
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Characteristics of a Well-Designed
Service System (Continued)
5. It provides effective links between the back
office and the front office so that nothing falls
between the cracks.
6. It manages the evidence of service quality in
such a way that customers see the value of the
service provided.
7. It is cost-effective.
- There is minimum waste of time and resources in
delivering the service