Service Operations Management

Fundamentally, there are no differencesbetween service and manufacturingoperations! Both are concerned with:• Efficiency• Effectiveness• Quality• Cost

Effectiveness• Right prescription• Right advice• Service availability

Efficiency• No. of servers• Use of resources

Quality• Training• Error prevention• Continuous Improvement

Cost• Inventory management• Tradeoffs• Purchasing

Service Operations Management Selected Issues

• New service development• Managing service experiences• Front-office/Back-office• Analyzing processes• Service quality• Yield management• Inventory management• Waiting time management

New Service Development

• Service BlueprintingFocus on moments of truth

• Servicescapes• Utility-based Service Design

Perceived utility to customer• Relative importance of Dimensions of

Service Quality

Service Blueprinting

Source: Metters, King-Metters, Pullman, & Walton, p. 84

Utility-based Service Design

Source: Metters, King-Metters, Pullman, & Walton, p. 88

Dimensions of Service Quality

• Reliability• Responsiveness• Assurance• Empathy• Tangibles

Parasuraman, et al., 1985

ACSI Site:http://www.theacsi.org/index.php?option=com_content&task=view&id=15&Itemid=172

Managing Service Experiences

• Customer Engagement• Context• Time

• Service BlueprintingFocus on moments of truth

Front-office/Back-office

• Front-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 Processes

• Process flow diagrams (flow charts)– Process communication– Focusing mgt. attention on customer– Determining what to work on

• Process Simulation

Service Quality

• Defining service quality is more difficult than defining manufacturing quality.– Expectation vs Perception– Expectation vs Performance

Gaps in Service Quality

Source: Metters, King-Metters, Pullman, & Walton, p. 186

Developing a Culture of Service Quality

• Hire the right people.• Educate and train them well.• Allow them to fix anything.• Recognize and reward them regularly.• Tell them everything, every day.

Service Recovery

• Measure the costs• Listen closely for complaints• Anticipate needs for recovery• Act fast• Train employees• Empower front line• Close the loop

Yield Management

Purpose is to sell the right capacity to the right customer at the right price.

• Overbooking• Differential pricing• Capacity allocation

Inventory ManagementService vs Manufacturing

• Setup/Ordering costs high• Number of products higher• Limited shelf space• Lost sales vs backorders• Product substitution• Demand variance higher• Information accuracy (complication of

customers)

Waiting Time Management

• Waiting lines are pervasive in services• The problem is important• Lack 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). “Baldrige—Just 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 & Marketing

MGT 568 is a team-taught course available as a graduate elective.