Product Design and Process
Selection: Services
Based on slides for Chase Acquilano and Jacobs, Operations
Management, McGraw-Hill
Types of Services
Facilities-based services
You go to the service provider
Examples??
Field-based services
 The service provider comes to you
Examples??
Internal services
Employees as customers
What opportunities exist to transform facilities
based into field based?
Service Strategy: Focus and
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
Examples 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 efficiency
Product design
Environment & product
Fewer attributes
Process design
Production affects customer
Customer rarely involved
Scheduling
Accommodate customer
Focus on completion date
Production Planning
Cannot smooth production
Can smooth and backlog
Worker skills
Interacts with public
Technical skills only
Quality Control
Variable - eye of the beholder Measurable & fixed
Time standards
Inherently 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.
Customer Contact
None
High
High
Automated
V
o
l
u
m
e
Production Line
Self Service
Personal
Attention
Low
Efficiency
High
Low
Labor Skill
Low
High
Low
High
Low
High
Scheduling
Complexity
Sales
Opportunity
Characteristics of a WellDesigned 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 prices
 Vary promotion
 Change lead times
(e.g., backorders)
 Examples??
Capacity Management
 Vary staffing
 Change equipment
& processes
 Redesign the product
for faster processing
 Examples??
Queuing
Servicing System
Servers
Customer
Arrivals
Waiting Line
Exit
Example of Queues: Phone Systems
Suggestions for Managing
Queues
 Determine the acceptable waiting time
 use as upper limit
 Distract and entertain
 Manage expectations
 Segment customers
 triage
 Use demand management
 Keep “idle” resources out of sight
 even if they’re working