Services

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Service Processes

Operations Management

Dr. Ron Lembke

How are Services Different?

Everyone is an expert on services

What works well for one service provider doesn’t necessarily carry over to another

Quality of work is not quality of service

“Service package” consists of tangible and intangible components

Services are experienced, goods are consumed

Mgmt of service involves mktg, personnel

Service encounters mail, phone, F2F

Degree of Customer Contact

More customer contact, harder to standardize and control

Customer influences:

Time of demand

Exact nature of service

Quality (or perceived quality) of service

3 Approaches

Which is Best?

Production Line

Self-Service

Personal attention

What do People Want?

Amount of friendliness and helpfulness

Speed and convenience of delivery

Price of the service

Variety of services

Quality of tangible goods involved

Unique skills required to provide service

Level of customization

Service-System Design Matrix

High

Sales

Opportunity

Degree of customer/server contact

Buffered core (none)

Permeable system (some)

Reactive system (much)

Face-to-face loose specs

Face-to-face total customization

Face-to-face tight specs

Phone

Contact

Mail contact

Internet & on-site technology

Low

Production

Efficiency

Low

High

Applying Behavioral Science

The end is more important to the lasting impression (Colonoscopy)

Segment pleasure, but combine pain

Let the customer control the process

Follow norms & rituals

Compensation for failures: fix bad product, apologize for bad service

Restaurant Tipping

Normal

Introduce self

(Sun brunch)

15%

Smiling

(alone in bar)

Waitress

20%

28%

Experiment

23%

48%

33%

Waiter

(upscale lunch)

21% 18%

“…staffing wait positions is among the most important tasks restaurant managers perform.”

Fail-Safing

“poka-yokes” – Japanese for “avoid mistakes”

Not possible to do things the wrong way

Indented trays for surgeons

ATMs beep so you don’t forget your card

Pagers at restaurants for when table ready

Airplane bathroom locks turn on lights

Height bars at amusement parks

How Much Capacity Do We

Need?

Blueprinting

Fancy word for making a flow chart

“line of visibility” separates what customers can see from what they can’t

Flow chart “back office” and “front office” activities separately.

Demand rate varies by time

# customers arriving per hour

35

30

25

20

15

10

5

0

Arrivals

Average

9 10 11 12 1 2

Time of Day

Demand varies by Customer

3

Min to process customer

2,5

2

1,5

1

0,5

0

Time

1 2 3 4 5 6

Average

7 8 9 10

Customer #

What did we learn?

Human considerations very important in services

Hard to please everyone, because we’re all critics

Degree of customer contact important strategic decision

Keeping things simple is good

Fluctuations in demand making capacity setting difficult

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