Service Operations
Management
Fundamentally, there are no differences
between service and manufacturing
operations! Both are concerned with:
• Efficiency
• Effectiveness
• Quality
• Cost
Effectiveness
• Right prescription
• Right advice
• Service availability
Efficiency
• No. of servers
• Use of resources
Cost
• Inventory management
• Tradeoffs
• Purchasing
Quality
• Training
• Error prevention
• Continuous Improvement
Service Operations Management
Selected Issues
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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 Blueprinting
Focus 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
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Reliability
Responsiveness
Assurance
Empathy
Tangibles
ACSI Site:
http://www.theacsi.org/index.php?option=com_content&task=view&id=15&Itemid=172
Parasuraman, et al., 1985
Managing Service Experiences
• Customer Engagement
• Context
• Time
• Service Blueprinting
Focus 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 highcontact/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
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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
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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 Management
Service vs Manufacturing
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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
References
Fitzsimmons & 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.