Operations Analytics/

Service Management in Key Sectors

LECTURE 4
Service Operations Management
Service Operations Management
Service Operations Management (SOM) refers to
designing, implementing, and controlling the processes
and activities that deliver customer services. It is a field
of management that focuses specifically on the
operational aspects of service-oriented businesses.
While traditional operations management often deals
with manufacturing and production processes, service
operations management is concerned with service
delivery's unique challenges and characteristics.

Designing Service Processes and Managing

Service Capacity
Imagine you are in a hurry and need a ride during a busy time. You open the Uber app and notice that
you quickly find a driver despite high demand.

This efficient experience results from Uber's thoughtful service process design and effective
capacity management.

Designing Service Process

Designing service processes involves creating a framework or structure for the delivery of services.
It includes defining the steps and activities that need to be performed to fulfil customer needs and
expectations.

Components of Designing Service Process:

§ Identifying customer touchpoints: Understanding where and how customers interact with the
service.
§ Defining service steps: Breaking down the service delivery into manageable steps or stages.
§ Allocating resources: Determining the human, technological, and physical resources required
at each stage.
§ Implementing technology: Introducing appropriate technology to enhance the efficiency and
effectiveness of service delivery.

Managing Service Capacity

Managing service capacity involves optimizing the resources required to meet the demand for a
particular service. This includes balancing the available capacity with the demand to ensure
services are delivered efficiently and without delays.

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Components of Managing Service Capacity
§ Capacity planning: Anticipating and planning for future demand based on historical data and
market trends.
§ Resource allocation: Assigning human and physical resources to align with service demand.
§ Queue management: Handling waiting times and queues to prevent overloads and reduce
customer dissatisfaction.
§ Scalability: Designing systems and processes that scale up or down based on demand
fluctuations.

Resource Allocation and Scheduling

Imagine you are a popular food delivery service manager in your city.
Your customers are growing, and you want to enhance the overall
customer experience.

How would you allocate resources and schedule deliveries

efficiently to meet the demand, ensure a smooth service supply
chain, and maintain high-quality service throughout the process?

This can be done through four factors:

1. Resource allocation
2. Scheduling in service management
3. Managing service quality throughout the operations process

Resource Allocation
Resource allocation refers to distributing and assigning resources efficiently to meet the goals and
objectives of an organization. In service operations, resources can include human resources
(employees), financial resources, equipment, technology, time, and more.
Effective resource allocation helps optimize operational efficiency, reduce costs, and improve
overall performance.
For example, Southwest Airlines has mastered efficient resource utilization, leading to quick
turnarounds between flights and lower costs, ultimately benefiting the airline and passengers.
Zomato strategically assigns delivery executives based on location, order volume, and time of day.
They balance resources to meet peak demand, ensuring timely deliveries and customer
satisfaction.

Scheduling in Service Operation

Scheduling in service operations involves planning and organizing tasks and activities over time.
Ensuring that resources are used efficiently, and services are delivered promptly is crucial.
Efficient delivery personnel, kitchen staff, and transportation scheduling are crucial. Amazon is a
prime example (no pun intended) with their precise scheduling to ensure timely deliveries.

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Uber uses algorithms to predict demand, dynamically adjusts pricing to incentivize drivers, and
optimizes the availability of rides through strategic scheduling. This approach ensures a balance
between supply and demand.

Managing Service Quality

Managing service quality involves consistently meeting or exceeding customer expectations at
every stage of the service process.

Amazon employs quality control measures in its warehouses, tracks shipments in real-time, and
gathers customer feedback to enhance its services continuously. This commitment to quality
contributes to Amazon's reputation for reliable and efficient service.

Service Supply Chain Management

Service Supply Chain Management (SSCM) is a specialized
area of supply chain management that focuses on the unique
characteristics and challenges of service-based industries.

Unlike traditional supply chain management, which primarily

deals with physical goods, SSCM is concerned with the
efficient and effective delivery of services.

Components of Service Supply Chain Management:

1. Service Operations Planning involves strategic planning to align service delivery with business
objectives. It includes forecasting demand, capacity planning, and resource allocation.
For example, a hotel forecasts the number of guests during a specific season and planning
staffing levels accordingly.

2. Service Process Design: Designing the processes that contribute to the creation and delivery of
services. It involves mapping out workflows, defining roles, and optimizing service processes.
For example, an airline designing the check-in and boarding processes to enhance efficiency
and customer satisfaction.

3. Service Inventory Management: Managing the availability of resources and components

required for service delivery. This can include managing the inventory of spare parts,
information, or skilled personnel
For example, an IT service provider ensures they have the necessary hardware components in
stock to replace faulty equipment quickly.

4. Service Logistics and Distribution: Planning and executing the movement of services,
information, or resources to the point of consumption. This can include scheduling deliveries,
managing transportation, and optimizing routes.

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 For example, a food delivery service optimizes its delivery routes to ensure timely and efficient
delivery of orders.

5. Demand Management: Understanding and influencing customer demand for services. It

involves strategies to balance supply and demand, minimize fluctuations, and optimize resource
utilization.
For example, an event management company predicts and manages peak demand during the
holiday season to ensure adequate staffing and resources.

6. Customer Relationship Management (CRM): Building and maintaining positive customer

relationships. It involves understanding customer needs, preferences, and feedback to enhance
service delivery.
For example, a telecommunications company uses CRM software to track customer interactions
and preferences to provide personalized services.

Reference:

§ PlanetTogether. (n.d.). Resource Allocation and Scheduling in Manufacturing Operations: Enhancing Efficiency
through Integration. https://www.planettogether.com/blog/resource-allocation-and-scheduling-in-
manufacturing-operations-enhancing-efficiency-through-integration

§ Logistics, U. (2022, November 16). What is the service supply chain? - and why it matters. Unival-Logistics.
https://unival-logistics.com/service-supply-chain