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??
 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
Service System Design Matrix
 Contrasting Service Designs
 Automated Approach Customer Contact
 The production line approach None High

 The self-service approach High Automated

The personal attention approach

V
 o Production Line
Group Exercise: Select an
l
 u
example of each; identify m Self Service

operations management issues

e
Personal
Low
Attention
and ways to improve the service
experience.
Efficiency High Low

Labor Skill Low High

Scheduling
Low High
Complexity
Sales
Low High
Opportunity
 Characteristics of a Well-
Designed Service System
1. Each element of the system 5. Provides effective links
is consistent with the between back & front
operating focus of the office -- nothing falls
firm. between the cracks.
2. Is user-friendly.
6. Manages the evidence of
3. Is robust service quality in so that
4. Structured so that customers see the value of
consistent performance by the service provided.
its people & systems is
7. Is cost-effective.
easily maintained.
 Demand and Capacity
Management
Demand Management Capacity Management
 Vary prices  Vary staffing
 Vary promotion  Change equipment
 Change lead times & processes
(e.g., backorders)  Redesign the product
 Examples?? for faster processing
 Examples??
 Queuing
Servicing System
Servers

Customer Waiting Line

Arrivals 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