SERVICE OPERATIONS MANAGEMENT PDF
PDF | The extraordinary importance of the services sector for the economy Insights into service Operations Management: a research agenda. damages resulting from the use of information contained herein. TOEFL and ETS are registered trademarks of Educational. 1 Introduction to Operations. Management. 2 Competitiveness, Strategy, and. Productivity. 3 Forecasting. 4 Product and Service Design. 5 Strategic Capacity.
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Service operation inputs and outputs 4 Service operation processes. Event management. Incident management. Request fulfilment. Service Operations Management. Fundamentally, there are no differences. between service and manufacturing. operations! Both are concerned with: Efficiency. MANAGEMENT. The Total Experience. D A V I D. P A R K E R. SERVICE OPERATIONS MANAGEMENT. 'This is an important book for educators, students and.
All the operations are performed in the operations system of the enterprise, discussed further. As a definition is accepted, that system is a set of components that function as a whole to achieve a predetermined goal. Input Processing Output Storage Feedback Figure 2 — The IPO-S Model Input is all necessary resources for the transformation process as: 1 labor by qualification, occupation, education, experience, gender; 2 material by type, quantity, quality, and delivery; 3 equipment by quantity, quality, and condition; 4 finance by type, amount, sources, and conditions; 5 information from internal and external sources.
This component is specific for every enterprise and is described with its different technological capabilities.
Output is results of the processing the input as a product. A product is anything that can be offered to a market that might satisfy a want or need.
Products are separated into physical goods and nonphysical — services.
Often, goods and services are presented as a unified package, providing a well-rounded and attractive option for the consumer. However, some components of services can be stored, yet. The components are connected with feedback, which is a mechanism, process, or signal that is looped back to manage a system within itself. The enterprise is an open system that is connected other systems, i.
Based on the above model and the adopted definition, it might be concluded that like any other system, the operations one has objective, subsystems performing tasks for achieving the objective, functional components, relations among components and among subsystems, input, process, and output. In that system, based on rational division of labor and balanced combination of production factors in time and space, is realized the operations production function, i. Thus, the management of operations system and operations function can be defined as operations management, also.
The operations system has: - Subsystem for transformation that is the main system performing activities under the direct conversion of input into output basic operations ; - Subsystem for support, which is not directly linked with the transformation process, but performs all necessary functions to ensure its proper functioning support operations ; - Management subsystem, which receives information from internal and external environment, information about the above two subsystems condition, processes it and provides guidance decisions for corrective actions, if they do not work on plan management operations.
The output and the manufacturing methods of input classify operations systems that can be defined either in physical production or in services. Such classification is convenient if all the production is pure goods or pure service but production is a mixture of goods and services.
Figure 3 — The components of operations system Operations management proposes several models and approaches to manage services, which are analyzed further. By placing the customer at the center of the triangle, service enterprises are declaring that the customer will guide the decisions how the organization operates. The various departments in the organization treat one another as customers as well.
Finally, the way employees feel is the way that customers feel. The systems part of the triangle refers to the entire infrastructure of the organization.
All organizational structures, functional relationships, physical facilities, information systems, procedures, rules, and regulations should be customer friendly in their design. Many services exist to meet certain needs. Nevertheless, the widespread application the Maslow's theory does not explain the behavior of modern consumers. Researchers analyze consumer behavior individualism in deciding to purchase, frequency, locations, etc. Furthermore, they use the information from other scientific fields such as psychology, sociology, social psychology, cultural anthropology, economics, etc.
One of the famous models of consumer behavior is presented on Figure 5, as it can describe the decision to purchase services as a process of satisfying needs desires.
Figure 5 — An overall model of consumer behaviour Source: Hawkins et al.
I then went back to the office, checked the emails and went to bed at No two days are the same, but every one of them is enjoyable. Chapter 1 Introducing service operations management 1.
International Journal of Services and Operations Management
We hope by now it is becoming clear that service operations managers have an important and responsible role. This delivers value for the customer for more discussion on value see Chapter 3. At the most basic level, the economising customers will think of value as getting more for their money. Other customers may be prepared to pay more in order to receive a higher service specification. Still others will value the psychological value in being able to say that they are able to afford to be customers of high-status services even though the specification may be no better than a lower priced service.
A key element in this understanding is the relationship between the service brand values as communicated to the customer and the potential mismatch in terms of customer experience. Because the operation works well and generates the right outcomes there will be fewer problems and therefore less hassle for the staff and fewer unpleasant complaints to deal with. Customers who are satisfied tend to be more tolerant, so when things go wrong they are much more accepting than they might otherwise have been, again making life easier for the staff.
A smooth operation and contented customers means things are going well, thus staff are more likely to have pride in both the job they do and the organisation they work for. Better services may also provide the organisation with a source of competitive advantage. Service activities are a vital and significant part of most developing and developed economies. In most developed countries services account for in excess of 80 per cent of gross domestic product GDP , and for over 50 per cent of GDP in developing economies.
They also provide employment for a significant number of people. The challenges facing service operations managers throughout the whole range of service organisations — such as financial institutions, government bodies, retailers, wholesalers and personal service providers — need to be taken seriously and managed well to support economic success and development.
We can see that from the standpoint of economic value alone we should pay attention to the service sector, and to service operations in particular as this is where the service, and therefore wealth and value, are created.
Services also have an important economic role in non-service organisations. Many manufacturing companies have significant revenue-earning service activities, such as customer support, and also many service activities internal to the organisation, such as payroll, catering, information and IT services etc.
In many economies the service sector is the only area where new jobs are being created, notably in tourism and leisure. Many service organisations, such as hospitality and transportation, are people-intensive, requiring different mixes of skilled and unskilled labour.
Other organisations, such as banking and many financial services, are more technology-based. Finally, we cannot ignore the vast numbers of people employed in the public and voluntary sectors.
Managing services such as education, health, fire, police, social services, famine relief organisations, faith organisations and charities requires as much expertise as their private sector counterparts. Governments are increasingly subcontracting many services to the voluntary sector that were previously provided directly by the state. In so doing, governments are applying commercial approaches to supplier assessment, and there is therefore a growing pressure on the voluntary sector to apply improvement methodologies see Chapter What is service operations management?
It entails providing services, and value, to customers or users, ensuring they get the right experiences and the desired outcomes. While these services are less efficient, they cater more to unique customer's needs. Many different service process matrices have been proposed for explaining the relationship between service products that are selected and corresponding processes. The Service Delivery System Matrix  by Collier and Meyer illustrates the various types of routings used for service process depending on the amount of customization and customer involvement in the process.
With high levels of customization and customer involvement, there are many pathways and jumbled flows for service. As a result, the service delivery of Customer-Routed services is less efficient than Co-routed or Provider-Routed processes that have less customization and less customer involvement. Process that should be used for each combination of customization and customer involvement are shown on the diagonal of this matrix. Self-service is in wide use. For example, in the s gas station attendants came out and pumped your gas, cleaned your windshield and even checked your oil.
Fast food is famous for self-service, since customers have been trained to order their own food, pay immediately, find a table, and clean up the trash. ATM's have replaced many traditional tellers and online banking provides even more self-service. When self-service is accepted by the customer, it can reduce costs and even provide better service in the customer's eyes—faster service with less hassle.
Services that were previously customer-routed have been moved down the diagonal to be more efficient and accepted by customers. Service Blueprint The service blueprint is a way to describe the flow of a customer through a service operation from the start to the finish, along with the actions provided by the service providers both in interaction with the customer and in the "back room" out of sight of the customer.
A blueprint flowchart shows every step in the process and can be used to illustrate the process and improve it. If lean thinking is applied, the time taken for each step in a service blueprint flowchart can be recorded, or a separate value-stream map can be constructed. Then the process can be analyzed for time reductions to reduce waiting and non-value added steps. Waste is anything that does not add value to the process including waiting time in line, possibility of more self-service, customer hassle, and defects in service.
But, lean thinking also requires attention to the customer and the people providing the service. It is important to apply important principles such as completely solve the customer's problem, don't waste time and provide exactly what the customer requires.
Leite and Vieira state that service managers must realize that the customer will be happy if the service provided meets or exceeds expectations. Also the interaction between the customer and the people providing the service is essential to achieve satisfied customers.
Employee involvement is often emphasized as part of lean thinking to achieve high levels of commitment by service employees.
Queuing is an analytic method for determining waiting time when customers must wait in line to get service. The length of the queue and waiting time can be calculated based on the arrival rate, service rate, number of servers and type of lines. There are many formulas for various types of queuing theory problems. The reason for this is that a long line will build up when randomness of arrivals occurs faster than the average and service times are longer than the average. If the distributions of arrival times and service times are known, formulas are available for calculating the exact waiting times and line lengths for many different queuing configurations of servers, types of lines, server distributions and arrival distributions.
Heskett, Sasser and Schlensinger proposed the service-profit chain as a way to design service processes. The service-profit chain links various aspects and tasks required to deliver superior service and profits. It starts with a high level of internal quality leading to employee satisfaction and productivity to deliver superior external customer service leading to customer satisfaction, customer loyalty and finally high revenues and profits.
Every link in this chain is important and the linkage between the service providers and the customer is essential in service operations. The service manager should not break any of the links in order to receive the results of high probability and growth. The dimensions are:.
Others argue that ultimately the service result is judged by the customer relative to the customer's expectations and not by the service provider.
Quality management practices for services have much in common with manufacturing, despite the fact that the product is intangible. The following approaches are widely used for quality improvement in both manufacturing and services:. These approaches have several things in common. They begin with defining and measuring the customer's needs e.
Any service that does not meet a customer's need is considered a defect. Then these approaches seek to reduce defects through statistical methods, cause-and-effect analysis, problem solving teams, and involvement of employees. They focus on improving the processes that underlie production of the service. In addition to intangibility, there are two approaches about quality that are unique to service operations management.
Service Operations Management
For manufactured products, quality problems are handled through warranties, returns and repair after the product is delivered. In high contact services there is no time to fix quality problems later; they must be handled by service recovery as the service is delivered.
For example, if soup is spilled on the customer in a restaurant, the waiter might apologize, offer to pay to have the suit cleaned and provide a free meal.
If a hotel room is not ready when promised, the staff could apologize, offer to store the customer's luggage or provide an upgraded room. Service recovery is intended to fix the problem on the spot and go even further to offer the customer some form of consolation and compensation.
The objective is to make the customer satisfied with the situation, even though there was a service failure. A service guarantee is similar to a manufacturing guarantee, except the service product cannot be returned. A service guarantee provides a specific monetary reward for failure of service delivery.
Some examples are:. Service guarantees serve to assure the customer of quality and they provide a way for the employees to know the cost of service failure. Forecasting demand is a prerequisite for managing capacity and scheduling. Forecasting demand often uses big data to predict customer behavior. The data comes from scanners at retail locations or other service locations.
In some cases traditional time series methods are also used to predict trends and seasonality. Future demand is forecasted based on past demand patterns. Many of the same time-series and statistical methods for forecasting are used for manufacturing or service operations. Capacity planning is quite different between manufacturing and services given that service cannot be stored or shipped to another location. Customers are only willing to travel short distances to receive most services.
Exceptions are health care when the illness requires a specialist, airline transportation when the service is to move the customer, and other services where local expertise is not available. Aside from these exceptions, location analysis depends on the "drawing power" based on the distance a customer is willing to travel to a service site relative to competitive offerings and locations. The drawing power of a site for a particular customer is high if the site is close by and provides the required service.
High drawing power is related to high sales and profits. This is much different than manufacturing locations which depend on the cost of building a factory plus the cost of transporting the goods to the customers. Manufacturing plants are located on the basis of low costs rather than high revenues and profits for services. A second difference from manufacturing is planning for capacity utilization once a facility is built.
Since the product cannot be stored in inventory and sold later, service capacity is perishable and must meet peak demand at any point in time. First, management can attempt to reduce peak demand and level it over time by the following actions.
While some of these same mechanisms are used in manufacturing, they are much more crucial in service operations. Revenue management is unique to services, since capacity is perishable. This applies to the airline industry.
When the plane leaves the runway, empty seats generate no revenue, but the cost of the flight is almost the same. As a result, mathematical models have been formulated to allocate capacity at various prices and times as the flight is booked in advance.
Initially, a certain number of seats are reserved for first class, coach, premium coach and various other categories. Based on the elasticity of demand, seats prices are lowered at the last minute in order to fill empty seats and maximize the revenue of the flight. Scheduling has some differences between manufacturing and service. In manufacturing, jobs are scheduled through a factory to sequence them in the best order to meet due dates and reduce costs.
Mindset: The New Psychology of Success
In services, it is customers who are being scheduled. As a result, waiting time becomes much more critical. While manufacturing orders don't mind waiting in line or waiting in inventory, real customer's do mind.
Some of the scheduling applications for services are: Many scheduling problems have been solved by using operations research methods to optimize the schedule. Inventory management and control is needed in service operations with facilitating goods.
Almost every service uses some amount of facilitating goods. The presence of facilitating goods is critical in retail and wholesale operations but these operations don't manufacture anything, rather they distribute goods and provide service while doing it.
One difference from manufacturing inventories is that services use only finished goods, while manufacturing has finished goods, work-in-process and raw-materials inventories. As a result, manufacturing uses a Materials Requirements Planning System, while services do not.
Operations management for services
Services use Replenishment inventory control systems such as order-point and periodic-review systems. Supply chains for service operations are critical to supply facilitating goods.Daniel Bell, a professor of sociology at Harvard University, has written extensively on this topic, and the material that follows is based on his work.
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Capacity planning is quite different between manufacturing and services given that service cannot be stored or shipped to another location. Forgot password?