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

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

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

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

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

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). BaldrigeJust 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.