Assignment Operation Management

Submitted By: Siddharth Kr. Pathak

(16/IEE/054)

1. Explain how service systems are organized?

Sol. A service operation is an open transformation process of converting inputs (consumers) to

desired outputs (satisfied consumers) through the appropriate application of resources (family,
material, labor, information, and the consumer as well). More simply, services are economic
activities that produce time, place, form, or psychological utility. A meal in a fast food restaurant
saves time. A meal with a date in an elegant restaurant with superior service provides a
psychological boost. Wal-Mart attracts millions of customers because they can find department
store merchandise, groceries, gasoline, auto service, dry cleaning, movie rental, hair styling,
eyeglasses and optical services, and nursery items all in one place.

Designing service organization

Structuring the Service Encounter: The Service-System Design Matrix Strategic Uses of
the Matrix The matrix in Exhibit 9.3 has both operational and strategic uses. The operational uses
are reflected in their identification of worker requirements, focus of operations, and innovations
previously discussed. The strategic uses include

1. Enabling systematic integration of operations and marketing strategy. Trade-offs become more
clear-cut, and, more important, at least some of the major design variables are crystallized for
analysis purposes. For example, the matrix indicates that it would make little sense relative to sales
for a service firm to invest in high-skilled workers if it plans to operate using tight specs.

2. Clarifying exactly which combination of service delivery the firm is in fact providing. As the
company incorporates the delivery options listed on the diagonal, it is becoming diversified in its
production process.

3. Permitting comparison with how other firms deliver specific services. This helps to pinpoint a
firm’s competitive advantage.

4. Indicating evolutionary or life cycle changes that might be in order as the firm grows. Unlike the
product–process matrix for manufacturing, however, where natural growth moves in one direction
(from work center to assembly line as volume increases), evolution of service delivery can move in
either direction along the diagonal as a function of a sales–efficiency trade-off

Virtual Service: The New Role of the Customer The service–system design matrix was
developed from the perspective of the production system’s utilization of company resources. With
the advent of virtual services through the Internet, we need to account not just for a customer’s
interactions with a business, but for his or her interaction with other customers as well.

Managing Customer-Introduced Variability

Among the decisions that service managers must make is how much they should accommodate the
variation introduced by the customer into a process. The standard approach is to treat this decision
as a trade-off between cost and quality. More accommodation implies more cost; less
accommodation implies less-satisfied customers. This narrow type of analysis overlooks ways that
companies can accommodate the customer while at the same time control cost. To develop these, a
company must first determine which of five types of variability is causing operational difficulties and
then select which of four types of accommodation would be most effective.

Applying Behavioral Science to Service Encounter

1. The front end and the back end of the encounter are not created equal.

2. Segment the pleasure; combine the pain.

3. Let the customer control the process.

4. Pay attention to norms and rituals.

5. People are easier to blame than systems.

6. Let the punishment fit the crime in service recovery.

2. Contrast different service designs.

Sol. Three Contrasting Service Designs Approach

1. The Production Line Approach: The production line approach pioneered by

McDonald’s refers to more than just the steps required in assembling a Big Mac. As Theodore Levitt
notes, it is treating the delivery of fast food as a manufacturing process rather than a service
process. The value of this philosophy is that it overcomes many problems inherent in the concept of
service itself. That is, service implies subordination or subjugation of the server to the served;
manufacturing, on the other hand, avoids this connotation because it focuses on things rather than
people.

2. The Self Service Approach: C. H. Lovelock and R. F. Young proposes having the customer
take a greater role in production of the service can enhance the service process. Automatic teller
machines, self-service gas stations, and in room coffee-making equipment in motels etc are
approaches that shift the service to the consumer. Many customers like self-service because it puts
them in control.

3. The Personal Attention Approach: An interesting contrast in the way personal

attention is provided can be seen in Nordstrom Department Stores and the Ritz-Carlton Hotel
Company. At Nordstrom, a rather loose, unstructured process relies on developing a relationship
between the individual salesperson and the customer. At the Ritz-Carlton, the process is virtually
scripted, and the information system rather than the employee keeps track of the guest’s
(customer’s) personal preferences.

3. Identify the high-contact and low-contact operations of the following services:

Sol. (a) An Airline - An airline industry will come under low-contact operations as the customer
doesn't have the access of the airline owner for his services, rather he choose other options to know
about the services of the airlines . The mode of information can be internet , advertisements, or
some other source.

(b) An automobile - An automobile agency will come under medium-contact operations

because here the customer can visit the agency for the service or come to know the information by
some advertisement or by some other person or through internet.

(c) Dental clinic - A dental clinic will come under high-contact operations as here the
customer is all known about the doctor and has to visit in person to get the services .This type of
operation is most satisfying for the customers demand as the problem and the solution are shared
face-to -face.