Service Operations

Management
Fundamentally, there are no differences
between service and manufacturing
operations! Both are concerned with:
• Efficiency
• Effectiveness
• Quality
• Cost
Effectiveness
• Right prescription Cost
• Right advice • Inventory management
• Service availability • Tradeoffs
• Purchasing

Efficiency
• No. of servers Quality
• Use of resources • 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 high-
contact/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). “Baldrige—Just 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.