Intro to Supply Chain Management Chapter 12 Rutgers Taitt

Pure Services

Offer very few to no tangible products

( consulting, training, education)

End product services

offer tangible components along with the service (restaurants - Food + dining service)

State Utility Services

Directly involve things the customer owns

(Haircut, car repair, dry cleaning)

Differences between Goods and Services

- Services cannot be inventoried

- Services are often unique to customer

- Services have higher customer interaction

- Services are decentralized

Improving service productivity is challenging due to:

- High Labor content

- Individual customized services

- Difficulty of automating services

- Problem of assessing service quality

Cost Leadership

Lowest cost service provider

- requires large capital investment

Differentiation

Unique service created based on customer input and feedback

Focus

Serve a narrow niche better than other firms

Service Delivery System

expressed as a continuum with mass produced, low customer contact systems at one end and highly customized high customer contact systems at the other end (blended in the middle)

Example:

Vending machine -> Restaurant -> Hair stylist

Bundling Service Attributes

delivers more customer satisfaction

- Explicit Services

- Implicit Services

supported by:

- Facilities and equipment

- Facilitating Goods

Explicit Services

Examples:

- availability and access to service

- Consistency of service performance

- comprehensiveness of service

- training of service personnel

Implicit services

Examples:

- Attitude of servers

- atmosphere

- waiting time

- privacy

- security

Facilities and equipment

- Location

- layout

- architectural appropriateness

- equipment

- decoration

Facilitating goods

tangible elements used or consumed by customer or service provider alongside service provided

Location Strategy

- Make it easy for customers to find the facility

- make it easy to find what they want or what you want them to find (eg: drop off / pick up clothes at dry cleaners on way to work)

Layout Strategy

- Layout designed to reduce distance traveled within the store

- departmental layouts to maximize closeness

Primary concern of service response logistics

the management and coordination of the orgs service activities

4 primary activities of service response logistics are managing:

1. Service capacity

2. Waiting times

3. Distribution channels

4. service quality

Service capacity

the number of customers per day, shift, hour, month, or year that the companys service system is designed to serve

Service Capacity Challenges

- Fluctuating customer arrivals and demand

- Idle Capacity

- level of congestion impacts perceived quality

- inability to control demand results in capacity measured in terms of inputs (# of hotel rooms available rather than # of guest nights)

Capacity Utilization formula

Actual customers served per period / Capacity

( hotel has 80 rooms booked out of 100 rooms available, utilization = 80% )

Level Demand Strategy

Capacity remains constant regardless of demand

- When demand exceeds capacity, queue management tactics deal with excess customers

Chase Demand Strategy

Capacity varies with demand

- when demand exceeds capacity implementing planned options to increase capacity

Demand exceeds capacity basic alternatives

- Turn customers away

- Make them Wait

- Increase service capacity

Dealing with high demand

- Cross trained employees

- Part time employees

- Hidden customers

- Using technology

- Employee scheduling policies

Capacity exceeds demand

- Do other jobs when not busy

- Do training / cross training

- Use demand management techniques to shift demand to non peak times (Like early bird specials)

Long Range Capacity

Capacity can be used as a preemptive strike where the market is too small for two competitors to co-exist

( Strategy of building ahead of demand is often taken to avoid losing customers )

Short Range Capacity

The lack of short term capacity planning can generate customers for the competition

Balance Capacity

capacity decisions must be balanced against the costs of lost sales if capacity is inadequate ... or against operating losses if demand does not reach expectations

Managing waiting time

Involves both actual and perceived waiting times

Queue management system

used to help control the flow and prioritize people expecting to receive a service

Structured Queues

Queues set in a fixed position

(airport, bank, etc.)

Unstructured Queues

When people form queues informally in various directions and locations

( Waiting for taxi, ATM, etc. )

Mobile Queues

Queues formed virtually with technology

Balking

Customer refuses to join a queue

Reneging

Customer decides to leave the queue

Single Channel, Single Phase

Customer at the head of the line proceeds to the single service provider who completes the required service for the customer

( EG: ATM )

Single Channel, Multiple Phase

Customer at the head of the line proceeds to the initial service provider, who provides part of the service, and the customer is then passed off to the next service provider in sequence until the entire service is completed

( EG: Restaurant; customer -> hostess -> waiter -> chef -> waiter )

Multiple Channel, Single Phase

Customer at the head of the line proceeds to the first available service provider from a group of service providers, who complete the required service for the customer

( EG: Bank Teller; Customer -> first available teller (of multiple) )

Multiple Channel, Multiple Phase

Customer at the head of the line proceeds to the first available service provider from a group of service providers, who provides part of the service, and the customer is then passed off to the next service provider in the sequence until the entire service is completed

( EG: Fast food restaurant )

Rules of service

- Satisfaction = customer perception >= customer expectation

- Hard to play catch up, may only get one chance

Waiting time management techniques

- Keep customers occupied

- Start service quickly

- Relieve customer anxiety

- keep customers informed

- group customers together

- design fair waiting system

Eatertainment

Combines restaurant and entertainment elements

Entertailing

Combines retail with entertainment elements

Edutainment

Combines learning with entertainment

Franchising

Allows business to expand quickly

International expansion

partner with firms familiar with the regions markets, suppliers, infrastructure, government regulations, and customers

Dimensions of Service Quality

- Reliability

- Responsiveness

- Assurance

- Empathy

- Tangibles

Service recovery systems require

- developing recovery procedures that are thought out before the bad event happens

- training employees in these procedures before the event

- empowering employees to remedy customer problems, and recognizing them when they do