Summary Lecture 8 Notes

Key Focus

  • Understanding Gap 3: Failure to match demand and supply in services

  • Identifying challenges and strategies for managing capacity constrained services.

Provider Gap 3: Delivery Gap

  • Definition: Discrepancy between service standards set by an organization and the actual performance delivered by employees.

Key Concepts

Demand and Capacity

  • Relationships: The interplay between customer demand and the capacity of service providers

  • Issues: Lack of inventory capability leads to challenges in matching demand with service availability.

Capacity Constraints

  • Types of Constraints:

    • Time: Critical for time-selling organizations (e.g. consulting)

    • Labour: Important in labour-intensive service sectors

    • Equipment: Services highly reliant on specialized equipment (e.g. airfreight)

    • Facilities: Common constraints in hotels, restaurants, schools, etc.

Strategies for Matching Capacity and Demand

  • Understanding and recording demand patterns:

    • Predictable Cycles: Daily, weekly, yearly trends

    • Random Fluctuations: Unpredictable variables affecting demand (e.g. weather)

    • Market Segment Patterns: Analyzing customer transactions for insights

Operational Strategies

  • When demand and capacity cannot be matched:

    • Establish a reservation process to manage customer flow

    • Differentiate waiting customers based on urgency and other factors

Enhancing the Waiting Experience

  • Strategies:

    • Use time occupation tactics: occupied waits feel shorter

    • Mitigate anxiety and uncertainty during waits

    • Manage perception of fairness and equity in waiting times

    • Recognize customer value correlation with waiting time

Summary

  • Service organizations cannot inventory their services, making capacity planning crucial.

  • Two strategic approaches: demand management strategies and capacity management strategies.

robot