Addressing Gap 3: Failure to match demand and supply
Challenges and strategies for matching demand and supply in capacity-constrained services.
Defined as the discrepancy between developed customer-driven service standards and the actual performance by company employees.
Important for ensuring the service meets designed expectations.
Services have unique challenges compared to goods due to the inability to inventory services.
Variations in demand can significantly impact how organizations manage capacity.
Types of Capacity Constraints:
Time: Critical for organizations that sell time, such as professional services.
Labour: Constraints from labor-intensive service models.
Equipment: Services that rely heavily on specific equipment can face significant capacity limitations (e.g., airfreight).
Facilities: Common constraints in services like hospitals, restaurants, schools, etc.
Demand Patterns:
Understanding demand through analyzing data over time helps predict behavior.
Types of demand patterns include predictable cycles (daily, weekly) and random fluctuations influenced by external factors (e.g., weather).
Operational Strategies:
Develop a reservation process.
Differentiate waiting customers based on importance, urgency, service duration, or premium payment options.
Different methods to improve wait times:
Keep customers engaged to reduce perceived wait time.
Provide explanations for waits to mitigate anxiety.
Aim for equitable treatment of customers to enhance satisfaction.
Understand factors influencing wait perception (solo vs. group waits, value of service).
Service organizations must effectively utilize capacity planning due to their inability to inventory products.
Employ both demand and capacity strategies for optimization.