Summary Lecture 8 Notes

Key Focus Areas

  • Addressing Gap 3: Failure to match demand and supply

  • Challenges and strategies for matching demand and supply in capacity-constrained services.

Understanding Provider Gap 3

  • 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.

Demand and Capacity Issues

  • Services have unique challenges compared to goods due to the inability to inventory services.

  • Variations in demand can significantly impact how organizations manage capacity.

Capacity Constraints

  • 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.

Strategies for Matching Capacity and Demand

  • 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.

Enhancing Customer Experience During Waits

  • 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).

Summary and Takeaways

  • Service organizations must effectively utilize capacity planning due to their inability to inventory products.

  • Employ both demand and capacity strategies for optimization.

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