Service Operations Management
Term II, 2011
Sachin Jayaswal Indian Institute of Management Ahmedabad sachin@iimahd.ernet.in
Role of Services in an Economy
Goods vs. Services
Automobile Installed Carpeting Fast-food Meal Restaurant Meal Auto Repair Hospital Care Consulting Service Counseling g 100 75 50 25 0 25 50 75 100
% of Product that is a Good
% of Product that is a Service
Distinctive Characteristics of Services
Intangibility: difficult to measure output and quality Perishability: cannot inventory, opportunity cost of idle inventory capacity, need to match supply with demand Simultaneity: opportunities for p y pp personal selling; interaction g creates customer perceptions of quality; service cannot be inspected before consumed Heterogeneity: Managing quality a challenge Customer Participation in the Service Process: attention to facility location and design; opportunities for coco production; concern for customer and employee behavior; multi-facilities
Service Classifications S i Cl ifi i
Classification of services based on extent of customer contact
High contact Pure Service Entertainment centers Hotels Schools Public Transportation Health centers Low contact
Mixed Service Banks branch offices Government Repair shops Moving companies
Quasi Manufacturing Banks central office Postal service Waste disposal Research laboratories
Greater potential for designing efficient production procedures
The Service Process Matrix
Degree of Interaction and Customization Low L Degre of labo Intensi ee or ity Low High Hi h
Service Factory:
- Airlines - Trucking - Hotels - Resorts and recreation
Service shop:
- Hospitals o p - Auto repair - Other repair services
Mass service:
High - Retailing -Wholesaling Wholesaling - Schools - Retail aspects of Commercial banking
Professional Service:
- Doctors - Lawyers - Accounts - Architects
Challenges for Service Managers
Challenges for Managers (low l b i (l labor intensity) i ) - Capital decisions - Technological advances - Managing d g g demand to avoid p d o o d peaks and to promote off p d o p o o o peaks - Scheduling service delivery
Service Factory
Service shop
(low labor/low interaction (low labor/high interaction and customization) and customization)
Mass service
(high labor/low interaction and customization) d t i ti )
Professional Service
(high labor/high interaction and customization)
Challenges for Service Managers
Service Factory Service shop
(low labor/low interaction (low labor/high interaction and customization) and customization)
Mass service
(high labor/low interaction and customization)
Professional Service
(high labor/high interaction and customization)
Challenges for Managers (high labor intensity) - Hiring -Training -Employee welfare - Methods development and control - Scheduling workforces
Challenges for Service Managers
Challenges for Managers: (Low interaction/low customization) -Marketing - Managing need for standard operating procedures
Service Factory
(low labor/low interaction and customization)
Service shop
(low labor/high interaction and customization)
Mass service
(high labor/low interaction and customization)
Professional Service
(high labor/high interaction and customization)
Challenges for Service Managers
Service Factory
(low labor/low interaction and i t ti d customization)
Challenges for M Ch ll f Managers:
Service shop
(low labor/high interaction and customization)
(High interaction/high customization) - Fighting cost increases - Maintaining quality and responding to consumer intervention in process -Managing advancement of talented employees l - Gaining employee loyalty
Mass service
(high labor/low interaction and customization)
Professional Service S i
(high labor/high interaction and customization) )
Strategic Service Classification (Nature of the Service Act)
Direct recipient of the service People P l Tangible - Health care actions ti - Passenger transportation - Beauty salons -Exercise clinics -R t Restaurants t Thing Thi
Peoples bodies:
Physical possessions:
- Freight transportation g po o - Repair and maintenance - Janitorial services - Laundry and dry cleaning
Nature of the service ac s ct
Peoples minds:
- Education -Broadcasting Intangible - Information services actions -Theaters -M Museums
Intangible assets:
- Banking - Legal services - Accounting - Securities -I Insurance
Service Design
Bottleneck analysis T h l Technology choice h i Capacity Planning
Matching Supply and Demand
Managing variability (reduce vs accommodate) b d d
Managing variability
Influence the demand
Reservations Promotions
