Chapter 12 - Supply Chain management in the service industry

Location Strategy - example - Layout Strategy - example -

- Make it easy for customers to find the facility. Ex. drop off/pick up your clothes at dry cleaners on the way to work - Layouts designed to reduce distance traveled within the store. ex. Doctors office waiting room, service center at the car dealership, pet grooming, car wash etc.

Differences Between Goods and Services (4)-- - Services cannot - Services are - Services have - Services are Improving service productivity is challenging due to: High Individual Difficulty Problem

-Services cannot be inventoried. Typically services are produced and consumer simultaneously -Services are often unique (ex. insurance policies, legal services) -Services have high customer-service interaction -Services are decentralized. Due to the inability to inventory or transport most services, they must be located near to the customer base. -High Labor Content -Individual Customized Services -Difficulty of Automating Services -Problem of assessing service quality

Types of services -- Pure Services - End Products - State Utility -

-Services offering very few or no tangible products to customers (ex. consulting, storage facilities, training/education) - Services which offer tangible components along with the service component (e.g., restaurants; food along with the dining service) - Services which directly involve things owned by the customer (e.g., car repair, dry cleaning, haircut, and healthcare).

D Eatertainment - Entertailning - Edutainment - Franchising - Partnership - Internet -

Distribution channels - involve traditional methods and new channels that incorporate new internet technologies -combines restaurant and entertainment elements (medieval times, rainforest cafe) - combines retail with entertainment (mall of america) - combines learning with entertainment (epcot center, liberty science center) - allows businesses to expand quickly in dispersed geographic markets. protects existing markets. builds market share and facilitates business - operate /partner with firms familiar with the regions markets, suppliers, infrastructure, government regulations and customers. must address language and cultural barriers. - internet retailing is growing faster than traditional retailing. primary advantage includes the ability to offer convenient sources of real-time info, integration, feedback and comparison shopping

Service Strategies (LDN) -- L - lowest ______ _____ _________ --> ___________ initial __________ D - N Bundle of Service Attributes (SFEI) -- S - F - E - I -

Leadership Strategy - Lowest cost service provider Differentiation Strategy - Unique service created based on customer input and feedback. Niche Strategy - -Supporting infrastructure - Location, layout, architectural appropriateness, equipment, decoration (ex. drive up tellers, ATM) -Facilitating goods - Tangible elements that are used or consumed by the customer or the service provider along with the service provided (ex. deposit forms, statements) -Explicit services - Availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel (e.g., vault, safe deposit boxes, loans, etc.). Implicit services - attitude of the servers, atmosphere, waiting time, status, privacy and security, and convenience

S - 5 dimensions of service quality (RTRAE) -

Service Quality - Service quality depends on the firm's employees to satisfy customers varying expectations. - reliability, tangibility, responsiveness, assurance, empathy

M - Queing Systems - 3 Queue types -- Structured queues - Unstructured Queues - Mobile Queues - Queuing System designs -- (4) Waiting time management techniques -- (3) (KKS)

Managing Wait time - Involves managing both the actual waiting time and the perceived waiting time. -A queue management system is used to help control the flow and prioritization of people expecting to receive a service. -- -These queues are set in a fixed position such as a super market checkout line, airport or bank. -When people form queues somewhat informally in various directions and locations. - Queues formed virtually with technology. Single Channel, Single Phase, Single Server (ex. customer, to service representative) ex. museum, kiosk, atm Single Channel, Multiple Phase, multiple servers acting in series (ex. customer, to hostess, to wait staff, to chef) ex. restaurant Multiple Channel, single phase, single server (ex. customer, to one of multiple available service representatives ex. bank teller Multiple channel, multiple phase, multiple servers acting in parallel (ex. customer, to one of multiple fast food order takers, to fast food cook) ex. fast food restaurant Keep customers occupied start the service quickly Keep customer informed

Service Response Logistics (4) (CWDQ) -- M - Level demand Strategy - Chase Demand Strategy - If demand exceeds capacity.... (3) (TCI) 1. 2. 3. 5 Strategies to minimize cost of hiring and laying off employees (CPCTE) 1. 2. 3. 4. 5. Service Capacity Decisions (3) L - S - B -

Managing Service Capacity - the number of customers per day, per shift, per hour, per month, or per year, that the company's service system is designed to serve. - Capacity remains constant regardless of demand. When demand exceeds capacity, queue management tactics deal with excess customers. - Capacity varies with demand. So you can handle fluctuations but must take appropriate actions prior. Need to have options. 1. Turn customers away 2. Customers wait until a service is available for them 3. Increase service capacity 1. Cross-training and sharing employees so that they can help on the task that is busy at the moment 2. Using part-time employees 3. Using customers ("hidden employees") 4. Using technology 5. Using employee scheduling policies Long range - Capacity can be used as a preemptive strike where the market is too small for two competitors to co-exist Short range - The lack of short-term capacity planning can generate customers for the competition. Balance - 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