Supply Chain Ch.12

Ways to minimize cost of hiring

-Cross-training and sharing employees so that they can help on the task that is busy at the moment. -Using part-time employees (e.g., during the holiday season) -Using customers - "hidden employees" (e.g., self check out) -Using technology (e.g., Scanning documents in insurance industry for use in multiple departments as necessary) -Using employee scheduling policies (e.g., nurses have to work alternating holidays)

Mixed Strategy

While others use internet as a supplemental distribution channel

edutainment

(infotainment) combines learning with entertainment to appeal to customers looking for substance along with play

Waiting Time Rules

1. Satisfaction = customer perception ≥ customer expectation 2. It is hard to play catch-up. You may only get one chance to get it right.

Types of Services

1.Pure Services 2.End Products 3.State Utility

Five dimensions of service quality

1.Reliability 2.Responsiveness 3.Assurance 4.Empathy 5.Tangibles

Activities of Service Response Logistics

1.Service Capacity 2.Waiting Times 3.Distribution Channels 4.Service Quality

Demand Exceeds Capacity Alternatives

1.Turn customers away and not service them, i.e., lose business. 2.Make them wait until service is available for them 3.Increase service capacity, i.e., the number of service personnel and the associated infrastructure to provide the service.

Demand Exceeds Capacity

If the demand exceeds capacity, and the provider does not currently have the capacity to serve all of the customers. §This situation makes forecasting service demand critically important, particularly because services cannot be inventoried or carried out in advance.

Managing Wait time

Involves managing both the actual waiting time and the perceived waiting time. §What is the average arrival rate of the customers? §In what order will customers be serviced? §What is the average service rate of providers? §How are customer arrival and service times distributed? §How long will customers wait before they either leave or lower their perceptions of service quality? §How can customers wait even longer without lowering their perceptions of service quality?

Managing Service Capacity

Service capacity can be expressed as 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. §Regardless of the specific breakdown, it's the number of customers that the service provider can service at any one time. §The planned capacity for the service environment.

Pure Strategy

Many retailers today sell products exclusively over the Internet

Pure Services

Services offering very few or no tangible products to customers (e.g., consulting, storage facilities, training / education, etc.)

Service Response Logistics

The primary concern of service response logistics is the management and coordination of the organization's service activities

Assurance

ability to convey trust and confidence to customers

Demand management tactics

are also important, as services cannot be inventoried and customer demand must be met

Eatertainment

combines restaurant and entertainment elements

entertailing

combines retail with entertainment elements

Reliability

consistently performing the service correctly and dependably

Service Strategies

cost leadership, differentiation, and focus

Distribution Channels

eatertainment, entertailing, edutainment

Responsiveness

promptly and timely service

Empathy

providing caring attention to customers

Tangibles

the physical characteristics of the service including, facilities, servers, equipment, associated goods, and other customers

internet distribution strategies

§Internet retailing is growing faster than traditional retailing §Primary advantages of the Internet include the ability to offer convenient sources of real-time information, integration, feedback, and comparison shopping -Pure strategy -mixed strategy

Layout Strategy

§Layouts designed to reduce distance traveled within the store §Departmental layouts to maximize closeness desirability -e.g., Doctors office waiting room -e.g., Service center at the car dealership, pet grooming, car wash, etc. (i.e., Watch them working on your prized possession)

Cost Leadership

§Lowest cost service provider. Requires large capital investment in state-of-the art equipment and significant efforts to control and reduce costs. -Examples: Auto diagnostics software, route planning to reduce windshield time, UPS optimization, etc.

Location Strategy

§Make it easy for customers to find the facility / store. §Once they arrive, make it easy to find what they want, or to find what you want them to find. -e.g., Drop off / pick up your clothes at dry cleaners on the way to work.

Focus

§Serve a narrow niche better than other firms. -Examples: Grocery shopping for you, Mechanic specializing in Volvo or Porsche repair, Custom stereo in your house or car

Differences Between Goods and Services

§Services cannot be inventoried (in most cases). Typically, services are produced and consumed simultaneously. §Services are often unique to the customer (e.g., insurance policies, legal services, tax preparation, etc.) §Services have high customer interaction §Services are decentralized. Due to the inability to inventory or transport most services, they must be located near to the customer base.

Differences of supply chain in service industry from supply chain in manufacturing

§The tangibility of the end product. Services are generally not tangible [i.e., you can't touch or hold them in your hands] §The involvement of the customer in the service process. Customers are much more directly involved in the service industry §The assessment of quality. Quality is assessed differently in the service industry §The labor content. There is a much higher ratio of labor to materials in the service industry §The facility location considerations. Services are largely provide and heavily impacted by location decisions.

Differentiation

§Unique service created based on customer input and feedback. -Examples: Sunday car servicing at Hyundai, Ford, etc. Being different from another local dealer. This may be helpful in selling a car to someone who can't take off work on a Monday-thru-Friday when their car needs repair.

franchising

‒Allows business to expand quickly in dispersed geographic markets ‒Protects existing markets ‒Builds market share and facilitates business when owners have limited financial resources.

international expansion

‒Operate / partner with firms familiar with the region's markets, suppliers, infrastructure, government regulations, and customers ‒Must address language and cultural barriers

State Utility

Services which directly involve things owned by the customer (e.g., car repair, dry cleaning, haircut, and healthcare).

End Products

Services which offer tangible components along with the service component (e.g., restaurants; food along with the dining service)

Service Delivery System

Some service offerings blend these delivery systems together §Example: Restaurant -Front of the house staff tend to be customer centric -Back of the house staff generally do not have contact with customers §May be designed to keep these separate in order to use various and different management techniques to maximize performance in each area. *** Any service system should be audited often to assess performance