Supply Chain Chapter 12

Edutainment

combines learning with entertainment to appeal to customers looking for substance along with play (e.g., Epcot Center, Liberty Science Center. etc.)

Eatertainment

combines restaurant and entertainment elements (e.g., Medieval Times, Rainforest Café, Dave & Busters, etc.)

Entertailing

combines retail with entertainment elements (e.g., Mall of America has a ferrous wheel, rock climbing wall, fashion shows, play area, etc.)

Balance Service Capacity Decisions

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.

Queuing System

A queue management system is used to help control the flow and prioritization of people expecting to receive a service. Queues can be utilized for almost any situation where large numbers of persons are gathering, or waiting in line to purchase tickets, enter a facility, etc. Queues are common in airports, amusement parks and retail stores.

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.

Differences between goods and services

Cannot be inventoried Unique to the customer High customer interaction Decentralized

Service Capacity Utilization

Capacity Utilization= Actual Customers Serviced Per period/Capacity

Long Range Service Capacity Decisions

Capacity can be used as a preemptive strike where the market is too small for two competitors to co-exist (e.g., the first to build a luxury hotel in a mid-sized city may capture all the business)

Level Demand Strategy

Capacity remains constant regardless of demand. When demand exceeds capacity, queue management tactics deal with excess customers One line instead of many lines at a Bank or at McDonald's so its 1st come 1st serve. Numbers at the deli in the grocery store. Note: This technique does not work well in a Hospital Emergency Room.

Chase Demand Strategy

Capacity varies with demand. So you can handle fluctuations but must take appropriate actions prior. Need to have options. Open up additional line(s) Call in additional off-shift workers to meet increased demand.

Service Capacity Planning Challenges

Customer arrivals fluctuate and service demands also vary. Customers are participants in the service and the level of congestion impacts on perceived quality. Idle capacity is a reality for services Inability to control demand results in capacity measured in terms of inputs (e.g. number of hotel rooms rather than guest nights).

Managing Service Quality

Customer satisfaction with the service depends not only on the ability of the firm to deliver what customers want, but on the customers' perceptions of the quality of the service received Service quality depends on the firm's employees to satisfy customers varying expectations The key is to exceed the customers expectations . . . so you also need to help form their expectations

Queuing System Input

Customers are the demand source for services and their arrival triggers the start of the service experience. Customers generally appear in predictable arrival patterns (e.g., the dinner rush at a restaurant). There are models used to predict customer arrivals such as a Poisson distribution

Improving Service Productivity

High labor content Individual customized services Difficulty of automating services Problem of assessing service quality

Global Services

Increasing all over the world and managing them involves a number of issues Identifying global customers Labor, facilities, and infrastructure support vary by country Legal and political issues: Laws may restrict foreign competitors. Domestic competitors and the economic climate: Managers must be aware of local competition and their environment.

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 - Many retailers today sell products exclusively over the Internet (e.g., Amazon) Mixed Strategy - While others use it as a supplemental distribution channel (e.g., Walmart)

Wait Time Management Techniques

Keep customers occupied Start the service quickly Relieve customer anxiety Keep customers informed Group customers together (they often talk to pass the time) Design a fair waiting system

Layout Strategy

Layouts designed to reduce distance traveled within the store Departmental layouts to maximize closeness desirability

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.

Managing Wait Time

Managing waiting time involves managing both the actual waiting time and the perceived waiting time.

Queue System Assumptions

Most queuing models assume that customers enter the queue, and stay in the queue until served: Balking is when a customer refuses to join the queue. Reneging is when customers decide to leave the queue. Queuing models assume infinite length of a queue

International Expansion

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

Queue System Characterisitcs

Queue discipline describes the order in which customers are served. Queuing can be comprised of single or multiple lines. Queue lines can be serviced by either a single server or multiple servers. Multiple servers can also act in series or in parallel.

Mobile Queues

Queues formed virtually with technology. Customers can use technology such as a smartphone to place their name in a real-time electronic queue such as at a restaurant. This type of queuing has provided a great deal of flexibility and allows for reduced stress level on the part of the customer.

Five Dimensions of Service Quality

Reliability - consistently performing the service correctly and dependably Responsiveness - promptly and timely service Assurance - ability to convey trust and confidence to customers Empathy - providing caring attention to customers Tangibles - the physical characteristics of the service including, facilities, servers, equipment, associated goods, and other customers

Cost Leadership

Requires large capital investment in state-of-the art equipment and significant efforts to control and reduce costs.

Focus

Serve a narrow niche compared to other firms

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.

Transportation and Warehousing in Services

Services may require the use of facilitating goods which are tangible elements that are used or consumed by the customer or the service provider along with the service provided. These items need to be transported and warehoused in order to provide the service activity. Generally these transportation and warehousing activities occur behind the scenes (i.e., out of view of the service customer) Customers have no idea how they actually get to the destination but they sure notice if they are not available as expected!

Pure Services

Services offering very few or no tangible products to customers

State Utility

Services which directly involve things owned by the cutsomers

End Products

Services which offer tangible components along with the service component

Supply Chain Management in The Service Industry

Tangibility of end product Involvement of the customer in the service process Assessment of quality The labor content The facility loaction considerations

Service Delivery System

The delivery of services can be expressed as a continuum with mass produced, low-customer contact systems at one end, and highly customized, high-customer-contact systems at the other end. Some service offerings blend these delivery systems together

Short Range Service Capacity Decisions

The lack of short-term capacity planning can generate customers for the competition (e.g., if restaurant staffing is inadequate to handle the volume of customers arriving at the restaurant, customer will likely go elsewhere

Structured Queues

These queues are set in a fixed position such as a super market checkout line, airport or bank. In some cases queue management systems can be structure with or without numbers such as "take-a-ticket number" allowing a person to walk around and wait for their number to be called.

Demand Exceeds Capacity

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

Differentiation

Unique service created based on customer input and feedback.

Unstructured Queues

When people form queues somewhat informally in various directions and locations. These types of ques are seen in retail stores, at an airport waiting for a taxi, people waiting for an ATM machine, etc.

Implicit Service

attitude of the servers, atmosphere, waiting time, status, privacy and security, and convenience (e.g., security, atmosphere, privacy, convenience, etc.).

Explicit Service

availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel

Capacity Exceeds Demand

instead of disposing of excess capacity (e.g., laying off personnel), find other uses for the available capacity Do other jobs when it's not busy. Example: in a restaurant you might have workers clean the bathrooms, prep for the dinner rush, etc. Do training or cross training Use demand management techniques to shift demand from peak demand periods into non-peak periods by offing incentives like discounts and special sales

Supporting Facility

location, decoration, layout, architectural appropriateness, equipment.

Facilitating Goods

tangible elements that are used or consumed by the customer or the service provider along with the service provided.

Service Response Logistics

the management and coordination of the organization's service activities Service capacity Waiting times Distribution channels Service quality