SCM Ch.12

long range capacity planning

Capacity can be used as a preemptive strike where the market is too small for two competitors to coexist.

Balance capacity planning

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.

Challenges of Global Services

Competition Customers Government Infrastructure

Pure Services

Services provided to consumers without the involvement of any tangible product

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)

Ways to improve customer satisfaction

1. Keep customers occupied during the wait time 2. Start the service quickly 3. Relieve customer anxiety and communicate 4. Keep the customers informed 5. Group customers together in the queue. 6. Design a fair waiting system

Demand exceeds capacity

1. Turn customers away and not service them 2. Make customers 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)

Location Strategy

Aspects considered include population, demographics, income levels, vehicle traffic, pedestrian traffic, number and type of competitors in the area, and the proximity of competitors. Service providers should make it easy for customers to find the facility.

Implicit Services

Attitude of the servers, atmosphere, waiting time, status, privacy and security, and convenience

Differentiation Strategy

Calls for the development of a service(s) that is unique from that of the competition. Approaches include developing unique brand images, unique technology, unique features, unique channels, unique customer service, and the like.

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.

Capacity exceeds demand

Do other jobs when it's not busy. Do training or cross training. Use demand management techniques to shift demand from peak demand periods into non-peak periods by offering incentives like discounts and special sales.

Transportation and Warehousing in Services

Facilitating goods need to be ________________ and _______________ in order to provide the service activity. Generally, these activities occur behind the scenes (i.e., out of view of the service customer).

Perishability

For the most part, services are simultaneously produced and consumed. They cannot be saved, stored, returned, or inventoried.

Service Productivity Challenges

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

Supporting Infrastructure

Includes location, decoration, layout, architectural appropriateness, equipment, etc. Banking Industry Examples: drive-up tellers, ATMs.

Explicit Services

Includes the availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel. Banking Industry Examples: check cashing, safe deposit boxes, loans.

Leadership Strategy

Involves establishing the company as the market leader by providing the best service at the lowest cost. This strategy may require a large capital investment in state-of-the-art equipment, the newest and most efficient technologies, and significant efforts to control and reduce costs.

Niche Strategy

Involves focusing the service offering on a narrow area and customer base in order to become extremely proficient at providing that particular service. An organization that wants to succeed in service response has to be strong in its market expertise and be better and more responsive than the competition. This strategy allows for high customization and personalized service, where the service provider may be the only company providing that service in that area.

Layout Strategy

Once customers arrive, service providers should also make it easy for customers to find what they are looking for, or to find what the service provider wants them to find. The ______________ of the facility should be designed to reduce the distance traveled by the customer within the facility.

short range capacity planning

Overtime, personnel transfers, alternative production routings. The lack of short-term capacity can generate customers for the competition. Example: If restaurant staffing is inadequate to handle the volume of customers arriving at the restaurant, the customer will likely go elsewhere.

Pure Service

Products that do not include any goods. Do not need much in terms of facilitating goods, but what they do use is essential to providing the service, thus facilitating goods (e.g., software, diagnostics tools).

Pure Goods

Products that do not include any services. They are generally low-margin commodity businesses that, in order to compete against one another, often add some services (e.g., extended warranties, consulting).

Core Goods

Provide a significant service component as part of their business; appliances, data storage systems, automobiles

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.

Level demand strategy

Service capacity is set to remain constant regardless of demand. When demand exceeds capacity, queue management tactics are used to handle the excess customers

Chase demand strategy

Service capacity is set to vary along with demand. The company hires and lays off workers to match the fluctuating demand. The company must take appropriate actions in advance to have available options for this strategy to work.

Location Consideration

Services are decentralized due to the inability to inventory and/or transport service products. Tangible goods are frequently produced in a location that is remote from the customer, whereas in most cases services require a well-designed customer-oriented facility in order to meet a customer's needs.

Strategies to handle high demands

Sharing employees who have been cross-trained 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-checkout) Using technology (e.g., scanning documents in the insurance industry for use in multiple departments as necessary) Using employee scheduling policies (e.g., nurses have to work alternating holidays)

Distribution channel

Some of the more common ways are through: Facilities, Retail stores, Mail order, Telephone, Door to door, Television, Seminars and classrooms, Automated equipment (ATM, kiosk, etc.), Mobile units.

Facilitating Goods

Tangible elements that are used or consumed by the customer, or the service provider, along with the service provided. Banking Industry Examples: cash and coins, deposit forms, statements.

Core Service

The basic service experience a customer expects to receive. Suppliers must integrate tangible goods (e.g., cars for rental, food at a restaurant, planes for air travel) in order to provide their services.

Labor Content

There is a much higher ratio of ________________ to materials in the service industry.

Structured queues

These queues are clearly marked and set in a fixed position such as a super market checkout line or airport security. This also includes "take-a-ticket number" system which allows a person to walk around and wait for their number to be called.

Tangibility

Unlike manufactured products, services are not _______________.

Queue management system

Used to help control the flow and prioritization of people expecting to receive a service. Often referred to as "crowd control," they can be utilized for almost any situation where large numbers of people are gathering, or waiting in line to purchase tickets, enter a facility, etc.

Unstructured queues

When people form queues somewhat informally in various directions and locations.

Customer Involvement

________________ are much more directly involved in the service process than with manufactured goods. Services typically require direct interaction with _________________ for the service to be completed or delivered.

Assessment of Quality

_________________ is assessed differently in the service industry. Each customer and each service provider are different. Services are often unique to the customer

Franchising

an arrangement where one party grants another party the right to use its trademark or trade name as well as certain business systems and processes, or produce and market a good or service according to certain specifications.

Service capacity utilization

is calculated as the number of actual customers served per time period, divided by the available capacity.

Reneging

is when customers decide to leave the queue. They are already in the queue and then decide that it is taking too long, or they change their mind about the service and decide to leave the queue.

Perceived Waiting Time

management of consumers' perceptions of the service level for a given waiting time

Service Quality

reliability, responsiveness, assurance, empathy, tangibles

Bundle of Service Attributes

supporting facility, facilitating goods, explicit services, implicit services

Balking

when customers refuse to join the queue. They arrive and determine that the queue is too long and decide to go elsewhere or return later.