TOM 453 chapter 2 notes

TOM 453 chapter 2 notes - Chapter 2 Chapter The Nature of...

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Unformatted text preview: Chapter 2 Chapter The Nature of Services Service / Product Bundle Service Product accompanied by service e.g., Product automobile with warranty automobile a Service accompanied by product e.g., post Service office with mailing supplies office a Distinctive characteristics of service operations service a Customer participation in the service Customer process process • Importance of facility design • Customer as a temporary employee e.g., fast food Customer restaurant restaurant – Need fewer personnel – Customer provides labor when required – matching capacity to Customer demand demand • Trend is toward ‘remote’ transactions e.g., phone, Trend computer, e-commerce computer, • Front office vs. back office Service characteristics (contd.) Service a Simultaneity • Simultaneous production and consumption • Cannot inventory Cannot – In manufacturing – Inventory used to absorb demand fluctuations – Decoupling of production and demand (closed system) – Services are like open systems – Decoupling through customer waiting (queuing) – Facility utilization vs. customer waiting time • Fewer opportunities for quality control intervention Service characteristics (contd.) Service a Perishability Perishability • e.g., empty airline seat, hotel room, gap in e.g., doctor’s schedule doctor’s • Lost if not used • Capacity utilization is a challenge • Service demand is often variable (seasonal Service patterns) patterns) Perishability (contd.) Perishability a Options to deal with variable demand and Options perishable capacity perishable • Smooth demand – Reservations/appointments – Price incentives – Demarket peak times • Adjust service capacity – Part-time personnel – Workshift scheduling (e.g., call centers) • Allow customers to wait Service characteristics (contd.) Service a Intangibility • • a Importance of reputation Registration, licensing (e.g., doctors, lawyers) Heterogeneity • Variation from customer to customer • Ensure consistency of service through Ensure standards, training standards, Non-ownership characteristic Non-ownership a Customers typically do not receive Customers ownership ownership • Access or rental for a period of time • e.g., hotel room, airplane seat, labor/expertise a Challenges for service provider • Maintenance between customer rentals e.g., Maintenance housekeeping housekeeping • Keeping expertise current e.g., training • Avoiding idle periods e.g., non-billable time • Management of queues e.g., Disney The Service Package a Supporting facility • Physical resources e.g., airplane, classroom, lab a Facilitating goods • Material consumed by buyer or items provided Material by consumer e.g., medical supplies, food items, mailing supplies mailing a Information • e.g., customer preferences, medical records, e.g., seats available seats The Service Package (contd.) The a Explicit services • Benefits readily observable; essential features Benefits e.g., response time, on-time departure, repaired auto auto a Implicit services • Psychological benefits e.g., privacy of loan Psychological office, security of well-lighted parking lot office, Service Classification: The Service Process Matrix Service a Degree of labor intensity • Ratio of labor cost to capital cost a Degree of interaction and customization • Standardized vs. customized The Service Process Matrix The Degree Degree of Labor Intensity of Low Degree of Interaction and Customization Low High Service Factory Service Shop Service Service * Airlines * Hospitals Airlines * Trucking * Auto repair * Hotels * Other repair services services * Resorts and recreation Resorts High High Mass Service Mass * Retailing Retailing * Wholesaling * Schools * Retail banking Retail Professional Service Professional * Doctors * Lawyers * Accountants * Architects Managerial challenges Managerial a Low labor intensity (high capital intensity) • Capital decisions • Keep abreast of technological advances • Manage demand (peak vs. off-peak to maintain Manage equipment utilization) equipment a High labor intensity • • • Hiring Hiring Training Scheduling the workforce Managerial challenges (contd.) Managerial a Low customization • Making service ‘warm’ • Need standard operating procedures • Attention to physical surroundings a High customization • Maintaining quality • Managing costs Classifying services Classifying a Nature of the service act • Services directed at people Services – Bodies e.g., health care, fitness center, salon – Minds e.g., education, entertainment • Services directed at things – E.g., laundry, mail, banking Classifying services (contd.) Classifying a Relationship with customers • Membership relationship e.g., banking, frequent Membership flyer flyer • No formal relationship e.g., movie theater, No restaurant restaurant Classifying services (contd.) Classifying a Customization • High e.g., surgery, taxi service • Low e.g., movie theater, public transportation a Nature of demand and capacity • Peak vs. off-peak Peak Classifying services (contd.) Classifying a Method of service delivery • Customer travels to service firm e.g., salon, fast Customer food food • Service provider travels to customer e.g., pest Service control, taxi control, • Transaction is at arm’s length e.g., TV, Transaction telephone telephone • Single vs. multiple sites – Ensure consistency across sites Case: Village Volvo Case: ...
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This note was uploaded on 10/19/2011 for the course TOM 453 taught by Professor Kumar during the Spring '11 term at Cal Poly Pomona.

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