Operationin

Service Industry

By Praveen Sidola

Role of Services in an Economy

Services are deeds, processes, and performances.Valarie Zeithaml & Mary Jo Bitner

A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.

James Fitzsimmons

Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives.

James Fitzsimmons

Role of Services in an Economy

Service Development Cycle

People

Technology Systems

Product

Full Launch Development

Design Analysis

Org

aniz

ati

onal

Conte

xt Team

s

Tools

Enablers

• Formulation of new services objective / strategy• Idea generation and screening• Concept development and testing

• Business analysis• Project authorization

• Full-scale launch• Post-launch review

• Service design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing

Role of Technology in the Service Encounter

Technology

Technology

Technology

Technology

Technology

Customer

Customer 

Server 

Server 

Server 

Server 

Server 

Customer

Customer

Customer

 

D. Technology-MediatedService Encounter

E. Technology-GeneratedService Encounter

A. Technology-FreeService Encounter

B. Technology-AssistedService Encounter

C. Technology-FacilitatedService Encounter

Service Quality Gap ModelCustomer

Perceptions

Customer

Expectations

Service

Delivery

Service Standards

ManagementPerceptions of Customer Expectations

Managing the Evidence

Conformance Service Design

Understanding the Customer

Customer Satisfaction GAP 5

Customer / Marketing Research

GAP 1

Conformance GAP 3

Communication GAP 4

Design GAP 2

Service Quality Gap Model

Service Process Control

Resources

Identify reasonfor

nonconformance

Establish measure of performance

Monitorconformance torequirements

Take corrective

action

Service concept

Customer input

Customer output

Service process

The Service Encounter Triad

ServiceOrganization

Efficiencyversus

satisfaction

Efficiencyversus

autonomy

CustomerContact

Personnel Perceived control

Process Analysis TerminologyCycle Time is the average time

between completions of successive units.

Bottleneck is the factor that limits production usually the slowest operation.

Capacity is a measure of output per unit time when fully busy.

Capacity Utilization is a measure of how much output is actually achieved.

Throughput Time is the time to complete a process from time of arrival to time of exit.

Process Analysis Terminology (cont.)

Rush Order Flow Time is the time to go through the system without any queue time.

Direct Labor Content is the actual amount of work time consumed.

Total Direct Labor Content is the sum of all the operations times.

Direct Labor Utilization is a measure of the percentage of time that workers are actually contributing value to the service.

Forecasting ModelsSubjective Models

Delphi MethodsCausal Models

Regression ModelsTime Series Models

Moving AveragesExponential Smoothing

Strategies for Matching Supply and Demand for Services

DEMANDSTRATEGIES

PartitioningdemandDeveloping

complementaryservices

Establishingprice

incentivesDevelopingreservationsystems

Promoting off-peakdemand

Yieldmanagement

SUPPLYSTRATEGIES

Cross-training

employees

Increasingcustomer

participationSharingcapacity

Schedulingwork shifts

Creatingadjustablecapacity

Usingpart-time

employees

Arrival Process

Static Dynamic

AppointmentsPriceAccept/Reject BalkingReneging

Randomarrivals withconstant rate

Random arrivalrate varying

with time

Facility-controlled

Customer-exercised

control

Arrival process

Essential Features of Queuing Systems

DepartureQueue

discipline

Arrival process

Queueconfiguration

Serviceprocess

Renege

Balk

Callingpopulation

No futureneed for service

Supply Chain for Physical Goods

Material transfer Information transfer

Suppliers

Process and Product Design

Manufacturing Distribution Retailing Customer Customer Service

Recycling/Remanufacturing

Customer-Supplier Duality in Service Supply Relationships (Hubs)

Material transfer Information transfer

Supplier

Service Design

Service Provider Customer

Inventory Models

Economic Order Quantity (EOQ)Special Inventory Models

With Quantity DiscountsPlanned Shortages

Demand Uncertainty - Safety StocksInventory Control Systems

Continuous-Review (Q,r)Periodic-Review (order-up-to)

Single Period Inventory Model

Expansion Strategies

Single Service Multiservice

Focused service: Clustered service:Single Location

Focused network: Diversified network:Multisite

ReferenceService Management: Operations, Strategy,

Information Technology

By - James Fitzsimmons Service Management—Academic Issues and

Scholarly Reflections from Operations Management Researchers.

By - Metters, Richard, Marucheck, Ann1