Services cannot be_____
Services are often _____ (insurance policies, legal services, financial services)
Services have ___ customer-service interaction
Services are _______ due to inability to inventory & transport service products
service system components
Queue (waiting area)
single server/ single phase
retail shop with one server
single server/ multiple phase
multiple server/ single phase
bank teller window
multiple server/ multiple phase
a large medical clinic where patients are checked in by one of several assistants, have their vital signs recorded by one of several nurses and receive a medical consultation by one of several doctors
Calling population can be
Infinite or Finite
customer arrivals are unrestricted; the number of potential customers greatly exceeds the system capacity
the number of potential customers is limited
arrival process can be
Rate ( λ )
Most queuing models assume that customers stay in the queue once they join it. In other words, customers do not exhibit _____ refusing to join the queue once they see
how long it is
leaving the queue before completing the service
service process can be
Rate ( μ )
expected customers in system
Lq = λ2/[μ(μ -λ) = Ls - λ/μ
expected customers in queue
Ws =1/(μ-λ) = Ls/ λ
expected waiting time in system
Wq =λ/[μ(μ - λ )] = Lq/λ
expected waiting time in queue
Pn = (λ/μ)n(1 - λ/μ)
probability of n units in the queuing system
average arrival rate
average service rate
average server utilization
improving service systems through service process
Reduce service time
Increase resource flexibility
Reduce service time variability
improving service systems through arrival process
ex: reservations, early warning incentives, better forecasting methods
ex: slow period discounts, reservations
improving service systems through waiting process
Influence perception of the waiting process
Unoccupied time feels longer than ____ time
___ waits feel longer than in-process waits
____ makes waits seem longer
Uncertain waits are longer than known, ___ waits
____ waits are longer than explained waits
Unfair waits are longer than ___ waits
The more valuable the service, the longer the customer will wait T/F
Solo waits feel shorter than group waits
Customer satisfaction with the service depends not only on the ability of the firm to deliver what customers want, but on the customers'_____of the quality of the service received
______ depends on the firm's employees to satisfy customers varying expectations
consistently performing the service correctly & dependably
promptly & timely service
ability to convey trust & confidence to customers
providing caring attention to customers
the physical characteristics of the service including e.g. facilities, servers, equip., & other customers
Improving service productivity is challenging due to ___ labor content
Improving service productivity is challenging due to individual _____services
Improving service productivity is challenging due to difficulty of _____services
Improving service productivity is challenging due to problem of ____ service quality
productivity growth in services is low
outputs produced/ inputs used
inputs (single factor productivity)
Inputs (multiple-factor productivity)
labor, material, energy, capital
What is productivity?
Effective use of overall resources
What is effectiveness?
Getting the most out of a fixed asset
cost leadership strategy
Requires large capital investment in state-of-the art equipment & significant efforts to control & reduce costs
Unique service is created as companies listen to customers
Serve a narrow niche better than other firms
Bundle of attributes :the combination of
Explicit services,Supporting facility Facilitating goods, Implicit services
reservations, baggage handling, website
security, atmosphere, privacy
Front of the house staff do not contact customers T/F
Back of the house staff generally do not contact customers T/F
The service system should be audited often to assess performance T/F
Reduce Distance Traveled
Departmental Layouts to
Departmental Layouts to Maximize
Services performed require a ____labor component than manufactured products
Services require use of_____(computers, furniture, office supplies) that are not part of the services sold
The four primary activities of service response logistics
is the # of customers per day the firm's service system is designed to serve (note: we use # of customers as an example, but it could be other measures as well)
When demand exceeds capacity
firms turn away customers or hire personnel
Hiring, training, supervising, & equipping personnel is costly (≈ ___% of ops. costs)
Maximum output facility is designed for
Design capacity minus allowances for personal time (breaks), maintenance
actual output/ effective capacity
actual output/ design capacity
Level demand strategy
Capacity remains constant regardless of demand
Chase demand strategy
Capacity varies with demand
queue management tactics
When demand exceeds capacity, _____ deal with excess customers
To minimize the cost of hiring and laying off employees, these strategies deal with periods of high demand
Cross-Training & Sharing Employees
Using Part-Time Employees
Using Customers- "Hidden employees"
Using Employee Scheduling Policies
Using demand management techniques
Instead of disposing of excess capacity, the following strategies deal with low demand
Finding other uses for service capacity
Using demand management techniques
managing queue times
Consists of the management of actual waiting time & perceived waiting time
queuing system design
the input process
Customer arrivals are referred to as
Customers appear in
A server in a service system
It is assumed that each ____can handle one customer at a time
The number of steps in a queuing system
Another characteristic of the service is the ___ required to complete each of the services provided
Multiple servers acting in ____ is referred to as a multiple channel queuing system
Multiple servers acting in ___ is referred to as a multiple phase queuing system
expectations and capacity
Often, demand exceeds
perception - expectation
Waiting time management techniques
Keep Customers Occupied
Start the Service Quickly
Relieve Customer Anxiety
Keep Customers Informed
Group Customers Together
Design a Fair Waiting System
Service Recovery Systems require -
Developing recovery procedures
Training employees in these procedures
Empowering employees to remedy customer problems
a sequence of activities and organizations involved in producing and delivering a good or service
Distribution networks range from range from low ____ to high _____
Changes in distribution networks affect the following supply chain costs
Facilities and Handling
Two Key Managerial Decisions
Will the product be delivered to the customer location or picked up from a predetermined site?
Will the product flow through an intermediary (or intermediate location)?
Centralization is beneficial if there is high variety, high value items with low and unpredictable demand.
Centralized inventories leading to high product availability, low inventory levels (higher inventory turnovers), better forecasts.
Manufacturer can postpone customization until order arrival.
Partial shipments introduce complexity, hard to implement if there are more than 20-30 sourcing locations
in-transit merge network
combines pieces of order coming from different locations, so the customer receives the order by single delivery
Ex: Order a Dell pc with a Sony Monitor.
Beneficial for high value items with low to medium demand and with 4-5 sources
Main advantage over drop shipping: Lower transportation cost and improved customer experience
Distributor Storage with Carrier Delivery
Inventory is not held by the manufacturers, but is held by distributor/retailer in intermediate warehouses.
Package carriers are used to transport items from the retailer to the customer. Ex: Amazon
Higher inventory capacity is needed than the manufacturer, since demand uncertainty is aggregated at a lower level!
Better for medium to fast moving items. Better response time, lower transportation costs when compared to manufacturer storage.
Distributor storage can handle somewhat lower variety than manufacturer storage but it is better than a chain of retailers
Distributor Storage with Last Mile Delivery
Disributor/retailer delivers the product to the customer's home instead of using a package carrier.
Requires distributor warehouse to be very close to the customer, so more warehouses are needed when compared to package delivery.
Suitable for fast moving items where disaggregation does not lead to significant increase of inventory.
Hard to justify this option when labor cost is high.
Can only be justified when there is large customer demand at this higher price. Very short response time, better customer experience and returnability.
should be integrated with the existing distribution network.
Distributor Storage with Customer Pickup
Inventory is stored at the manufacturer or distributor warehouse (cross dock), customer place orders on line or via call center and come to designated pickup points to collect their orders.
Ex: 7-Eleven Japan
Inventory and transportation costs are low due to appropriate aggregation
Retailer Storage with Customer Pickup
Inventory is stored locally at retail stores. Customers walk into the retail store or place an order online or by phone and pick it up at the retail store.
Best for fast moving items
Very short response time due to local storage, lower transportation cost
Increased inventory and facility costs
What are key performance measures?
Measure progress toward company goals
What is a goal?
A target-you need a target to reach and maintain
Companies using performance measurement are more or less likely to achieve leadership positions & ___ as likely to handle a major change successfully?
Performance measures must be___ & communicated to all members of the Supply Chain
Supply chain strategies must consider the potential trade-offs existing between:
Competitive Strategy is determined from how customers prioritize:
Variety of products required
Quantity & delivery frequency needed
Service level desired
Product quality desired
Price of the products
Decisions to maximize current stock prices do not necessarily reflect that the firm is performing well T/F
Financial performance measures, while important, can adequately capture a firm's ability to excel in these areas. T/F
the difference between the standard & actual performance
Managers can be pressured to find ways to make up these variances, resulting in poor decisions
Employees & managers do whatever it takes to reach the goal
Results in lower quality
____ may actually increase costs & reduce quality: lowering employee numbers can result in overwork, lower morale, increase in sick calls, lower customer service and quality
Firm-Wide Productivity & Utilization Measures
Tendency to continue producing & adding to inventory to keep machines & people busy
Less time is spent doing preventive maintenance & training thus reducing greater performance & profits in future
Traditional measures favor the ____ (delay capital improvements, selling assets, postponing projects)
A process characteristic indicating the degree to which the process output (work product) conforms to requirements. (Are we doing the right things?)
A process characteristic indicating the degree to which the process produces the required output at minimum resource cost. (Are we doing things right?)
The degree to which a product or service meets customer requirements and expectations.
Measures whether a unit of work was done correctly and on time. Criteria must be established to define what constitutes timeliness for a given unit of work. The criterion is usually based on customer requirements.
The value added by the process divided by the value of the labor and capital consumed.
Measures the overall health of the organization and the working environment of its employees.
Measure based on data that is___: some industries such as healthcare may limit data collection due to patient rights and privacy.
A second approach to performance measurement incorporates asking first what needs to be ___, and then ascertaining whether sufficient internal or external data are available to answer the question posed
The most rational approach would be first to define_______goals for the organization (i.e. what needs to be measured, why, and how), and then determine whether reliable data exist to support such measurement
The ___ represents the number of times that a provider had the opportunity to provide an element of recommended care to a patient who was a candidate for that care.
The _____consists of the number of times that the care was provided.
Actual vs. expected performance (Bar Graph or 100% indicator)
If someone should have received a type of care, did they in fact receive it? The "percent compliance" measures are well suited to measurement of processes.
Performance against a benchmark (Bar Graph)
Performance reporting seeks to push performance improvement by comparing a provider's performance level to the ____, or the best in class; "should reflect the best current assessment of optimal care and efficiency rather than average performance, wherever possible.
How do you choose a supplier?
Total SCM costs
are the costs to process orders; purchase & manage inventories; & information systems
SC cash to cash cycle time
is the avg. # of days between paying for materials & getting paid by SC partners
SC production flexibilitySC production flexibility
is the avg. time required to provide an unplanned, sustainable 20% increase in production
SC delivery performance
is the avg. % of orders filled by requested delivery date
SC perfect order fulfillment performance
is the average % of orders that arrive on time, complete, & undamaged
Supply chain e-business performance
is the avg. % of electronic orders received for all SC members.
Supply Chain Environmental Performance
is the % of SC w/ISO 14000 partners; avg. % environmental goals met
Balanced Score Card is used to
align an organization's performance measures with its strategic plan & goals. aka scorecarding
measures that address revenue and profitability growth,
product mix, cost reduction, productivity, asset utilization and investment strategies. Traditional financial measures are typically used.
measures that focus on customer requirements and satisfaction including customer satisfaction ratings, reliability and responsiveness, customer retention, new customer acquisition, customer valued attributes and customer profitability
Internal business process perspective
focuses on performance of the most critical internal business processes of the organization including quality, new product development, flexibility, innovative elements of processes and time based measures.
Learning & growth perspective
measures concentrating on the organization's people, systems, external environment, and including retaining and training employees, enhancing information technology and systems, employee safety and health and environmental sustainability issues.
Web-based software applications and dashboards used to
design scorecards, which also link via the Web to a firm's enterprise software system.
Provide managers a way to see real-time progress toward organizational milestones & help to ensure that decisions remain in sync with the firm's overall strategies.
is designed to provide managers with a formal
framework for achieving a balance between non-financial and financial results across both
short-term and long-term planning horizons