Chapter

01SERVICE RESPONSE LOGISITCSmks@mdi.ac.in http://mks507.vistapanel.net

mks

Prof. (Dr.) Manoj K SrivastavaOperations Management Area

APICSy y y y y y y y

Understand how supply chain management in services differs from SCM in manufacturing. Define service response logistics & describe all of its elements. Understand the importance of service layouts & perform a layout analysis using several techniques. Describe the strategies for managing capacity, wait times, distribution, & quality in services. services. Understand queuing system design issues & calculate queue characteristics. Use various techniques for managing customers perceived waiting times. Understand the different distribution channels available for services. Define service quality & describe how to measure it & improve it.

APICSServices provide state utility

they do something to things owned by the customer (e.g., store supplies & repair machines). machines).

APICSDifferences between goods & services:y y y y

Services cannot be inventoried. Services are often unique (e.g., Insurance policies & legal services. Services have high customer-service interaction. customerinteraction. Services are decentralized due to inability to inventory & transport service products.

APICSService Strategy Development Cost Leadership Strategy- Requires large capital investment in Strategystate-ofstate-of-the art equipment & significant efforts to control & reduce costs. Differentiation Strategy- Unique service is created as companies Strategylisten to customers. Focus Strategy- serve a narrow niche better than other firms Strategy-

APICSThe Service Delivery System Bundle of attributes (the combination of):

Explicit services Supporting facility Facilitating goods Implicit services

(ex. storage & use of your money) (ex. bank w/drive-up tellers) w/drive(ex. deposit forms, monthly statements),(ex. security provided, the atmosphere in the bank, privacy, & convenience).

Service Location & Layout StrategiesLocation StrategiesStrategiesHave a long-term $ impact on the company. longDecision should consider relevant factors & reduce intuitive decisions.

Layout Strategies Departmental Layouts to Reduce Distance Travelled Departmental Layouts to Maximize Closeness Desirability- A closeness desirability Desirabilityrating between departments used to design a layout that maximizes a rating for the entire office.

Supply Chain Management in ServicesServices performed require a larger labor component than manufactured products Services also require use of facilitating products (e.g., computers, furniture, office supplies) that are not part of the services sold Customers have no idea how things actually get to the destination. But they sure notice when the shipment is late! late!

Service Response Logistics (SRL)The management and coordination of the organizations service activities. The four primary activities of SRL: Service capacity Waiting times Distribution channels, and Service quality

Supply Chain Management in ServicesManaging Service CapacityCapacityService capacity: the # of customers per day the firms service system is designed to serve. When demand exceeds capacity, firms turn away customers or hire personnel Hiring, training, supervising, & equipping personnel is costly ( 75% of oper. costs) oper. Therefore, service managers must forecast demand & provide capacity to meet the forecast demand.

Supply Chain Management in ServicesManaging Service Capacity Capacity utilization

Level-demand strategy- Capacity remains constant regardless of demand. When demand exceeds capacity, queue management tactics deal with excess customers. Chase-demand strategy- Capacity varies with demand

Supply Chain Management in ServicesCapacity Management when Demand exceeds Capacity To minimize the cost of hiring and laying off employees, the following strategies deal with periods of high demand:CrossCross-Training & Sharing Employees Using part-Time Employees partUsing Customers- Hidden employees CustomersUsing Technology Using Employee Scheduling Policies Using demand management techniques

Capacity Management when Available Service Capacity exceeds Demand Instead of disposing of excess capacity, the following strategies deal with low demand: Finding other uses for service capacity Using demand management techniques

Supply Chain Management in ServicesConsists of the management of actual waiting time & perceived waiting time. What is the average arrival rate of the customers? In what order will customers be serviced? What is the average service rate of providers? How are customer arrival & service times distributed? How long will customers wait before they either leave or lower their perceptions of service quality? How can customers wait even longer without lowering their perceptions of service quality?

Supply Chain Management in ServicesManaging Waiting Times (Cont.) Queuing System DesignDesignService Characteristics Provided either by single server or by multiple servers who act in series or in parallel. Multiple servers, acting in parallel, referred to as a multiple-channel queuing multiplesystem. Multiple servers acting in series is referred to as a multiple-phase queuing multiplesystem. The single-channel, single-phase configuration is the most basic. singlesingleAnother characteristic of the service is the time required to complete each of the services provided.

Supply Chain Management in Services

Supply Chain Management in ServicesManaging Perceived Waiting Times Often, demand exceeds expectations & capacity. First & Second Laws of Service: Rule 1: Satisfaction = perception expectation. Rule 2: It is hard to play catch-up ball. catchWaiting time management techniques: Keep Customers Occupied Start the Service Quickly Relieve Customer Anxiety Keep Customers Informed Group Customers Together Design a Fair Waiting System

Supply Chain Management in ServicesManaging Distribution Channels Distribution channels involve traditional methods & new channels that incorporate new Internet technologies Eatertainment - Combination of restaurant & entertainment elements. Entertailing - Retail locations with entertainment elements. Edutainment (infotainment)- Combines learning with entertainment to appeal to customers looking for (infotainment)substance along with play. play. FranchisingFranchising- expand quickly in dispersed geographic markets protect existing markets; build market share & when owners have limited financial resources. International Expansion Operate/partner with firms familiar with the regions markets, suppliers, infrastructure, government regulations, & customers. Must address language & cultural barriers Internet Distribution Strategies Internet retailing is growing faster than traditional retailing. Primary advantages of the Internet - ability to offer convenient sources of real-time information, integration, realfeedback, & comparison shopping. Many retailers today sell products exclusively over the Internet (a pure strategy), while others use it as a supplemental distribution channel (a mixed strategy).

Where are we going?Exciting New Challenges in Operations Management