Service Operations Management MAN 3504 Exam 1 Review Chapter 1 Operations Intro to Operations Supply Chain Management A function or systems that transforms inputs into outputs of greater value The central activity of the firm Customers pay us for our operations Operations Management Designing planning controlling and improving these transformation systems Why is it important o Globally to save resources o Nationally more tax money better standard of living o Corporately make more money than competitors o Personally more structured Transformation Process Physical as in manufacturing operations Locational as in transportation or warehouse operations Exchange as in retail operations Physiological as in health care Psychological as in entertainment Information as in communication Service Emphasis Services activity that does not directly produce a physical product Good a physical product that can be held in your hand Most jobs in America are in services Why is Service Operations Management in marketing curriculum In services the marketing of the service is tied very closely to the creation of the service Separating marketing and operations is impossible in services Productivity Competitiveness Competitiveness test of relevant markets Productivity o Degree to which a nation or a company can produce goods and services that meet the o Ratio of output to input o Output sales made products produced customers served meals delivered or calls o Input labor hours investment in equipment material usage or square footage answered Compete well by o Do the right things strategy operations affect o Do things right Productivity using resources well Measures of Production Single Factor Multi Factor o o Total Factor Balanced Scorecard Measuring more than financial performance productivity o Finances o Customers o Processes o Learning and growing Key performance indicators o Set of measures to help managers evaluate performance in critical areas Strategy Formulation 1 Defining a primary task a What is the firm in the business of doing 2 Assessing core competencies a What does the firm do better 3 Determining what customer wants a Order winners and order qualifiers 4 Positioning the firm a How will the firm compete i Cost low cost through standardization automation reducing waste lean operations ii Speed fast service like McDonalds FedEx or LensCrafters iii Quality 1 2 External satisfaction ex Ritz Carlton Internal minimize defect rate iv Flexibility ability to adjust to changes mass customization v vi Environmental reuse raw materials save energy Innovation inventing new products 5 Deploying the strategy a Develop an operations function to achieve strategic goals Policy Deployment translates corporate strategy into measurable objectives Hoshins action plans generated from the policy deployment process Postponement delay the final customization until the time of purchase Policy Department Extras Chapter 6 Processes Process Planning Process Process Strategy Process Design they done Process Planning o Basic component of operations o Group of related tasks with specific inputs outputs o An organization s overall approach for physically producing goods and services o Critical to determine what the steps are their sequence who does them where are o Converts designs into workable instructions for manufacture or delivery Vertical Integration vs Outsourcing Cost Will it cost less to outsource Capacity Do we have enough resources Quality If we outsource will the quality remain the same Speed Which will be completed faster if we do it Or if we outsource Reliability Can we depend on another company What s their track record Expertise knowledgeable Trade off between efficiency and flexibility Capital Intensity Process Flexibility o Mix of capital and labor resources used in production process o Ease with which resources can be adjusted in response to changes in demand technology products or services and resource availability Process Selection Projects o One of a kind production of a product to customer order o Very low volume expensive Batch Production o Process many different jobs at the same time in groups or batches o Few individual customers o Not standardized low to medium volume variety higher o Ex Job Shop Small bakery Target Copy Mass Production o Produce large volumes of a standard product for a mass market o Standardized mass market high volume o Efficient low cost o Ex Assembly Lines Newspapers Continuous Production o Used for very high volume commodity products o Ex Chemicals petroleum Bottleneck slowest activity in a process Extras Chapter 5 Service Design Characteristics of Services Services Goods o Acts deeds or performances o Tangible objects something you can hold Facilitating Services Facilitating Goods o Accompany almost all purchases of goods o Accompany almost all service purchases More on services Services are inseparable from delivery Services tend to be decentralized and dispersed Services are consumed more often than products Services can be easily emulated Services are intangible Service output is variable Services have higher customer contact Services are perishable Service Design Process Service Concept Service Package Service Specifications Service Process Matrix o Purpose of a service it defines target market and customer experience o Mixture of physical items sensual benefits and psychological benefits o Performance design and delivery specifications Professional Service Lawyers doctors etc Service Shop Schools Hospitals Mass Service Retail banking Service Factory Fast food trucking High contact vs Low contact High Contact o Front office o Location is convenient to customer o Managers must interact with customers well and look presentable o Ex Bar or dining table Low Contact o Back office o Location is near labor or transportation source o Managers must have technical skills and manage workers o Ex Kitchen o It is designed for efficiency Customer Participation Customer performs some of the work in creating the service Ex Salad bars self serve drink dispensers Tools for Service Design Service Blueprinting o Line of visibility separation of front back office o Above line is front office o Below line is back office Waiting Lines Overview of Waiting Lines Waiting lines happen in most services Managers responsibility to manage Customers do not like waiting o Actual waiting time o Perceived waiting time Psychology of Waiting Perceived Waiting Times o Occupied vs Unoccupied occupied is