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Copyright Atomic Dog Publishing, 2004
Chapter Five
Operations
Copyright Atomic Dog Publishing, 2004
Differences Between Manufacturing and Services
• Intangibility
• Perishability
• Inseparability
• Variability
Copyright Atomic Dog Publishing, 2004
Operational Positions
Cost Efficiency
ServiceQuality Customization
(Tec
hnica
l)
(Functional)
Copyright Atomic Dog Publishing, 2004
Operational Position Map
Cost Efficiency
ServiceQuality Customization
(Tec
hnica
l)
(Functional)
Copyright Atomic Dog Publishing, 2004
Blueprinting
• Customer contact component
• Support component
• Capacity bottlenecks
• Divergence
• Complexity
• Symbols
Copyright Atomic Dog Publishing, 2004
Table 5-1
Employee
Activity
Time
Time Total
Max, Output
Cost
1
Take orders Prepare drinks
Receive payment
30 10 10
50
72
$6.00
2
Prepare sandwiches
25
25
144
$6.00
3
Prepare french fries
20
20
180
$6.00
4
Put order together
Give customer order
20 5
25
144
$6.00
Total 4 employees 72 customers/hour
Avg. Cost $0.33
Copyright Atomic Dog Publishing, 2004
Table 5-2
Employee
Activity
Time
Time Total
Max, Output
Cost
1
Take orders Receive payment
30 10
40
90
$6.00
2
Prepare sandwiches
25
25
144
$6.00
3
Prepare french fries
20
20
180
$6.00
4
Prepare drinks
Put order together Give customer order
10 20 5
35
102
$6.00
Total 4 employees 90 customers/hour
Avg. Cost
$0.26
Copyright Atomic Dog Publishing, 2004
Table 5-3
Employee
Activity
Time
Time Total
Max, Output
Cost
1 & 2
Take orders Prepare drinks
Receive payment
30 10 10
25
(50)
144
$6.00
2
Prepare sandwiches
25
25
144
$6.00
3
Prepare french fries
20
20
180
$6.00
4
Put order together
Give customer order
20 5
25
144
$6.00
Total 4 employees 72 customers/hour
Avg. Cost
$0.21
Copyright Atomic Dog Publishing, 2004
Complexity/Divergence
Divergence
Com
plex
ity
High
Low
High
Low
Cost Efficiency
CustomizationTechnical
Service Quality
FunctionalService Quality
Copyright Atomic Dog Publishing, 2004
Operational Design
• Support the firm’s targeted operational position
• Lower unit cost
• Provide customers with uniform and consistent service quality
Copyright Atomic Dog Publishing, 2004
Cost Efficiency Position
• Facility location
• Facility layout
• Job design
Maximize Productivity
Copyright Atomic Dog Publishing, 2004
Customization Position
• Facility location
• Facility layout
• Job design
Maximize Personalization
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Technical Service Quality Position
• Facility location
• Facility layout
• Job design
Maximize Service Outcome
Copyright Atomic Dog Publishing, 2004
Functional Service Quality Position
• Facility location
• Facility layout
• Job design
Maximize Service Process
Copyright Atomic Dog Publishing, 2004
Managing Customer Waiting• Determine acceptable waiting time
• Operations management techniques
• Perceptions management techniques
Copyright Atomic Dog Publishing, 2004
Operations Management
• Use reservations
• Encourage use of alternative modes of service
• Encourage use during slower periods
• Follow fair rules in serving customers
• Keep resources not serving customers out of sight
Goal: Reduce waiting and length of queue.
Copyright Atomic Dog Publishing, 2004
Perceptions Management
• Keep customers busy
• Shift some of pre-service waiting to the service encounter
• Inform customers how long they will have to wait
• Explain unexpected waiting or queues
• Reduce anxiety
Goal: Reduce perception of waiting.
