HT3 - Service and Manufacturing operations

Question 1

Bowen and Spear (1999)

Answer 1

Toyota Production System
Paradox: the rigid specification enables innovation and constant improvement + flexibility
The system stimulates workers to experiment: new specifications are hypotheses to be tested
Rule 1.: All work shall be highly specified as to content, sequence, timing and outcome - easy problem detection
Rule 2.: Every customer-supplier connection must be direct + yes-or-no way of communication - easy problem-solving
Rule 3.: The pathway of every product and service must be simple and direct - help comes from specific person
Rule 4.: Any improvement must be made in accordance with the scientific method at the lowest possible level of organisation
Notion of ideal: workers believe in a perfect production system, which motivates them to innovate and improve
Output is: defect free, can be delivered at request, immediately, without waste, in a safe environment

Question 2

Chase and Hayes (1991)

Answer 2

Operations in service firms
Four stages to service quality:
- 1. just ok: satisfies the basic needs, a niche area or a young firm with a unique proposition
- 2. Coping with competition: no unique proposition, same as competitors, goal is to keep up with the pace and hold on to market share
- 3. Distinctive service proposition: satisfying specific customer needs, consistent choices
e.g. CEO of Bank of America: providing one-stop shopping, a bundled account – delivered well, great service for customers
- 4. World class service delivery: creates needs, offers unique value proposition, proactive, e.g. Disney, Singapore Airlines
Competitiveness can be sorted based on operations, service quality, back office, customer understanding, introduction of new technology, workforce, and first-line management
Key to successful transition:
- from closed system to an open system that takes feedback
- from procedures to customer focus
- from islands of activity to total enterprise integration

Question 3

Berry et al (1990)

Answer 3

Improving service quality
Customers judge services based on:
-Tangibles – physical appearance
-Reliability – performing promised services dependably and accurately
-Responsiveness – willingness to help customers and provide prompt service
-Assurance – employee knowledge and courtesy; ability to convey trust/confidence
-Empathy – provision of caring, individualised attention
Service roles must be clearly defined
Service standards must be communicated and reinforced
Service reliability must be the core experience
Resolving problems: making it easy to complain, frovide feedback and responding effectively
Hiring the right people is key to delivering world-class service
e.g. Nordstrom – full-time employees only, who earn wages and commissions as well, higher payment but higher quality of service

Question 4

Pine and Gilmore (1998)

Answer 4

Experience Economy
Agrarian – industrial – service – experience economy (more differentiation, more premium pricing)
Experiences = memorable, personal
Experiences are a complex way of selling goods
Two dimensions of experiences – customer participation (passive vs active) and environmental relationship/connection (absorption vs immersion
How to design memorable experiences:
-Theme: consistency and imagination e.g. Disney (on ice)
-Harmonise impressions with positive cues – as simple as having ‘aneo haseo’ in a Korean restaurant instead of ‘welcome’
-Eliminate negative cues – try to remove disruptors; avoid overservice
-Mix in memorabilia
-Engage all senses

Question 5

Bitner et al (2002)

Answer 5

Implementing successful self-service technologies
Why SSTs?
-Reduce costs – labour costs; customers can resist if this is the only reason (no benefit to them)
-Increase customer satisfaction and loyalty – online banking; this works only when they can be better than interpersonal alternatives
-Reach new customer segments – geographic diversification
How to ensure successful implementation:
-Be clear on strategic purposes – implementation and marketing communication must be aligned with corporate strategic purposes
-Maintain a customer focus – understand customer needs/educate customers
-Actively promote SSTs – marketing benefits clearly
-Prevent and manage failure – plan for service recovery
-Offer choices – don’t ‘force’ SSTs
-Constant updates and continuous involvement – standards must be re-evaluated
e.g. McDonalds