lecture 1 Flashcards
SOM involves all
activities that transforms resources into a “service experience” in an efficient manner while still satisfying customer needs.
How to differentiate service-based business and product-based business?
It is often difficult to define whether a business is product-based or service-based as they usually provide both, a “bundle” of both service and product. They usually differentiate themselves using a “variant” to differentiate the “bundle”
2 main objectives of Operations Management are :
- To improve productivity
2. To improve quality (which includes customer satisfaction)
operations management input is?
What are the resources?
Resources: facilitating goods capital employee labour information knowledge others
INPUT:
CUSTOMER IS THE MOST IMPORTANT (major input) & customer focused
5 distinctive characteristics of service operations are?
Customer participation in service process Heterogeneity Intangibility Perishability Simultaneity
Describe the customer participation in service process.
The presence of customer participation in a service process requires attention to facility layout such as interior décor, noise, furnishing, layout, etc.
Customers as a co-producers can play an active role in the service process and influence service quality.
customer behaviour will affect service provider’s behaviour and taking customers out of the service process has become a common practise such as internet services.
Describe simultaneity in a service process & the difference between manufacturing and the service industry.
services are created and consumed simultaneously (at the same time) and hence, cannot be stored. (cannot be kept as inventory)
-eg. during a haircut, customer consumes the service at the same time.
the difference between manufacturing and the service industry is that:
for manufacturing, they rely on inventory as a buffer to absorb fluctuations in demand. However, for service, they are unable to inventorise services. Decoupling is achieved through letting customers to wait. (more customer than service provided, they will have to wait)
Since service cannot be stored, the determination of service capacity, utilising of facility and the use of idle time needs to be balances against customer’s waiting time.
- Interaction creates customer perceptions of service quality
- simultaneous production and consumption also eliminates many opportunities for quality control intervention (quality in manufacturing can be noticed)
Describe service perishability. What does management need to do?
A service is a perishable commodity as service cannot be stored and there is an opportunity loss of idle capacity. What management needs to do is to match the supply with the demand to fully utilise the service capacity. This is because consumer demand for services may vary between peaks and valleys ( travel peak periods / lunchtime peaks)
Why do managers need to optimise resource utilisation?
Perishability
They are faced with variable demand and a time-perishable capacity to provide the service
3 options for managers to optimise resources utilisation are?
(Perishability)
- smooth demand by using reservations, price incentives & discounts, demarketing during peak times
- Adjust service capacity by using part-timers during peak hours, schedule work shifts to vary workforce needs according to demand, increase the self-service content of the service (can see which part of service process can be self-service)
- Allow customers to wait. However it carries the risk of losing a dissatisfied customer to a competitor & might not come back.
describe why service is intangible and products are tangible.
Services are idea and concepts; products are physical items. Hence, service innovations are not patentable.
Problems faced by customers due to intangibility of services. What are the solutions?
When buying a service, customers will have to rely on the reputation of the service firm (unlike products where they can examine before purchase / check specifications)
However, government has intervened to guarantee acceptable service performances such as registration, licensing and regulations (eg. doctor, accountants, engineers)
Describe Heterogeneity.
Heterogeneity is the combination of the intangible nature of services and the customer as a participant in the service delivery process which results in a variant of service from customer to customer.
- the extent of customer involvement in delivery process results in variability.
- the direct customer-employee contact has implications on service quality and hence, employee satisfaction training are important.
Describe The Service Package and its 5 features.
The service package is defined as a bundle of goods and services with information that is provided in some environment.
The bundle consists of 5 features FIISE Facilitating goods Information Implicit services Supporting facility Explicit services
Explain the 5 features of The Service Package
- Facilitating goods
- It is the material purchased or consumed by the buyer, or items provided by the customer themselves. (golf clubs, food ingredients, legal documents, medical supplies, toiletries) - Information
- Data provided by customer/ service provider to enable efficient and customised service. (medical records, customer preference from previous hotel visit, google map link on a hotel website) - Implicit Services:
- Psychological benefits that the customer may sense only vaguely. (status of degree from prestigious school, privacy of a loan office, worry free car repair from a reputable shop) - Supporting facility:
- Physical resources that must be in place before a service can be offered (golf course, hospital, airplane) - Explicit Services:
- the benefits that are readily observed by the senses and consists of the essential features of the services. (absence of pain, response time of a taxi, smooth running of car after repair)
