Service operations management is concerned with efficiency, effectiveness, quality, and cost for both service and manufacturing operations. Key issues in service operations management include new service development using service blueprinting and utility-based design, managing customer experiences, analyzing front and back office processes, achieving service quality by addressing gaps between expectations and performance, and implementing strategies like yield management, inventory management, and waiting time management. References are provided on key texts and articles relating to various aspects of service operations management.

1. Service Operations
Management

2. Fundamentally, there are no differences
between service and manufacturing
operations! Both are concerned with:
• Efficiency
• Effectiveness
• Quality
• Cost

3. Effectiveness
• Right prescription
• Right advice
• Service availability
Efficiency
• No. of servers
• Use of resources
Quality
• Training
• Error prevention
• Continuous Improvement
Cost
• Inventory management
• Tradeoffs
• Purchasing

4. Service Operations Management
Selected Issues
• New service development
• Managing service experiences
• Front-office/Back-office
• Analyzing processes
• Service quality
• Yield management
• Inventory management
• Waiting time management

5. New Service Development
• Service Blueprinting
Focus on moments of truth
• Servicescapes
• Utility-based Service Design
Perceived utility to customer
• Relative importance of Dimensions of
Service Quality

6. Service Blueprinting
Source: Metters, King-Metters, Pullman, & Walton, p. 84

7. Utility-based Service Design
Source: Metters, King-Metters, Pullman, & Walton, p. 88

8. Dimensions of Service Quality
• Reliability
• Responsiveness
• Assurance
• Empathy
• Tangibles
Parasuraman, et al., 1985
ACSI Site:
http://www.theacsi.org/index.php?option=com_content&task=view&id=15&Itemid=172

9. Managing Service Experiences
• Customer Engagement
• Context
• Time
• Service Blueprinting
Focus on moments of truth

10. Front-office/Back-office
• Front-office work requires customer
presence.
• Back-office work does not require
customer presence.
• Decoupling: separating work into high-
contact/low-contact jobs.
Ultimate = outsourcing/offshoring

11. Analyzing Processes
• Process flow diagrams (flow charts)
– Process communication
– Focusing mgt. attention on customer
– Determining what to work on
• Process Simulation

12. Service Quality
• Defining service quality is more difficult
than defining manufacturing quality.
– Expectation vs Perception
– Expectation vs Performance

13. Gaps in Service Quality
Source: Metters, King-Metters, Pullman, & Walton, p. 186

14. Developing a Culture of
Service Quality
• Hire the right people.
• Educate and train them well.
• Allow them to fix anything.
• Recognize and reward them regularly.
• Tell them everything, every day.

15. Service Recovery
• Measure the costs
• Listen closely for complaints
• Anticipate needs for recovery
• Act fast
• Train employees
• Empower front line
• Close the loop

16. Yield Management
Purpose is to sell the right capacity to the
right customer at the right price.
• Overbooking
• Differential pricing
• Capacity allocation

17. Inventory Management
Service vs Manufacturing
• Setup/Ordering costs high
• Number of products higher
• Limited shelf space
• Lost sales vs backorders
• Product substitution
• Demand variance higher
• Information accuracy (complication of
customers)

18. Waiting Time Management
• Waiting lines are pervasive in services
• The problem is important
• Lack of management intuition about
waiting lines
15/30 Waiting Time Rule in hospital ER

19. References
Fitzsimmons & Fitzsimmons (1998). Service
Management 2ed., Irwin/McGraw-Hill.
Metters, King-Metters, Pullman, Walton (2006).
Successful Service Operations Management
2ed., Thomson.
Nelson. (2005). “Baldrige—Just What the Doctor
Ordered.” Quality Progress.
Sower, Duffy, Kohers, et al. (2001). “The
Dimensions of Service Quality for Hospitals…”
Health Care Management Review.

20. MGT 568 Service Management &
Marketing
MGT 568 is a team-taught course available as
a graduate elective.