Ops Summary - Service Operations Management PDF

**OPS SUMMARY** **LU1** *1. Importance of Service Operations* Central to sectors such as healthcare, hospitality, and finance, service operations are critical for daily life. Poorly managed services often fail due to inefficiencies in design, delivery, and customer engagement, impacting revenue,...

**OPS SUMMARY** **LU1** *1. Importance of Service Operations* Central to sectors such as healthcare, hospitality, and finance, service operations are critical for daily life. Poorly managed services often fail due to inefficiencies in design, delivery, and customer engagement, impacting revenue, social goals, and customer satisfaction. *2. IHIP Model for Defining Services* \- Intangibility: Services are not physical (e.g., consulting).\ - Heterogeneity: Service outcomes vary based on interactions.\ - Inseparability: Production and consumption occur simultaneously (e.g., dining).\ - Perishability: Services cannot be stored (e.g., unsold seats).\ - While these traits help define services, their relevance is debated, as technology can minimize some limitations. *3. Service Operations Management:* Employing an input-transformation-output model, service operations focus on managing resources (staff, technology) and processes. Unlike general operations, customers are integral to the transformation, influencing outcomes and value perception. *4. Customer Perspective in Services* A customer's experience is subjective, shaped by direct service interactions. Outcomes include tangible products, perceived benefits, emotional responses, and loyalty, underscoring the importance of aligning operational goals with customer expectations. *5. Service Operations Managers\' Responsibilities* \- Responsibilities include understanding market trends, setting strategic goals, designing service processes, managing staff and customer satisfaction, and ensuring continuous improvement.\ - Managers address both front-office (customer-facing) and back-office (supportive, behind-the-scenes) tasks, which are essential for holistic service delivery. *6. Managing Multiple Customer Groups* Service organizations often cater to diverse customer groups with unique needs, requiring careful resource allocation to maintain service quality. For example, a museum serves both educational groups and casual visitors in the same space, balancing experiences for each. *7. Balancing Operational and Customer Perspectives* Managers must align internal priorities (resources, performance) with the customer's desired outcomes, often requiring reconciliation of conflicting views to enhance customer satisfaction and operational effectiveness. *8. Tactical vs. Strategic Management* Service operations managers must solve real-time issues to avoid customer dissatisfaction, leading to a focus on immediate decisions. Balancing daily operational demands with long-term strategy is key to fostering innovation and service improvement. *9. Benefits of Effective Service Operations Management* \- For Customers: Satisfies diverse expectations, adapting to shifting definitions of value. \- For Staff: Enhances workplace satisfaction by reducing issues and fostering positive customer interactions. \- For Society and the Environment: Emphasizes sustainable practices, safety, and social impact, supporting long-term organizational goals and societal well-being. *10. Significance and Evolution of Services* Services dominate modern economies and are fundamental to daily life and business interactions, accounting for around 80% of GDP in developed nations. The sector's evolution reflects shifts from manufacturing to service-focused economies, influencing both consumption and business practices. *11. Future of Service Thinking* Service thinking is shaping business models across sectors, with significant trends like the experience economy, servitisation, and service-dominant logic (SDL) influencing how businesses create value and engage customers. *12. The Experience Economy* Introduced by Pine and Gilmore (1998), this concept suggests a shift from goods to experiences, where customers seek memorable and personalized interactions. Businesses \"stage experiences\" to foster emotional connections, seen in customer-centric sectors (e.g., retail, hospitality) and even in complex B2B contexts, where coordinated, tailored interactions create a unique value. *13. Servitisation* Blurring the line between manufacturing and services, servitisation integrates service offerings with products to enhance customer value and loyalty. Examples include Rolls Royce's "power by the hour" model, where companies generate revenue and maintain stability by offering services (e.g., maintenance) alongside product use. Servitisation supports differentiation, customer relationship building, and creates competitive advantages for companies facing commoditization pressures. *14. Service-Dominant Logic (SDL)* SDL reframes all business activities as forms of service, moving beyond the traditional goods-focused view. SDL posits that services, rather than tangible products, lie at the core of all economic activities, influencing academic perspectives and supporting the concept of service science. *15. Service Science* Evolving from SDL, service science is an interdisciplinary approach emphasizing the design and innovation of complex service systems through collaboration across fields like computer science, operations, and social sciences. It promotes a rigorous, scientific approach to understanding and improving services by focusing on the integration of people, technology, and business elements. *16. Service Concept Overview* \- The service concept is a comprehensive framework defining what a service aims to deliver, how it will be experienced by customers, and the alignment between customer expectations and service delivery.\ - It bridges the gap between a provider's internal processes and customer needs, ensuring service clarity and reducing misalignments. *17. Structure of a Service Concept* A robust service concept includes:\ - Organization Responsible: Identifies the entity providing the service. - Organizing Idea: Central vision or purpose that guides the service.\ - Summary of the Service: Outlines key features and value offered.\ - Details of the Service: Describes specific elements delivered to the customer.\ - Service Received: Focuses on the customer experience and perceived value. *18. Customer Experience and Outcomes* Services often entail various components, or \"mini-services,\" contributing to a full customer experience. \- Service Outcomes focus on benefits, emotions, and judgments (value) perceived by customers. Outcomes differ from outputs by focusing on customer-centric results (e.g., satisfaction, improved quality of life). \- Service Value is assessed by weighing benefits against costs, including both tangible and intangible elements that shape perceived value. *19. Distinctiveness of the Service Concept* It is not merely a brand, mission statement, or business model. Instead, it captures the current, detailed scope of service delivery, customer experience, and outcomes, going beyond basic marketing or strategic planning tools. *20. Uses for Managers* \- Communication: Defines and communicates the service\'s nature to align stakeholders. \- Organizational Alignment: Establishes a common understanding among employees, enhancing service culture and ensuring cohesive delivery. \- Design and Specification: Aids in designing resources, processes, and service experiences to meet customer expectations. \- Assessing Design Changes: The service concept allows managers to evaluate the impact of changes, ensuring that service modifications align with customer and organizational needs. *21. Capability Mapping* \- Profiling and capability mapping identify existing service potential, guiding the organization in leveraging its capabilities for future opportunities. **LU3** ***1. Service Process Design Fundamentals*** \- Focuses on creating efficient and effective service processes that meet the \"service concept\" requirements.\ - Balances front-office (customer-facing) and back-office (non-customer-facing) processes.\ - Emphasizes the role of technology and the balance between flexibility, efficiency, and varying employee skills. ***2. Defining Service Process Design*** \- Outlines procedures and staff interactions with resources (e.g., materials, equipment) for service delivery.\ - Forms an \"internal process network\" that supports end-to-end service provision, connecting individual processes. \- Challenges in coordination grow with organization size and process complexity. ***3. Resources and Processes in Service Operations*** \- Effective resource management (staff, technology, facilities) enhances value for stakeholders. \- Resources define process limits, and well-managed processes optimize resource use. \- Processes should evolve based on operational insights, improving resource capability over time. ***4. Understanding Processes*** \- Processes are structured methods for completing tasks, adaptable in formality based on purpose.\ - Effective process design aligns process detail and formality with the specific goals of the service. ***5. Distinctive Features of Service Processes*** \- Uses IHIP characteristics: intangibility, heterogeneity, inseparability, and perishability, which vary across services. \- Distinction between routine back-office processes (similar to manufacturing) and complex, adaptable front-office services. ***6. Importance of Service Process Design*** \- Acts as the \"DNA\" of a service, ensuring consistent delivery aligned with customer experience and organizational goals. \- Requires cohesive management of all interrelated process elements (customers, staff, materials).\ - Service success depends on end-to-end process management, not only on final customer interactions. ***7. Consequences of Broken Processes*** \- Inefficient or broken processes lead to errors, customer frustration, and resource waste.\ - Small process failures accumulate, disrupting stability and hindering continuous improvement. \- Process redesign skills are essential to identify and correct process inefficiencies. ***8. Types of Service Processes Based on Volume, Variety, and Customer Involvement*** \- **Volume**: Determines if a service process is high-volume (automated, efficient, standardized) or low-volume (personalized, requiring flexibility). \- Variety: Refers to the range of different tasks within a process, from routine tasks (standardized and predictable) to unique tasks (complex, infrequent). \- **Customer Involvement:** Includes customer participation levels in the process, impacting operational focus (e.g., self-service vs. staff-driven interactions). ***9. Classifying Service Processes by Task Types*** \- **Runners**: High-volume, standardized tasks (e.g., balance inquiries), benefiting from automation and tight control. \- **Repeaters**: Moderate-volume tasks that are complex and occur less frequently, requiring more resources and occasional adjustments. \- **Strangers:** Low-volume, one-off activities (e.g., custom requests), challenging due to unpredictability and lack of defined processes. ***10. Volume-Variety Matrix and Process Extremes*** \- **Capability Processes (Low Volume, High Variety):** Emphasize flexibility and personalized outcomes, requiring skilled staff and adaptable processes, typical in professional services (e.g., consulting). \- **Commodity Processes (High Volume, Low Variety):** Aim for efficiency through standardization, suited for repetitive tasks in consumer services (e.g., fast food). ***11. Profiling and Managing Mixed Process Types*** \- **Capability--Commodity Spectrum**: Helps managers position processes to improve alignment with service needs, ensuring optimal use of flexibility and control. \- **Complexity and Simplicity:** Processes may fall outside the spectrum (e.g., complex, high-volume customization or simple, low-volume niche services). ***12. Customer Involvement Matrix: Four Service Process Types*** \- **Service Factory (Low Involvement, High Volume):** Efficiency-driven, standard operations, with minimal customization (e.g., fast-food chains). \- **DIY Services (High Involvement, High Volume):** Self-service operations requiring customer engagement, such as online retail. \- **Service Projects (High Involvement, Low Volume):** Custom solutions with client interaction at specific phases (e.g., research services). \- **Service Partnerships (High Involvement, Low Volume):** Highly collaborative, customized services, emphasizing close client-provider relationships (e.g., management consulting). ***13. Evolving Service Process Focus and Task Allocation*** \- Operations adjust to changing service concepts, reallocating tasks between front and back offices or involving customers more directly.\ - Examples include reinsurance firms adopting standard procedures, retailers shifting to online models, and tech suppliers moving to consultative services. ***14. High-Volume, High-Involvement Service Operations -- Crowd Management*** Four stages of crowd management: flow prediction, performance analysis, planning, and real-time management, important for events with large gatherings. Crowd Marshals: Essential in overseeing crowd flow, safety, and efficiency, balancing service effectiveness and customer experience at events or tourist sites. ***15. Tools for Service Process Design*** \- **Process Mapping:** Essential tool for improving both back-office and front- office service processes. It involves charting all activities and relationships, promoting collaboration and ownership, and identifying areas for improvement. \- **Mapping Visibility:** Identifying process parts visible to customers to enhance customer experience; includes the "line of visibility" to differentiate customer-facing and internal processes. ***16. Analysing Process Maps*** \- **Strategic Alignment:** Ensures processes support overall service strategy, such as quality and speed. \- **Value Addition and Efficiency:** Evaluates each activity's contribution, aiming to remove non-value-adding tasks and reduce inefficiencies like bottlenecks. \- **Ownership and Control:** Assigns responsibility for each process element, including improvement measures and process visibility optimization. ***17. Process Demand and Capacity*** \- **Output Interval/Cycle Time**: Calculates the time between outputs to maintain process flow and meet demand. \- **Bottlenecks:** Points of congestion; process efficiency can be improved by balancing workload and optimizing capacity at these stages. ***18. Servicescapes in Process Design*** Servicescapes influence both customer perceptions and staff performance, encompassing elements like workspace layout, lighting, and amenities. ***19. Back-Office Facilities and the Allen Curve*** Proximity Effect: Physical proximity fosters frequent communication, even with digital tools, reinforcing teamwork and process efficiency. ***20. Repositioning Service Processes*** \- **Adjusting Volume and Variety**: Services shifting from high-variety, low- volume to low-variety, high-volume (or vice versa) must redesign processes for efficiency or flexibility. \- **Capability vs. Commodity**: Growing companies focus on consistent quality and standardized processes, while high-volume services aim to avoid commoditization by offering customized or modular service options. ***21. Technology in Service Process Design*** \- **Technology's Expanding Role**: Technological advancements transform service delivery by improving process performance across four key capabilities: \- **Thinking/Reasoning (AI, big data):** AI improves diagnostics and decision-making with data analysis. \- **Seeing/Sensing (AR, VR, sensors):** Tools like AR and sensors enhance customer interactions and monitor physical states. \- **Communicating/Connecting (cloud, blockchain):** Innovations enable secure, integrated information flow and tracking. \- **Moving/Managing Objects (robots, drones):** Automates tasks in distribution, inspections, and deliveries. ***22. Benefits of Technology in Service Processes*** \- **Efficiency and Speed:** Reduces costs and labour, improves accuracy, speed, and reliability. \- **Convenience and Safety**: Enhances customer convenience and workplace safety with robots and portable devices. \- **Customization and Sustainability**: Customizes services through data analysis and supports sustainability through renewable energy technologies. **LU4** ***1. Resource and Capacity Management Goals*** \- **Balancing Supply and Demand**: Service managers aim to maintain the right amount of resources (staff, equipment, materials) to meet customer demand efficiently without incurring excess costs.\ - **Risks of Imbalance:** Too much capacity can waste resources, while too little can lead to long waits, reduced quality, and lost revenue. Maintaining this balance is crucial for customer satisfaction and operational success. ***2. Defining and Measuring Service Capacity*** Capacity refers to the maximum work a service operation can handle under normal conditions. It varies by task and depends on factors like task complexity, location, and customer interaction needs. \- **Factors Affecting Capacity:** Variations in task complexity, travel requirements, customer interaction, and resource bottlenecks all impact the effective capacity of service operations, often requiring adaptable measurement approaches. ***3. Hierarchical Capacity Planning*** \- **Layered Decision-Making:** Capacity decisions span short-term (immediate adjustments), medium-term (monthly/quarterly changes), and long-term (strategic planning) levels. Integration of these layers ensures cohesive capacity management. \- **Stabilizing Operations**: Hierarchical planning structures help coordinate decisions across timeframes and departments, creating stability and adaptability within operations. ***4. Long-Term Resource and Capacity Management*** \- **Strategic Decisions on Scale and Location**: Key long-term choices involve the overall size of the operation, the number and size of facilities, and geographic location. These decisions depend on demand forecasts, cost, and market dynamics. \- **Demand Forecasting**: Reliable long-term planning requires accurate demand forecasting, but managers must balance investment risks, temporary surges, and sustained demand to avoid over- or under-capacity. ***5. Building Resilient and Flexible Operations*** \- **Resilience Strategies:** Facilities should be designed with adaptability in mind. Strategies include allocating extra land, using flexible office layouts, and adopting remote work and backup plans for scalability and quick adjustments to demand shifts. \- **Scalable Investments:** Investments in flexible infrastructure (e.g., modular buildings, adjustable seating) allow for incremental scaling to match demand more closely over time. ***6. Site Size, Focus, and Location*** \- **Scale and Scope per Site:** Determining site size and focus depends on service type and customer expectations. Multi-location services, like gym chains, balance between having enough sites for accessibility and the cost- effectiveness of fewer, larger sites. \- **Activity Specialization:** According to the \"focus\" concept, operations perform best when each site specializes in a limited set of tasks (e.g., veterinary clinics specializing by animal type), improving resource allocation and operational efficiency. \- **Location Considerations:** Choosing a location is critical for cost management and customer accessibility, factoring in supply-side elements (e.g., land, labour, transport costs) and demand-side factors (e.g., customer convenience, skilled labour availability). ***7. Supply and Demand-Side Factors in Location Choices*** \- Supply-Side Factors: Include operational costs such as land, labour, energy, transportation, and government policies, all affecting the feasibility of a location. \- Demand-Side Factors: Considerations like customer convenience, site reputation, and proximity to complementary services can boost revenue potential, especially in customer-facing businesses. ***8. Approaches to Managing Supply and Demand*** Organizations typically use a combination of the following three approaches to manage mismatches between supply and demand in the medium term: *Level Capacity* \- Definition: Maintain resources at a constant level despite fluctuating demand. \- Goals: Maximize the use of fixed resources (e.g., ensuring high load factors in airlines). \- Challenges: Can lead to lower customer satisfaction and varying service levels (e.g., overbooking in clinics). \- Examples: Airlines, specialized consultants, popular restaurants. Methods: \- Promote off-peak demand with pricing strategies. - Queue management systems.\ - Booking systems to manage appointments. *Chase Capacity* \- Definition: Adjust supply to match demand, focusing on flexibility and responsiveness. \- Goals: Provide quick access to services while minimizing customer wait times. \- Flexibility Needs: Quick adjustment to demand changes, often using part- time staff and flexible contracts. \- Examples: Fast-food restaurants, high-volume consumer services. Methods: \- Overtime for existing staff.\ - Annualized hours contracts for flexibility. - Temporary staffing for busy periods.\ - Training staff for multiple roles. *Demand Management* \- Definition: Influence customer demand to balance resource utilization without adjusting capacity. \- Examples:\ - Pricing strategies like discounts during off-peak times. - Surge pricing during high demand.\ - Limited service offerings during peak times.\ - Specialist service channels for efficient resource use.\ - Advertising to stimulate demand. ***9. Integration of Approaches*** Most organizations blend these approaches based on specific needs. For example:\ - Airlines use a mix of levelling and chasing strategies to optimize load factors while managing staff according to expected demand.\ - Insurance companies might level their actuarial staff due to high training costs. - Restaurant chains often level kitchen resources while adjusting front-of-house staffing based on demand. ***10. Short-Term Resource and Capacity Management*** \- Focus: Managing fluctuations in demand over hours and days through immediate adjustments rather than long-term planning.\ Key Tasks: \- Scheduling: Planning specific start and finish times for activities.\ - Loading: Assigning work to various parts of an operation.\ - Sequencing: Determining the order of tasks or customers, using rules like FIFO, LIFO, or prioritizing based on customer value or urgency. ***11. Challenges in Capacity Management*** \- **Bottlenecks**: Identifying and managing bottlenecks is critical as they limit overall capacity.\ - **Coping with High Demand**: When demand exceeds supply, organizations enter a "coping zone," risking service quality and staff pressure. \- **Capacity Leakage:** Organizations must address inefficiencies that hinder meeting demand effectively. ***12. Strategies for Improving Capacity Utilization*** \- Use yield management techniques for perishable goods (like hotel rooms). - Ensure resource flexibility with varied staffing and outsourcing options.\ - Foster a culture of support for effective resource management to enhance overall efficiency. ***13. Understanding the Coping Zone*** \- Break Point: Service managers encounter a \"break point\" where demand exceeds manageable levels, leading to a \"coping zone.\" Coping Zone Characteristics:\ - High capacity utilization causes staff stress, reduced customer satisfaction, and declining revenue per customer.\ - Long wait times, stock shortages, and hurried service can occur, negatively impacting both customer experience and employee demeanour. \- **Low Utilization Issues**: Underutilization can lead to a lack of atmosphere and slower service, resulting in customer dissatisfaction at both extremes. ***14. Managing the Coping Zone*** To effectively manage the coping zone, organizations can follow these seven steps: 1\. Identify the Service Concept: Clearly define the desired customer experience (e.g., relaxed dining vs. fast-paced service). 2\. Measure Capacity Utilization: Establish metrics to assess performance (e.g., table occupancy rates).\ 3. Outline Profile: Link customer-perceived quality with capacity utilization, noting variations based on customer expectations. 4\. Understand Coping Zone Impact: Recognize stress signs and analyze financial consequences of exceeding capacity limits.\ 5. Determine Ideal Operating Area: Set target capacity utilization (e.g., 80% in restaurants) to balance revenue and customer satisfaction.\ 6. Understand Why Coping Happens: Acknowledge that coping is sometimes inevitable due to last-minute demands or bookings.\ 7. Develop Coping Strategies: Implement methods like simplifying services during peak times and providing customer information to manage stress on resources. ***15. Key Questions for Coping Management*** \- Assess customer-perceived quality against capacity utilization.\ - Identify early warning signs that indicate impending coping zone issues. - Evaluate impacts on customers and employees when in the coping zone. - Develop strategies to minimize frequent entry into the coping zone. ***16. Improving Capacity Utilization*** Organizations can enhance capacity utilization through four key strategies: *1. Yield Management:* \- Common in hotels and airlines, yield management adjusts prices based on demand, maximizing revenue from perishable capacity (e.g., hotel rooms, airline seats).\ - Care must be taken to avoid dissatisfaction among customers who may feel undervalued if they see others paying less. *2. Building Flexibility:* Types of Flexibility:\ - **New Service Flexibility:** Ability to introduce new services. - **Service-Mix Flexibility**: Capacity to offer multiple services simultaneously.\ - **Delivery Flexibility:** Adjusting service timing.\ - **Volume Flexibility:** Scaling output to meet demand. \- Strategies for flexibility include flexible employment contracts, overtime, and teamwork for rapid adjustments. *3. Reducing Capacity Leakage:* Identify factors that lead to reduced capacity, such as: - Labor sickness and absenteeism. \- Labor underperformance due to insufficient training.\ - Scheduling mismatches between demand and workforce availability. - Complexity costs from offering diverse services.\ - Quality failures causing rework and lost capacity.\ - Addressing these issues can significantly improve overall capacity utilization. *4. Organizational Support for Capacity Utilization:* \- Ensure alignment with the organization's strategic direction and include operations managers in strategy development.\ - Foster effective internal communication and coordination across departments to address quality issues and enhance resource management.\ - Cultivate a culture that values resource management and long-term planning over short-term crisis management. **LU6** *Customer Journey Design (Chapter 7.3):* \- **Customer Journey**: The series of interactions a customer experiences while receiving a service. It involves both visible and behind-the-scenes processes. \- **Front-office Processes:** Direct customer interactions (e.g., consulting, online ordering). These impact the customer experience and should be carefully designed. \- **Back-office Processes**: Behind-the-scenes activities that support front-office operations (e.g., payment processing). They are more efficient without customer interaction. \- **Shifting Tasks**: Companies may move tasks between front and back offices to improve efficiency or customer experience. \- **Risk Factors**: Customer mindset, mood, and personality affect their experience. Designing services to manage these risks is crucial. *Performance and Process Capability (Chapter 12):* \- **Process Capability**: The ability of a process to consistently meet performance expectations (e.g., Hotel A consistently meets breakfast delivery times, Hotel B does not). \- **Process Control Charts**: Statistical tools to monitor performance over time, used to control process variation and identify when intervention is needed. \- **SPC (Statistical Process Control):** Applied in measurable service processes to reduce variability and improve service quality, especially in high-volume environments. *Service Improvement (Chapter 15):* \- **Improvement as an Investment**: Operations improvement should be a priority despite day-to-day pressures, as it can enhance both customer satisfaction and operational efficiency. page1image1131825264page1image1131825776 \- **Value in Improvement**: Balance benefits for stakeholders with costs. Improvements should either increase benefits without raising costs or reduce costs without compromising quality. \- **Cost-based value**: Cutting waste to reduce costs.\ - **Features-based value**: Enhancing services, potentially raising costs. *Lean Thinking and Improvement Approaches:* \- **Lean Thinking**: A methodology focused on eliminating non-value-adding activities (waste) to improve efficiency and reduce costs. It originated in manufacturing but is now widely applied in services. Key Lean Principles:\ 1. **Specify Value**: Define value from the customer's perspective.\ 2. **Identify Value Stream**: Map processes and eliminate non-value steps. 3. **Create Flow:** Ensure smooth, uninterrupted workflows.\ 4. **Pull, Not Push**: Align production with demand.\ 5. **Strive for Perfection**: Continuously improve all processes. \- **Total Quality Management (TQM)**: A customer-focused philosophy involving all employees in continuous quality improvement.\ - **Six Sigma**: A structured approach to minimize defects and variability, often using the DMAIC process (Define, Measure, Analyze, Improve, Control).\ - **Business Process Re-engineering (BPR):** A radical redesign of processes for significant performance improvements but often risky and complex. **Lean Six Sigma and Other Combined Approaches:** \- Combines lean efficiency with Six Sigma quality control, though implementation can face challenges like resource constraints and resistance to standard operating procedures (SOPs). **LU7** ***1. Managing Service Operations and the Total Chain of Processes*** Coordination across back-office and front-office processes is crucial for delivering smooth customer experiences. Cross-functional teams and clear communication help streamline service delivery, while tools like customer journey mapping, walk-through audits, and emotion mapping ensure the focus remains on enhancing customer experience ***2. Service Design and Customer Experience*** Service design is often less structured than manufacturing. Using tools like customer journey mapping and emotion mapping, managers can visualize and improve every customer touchpoint. This outside-in perspective helps identify pain points and emotional responses, driving targeted improvements. ***3. Value-Driven Improvement*** Improvement efforts in service operations should aim to enhance value for both customers and stakeholders, whether by reducing costs or enhancing service features. Understanding what customers truly value is critical, as it helps align operations with customer needs while avoiding inefficiencies. ***4. Incremental vs. Radical Improvement Approaches*** Incremental (Continuous) Improvement (CI) involves small, ongoing changes that cumulatively lead to significant enhancements, fostering long-term stability. In contrast, radical improvement focuses on dramatic changes that can revolutionize processes but carry higher risks. Organizations must decide between these paths or balance them through organizational ambidexterity, which involves managing both strategies effectively. ***5. Service Operations Improvement Challenges*** Services are intangible and perishable, making improvements more complex than in manufacturing. Frontline employees play a key role in identifying areas for improvement, particularly in labour-intensive services. Managers must also address bottlenecks, queue management, and demand variability, as these impact both operational efficiency and customer satisfaction. ***6. Customer-Centric Improvement Tools*** Tools such as walk-through audits (where staff simulate customer journeys), emotion mapping, and customer experience analysis (CEA) focus on evaluating and enhancing the customer's emotional and practical experience. These insights guide more effective service design and process improvements. ***7. Managing Bottlenecks, Queues, and Variability*** Effective queue management, including reducing perceived wait times and optimizing resource allocation, improves the customer experience. Managers must also account for variability in customer behaviour and adjust operations to meet demand fluctuations, ensuring that service quality remains high. ***8. Automation and Standardization*** Automation helps reduce human variability in service delivery, improving consistency while maintaining the flexibility needed to cater to individual customer needs. Balancing standardization with personalized service is key to operational success. ***9. Sustaining Continuous Improvement*** Sustaining improvement efforts requires a culture of continuous learning, problem-solving, and staff development. Organizations must avoid falling into the trap of management fads, which promise quick fixes but lack long-term effectiveness. Stability in operations and strategy is essential for fostering successful, lasting improvements. ***10. Operations Improvement and Resource Optimization*** Effective improvement hinges on the interplay between resources (staff, technology, etc.) and processes. Changes in processes should lead to better resource utilization, enhancing overall operational effectiveness and creating long-term value. ***11. Conclusion: Strategic Improvement Approaches*** Service improvement strategies should align with organizational goals, focusing on increasing value while managing trade-offs between operational efficiency and customer satisfaction. Organizations must choose between incremental improvements or radical changes, or balance both, depending on their strategic objectives. Common improvement frameworks include Total Quality Management (TQM), Six Sigma, Lean Thinking, and Business Process Re- engineering, all of which aim to enhance quality, reduce waste, and boost performance. **LU8** ***1. Service Strategy vs. Operational Management*** Service strategy focuses on long-term positioning and competitive advantage, while operational management handles daily execution. Both are linked and essential for organizational success. ***2. Four Key Goals of Service Strategy*** A successful service strategy must:\ - **Align** with the overall business strategy.\ - **Meet** market needs.\ - **Consider** practical service delivery aspects. - **Enhance** service resources and processes. ***3. Importance of Service Strategy*** A clear service strategy aligns decisions, ensures cohesive efforts across the organization, and provides a framework for delivering value to customers. It also helps non-profits achieve social objectives alongside financial considerations. ***4. Service Strategy Formulation Process*** Six critical elements of service strategy:\ - **Business Objectives:** Setting clear, achievable goals.\ - **Market Environment:** Understanding external factors (PESTEL) and market dynamics.\ - **Service Positioning:** Determining how services fit within the market.\ - **Service Concept**: Defining the nature and value of services.\ - **Performance Objectives:** Translating strategy into operational goals.\ - **Service Resources and Processes:** Aligning resources to meet strategic goals. ***5. Iterative and Adaptive Strategy*** Strategy formulation is an ongoing process that adapts to changes in the external and internal environment. Continuous alignment of objectives, market insights, and operational capabilities is essential. ***6. Service as a Competitive Advantage*** Service can differentiate organizations, especially in markets with little product differentiation. High-quality service boosts customer loyalty, retention, and financial performance. ***7. Service Competitiveness -- The 4-stage scheme; Chase and Hayes' Model Stage 1: Internally Neutral*** (Available for Service) Operations are reactive and internally focused. The goal is to avoid mistakes, and operations are seen as a \"necessary evil.\" ***Stage 2: Externally Neutral*** (Journeyman)\ Operations aim to match industry norms and perform at the same level as competitors. The focus is on benchmarking and adopting best practices to avoid falling behind. ***Stage 3: Internally Supportive*** (Distinctive Competence)\ Operations align with and support the organization\'s business strategy. Operations are among the best in the industry and help strengthen the company's strategic objectives. ***Stage 4: Externally Supportive*** (World-Class Service)\ Operations drive competitive advantage by leading in industry standards. They proactively exceed customer expectations and shape the organization's strategy, aiming to be world-class. This model outlines the progression toward \"world-class\" service, where organizations lead the market by setting new standards for customer experience.  ***8. Strategic Role of Operations Management*** \- Operations management is not just about short-term, tactical decisions but plays a crucial role in long-term business success by aligning day-to-day activities with strategic goals. \- Operations interact with various business functions (e.g., marketing, finance, HR), often leading to conflicting priorities. Effective operations management ensures alignment across all functions. ***9. The Nature of Strategy*** Strategy is the long-term direction of an organization, aimed at achieving a competitive advantage by configuring resources to meet stakeholder expectations. \- It exists at three levels:\ 1. **Corporate-level strategy**: Overall direction and resource allocation. 2. **Business-level strategy:** How individual units compete.\ 3. **Functional-level strategy:** Contribution of specific functions (e.g., operations) to overall strategy.\ Operations must align with these strategies to contribute to competitive advantage. ***10. Operations Performance Objectives*** \- Operations influence an organization\'s performance through five key objectives: cost, quality, speed, dependability, and flexibility.\ - Organizations must balance these objectives, often making trade-offs, to meet customer expectations and maintain strategic success.\ - Strategic maturity models (e.g., Hayes and Wheelwright\'s four-stage model) help categorize an organization\'s strategic use of operations. ***11. Operations Strategy*** \- Defined as the consistent pattern of decisions and actions regarding the role and objectives of operations.\ - Aligns with the broader business strategy and includes both deliberate planning and emergent actions. \- Operations strategy influences competitive advantage by ensuring alignment between daily operations and long-term goals. ***12. Operations Strategy Process*** \- Operations strategy requires both vertical alignment (with corporate/business strategy) and horizontal alignment (with other functional strategies like marketing).\ - It can emerge from: 1\. **Top-down approach**: Derived from business strategy. Corporate-level decisions guide business units. 2\. **Bottom-up approach**: Emerging from incremental improvements and operational learning. Strategies evolving from daily operations and customer interactions. 3\. **Outside-in** (**Market-led) approach**: Shaped by customer needs and market demands. 4\. **Inside-out (Operations-led) approach**: Focusing on internal resources, processes, and knowledge for service success. Leveraging internal capabilities to shape strategy (resource-based view). ***13. Content of Operations Strategy*** \- Structural decisions: Long-term decisions that include:\ 1. *Facilities*: Location, size, and focus.\ 2. *Capacity:* Ability to meet demand.\ 3. *Process Technology:* Equipment and technology choices.\ 4. *Supply Network*: In-house versus outsourcing, supplier management. \- Infrastructural decisions: Easier to modify but impactful, including: 1. *Planning and Control:* Systems for managing operations.\ 2. *Quality Management:* Policies and practices.\ 3. *Work Organization:* Operational structure and responsibilities. 4. *Human Resources:* Recruitment, training, management. 5\. *New Product Development:* Systems for innovation. 6. *Performance Measurement:* Metrics and rewards.