Module C: Service Delivery System PDF

Prof. Jalili Service Operations Management MG316 Module C: Service Delivery System Table of Contents Module C: Service Delivery System..................

Prof. Jalili Service Operations Management MG316 Module C: Service Delivery System Table of Contents Module C: Service Delivery System..................................................................................................... 1 Service Delivery System vs. Service Delivery Process................................................................. 2 Service Delivery Process................................................................................................................ 2 Designing the Service Delivery Process........................................................................................ 4 Degree of Divergence................................................................................................................................ 4 Object of the Service Process................................................................................................................... 4 Type of Customer Contact........................................................................................................................ 5 General Approaches to Service Design......................................................................................... 6 Production-Line Approach:....................................................................................................................... 6 Customer as Coproducer:......................................................................................................................... 7 Information Empowerment Approach:.................................................................................................... 8 Different Types of Service Processes............................................................................................ 9 Servicescape................................................................................................................................. 10 Process Mapping........................................................................................................................... 12 Service Blueprinting...................................................................................................................... 13 Why Process Analysis Matters..................................................................................................... 15 Process Analysis........................................................................................................................... 17 Process Line Balancing................................................................................................................. 19 Task Division............................................................................................................................................ 19 Combining Tasks...................................................................................................................................... 20 Little’s Law..................................................................................................................................... 21 1 Prof. Jalili Service Operations Management MG316 Service Delivery System vs. Service Delivery Process How do hospitals, restaurants, and online retailers ensure smooth operations and meet your needs? The answer lies in their service delivery systems—a collection of interconnected processes that rely on resources such as staff, equipment, and technology to function. These processes work together to create a seamless experience. For example, in a hospital, the system includes doctors, nurses, medical devices, and information systems, ensuring that processes like scheduling, check-ups, and follow-ups are all coordinated efficiently. Similarly, in a restaurant, the system involves chefs, servers, and kitchen equipment to guarantee that each step—from placing an order to serving the meal—flows smoothly. The system represents the overall structure, while the service delivery process refers to the individual steps a customer encounters within that system. Service Delivery Process A process is a systematic series of actions or steps taken to achieve a particular end. Process activities include operations, transportation, storage, delay & inspection. A process accepts inputs, flows them through the process, and delivers outputs. A process needs different types of resources; resources enable the process. Process Activities Process Resources Process Flow Operation Labor Inputs Transportation Machines Flow Units Inspection Facilities Outputs Delay Knowledge Storage Capital Process Flow: Inputs: A process begins by receiving inputs from internal or external suppliers. The inputs can be materials (e.g., raw components), people (e.g., patients or students) or information (e.g., design specs or customer requests). Flow Units: Once inputs are received, they “flow” through the various activities within the process. Outputs: The completed product is delivered to the internal or external customer. 2 Prof. Jalili Service Operations Management MG316 Process Activities: Operations: Value-adding transformation of inputs Transportation: Movement of flow units, between locations. Inspection: Quality assurance, verification/validation of flow units Delay: Undesirable pause in the process, idle time of the flow units Storage: Flow units being held for short-term or long-term Process Resources: Labor: Human workforce involved in executing process tasks Machines: Tools & equipment used in the process Facilities: Physical locations where processes occur Knowledge: Intellectual resources, expertise necessary to perform process activities. Capital: Financial resources required to acquire labor, machines, facilities, and knowledge Let’s use a prescription filling process to explore the process building blocks. We can explore the prescription filling process from the perspectives of three different flow units: the customer, the medication itself, the data. Each perspective provides unique insights into how the process operates and adds value. Perspective Main Flow Unit Key Process Activities Key Process Resources Submission (Operation), Pharmacists (Labor), Patient’s Technicians (Labor), Waiting (Delay), Customer journey through Physical space (Facilities), Receiving counseling (People) the prescription Payment systems (Machines), (Operation), process Knowledge Payment (Operation) Physical Pharmacy technicians (Labor), Retrieval (Operation), Pharmacists (Labor), medication as it Medication Verification (Inspection), Storage facilities (Facilities), moves from (Goods) Packaging (Operation), Packaging equipment inventory to the patient Dispensing (Operation) (Machines) Data entry (Operation), Pharmacists (Labor), Prescription Verification (Inspection), Technicians (Labor), Data and insurance Insurance processing IT systems (Machines), (Information) information (Operation), Digital storage (Facilities) Record-keeping (Storage) Dissecting the prescription filling process from three perspective 3 Prof. Jalili Service Operations Management MG316 Designing the Service Delivery Process When designing a service delivery process, we must consider several key elements that define the nature of the service and how it is provided to customers. Here are three critical concepts when designing a service delivery process: Degree of Divergence1 The degree of divergence refers to the flexibility and variability in the service delivery process. The spectrum of divergence ranges from low to high: Low Divergence (Standardized): This indicates a highly standardized process where little to no customization is involved. The service is delivered in a consistent, repeatable manner, ensuring uniformity across all customers. High Divergence (Customized): This represents a more flexible approach, where services are tailored to the specific preferences and requirements of each customer. This classification is important because it directly affects the efficiency and cost structure of the service operation. Services with low divergence are generally more efficient and cost-effective to deliver since they rely on uniform processes, technology, and fewer variations in labor. These services can often be automated or performed by employees with lower skill levels. Standardization allows for economies of scale and helps ensure consistency in quality, which is ideal for large-scale operations such as fast-food chains or automated banking services. On the other hand, services with high divergence require more skilled labor, flexible systems, and a focus on customer relationship management to accommodate individual preferences. These services often come with higher costs due to the need for specialized training, more personalized attention, and the use of advanced technology to facilitate customization. However, they provide a competitive advantage in markets where personalization and unique customer experiences are valued, such as luxury hotels, consulting firms, or custom-made products. Question 1: Think of two businesses you’ve interacted with recently: one that offers a highly standardized service and one that offers a highly customized service. How does the degree of divergence in their service delivery impact your perception of their efficiency and the overall customer experience? Which do you prefer, and why? Object of the Service Process The object of the service process defines what is transformed or altered during the service (i.e., the flow unit). This transformation can involve different categories, including: 1 This relates to Heterogeneity 4 Prof. Jalili Service Operations Management MG316 Goods: Services that involve the transformation of tangible goods or property, like repair services or dry cleaning. People: Services that directly transform individuals, such as healthcare, education, or personal services like beauty treatments. Information: Services that process data or information, such as banking, consulting, or legal services. This classification is important because it helps organizations design their service processes around the specific needs of what is being transformed. Understanding whether the service focuses on goods, people, or information enables managers to align their resources, workforce skills, and technology to optimize efficiency and customer satisfaction. For instance, services that transform goods require specialized equipment, tools, and facilities to handle physical items, as seen in repair services or manufacturing. On the other hand, services that involve transforming people—like healthcare—demand highly skilled labor, empathy, and communication, as well as infrastructure that ensures personal safety and well-being. Lastly, services focused on information transformation rely heavily on data management systems, accuracy, confidentiality, and secure communication networks to maintain the trust and effectiveness of the service, as seen in banking or IT services. Question 2: If you were managing a healthcare clinic, how would your approach to service design differ from managing an online banking service? How do the 'objects' being transformed (people versus information) shape your decisions regarding workforce, technology, and infrastructure? Type of Customer Contact2 The type of customer contact refers to the level of interaction between the customer and the service provider. There are three primary categories: No Customer Contact: In this scenario, the service is fully automated or occurs behind the scenes, with no direct interaction between the customer and the service provider. Examples might include automated services such as subscription-based deliveries, where customers receive goods or services without ever needing to speak to or interact with a service provider. Indirect Customer Contact: This type of service involves minimal interaction, often through intermediaries or automated systems, rather than direct engagement with a service worker. For instance, customers might interact with a website, mobile app, or an automated phone system to complete a transaction or get assistance. An example could be an online banking service where customers complete transactions without speaking directly to a bank teller. Direct Customer Contact: This category is divided into two subcategories: 2 This relates to customer participation and simultaneity 5 Prof. Jalili Service Operations Management MG316 o Self-service: Here, customers are involved directly in the service process, but they largely manage the service themselves using available technology. An example would be self-checkout kiosks at grocery stores, where customers scan their items and complete the transaction on their own. o No Self-service: This refers to services where customers interact directly with service employees who perform the service on their behalf. An example could be a traditional retail environment where a cashier handles the checkout process, or a customer receiving assistance at a hotel concierge desk. This classification is important because the degree of customer contact impacts service design, employee roles, and the overall customer experience. Services with high customer contact, especially in the "No Self-service" category, often require employees with strong communication and interpersonal skills. On the other hand, services with low customer contact can benefit from automation and efficiency but may require a different focus on technology and operational excellence. Question 3: Services with high customer contact, such as in-person consultations, tend to emphasize personal interaction. In contrast, automated or self-service processes minimize direct interaction. As a business manager, how would you decide which level of customer contact is most appropriate for your service? What factors would influence your decision? General Approaches to Service Design We can envision designing a service delivery from different approaches: Production-Line Approach: This approach treats service delivery as a standardized process, similar to a manufacturing production line. Examples include Fast-food chains, Budget Airlines, Self- checkouts, Online bill payment and Vending machines. Limits of the production-line Approach: - Impersonal Service: Due to its focus on standardization and efficiency, the Production- Line Approach can result in impersonal service interactions. Customers may feel like they are just one among many, leading to a lack of personal connection. - Routine Process Reduces Incentives for Continuous Improvements: When service processes become highly routine and standardized, the incentive for service providers to 6 Prof. Jalili Service Operations Management MG316 make continuous improvements or innovate may diminish. This can stifle creativity and adaptability. - May Require Customer Education: Customers may need to be educated or familiarized with the standardized procedures and technology used in this approach, which can add a layer of complexity to their experience. - Easy Customer Substitution: The highly standardized nature of the service makes it relatively easy for customers to substitute another service provider or even perform the service themselves. This can lead to customer churn if competitors offer a more personalized or appealing alternative. Question 1: If a restaurant used a highly standardized service model, like the Production-Line Approach, what impact would that have on customer satisfaction? Could efficiency ever hurt the customer experience? Customer as Coproducer: In this approach, service delivery is viewed as a collaborative effort between service providers and customers. This approach emphasizes active customer involvement in the creation and customization of the service, fostering a sense of co-creation, personalization, and mutual benefit. Here, customers are not just passive recipients of services but active participants in shaping their service experiences. Examples include Self-Service, Personal Fitness Training and Software Development. Limits of the Customer as Coproducer Approach: - Time-Consuming: Highly customized services can be time-intensive, leading to longer service delivery times. - Resource-Intensive: Requires extensive communication and coordination between service providers and customers. - Skill and Knowledge Variation: Customers may have varying levels of expertise or knowledge, which can affect the quality of co-produced services. - Potential for Misalignment: Customer preferences and expectations may not always align with what is feasible or profitable for the service provider. In the Customer as Coproducer approach, the key lies in effectively managing customer involvement and ensuring that both parties benefit from the collaborative service creation process. While it can lead to highly personalized and satisfying service experiences, it also presents challenges in terms of resource allocation and alignment of expectations. 7 Prof. Jalili Service Operations Management MG316 Question 2: In a personal training session, the customer is an active co-producer. What are the benefits and challenges of this approach for both the customer and the trainer? How can this model be adapted for other industries? Information Empowerment Approach: In this approach, service delivery revolves around the strategic use of information and technology to enhance customer experiences. This approach places a strong emphasis on data-driven personalization, empowering customers with insights, recommendations, and tailored solutions. Customers actively participate in shaping their service experiences through the information they provide and receive. Examples are - Personalized E-commerce Recommendations: Online retailers analyze customer data and browsing behavior to provide personalized product recommendations. - Streaming Services: Platforms like Netflix use data on viewing history and preferences to suggest content tailored to individual users. - Financial Advisory Apps: Apps and platforms use financial data to provide customized investment advice and financial planning. - Health and Fitness Apps: Mobile apps use health and exercise data to create personalized fitness plans and track progress. Limits of the Information Empowerment Approach: - Data Privacy Concerns: Collecting and using customer data raise privacy issues, and mishandling data can lead to trust and security problems. - Technology Dependency: The success of this approach heavily relies on technology infrastructure and data analytics capabilities. - Information Overload: Providing too much data and recommendations can overwhelm customers and hinder decision-making. - Data Accuracy: Accurate data is crucial; inaccurate or outdated information can lead to incorrect recommendations. In the Information Empowerment Approach, the key lies in harnessing data and technology to offer highly customized and relevant services. It enables customers to actively engage with service providers through data sharing and technology interactions. However, it also necessitates responsible data management and technology proficiency to deliver meaningful and accurate information-driven services. Question 3: Platforms like Netflix or Amazon use the Information Empowerment Approach to provide personalized content or product suggestions. How do you think companies balance personalization with privacy concerns? Is there a point where personalization becomes too invasive? 8 Prof. Jalili Service Operations Management MG316 Different Types of Service Processes In the vast and varied world of services, businesses use different types of service processes tailored to the unique needs of their customers and the specificities of their operations. From highly individualized professional services like legal consultations to large-scale, standardized offerings such as those by airlines, service processes can be broadly categorized into: In the following, we describe these five process types with focusing on comparing Efficiency vs. Customization. Efficiency emphasizes processing a large number of flow units with standardized services, allowing for high throughput but sacrificing personal attention. Customization focuses on tailoring services to meet individual needs, enhancing the customer experience but reducing the total number of customers that can be served due to the time and resources required. Professional Services: Highly customized, individualized services offered by experts. Customization: Lawyers provide tailored advice based on each client’s specific situation, analyzing contracts or offering case-specific strategies. Efficiency Trade-off: Limited efficiency as lawyers can only serve a few clients at a time, offering deep, personalized service. Service Shops: Moderately customized services produced in lower volumes. Customization: Auto repair shops tailor repairs based on the unique condition of each vehicle, requiring diagnostic tools and specialized attention. Efficiency Trade-off: Efficiency is lower as each car requires specific parts and time, reducing the overall volume. 9 Prof. Jalili Service Operations Management MG316 Mass Services: Large-scale, standardized services designed for many customers with minimal customization. Efficiency: Fast-food restaurants process high volumes quickly, providing standardized meals to meet demand. Customization Trade-off: Low customization as customers select from limited options, reducing the personal nature of the service. Service Factories: Standardized services with complex back-end operations. Efficiency: Airlines handle thousands of passengers efficiently, offering standardized services like boarding and inflight meals. Customization Trade-off: Customization is limited to allow efficient management of the complex logistics of flights. Mass Customization: Blends high customization with high demand volume, often using technology to personalize services. Customization: Online retailers like Amazon use algorithms to create personalized shopping experiences for millions of users. Efficiency Trade-off: While the experience is personalized, the digital interaction may lack a personal touch, optimizing for both customization and efficiency through automation. Servicescape "Servicescape" refers to the (physical or virtual) environment in which a service delivery process takes place. The servicescape influences both customer and employee behavior and should be designed with an image and feel that is compatible with the service concept (WHAT). A typology of servicescapes is organized according to who participates within the service environment (customer, employee or both) and the degree of complexity of the servicescape (elaborate or lean)? Complexity of the Servicescape Who is present within the Elaborate Lean Servicescape? Golf Course Driving Range Customer Museum Gallery Resort Hotel Budget Motel Theme Restaurant Fast-food restaurant Customer and Employee Disneyland County Fair Airline Terminal Bus Station Employee Professor’s Office Tutor’s Cubicle 10 Prof. Jalili Service Operations Management MG316 "Servicescape" encompasses the ambient conditions, space/function, and signs, symbols, and artifacts associated with the service environment. These elements play a critical role in shaping the customer experience and influencing both employee and consumer behavior. Ambient Conditions are the background characteristics of a setting, including temperature, music, lighting, scent, and air quality. For example, the soft lighting and subtle background music in a high-end restaurant create a relaxing and intimate atmosphere, encouraging customers to stay longer and enjoy their meals. Similarly, the scent of fresh coffee in a café can evoke feelings of comfort and entice customers to purchase a beverage. Space/Function relates to the ways spatial environments and functions influence both employees and consumers, including layouts, equipment, furnishing, and seating arrangements. For instance, an open and spacious retail store layout allows customers to navigate easily and encourages them to explore more products. In contrast, the layout of a fast-food restaurant is designed to facilitate quick service and turnover, with functional seating arrangements that prioritize efficiency over comfort. Signs, Symbols, and Artifacts are explicit or implicit forms of communication within the environment, such as logos, signage, decor, menus, merchandise, and more. A well-designed logo and consistent use of brand colors across all touchpoints reinforce brand identity and create a cohesive customer experience. In a hotel lobby, elegant decor and thoughtfully placed artifacts, such as artwork and furniture, convey a sense of luxury and comfort, setting the tone for the guest’s stay. Clear and strategically placed signage in an airport helps guide travelers through the complex environment, reducing stress and enhancing their overall experience. 11 Prof. Jalili Service Operations Management MG316 Process Mapping Process mapping is a technique used to visually represent, document, and analyze the steps involved in a process. It provides a structured way to gain a deeper understanding of how work is carried out, allowing organizations to identify opportunities for improvement. Here are the main aspects and benefits of process mapping: Process mapping uses various symbols to denote start and end points, operations, decision points, flow direction, and inputs/outputs. The maps can range from high-level overviews to detailed step-by-step diagrams, depending on the objective. What can be achieved by mapping a process? Visual Representation: At its core, process mapping translates complex procedures into easily digestible, visual formats. This helps stakeholders grasp the entirety of a process quickly. Clarification of Roles: Process maps often highlight the roles or departments responsible for each step. This can clarify accountability and ensure everyone understands their responsibilities. Identification of Weaknesses: By visualizing a process, inefficiencies, redundancies, or bottlenecks become apparent, offering clear areas for improvement. Standardization: Process maps can serve as a benchmark or standard for how specific tasks should be performed, ensuring consistency across the organization. Training Tool: For new employees or when changes occur, process maps can be invaluable resources, offering a clear guide to what needs to be done. Supports Continuous Improvement: Organizations committed to continuous improvement can use process maps as a foundation, tweaking and optimizing steps as they gather more data and feedback. 12 Prof. Jalili Service Operations Management MG316 Communication: A well-drawn process map can facilitate communication across departments, ensuring everyone understands the bigger picture and their place within it Complexity Management: For particularly intricate or multifaceted processes, mapping can break down complexity into understandable segments. Service Blueprinting Service Blueprinting is a visualization tool used in service design to show the processes, touchpoints, and interactions involved in delivering a service. It provides a complete view of both the customer's journey and the behind-the-scenes operations that make the service work. A Service Blueprint uses a 5-lane diagram to show the relationship between service components— people, physical or digital elements, and processes—connected to key touchpoints in the customer journey. Key Swim Lanes: 1. Evidence: Environmental elements the customer interacts with, like websites, physical spaces, or tools (servicescape). 2. Customer Journey: The steps taken by the customer as they experience the service. 3. Frontstage Actions: Actions by employees that are visible to the customer. 4. Backstage Actions: Employee actions that support the service but aren't seen by the customer. 5. Support Processes: Other behind-the-scenes processes (like technology) that ensure the service runs smoothly. 13 Prof. Jalili Service Operations Management MG316 Take a look at another example below and three lines that are used to separate the lanes and define their interactions: Line of Interaction: Separates the customer actions from the frontstage employee actions. Line of Visibility: Separates what the customer can see (frontstage) from what they can't see (backstage). Line of Internal Interaction: Separates the frontstage employee actions from the backstage employee actions. 14 Prof. Jalili Service Operations Management MG316 Why Process Analysis Matters To understand the importance of process analysis in a business setting like a coffee shop, let’s examine a simple customer-facing process: ordering coffee. Process Steps Description Who The customer arrives and decides what they want to Customer order, often browsing the menu or interacting with staff Customer Arrival for help. Order The customer places their order with the cashier. The Cashier Placement cashier enters the order into the system. The cashier informs the customer of the total amount. Payment The customer makes a payment, and the cashier provides Cashier change or a receipt. The barista receives the order ticket and begins preparing Beverage the beverage, including grinding beans, brewing, and Barista Preparation adding additives. The completed order is placed on the pickup counter with Order Delivery the customer’s name or order number. The customer Barista/Customer collects their beverage. 1. Efficiency: Process analysis ensures that each step operates smoothly. Example: If the cashier takes too long to enter orders due to an outdated system, customers wait longer, delaying the barista's preparation. Process analysis can help identify this issue, leading to system upgrades or better training to reduce delays. 2. Quality Control: Process analysis helps maintain and improve the quality of the service or product. Example: If the barista’s drinks sometimes aren’t up to standard, it could be due to inconsistencies in preparation, such as incorrect grind size or milk temperature. Process analysis can reveal these issues, allowing for adjustments that ensure each customer gets a high-quality beverage. 3. Bottleneck Identification: Every process has stages that might slow down the overall flow, known as bottlenecks. Example: If customers wait longer at the pickup counter than at the cashier, it could signal a bottleneck in the barista's preparation process. Analyzing this step could uncover issues like equipment speed or overly complex drink orders. 15 Prof. Jalili Service Operations Management MG316 4. Cost Savings: Analyzing processes can highlight areas of waste or inefficiency, resulting in cost savings. Example: If the barista regularly wastes ingredients by overestimating milk or coffee amounts, process analysis can help fine-tune measurements, reducing waste and saving costs. 5. Informed Decision Making: Understanding the details of each step allows management to make data-driven decisions. Example: If the cashier struggles during peak hours but is idle during off-peak times, a process analysis might suggest adjusting staffing or introducing a digital ordering system to balance workloads. 6. Synchronization & Risk Management: Ensuring that consecutive steps in the process are well-coordinated can reduce wait times and manage risks. Example: Should the barista begin preparing the beverage as soon as the order is entered, or wait until payment is confirmed? o If the barista starts early, this could lead to faster service, especially during peak times. However, if there's a payment issue or the customer changes their order, the beverage might be wasted. o Waiting until after payment reduces this risk but could increase waiting times. Process analysis helps assess which approach balances efficiency and risk based on historical data. 7. Enhanced Customer Experience: An optimized process leads to a better customer experience. Example: By ensuring the cashier is fast and the barista consistently delivers high-quality drinks, customers experience a smooth and satisfying transaction, increasing the likelihood of returning or recommending the shop to others. 16 Prof. Jalili Service Operations Management MG316 Process Analysis Suppose a Patient Visit process has 7 sequential steps: A, B, C, D, E, F and G. Cycle Step Who and What Description Time The patient arrives and completes check-in, Customer: Completes A including filling out forms, either digitally or 4 minutes Check-in physically. Machine: Automated A machine takes the patient’s vital signs, such as B 5 minutes Vitals Check blood pressure, temperature, and heart rate. Labor (Nurse 1): The nurse asks initial questions about symptoms C 2 minutes Preliminary Evaluation and medical history. The doctor reviews the patient’s case, conducts a Labor (Doctor): D thorough examination, and discusses treatment 8 minutes Consultation options. Labor (Nurse 2): The nurse provides the necessary prescriptions or E Prescription/Next instructions for the next steps, such as follow-up 5 minutes Steps tests or visits. Customer: Completes The patient makes payment, schedules follow-up F Payment and Check- 4 minutes appointments, and checks out. out An automated system updates the patient’s Machine: Medical G records in the electronic medical record (EMR) 4 minutes Records Update system. Cycle Time (CT): Average time between completions of successive flow units. For example, cycle time of step A is 4 minutes. Bottleneck: The step in the process that limits the overall capacity. For example, doctor consultation is the slowest step in the process and thus the bottleneck step. Process Cycle Time: Cycle time of the bottleneck step. (how fast can we process flow units?). This process, if accepting patients back-to-back, can process one patient every 8 minutes, Throughput Time3: Total time taken for a flow unit to move from the beginning to the end of a process. The throughput time for the first patient is 32 minutes. Question 1: Is the throughput time for the second patient also 32 min? Question 2: When are process cycle time and throughput times the same? 3 Also called “Flow Time” 17 Prof. Jalili Service Operations Management MG316 Takt Time (TT): How fast should we process flow units to meet the market demand? The demand for this office dictates the ideal cycle time of 6 minute. Since bottleneck’s cycle time exceeds this takt time, this means this process is “capacity-constrained” and may deal with patient backlogs or waiting. Process Design Capacity: The maximum output rate at which the process or system can produce output under ideal conditions. For example, this office can process up to 7.5 patients/hr (60 minutes/8 = 7.5) Process Effective Capacity: The output rate at which the process or system can produce output under “realistic conditions,” given operational constraints. Counting for 10 min slowdown per hour due to potential operational issues and variability, this office can handle a maximum of 6.25 patients/hr (50 minutes/8=6.25) Demand Rate: The rate at which flow units (e.g., products, services, customers) are requested or demanded by the end-users or customers in a given time frame. For example, in a busy hour, we might have an average of 8 customers visiting this office per hour versus on a slow day, av average of 3 customers may visit this office to demand for services. 18 Prof. Jalili Service Operations Management MG316 Throughput Rate4: The smaller value between Demand Rate and Process Capacity. If demand is 8 customers/hr, then throughput rate is between 6.25 and 7.5 customers/hr If demand is 3 customers/hr, then throughput rate is 3 customers/hr Utilization: A measure of how intensively a resource or system is being used, expressed as a fraction or percentage of the capacity. It's calculated as the actual flow rate divided by the capacity rate. 𝐓𝐡𝐫𝐨𝐮𝐠𝐡𝐩𝐮𝐭 𝑹𝒂𝒕𝒆 𝐑𝐞𝐬𝐨𝐮𝐫𝐜𝐞 𝐔𝐭𝐢𝐥𝐢𝐳𝐚𝐭𝐢𝐨𝐧 = 𝑹𝒆𝒔𝒐𝒖𝒓𝒄𝒆 𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝑹𝒂𝒕𝒆 𝐓𝐡𝐫𝐨𝐮𝐠𝐡𝐩𝐮𝐭 𝑹𝒂𝒕𝒆 𝐏𝐫𝐨𝐜𝐞𝐬𝐬 𝐔𝐭𝐢𝐥𝐢𝐳𝐚𝐭𝐢𝐨𝐧 = 𝑷𝒓𝒐𝒄𝒆𝒔𝒔 𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝑹𝒂𝒕𝒆 Process Line Balancing Line balancing involves evenly distributing tasks among different workstations to minimize idle time and ensure that each station operates in sync with the others. A key aspect of line balancing is identifying and eliminating bottlenecks that disrupt the flow of work. Line balancing strategies might involve breaking down complex tasks into simpler ones, combining tasks where feasible, reallocating resources, or employing technology and automation to enhance efficiency. Below are two examples illustrating line balancing through breaking down and combining activities: Task Division Process Step Assigned Worker Cycle Time Capacity Receiving (unload and log parcels) Employee 1 20 min 3 parcels/hr Sorting Employee 2 30 min 2 parcels/hr Dispatch Preparation (labeling and prep) Employee 3 10 min 6 parcels/hr Problem: Sorting creates a bottleneck, slowing down the entire process. 4 Also called “Flow Rate” 19 Prof. Jalili Service Operations Management MG316 Solution: Break down the Sorting task into two parts and reassign tasks. Sorting Part 1: Preliminary sorting (15 min) Sorting Part 2: Detailed sorting (15 min) Employee Assignment: Employee 1: Receiving Employee 2: Sorting Part 1 Employee 3: Sorting Part 2 + Dispatch Prep Process Step Assigned Worker Cycle Time Capacity Receiving Employee 1 20 min 3 parcels/hr Sorting Part 1 (Preliminary Sorting) Employee 2 15 min 4 parcels/hr Sorting Part 2 + Dispatch Preparation Employee 3 15+10=25 min 2.4 parcels/hr Outcome: Process capacity increase from 2 to 2.4 parcels per hour Combining Tasks Process Step Assigned Worker Cycle Time Capacity Customer Check-in Employee 1 5 min 12 returns/hr Vehicle Inspection Employee 2 10 min 6 returns/hr Cleaning Vehicle Employee 3 15 min 4 returns/hr Final Documentation Employee 4 10 min 6 returns/hr Return Confirmation Employee 5 2 min 12 returns/hr Problem: The Cleaning Vehicle step (15 minutes) is the bottleneck, significantly reducing the flow of vehicles through the system. Solution: Combine Final Documentation and Return Confirmation into one task, freeing Employee 5 to assist Employee 3 with the Cleaning Vehicle step, reducing the bottleneck. Process Step Assigned Worker Cycle Time Capacity Customer Check-in Employee 1 5 min 12 returns/hr Vehicle Inspection Employee 2 10 min 6 returns/hr Cleaning Vehicle Employee 3 + Employee 5 15/2=7.5 min 8 returns/hr Final Documentation + Employee 4 10 + 2 = 12 min 5 returns/hr Confirmation Outcome: Before Line Balancing: Capacity = 4 returns per hour due to the bottleneck in Cleaning. After Line Balancing: Capacity increases to 5 returns per hour. 20 Prof. Jalili Service Operations Management MG316 Little’s Law Little’s Law is a fundamental concept used in process analysis across various domains like operations, supply chain management, and service systems. In service operations, it helps explain the relationship between Work-in-Process (WIP), Throughput Rate, and Throughput Time in stable processes, where the arrival rate equals the departure rate. Key Components: Inventory (L): The average number of flow units (e.g., customers, cars, orders) currently within the system. Throughput Time (W): The time it takes for a flow unit to move through the entire system, from start to finish. Throughput Rate (λ): The rate at which the system completes and delivers flow units. Imagine a car wash station that operates at a steady state, where cars arrive and depart at a constant rate. The system has the following characteristics: Throughput Time (W): On average, a car spends 15 minutes (0.25 hours) in the system. Throughput Rate (λ): The car wash station washes 12 cars per hour. 21 Prof. Jalili Service Operations Management MG316 Using Little’s Law, we can calculate the average number of cars in the system: L = (12 cars per hour)×(0.25 hours per car) = 3 cars This means that, on average, 3 cars are either being washed or waiting in line at any given time. When Can We Use Little’s Law? 1. Steady-State Systems: Little’s Law applies when the system is stable, meaning the arrival rate equals the departure rate over time. 2. Queueing Systems: It’s commonly used to analyze systems where customers or entities wait for service, such as at a restaurant, bank, or hospital. 3. Performance Metrics: Little’s Law helps calculate important performance metrics like: o Average number of customers in the system (L) o Average time a customer spends in the system (W) o Throughput rate of customers served per hour (λ) 4. Process Analysis in Service Operations: The law can be applied to various service operations—whether it's patient flow in healthcare, customer orders in a fast-food restaurant, or vehicles in a toll booth—to improve efficiency and performance. 5. Continuous Flow: Little’s Law works best in processes where there’s a continuous flow of entities through the system, such as a drive-through or customer support center. 6. Capacity Planning: It’s useful for planning capacity by understanding the relationship between how fast entities arrive, how long they stay, and the system’s overall capacity to handle them. Thinking time: 1. In the car wash example, if more cars start arriving per hour but the time it takes to wash each car stays the same, what will happen to the number of cars in the system? How could the business handle an increase in demand? 2. Think about a fast-food restaurant during rush hour. If they reduce the time it takes to serve each customer, how will that affect the number of customers waiting and the overall throughput? What risks might arise if service speed increases too much? 3. In a hospital emergency room, if patients spend an average of 2 hours in the system and the hospital sees 10 patients per hour, how can Little’s Law help the hospital identify potential inefficiencies? What could the hospital do to either reduce wait times or improve 4. Consider an amusement park with long lines at popular rides. How could Little’s Law be used to manage customer expectations and optimize the number of people waiting in line? Could changing the service process or the throughput rate improve customer satisfaction? 5. How could modern technology (like mobile ordering or self-service kiosks) change the dynamics of Little’s Law in fast-food restaurants or retail stores? What impact would this have on throughput time and overall customer experience? 22