Cases in operations management robert johnston pdf

Robert Johnston Graham Clark Michael Shulver

Service OperatiOnS ManageMent Improving Service Delivery

Fourth Edition

This international market-leading book, aimed at both students and practising managers, provides a comprehensive and balanced introduction to service operations management. Building on the basic principles of operations management, the authors examine the operations decisions that managers face in controlling their resources and delivering services to their customers.

Combining a unique practical approach with a detailed theoretical underpinning, the authors provide tools, frameworks and techniques for operational analysis and improvement and set operations management within the wider business context, bringing a valuable ‘real world’ perspective to this growing area.

Each chapter includes definitions of key terms, real-world examples and case studies with exercises, questions to test both understanding and application, together with recommended further reading and suggested websites to deepen your knowledge.

New features for this 4th edition include:

• A new 17 chapter structure • A practical focus on ‘how to’ deal with the key

issues and challenges facing service operations managers

• A new chapter on the customer experience • A new chapter on driving continuous improvement • A new chapter on learning from other operations • A new chapter on world-class service • Six new end-of-chapter case exercises • A new full-colour design

Service Operations Management is an invaluable guide to students and managers confronting operational issues in service management, whether from a general management perspective or focused in specific sectors, such as tourism and leisure or business services. This book is ideal for undergraduates, postgraduates or executives wishing to gain a deeper understanding of managing service operations and improving service delivery.

Service OperatiOnS ManageMent Improving Service Delivery

Fourth Edition

Robert Johnston, Graham Clark and Michael Shulver

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SERVICE OPERATIONS MANAGEMENT

Robert Johnston Graham Clark and Michael Shulver

SERVICE OPERATIONS MANAGEMENT Improving Service Delivery

Fourth Edition

Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England

and Associated Companies throughout the world

Visit us on the World Wide Web at: www.pearson.com/uk

First published 2001 Fourth edition published 2012

© Pearson Education Limited 2012

The rights of Robert Johnston, Graham Clark and Michael Shulver to be identifi ed as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.

All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affi liation with or endorsement of this book by such owners.

Pearson Education is not responsible for the content of third-party internet sites.

ISBN 978-0-273-74048-3

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloguing-in-Publication Data A catalog record for this book is available from the Library of Congress

10 9 8 7 6 5 4 3 2 1 16 15 14 13 12

Typeset in 10/12pt Minion by 73 Printed and bound by Rotolito Lombarda, Italy

Contents

Preface xiii New features for this edition xvi Case Examples xvii Authors’ acknowledgements xix Publisher’s acknowledgements xx About the authors xxi

Introduction 3 Part 1

Chapter 1 Introducing service operations management 4

1.1 Introduction 4 1.2 What are services? 5 1.3 What is ‘service’? 6 1.4 What is service operations management? 12 1.5 Why is service operations management important? 15 1.6 Summary 17 1.7 Discussion questions 18 1.8 Questions for managers 18 Suggested further reading 18 Useful web links 19 Notes 19

Chapter 2 Understanding the challenges for operations managers 21

2.1 Introduction 21 2.2 What are the key strategic challenges faced by service operations managers? 22 2.3 What are the key tactical challenges faced by service operations managers? 25 2.4 What are the challenges for different types of services? 30 2.5 What are the challenges for different types of processes? 35 2.6 What are the challenges in working with other management functions? 38 2.7 How can this book help? 39 2.8 Summary 40 2.9 Discussion questions 41 2.10 Questions for managers 41 Case Exercise: Sky Airways 41 Suggested further reading 43 Useful web links 43 Notes 43

Frame 45 Part 2

Chapter 3 Developing and using the service concept 46

3.1 Introduction 46 3.2 What is a service concept? 47 3.3 How can managers use the service concept? 53 3.4 Summary 61 3.5 Discussion questions 62 3.6 Questions for managers 62 Case Exercise: The Sunningtree Golf Club 62 Suggested further reading 64 Useful web links 64 Notes 64

Contentsvi

Connect 67 Part 3

Chapter 4 Understanding customers and relationships 68

4.1 Introduction 68 4.2 Customers, who are they? 69 4.3 What are the benefi ts of retaining good customers? 77 4.4 How can managers develop good customer relationships? 79 4.5 How can managers develop good business relationships? 86 4.6 Summary 94 4.7 Discussion questions 95 4.8 Questions for managers 95 Case Exercise: The National Brewery 96 Suggested further reading 98 Useful web links 98 Notes 99

Chapter 5 Managing customer expectations and perceptions 101

5.1 Introduction 101 5.2 What is customer satisfaction? 102 5.3 What infl uences expectations and perceptions? 106 5.4 How can expectations and perceptions be ‘managed’? 109 5.5 How can service quality be operationalised? 115 5.6 How can managers capture customers’ expectations? 120 5.7 How can a service be specifi ed? 123 5.8 Summary 124 5.9 Discussion questions 125 5.10 Questions for managers 126 Case Exercise: The Northern Breast Screening Unit 126 Suggested further reading 128 Useful web links 128 Notes 129

Contents vii

Chapter 6 Managing supply networks and supplier relationships 131

6.1 Introduction 131 6.2 What are supply chains and networks? 132 6.3 What is the role of information and inventory? 135 6.4 How can supply networks be managed? 137 6.5 How can managers develop a global network strategy? 153 6.6 Summary 154 6.7 Discussion questions 155 6.8 Questions for managers 155 Case Exercise: The Regional Forensic Science Laboratory 156 Suggested further reading 157 Useful web links 157 Notes 158

Deliver 161 Part 4

Chapter 7 Designing the customer experience 162

7.1 Introduction 162 7.2 What is a customer experience? 163 7.3 How can the servicescape be designed? 167 7.4 How can managers design the customer journey? 169 7.5 What is the role of technology in developing the customer experience? 180 7.6 Summary 186 7.7 Discussion questions 187 7.8 Questions for managers 187 Case Exercise: The Southern Provincial Hospice 188 Suggested further reading 189 Useful web links 190 Notes 190

Chapter 8 Designing the service process 193

8.1 Introduction 193 8.2 Why is service process design important? 194 8.3 What are the main types of service process? 194 8.4 How can managers ‘engineer’ service processes? 206 8.5 How can service processes be repositioned? 208 8.6 How can managers harness technology in service process design? 216 8.7 Summary 220 8.8 Discussion questions 222 8.9 Questions for managers 222 Case Exercise: Banca San Giovanni 222 Suggested further reading 225 Useful web links 225 Notes 225

Chapter 9 Measuring, controlling and managing 226

9.1 Introduction 226 9.2 Why do managers need to measure things? 227

Contentsviii

9.3 What needs to be measured? 228 9.4 How can managers measure the customer’s perspective? 231 9.5 How can managers measure, control and manage the operation? 235 9.6 Summary 244 9.7 Discussion questions 244 9.8 Questions for managers 245 Case Exercise: The Squire Hotel Group 245 Suggested further reading 247 Useful web links 247 Notes 247

Chapter 10 Managing people 249

10.1 Introduction 249 10.2 Why is service delivery a pressurised task? 250 10.3 How can organisations manage and motivate service providers? 255 10.4 How can customers be ‘managed’ and motivated? 274 10.5 Summary 277 10.6 Discussion questions 278 10.7 Questions for managers 278 Case Exercise: The Empress Hotel Group 278 Suggested further reading 280 Useful web links 280 Notes 280

Chapter 11 Managing service resources 283

11.1 Introduction 283 11.2 What is capacity management? 284 11.3 How can managers balance capacity and demand? 287 11.4 How is day-to-day planning and control carried out? 295 11.5 How do organisations manage bottlenecks and queues? 299 11.6 What happens when managers can’t cope with demand? 303 11.7 How can organisations improve their capacity utilisation? 308 11.8 Summary 312 11.9 Discussion questions 313 11.10 Questions for managers 314 Case Exercise: Medi-Call Personal Alarm Systems Ltd 314 Suggested further reading 315 Useful web links 316 Notes 316

Improve 319 Part 5

Chapter 12 Driving continuous improvement 320

12.1 Introduction 320 12.2 How can managers use ‘value’ to drive continuous improvement’? 321 12.3 What are the main approaches to continuous improvement? 323 12.4 How can managers sustain continuous improvement? 337 12.5 Summary 338 12.6 Discussion questions 339

Contents ix

12.7 Questions for managers 339 Case Exercise: Cranleigh Metropolitan Council 340 Suggested further reading 342 Useful web links 342 Notes 342

Chapter 13 Learning from problems 344

13.1 Introduction 344 13.2 Why do problems occur? 345 13.3 How can complaining customers be dealt with? 346 13.4 How can managers use problems to drive improvement? 350 13.5 How can managers prevent problems occurring? 354 13.6 Summary 362 13.7 Discussion questions 363 13.8 Questions for managers 363 Case Exercise: Gold Card Protection Service 363 Suggested further reading 365 Useful web links 366 Notes 366

Chapter 14 Learning from other operations 368

14.1 Introduction 368 14.2 What is benchmarking? 369 14.3 How can benchmarking help organisations improve their performance? 369 14.4 What are the different types of benchmarking? 370 14.5 How do organisations go about benchmarking? 375 14.6 How can quality awards and academic studies help with benchmarking? 381 14.7 Summary 382 14.8 Discussion questions 383 14.9 Questions for managers 383 Case Exercise: Mumbai Private Bank 384 Suggested further reading 384 Useful web links 385 Notes 385

Implement 387 Part 6

Chapter 15 Creating and implementing the strategy 388

15.1 Introduction 388 15.2 What is a service strategy? 389 15.3 How can service provide a competitive advantage? 390 15.4 How can managers turn performance objectives into operations priorities? 394 15.5 How can strategy be formulated and developed? 397 15.6 How can a strategy be sustained? 402 15.7 Summary 403 15.8 Discussion questions 404 15.9 Questions for managers 404 Case Exercise: Smith and Jones, Solicitors 404 Suggested further reading 406 Useful web links 406 Notes 407

Contentsx

Chapter 16 Understanding and infl uencing culture 408

16.1 Introduction 408 16.2 Why is understanding and infl uencing organisational culture important? 409 16.3 What is organisational culture? 410 16.4 What are the main culture types and the implications for service delivery? 421 16.5 What is the infl uence of national cultures? 423 16.6 How can managers infl uence cultural change? 424 16.7 Summary 429 16.8 Discussion questions 430 16.9 Questions for managers 430 Case Exercise: North Midlands Fire and Rescue Service 430 Suggested further reading 432 Useful web links 432 Notes 433

Chapter 17 Building a world-class service organisation 434

17.1 Introduction 434 17.2 What is excellent service? 435 17.3 How do organisations go about becoming and remaining world-class? 439 17.4 How can managers make the business case for service? 446 17.5 A fi nal word 449 17.6 Summary 449 17.7 Discussion questions 450 17.8 Questions for managers 450 Case Exercise: Superstore Plc 451 Suggested further reading 453 Useful web links 454 Notes 454

Index 455

Supporting resources for lecturers

Please visit www.servops.net to fi nd valuable online resources. These include:

● A downloadable Instructor’s Manual

● PowerPoint and Keynote slides that can be downloaded and used for classroom presentations

● Instructional video screencasts by the author team showing you how we approach the subjects in our own teaching

● Lesson plans

● Opportunities to network, share ideas and provide feedback

● …and much, much more.

Contents xi

Preface

Introduction

This book is about how to manage and improve the operations in service organisations. Service operations are important . They are the parts of the organisation that create and deliver service to customers. The service could be that delivered to customers inside an organisation, such as staff in other functions, or the service provided by public sector organisations, voluntary organisations, mass transport services, professional services, business-to-business services, retailers, internet services, tourism and hospitality, for ex- ample. In this book we do not focus on any particular type of service but seek to cover the many decisions faced by operations managers in all these organisations. To illustrate this diversity we have provided examples from many different organisations and from many countries, including Australia, Denmark, France, Hong Kong, India, Japan, Malaysia, the Maldives, New Zealand, Singapore, Sweden, Thailand, the United Arab Emirates, the UK and the USA.

Service operations management is important. Operations managers are usually responsi- ble for most of the costs in an organisation, and for most of the revenues, and they manage most of the people and physical assets. Operations managers deliver the ‘profi t’. In this book we refer to many aspects of ‘business performance’, not simply profi t. Although many organi- sations are motivated by profi t, most operations are also assessed on criteria such as costs, revenues, adherence to budgets, customer loyalty and technological leadership.

Service operations management is also very challenging . We have captured many of the challenges that operations managers face every day and the book is structured around how to deal with those challenges. Managing operations is also exciting . Operations deal with cus- tomers, often in real time, so part of the excitement comes from the immediacy of operations; dealing with the needs of a stream of customers, managing the staff and making operational decisions to ensure the delivery of an appropriate quality of service at an appropriate cost.

The aim of this book

The aim of this book is to provide a clear, authoritative, well-structured, easy to read and interesting treatment of service operations management. Our objective in writing this book is to help students and managers understand how service performance can be improved by studying service delivery and associated management issues. Service delivery is the focus of this book, yet we recognise that success depends not only on the obvious territory of opera- tions in managing processes and resources, but also in understanding how operations managers must be involved in aspects of the organisation’s strategy, organisational culture, and the way employees and customers are motivated and managed. How well a service is delivered refl ects the ability of the organisation to pull all these strands together. The result should be a service which meets the demands of its various stakeholders, including an appropriate and achievable level of service for customers, delivery of the required operational and fi nancial targets and implementation of the organisation’s strategy.

xiv Preface

Who should read this book?

This book is intended as a textbook for those who want to build on knowledge of the basic principles of operations management. It will also serve as a handbook for operations man- agers in service organisations as they seek to develop and implement operations strategies. Specifi cally it is intended for:

● Undergraduates on business studies or joint studies degrees or those specialising in hospi- tality, tourism or the public sector, for example, who wish to enhance their understanding of service operations management.

● MBA students who are managing service organisations and want to stretch their under- standing of the area and assess and improve their operations.

● Executives who want to focus on certain aspects of service delivery, such as the customer ex- perience, process design, capacity management, improvement, creating high- performance teams, performance measurement, world-class service or service strategy development, for example, in order to challenge and change their own organisations.

Distinctive features

● Operations focused. This text has a clear operations focus and is concerned with managing operations. It explores operational issues, problems and decisions. It exposes undergradu- ates to the problems faced by service operations managers and helps practising managers deal with those issues. Each of the main chapters addresses how to deal with a particular problem or challenge.

● Frameworks and tools. Each chapter provides tools, frameworks and techniques that will help students and managers not only analyse existing operations but also understand better how they can deal with the issues that operations managers face. The frameworks, approaches and techniques will vary from topic to topic and will include, for example:

• a list of key points to bear in mind when making decisions in a particular area • a diagram or chart showing the relationship between two variables or sets of variables

to help position an operation or help identify the nature of the relationships • a list of questions, checks or tests that can be applied to a situation • ways of quantifying or assessing qualitative variables • the key stages in undertaking a particular activity.