Service Operations Management Improving Service Delivery Robert Johnston, Graham Clark and Michael Shulver 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 Fourth Edition Fourth Edition Service Operations Management Improving Service Delivery Robert Johnston Graham Clark Michael Shulver Fourth Edition Johnston, Clark and Shulver 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 www.pearson-books.com CVR_JOHN0483_04_SE_CVR.indd 13/03/2012 09:22 SERVICE OPERATIONS MANAGEMENT Fourth Edition SERVICE OPERATIONS MANAGEMENT Improving Service Delivery Robert Johnston Graham Clark and Michael Shulver 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 identified 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 affiliation 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 16 15 14 13 12 Typeset in 10/12pt Minion by 73 Printed and bound by Rotolito Lombarda, Italy Contents Preface New features for this edition Case Examples Authors’ acknowledgements Publisher’s acknowledgements About the authors Part Introduction xiii xvi xvii xix xx xxi Chapter Introducing service operations management 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Introduction What are services? What is ‘service’? What is service operations management? Why is service operations management important? Summary Discussion questions Questions for managers Suggested further reading Useful web links Notes 12 15 17 18 18 18 19 19 Chapter Understanding the challenges for operations managers 21 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 21 Introduction What are the key strategic challenges faced by service operations managers? What are the key tactical challenges faced by service operations managers? What are the challenges for different types of services? What are the challenges for different types of processes? What are the challenges in working with other management functions? How can this book help? Summary Discussion questions Questions for managers Case Exercise: Sky Airways Suggested further reading Useful web links Notes 22 25 30 35 38 39 40 41 41 41 43 43 43 vi Contents Part Part Frame 45 Chapter Developing and using the service concept 46 3.1 3.2 3.3 3.4 3.5 3.6 46 Introduction What is a service concept? How can managers use the service concept? Summary Discussion questions Questions for managers Case Exercise: The Sunningtree Golf Club Suggested further reading Useful web links Notes Connect 47 53 61 62 62 62 64 64 64 67 Chapter Understanding customers and relationships 68 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 68 Introduction Customers, who are they? What are the benefits of retaining good customers? How can managers develop good customer relationships? How can managers develop good business relationships? Summary Discussion questions Questions for managers Case Exercise: The National Brewery Suggested further reading Useful web links Notes 69 77 79 86 94 95 95 96 98 98 99 Chapter Managing customer expectations and perceptions 101 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 101 Introduction What is customer satisfaction? What influences expectations and perceptions? How can expectations and perceptions be ‘managed’? How can service quality be operationalised? How can managers capture customers’ expectations? How can a service be specified? Summary Discussion questions Questions for managers Case Exercise: The Northern Breast Screening Unit Suggested further reading Useful web links Notes 102 106 109 115 120 123 124 125 126 126 128 128 129 Contents Part vii Chapter Managing supply networks and supplier relationships 131 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 131 Introduction What are supply chains and networks? What is the role of information and inventory? How can supply networks be managed? How can managers develop a global network strategy? Summary Discussion questions Questions for managers Case Exercise: The Regional Forensic Science Laboratory Suggested further reading Useful web links Notes Deliver 132 135 137 153 154 155 155 156 157 157 158 161 Chapter Designing the customer experience 162 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 162 Introduction What is a customer experience? How can the servicescape be designed? How can managers design the customer journey? What is the role of technology in developing the customer experience? Summary Discussion questions Questions for managers Case Exercise: The Southern Provincial Hospice Suggested further reading Useful web links Notes 163 167 169 180 186 187 187 188 189 190 190 Chapter Designing the service process 193 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 193 Introduction Why is service process design important? What are the main types of service process? How can managers ‘engineer’ service processes? How can service processes be repositioned? How can managers harness technology in service process design? Summary Discussion questions Questions for managers Case Exercise: Banca San Giovanni Suggested further reading Useful web links Notes 194 194 206 208 216 220 222 222 222 225 225 225 Chapter Measuring, controlling and managing 226 9.1 9.2 226 Introduction Why managers need to measure things? 227 viii Contents 9.3 9.4 9.5 9.6 9.7 9.8 Part What needs to be measured? How can managers measure the customer’s perspective? How can managers measure, control and manage the operation? Summary Discussion questions Questions for managers Case Exercise: The Squire Hotel Group Suggested further reading Useful web links Notes 228 231 235 244 244 245 245 247 247 247 Chapter 10 Managing people 249 10.1 10.2 10.3 10.4 10.5 10.6 10.7 249 Introduction Why is service delivery a pressurised task? How can organisations manage and motivate service providers? How can customers be ‘managed’ and motivated? Summary Discussion questions Questions for managers Case Exercise: The Empress Hotel Group Suggested further reading Useful web links Notes 250 255 274 277 278 278 278 280 280 280 Chapter 11 Managing service resources 283 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 283 Introduction What is capacity management? How can managers balance capacity and demand? How is day-to-day planning and control carried out? How organisations manage bottlenecks and queues? What happens when managers can’t cope with demand? How can organisations improve their capacity utilisation? Summary Discussion questions Questions for managers Case Exercise: Medi-Call Personal Alarm Systems Ltd Suggested further reading Useful web links Notes Improve 284 287 295 299 303 308 312 313 314 314 315 316 316 319 Chapter 12 Driving continuous improvement 320 12.1 12.2 12.3 12.4 12.5 12.6 320 Introduction How can managers use ‘value’ to drive continuous improvement’? What are the main approaches to continuous improvement? How can managers sustain continuous improvement? Summary Discussion questions 321 323 337 338 339 Contents 12.7 Part Questions for managers Case Exercise: Cranleigh Metropolitan Council Suggested further reading Useful web links Notes ix 339 340 342 342 342 Chapter 13 Learning from problems 344 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 344 Introduction Why problems occur? How can complaining customers be dealt with? How can managers use problems to drive improvement? How can managers prevent problems occurring? Summary Discussion questions Questions for managers Case Exercise: Gold Card Protection Service Suggested further reading Useful web links Notes 345 346 350 354 362 363 363 363 365 366 366 Chapter 14 Learning from other operations 368 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 368 Introduction What is benchmarking? How can benchmarking help organisations improve their performance? What are the different types of benchmarking? How organisations go about benchmarking? How can quality awards and academic studies help with benchmarking? Summary Discussion questions Questions for managers Case Exercise: Mumbai Private Bank Suggested further reading Useful web links Notes Implement 369 369 370 375 381 382 383 383 384 384 385 385 387 Chapter 15 Creating and implementing the strategy 388 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 388 Introduction What is a service strategy? How can service provide a competitive advantage? How can managers turn performance objectives into operations priorities? How can strategy be formulated and developed? How can a strategy be sustained? Summary Discussion questions Questions for managers Case Exercise: Smith and Jones, Solicitors Suggested further reading Useful web links Notes 389 390 394 397 402 403 404 404 404 406 406 407 ... Introducing service operations management 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Introduction What are services? What is service ? What is service operations management? Why is service operations management. .. What are services? ● What is service ? ● What is service operations management? ● Why is service operations management important? Introduction We all come into contact with service operations. . .SERVICE OPERATIONS MANAGEMENT Fourth Edition SERVICE OPERATIONS MANAGEMENT Improving Service Delivery Robert Johnston Graham Clark and Michael Shulver