Chapter 12

Question 1

Differences of supply chain in the service industry

Answer 1

1. Tangibility of the end product (services are not tangible)
2. Involvement of the customer: customers are more directly involved
3. Assessment of quality: quality is hard to measure and assessed differently in the service industry
4. Labor content: much higher ratio of labor to materials in the service industry
5. Facility Location considerations: services are largely provided very near where customers are located and impacted by location decisions

Question 2

Types of services

Answer 2

1. Pure services: few or no tangible products to customers (massage, consulting, storage facilities, movies)
2. End Product Services: which offer tangible components along with the service component (restaurants, takeout food, bank teller)
3. State Utility Services: directly involve things owned by the customer (water, power, broadband, car repair, dry cleaning)

Question 3

Difference between goods and services

Answer 3

1. Services cannot be inventoried, services are produced and consumed simultaneously
2. Services are often unique to the customers
3. Services have high customer interaction
4. Services need to be timely
5. Services are decentralized

Question 4

Service Productivity

Answer 4

Improving service productivity is challenging due to:
1. Demand unpredictability
2. High labor content
3. Individually customized services
4. Lack of adequate skills

Question 5

Local versus Global Services

Answer 5

Local Services normally limited to specific geographic area such as:
- Dry Cleaning
- Auto Repair
- Post office
Global Services transcend geographic areas such as:
- Telecommunications
- Travel Services
- Financial Services

Question 6

Global Services are increasing all over the world, the challenges of managing them are:

Answer 6

identifying global customers, trade, social, and cultural practices, labor, facilities, and infrastructure support vary by country, legal and political issues, laws may restrict foreign competitors, domestic competitors and economic climate

Question 7

Cost Leadership

Answer 7

Lowest cost service provider, requires large capital investment in state-of-the-art equipment and significant efforts to control and reduce costs
ex. auto diagnostics software, route planning to reduce windshield replacement time

Question 8

Differentiation

Answer 8

Unique service created based on customer input and feedback
ex. weekend car servicing at hyundai, ford, being different from another local dealer

Question 9

Focus

Answer 9

serves a narrow niche better than other firms
ex. grocery shopping for you, mechanic specializing in mercedes or porsche repair

Question 10

Bundle of Service Attributes

Answer 10

bundling services can deliver more than expected services and benefits to enhance customers satisfaction

Question 11

Explicit Services

Answer 11

availability and access to the service, consistency of service performance, comprehensiveness of the service, and training of service personnel (ATM, safe deposit boxes, car loans, notary services)

Question 12

Implicit Services

Answer 12

attitude of the servers, atmosphere, waiting time, status, privacy, security, and convenience

Question 13

Implicit and Explicit Services are supported by:

Answer 13

facilities and equipment: location, layout, architectural appropriateness, equipment, decoration
facilitating goods: tangible elements that are used or consumed by the customer or the service provider along with the service provided

Question 14

Service Location Strategy

Answer 14

• make it easy for customers to find the facility/store, close to highly populated areas
• once they arrive, make it easy to find what they want, or to find what you want them to find
  ex. drop/pick up clothes at dry cleaners on way to work

Question 15

Service Layout Strategy

Answer 15

• layouts designed to reduce distance traveled within the store
• departmental layouts to maximize closeness desirability
  ex. doctors office waiting room, service center at car dealership, cosmetics store within department store

Question 16

Facilitating Goods

Answer 16

services may require the use of facilitating goods (products) that are tangible elements used or consumed by the customer or the service provider along with the service provided
ex. cash & coins, pharmaceuticals, food, medical equipment
- these items need to be purchased, transported, recieved, inventoried and replenished in order to provide the service activity

Question 17

Service Response Logistics primary activities

Answer 17

1. Service Capacity
   2.
   3.
   4.

Question 18

Service Capacity

Answer 18

service capacity can be expressed as the number of customers per day, per shift, per hour, per month, or per year, the company’s service system is designed to serve
- number of customers the service provider can service at any one time
- the planned capacity for the service

Question 19

Service Capacity Planning Challenges

Answer 19

• customer arrivals fluctuate and service demands vary
• customers are participants in the service and the level of congestion has an impact on percieved quality
• idle capacity is a reality for services
• inability to control demand results in capacity measured in terms of inputs

Question 20

Service Capacity Utilization

Answer 20

Capacity Utilization= actual customers served per period/capacity

Question 21

Level Demand Strategy

Answer 21

capacity remains constant regardless of demand

Question 22

Chase Demand Strategy

Answer 22

capacity varies with demand

Question 23

Demand Exceeds Capacity what happens:

Answer 23

1. Turns customers away (lose business)
2. Make them wait until the service is available
3. Increase service capacity

Question 24

Four Primary Activities of Service Response Logistics

Answer 24

Service Capacity, Waiting Times, Distribution Channels, Service Quality

Question 25

Long Range Service Capacity

Answer 25

Capacity can be used as a preemptive strike where the market is too small for two competitors to co-exist

Question 26

Short Range Service Capacity

Answer 26

The lack of short-term capacity planning can generate customers for the competition

Question 27

Balance: Service Capacity

Answer 27

Capacity decisions must be balanced against the costs of lost sales if capacity is inadequate...or against operating losses if demand does not reach expectations

Question 28

Managing Waiting Time

Answer 28

Managing waiting time involves managing both the actual waiting time and the perceived waiting time

Question 29

Balking

Answer 29

when a customer refuses to join the queue

Question 30

Reneging

Answer 30

when customer decides to leave the queue

Question 31

Queue Discipline

Answer 31

the order in which customers are served

Question 32

Single channel, single phase

Answer 32

single server (1 queue 1 service provider)

Question 33

Single channel, multiple phase

Answer 33

multiple servers acting in series (1 queue, multiple services being provided one after another) ex. customer to hostess to wait staff to chef

Question 34

Multiple channel, single phase

Answer 34

single server (one queue, multiple service providers at same time)

Question 35

Multiple channel, multiple phase

Answer 35

multiple servers acting in parallel

Question 36

Eatertainment

Answer 36

combines restaurant and entertainment elements

Question 37

Entertailing

Answer 37

combines retail with entertainment (mall of america)

Question 38

Edutainment

Answer 38

combines learning with entertainment to appeal to customers looking for substance along with play (epcot center, liberty science center)

Question 39

Franchising

Answer 39

allows business to expand quickly in dispersed geographic markets, protects existing markets, builds market share and facilitates business when owners have limited financial resources