OPERATIONS MANAGEMENT
CHECK POINT 79: SERVICE OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
CHECK POINT 79: SERVICE OPERATIONS MANAGEMENT
Please Select Any Topic In Check Point 79 Below And Click. |
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DO I NEED TO KNOW THIS CHECK POINT?
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WELCOME TO CHECK POINT 79 |
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HOW CAN YOU BENEFIT FROM CHECK POINT 79? |
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The main purpose of this check point is to provide you and your management team with detailed information about Service Operations Management and how to apply this information to maximize your company's performance. |
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In this check point you will learn: |
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• About various examples of custom service and standard service.
• About facility design, location and organization in a service company.
• About the design office issues in a service company.
• About service design and standardization procedures.
• About process design in a service company.
• About the similarities between a custom service and a job shop production method.
• About the similarities between a standard service and a flow production method.
• About important considerations in the service design process.
• About basic steps in the service blueprint development process.
• About service flowcharts. and much more. |
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LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 79 |
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You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point. |
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You and your team should adhere to basic lean management guidelines on a continuous basis: |
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Treat your customers as the most important part of your business. |
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Provide your customers with the best possible value of products and services. |
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Meet your customers' requirements with a positive energy on a timely basis. |
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Provide your customers with consistent and reliable after-sales service. |
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Treat your customers, employees, suppliers, and business associates with genuine respect. |
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Identify your company's operational weaknesses, non-value-added activities, and waste. |
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Implement the process of continuous improvements on organization-wide basis. |
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Eliminate or minimize your company's non-value-added activities and waste. |
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Streamline your company's operational processes and maximize overall flow efficiency. |
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Reduce your company's operational costs in all areas of business activities. |
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Maximize the quality at the source of all operational processes and activities. |
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Ensure regular evaluation of your employees' performance and required level of knowledge.
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Implement fair compensation of your employees based on their overall performance.
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Motivate your partners and employees to adhere to high ethical standards of behavior. |
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Maximize safety for your customers, employees, suppliers, and business associates. |
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Provide opportunities for a continuous professional growth of partners and employees. |
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Pay attention to "how" positive results are achieved and constantly try to improve them. |
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Cultivate long-term relationships with your customers, suppliers, employees, and business associates. |
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1. CLASSIFICATION OF SERVICES |
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CLASSIFICATION OF SERVICES |
Business owners and operations managers of service companies must be fully familiar with all relevant operations management procedures to succeed in a competitive business environment.
Design, Planning And Control Of Services entails a number of steps which are in some ways similar to those undertaken in the manufacturing environment. Such steps have been discussed earlier in the context of job shop production, batch production, and flow production.
All Service Operations have been previously classified in Tutorial 4 into two types as outlined below. |
TYPES OF SERVICES |
Custom Service |
Standard Service |
- • Accounting.
- • Advertising .
- • Architectural .
- • Catering.
- • Cleaning.
- • Consulting.
- • Electrical.
- • Electroplating.
- • Engineering.
- • Financial Planning.
- • Health care.
- • Dental care.
- • Legal.
- • Maintenance.
- • Musicians.
- • Plumbing.
- • Psychotherapy.
- • Repair shop.
- • Photography.
- • Secretarial.
- • Search Engine Optimization (SEO).
- • Transportation.
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- • Banking.
- • Child day care.
- • Communication.
- • Education.
- • Entertainment.
- • Equipment rental.
- • Insurance.
- • Restaurant.
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ADDITIONAL INFORMATION ONLINE |
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2. FACILITY DESIGN, LOCATION, AND ORGANIZATION |
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FACILITY DESIGN, LOCATION, AND ORGANIZATION |
Facility Design, Location, And Organization play an important role in many service companies. The prime reason for this is the potentially high level of contact between customers and the service provider. It is essential, therefore, to become familiar with a broad range of facility design, location, and organization issues outlined below. |
FACILITY DESIGN, LOCATION, AND ORGANIZATION ISSUES |
1. |
Types of a service facility. |
2. |
Facility design. |
3. |
Facility location. |
4. |
The point-rating method. |
5. |
Selection of facility location. |
6. |
Facility organization. |
7. |
Allocation of authority, accountability, and responsibility within a facility. |
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Facility Design, Location And Organization are discussed in detail in Tutorial 4. |
ADDITIONAL INFORMATION ONLINE |
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3. THE DESIGN OFFICE |
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THE DESIGN OFFICE |
The functionality of the Design Office in some service companies is usually integrated with the overall managerial responsibility. This, of course, is very different to the importance of the design office in many manufacturing companies where the entire manufacturing operation usually begins in that office.
Thus, if you are involved in any form of Service Design, it may be helpful to become familiar with a broad range of related issues outlined below. |
THE DESIGN OFFICE ISSUES |
1. |
What needs to be designed? |
2. |
Is design really necessary? |
3. |
Lean operational guidelines. |
4. |
Trends in service and process design. |
5. |
The design office. |
6. |
The purpose of the design office. |
7. |
The efficiency of the design office. |
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The Design Office is discussed in detail in Tutorial 4. |
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4. SERVICE DESIGN AND STANDARDIZATION |
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SERVICE DESIGN AND STANDARDIZATION |
There are a broad range of important activities, which relate to the process of Service Design. So, if you are involved in this activity, it may be useful to become familiar with the Service Design And Standardization issues outlined below. |
SERVICE DESIGN AND STANDARDIZATION ISSUES |
1. |
Purpose of services. |
2. |
Lean operational guidelines for service design. |
3. |
Service selection. |
4. |
Service design. |
5. |
Service conception. |
6. |
Service feasibility study. |
7. |
Service preliminary design. |
8. |
Service simulation and testing. |
9. |
Service final design. |
10. |
Pre-operational testing of services. |
11. |
The critical path method (CPM). |
12. |
Product and service standardization. |
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Service Design And Standardization are discussed in detail in Tutorial 4. |
ADDITIONAL INFORMATION ONLINE |
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5. PROCESS DESIGN |
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PROCESS DESIGN |
Process Design may also play an important role in the overall service design. This is particularly important for service-oriented companies with a high level of contact between the company and its customers. It may be useful, therefore, to become familiar with a broad range of process design issues outlined below. |
PROCESS DESIGN ISSUES |
1. |
Purpose of the process design. |
2. |
Lean operational guidelines related to the process design. |
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Process Design is discussed in detail in Tutorial 4. Additional issues related to process design in a service company are discussed in this Tutorial. |
ADDITIONAL INFORMATION ONLINE |
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6. COMPARISON BETWEEN A CUSTOM SERVICE AND A JOB SHOP |
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COMPARISON BETWEEN SERVICES AND MANUFACTURING METHODS |
To succeed in the process of service design, it is essential to understand the nature of various Types Of Services, and how it compares, for example, with the related manufacturing processes. All services may be classified as illustrated below. |
CLASSIFICATION OF SERVICES |
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Custom
Services |
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Standard
Services |
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Comparative Evaluation Of Service Methods is discussed in detail in Tutorial 4. |
WHAT IS A CUSTOM SERVICE? |
Some examples of Custom Services, also known as Specialized Services, have been illustrated earlier. Custom services are provided either by trade people (plumbers, electricians, or hairdressers) or professional people (doctors, accountants, or lawyers).
A custom service is provided to individual customers on a special order basis similar to the Job Shop Production method. The basic difference, however, is that the service process does not require that inventory be kept except for consumable items, like spare parts kept by plumbers or medicine kept by doctors.
The basic comparison between a custom service and a Job Shop is illustrated below. |
COMPARISON BETWEEN A CUSTOM SERVICE
AND A JOB SHOP PRODUCTION METHOD |
Description |
Custom Service (Job Shop Production) |
Process |
Service (manufacturing) to customers' orders only. |
Type Of Order |
Mostly unique and non-repetitive. |
Service (Product) Range |
No standard range of services (products). |
Service (Product) Unit Cost |
High. |
Volume Of Operations |
Very low, often one-off item. |
Method Of Operations |
Very diversified, sometimes repetitive. |
Equipment Application |
Very general application to various operations. |
Operational Capacity Planning |
Can be scheduled at short notice only. |
Employee Skill Requirements |
Very high level for general and specialized application. |
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7. COMPARISON BETWEEN A STANDARD SERVICE AND FLOW PRODUCTION |
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WHAT IS A STANDARD SERVICE? |
Standard Service can be compared with Flow Production method. This service is provided on a "flow production" basis, not to a particular customer order.
Standard service entails rendering a regular range of services to customers at a predetermined fee. Standard service may be offered to a large number of customers simultaneously, e.g. child day-care, education, or transportation.
Standard service, like Custom Service, does not require that inventory be kept except for consumable items, such as food items kept by a fast food outlet or chemicals kept by an electroplating company.
The basic comparison between standard service and Flow Production is illustrated below. |
COMPARISON BETWEEN A STANDARD SERVICE AND FLOW PRODUCTION |
Description |
Standard Service (Flow Production) |
Process |
Service (manufacturing) to customers on a continuous basis. |
Type Of Order |
All standard and repetitive. |
Service (Product) Range |
Limited range of standard services (products). |
Service (Product) Unit Cost |
Low. |
Volume Of Operations |
High. |
Method Of Operations |
Standard. |
Equipment Application |
Very specialized application to a narrow range of operations. |
Operational Capacity Planning |
Must be planned and scheduled well in advance. |
Employee Skill Requirements |
Average level for a highly standardized application. |
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8. DIFFERENCES BETWEEN SERVICE DESIGN AND PRODUCT DESIGN |
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SERVICE DESIGN |
There are obvious differences between services and products which must be taken into account when engaging in the process of Service Design. Some of these differences are summarized below. |
DIFFERENCES BETWEEN SERVICE DESIGN AND PRODUCT DESIGN |
Area Of Comparison |
Service |
Product |
Tangible Or Intangible |
Service is intangible, i.e. does not have physical characteristics. |
Product is tangible, i.e. has physical characteristics. |
Focus Of
Design |
To complete a specific task and to provide peace of mind to customers. |
To provide a physical means of completing a task. |
Storage Capacity |
Service can’t be stored or inventoried. |
Product can be stored or inventoried. |
Contact With Customer |
There is a various degree of contact with a customer during the process of rendering service. |
There is no contact with a customer during the product manufacturing process. |
Material
Content
Level |
There is a various degree of material (spare parts or consumables) content during the process of rendering service. |
There is a constant degree of material content depending on the specific type of the product. |
Customer Relations |
Relations with customers are highly important during the service rendering process. Therefore training of employees is very important. |
Relations with customers are irrelevant during the manufacturing process. They become important, when the product is already manufactured. |
Location |
Location is usually very important during the process of rendering service. |
Location is usually not important during the product manufacturing process. |
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9. TWO IMPORTANT CONSIDERATIONS IN THE SERVICE DESIGN PROCESS |
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TWO IMPORTANT CONSIDERATIONS IN THE SERVICE DESIGN PROCESS |
Two important considerations must be taken into account during the service design process. |
1. |
The Level Of Customer Contact In The Service Process.
Depending upon the nature of the service, the level of direct contact with a customer may vary substantially during the service rendering process. This is illustrated below. |
2. |
The Level Of Materials Requirements In The Service Process.
Depending upon the nature of the service, the level of materials, spare parts, or consumables used during the service rendering process may vary substantially. This is illustrated below. |
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1. THE LEVEL OF CUSTOMER CONTACT DURING THE SERVICE PROCESS |
Customized Or Standardized
Service |
No Contact
With The Customer |
Low Level Of Contact With The Customer |
Medium Level Of Contact With The Customer |
High Level Of Contact With The Customer |
Highly
Customized
Service |
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• Health care.
• Dental care.
• Psychotherapy.
• Consulting.
• Photography. |
Semi-
Customized
And Semi-
Standardized
Service |
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• Plumbing.
• Electrical.
• Engineering.
• Cleaning.
• Musicians. |
• Accounting.
• Architectural.
• Legal.
• Repair shop.
• Catering. |
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Highly
Standardized
Service |
• Electro-
plating.
• Direct mail
distribution |
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2. THE LEVEL OF MATERIAL REQUIREMENTS IN THE SERVICE PROCESS |
Zero Level
Of Material Requirements |
Low Level
Of Materials Requirements |
Medium Level
Of Material Requirements |
High Level
Of Materials Requirements |
• Accounting.
• Communications.
• Entertainment.
• Consulting. |
• Architectural.
• Banking.
• Education.
• Health care. |
• Cleaning.
• Electrical.
• Plumbing.
• Painting. |
• Catering.
• Electroplating.
• Maintenance.
• Repair shop. |
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Once the essential parameters of the service requirements are established, it is essential to design the service by taking into account specific Service Objectives outlined below. |
SERVICE DESIGN OBJECTIVES |
1. |
The service must be very customer-friendly. |
2. |
The service provider must be able to provide the service on a highly professional basis. |
3. |
The service provider must offer a high level of quality and reliability of the service to customers. |
4. |
The service provider must offer fast and efficient service to customers. |
5. |
The service provider must be able to accommodate a fluctuation in the service demand. |
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10. SERVICE BLUEPRINT |
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SERVICE BLUEPRINT |
It is very helpful to use a Service Blueprint during the process of service design. A service blueprint represents a method for describing and analyzing a particular service. The main steps related to the service blueprint development are outlined below. (37) |
THE SERVICE BLUEPRINT DEVELOPMENT PROCESS |
Step 1: Establish Boundaries.
Establish boundaries for the service process and select the required level of details.
Step 2: Identify The Specific Steps.
Identify specific steps involved in the service process and describe each step.
Step 3: Prepare A Flowchart.
Prepare a flow chart of main steps in the service process.
Step 4: Identify Areas For Potential Problems.
Identify areas for potential problems and include features to avoid such problems.
Step 5: Develop A Time Schedule.
Develop a time schedule for service completion and estimate potential time variables for each step.
Step 6: Identify Cost Parameters.
Identify cost parameters for each step of the service process.
Step 7: Determine The Profitability.
Determine the profitability parameters for the entire service process.
Step 8: Consult With Employees.
In case of existing service, consult with employees engaged in various stages of the service process and adjust the service design process accordingly. |
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ADDITIONAL INFORMATION ONLINE |
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11. SERVICE FLOWCHART |
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SERVICE FLOWCHART |
The central element of the service blueprint is a Service Flowchart which provides a visual illustration of various stages of the service rendering process.
It is essential to develop a detailed service flowchart, which will include a step-by-step illustration of what is supposed to happen during the service rendition process. Each step should be followed by the next step, based on two possible outcomes – Positive (Yes) and Negative (No) until the final result is reached.
Once the entire sequence of steps is completed, it will become the basis of the detailed service flowchart. This flowchart will provide all service employees with a better understanding about the specific sequence of all steps entailed in the service process. Moreover, it will help management provide better training to employees, thereby ensuring a higher level of customer satisfaction and increased profitability for the service organization.
A typical example of a service flowchart in a company engaged in catalog sales is presented below. |
ADDITIONAL INFORMATION ONLINE |
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12. SMALL BUSINESS EXAMPLE
SERVICE FLOWCHART |
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SERVICE FLOWCHART |
1. Service Flowchart - Start. |
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Possible
Loss
Of
Sale
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Yes |
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2. Customer calls the office. |
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Yes |
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3. Is the phone line open? |
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Yes |
No |
4. The receptionist answers the phone. |
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Yes |
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5. The customer asks for sales person. |
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Yes |
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6. The customer asks for a specific product. |
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Yes |
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7. Is the product available? |
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Yes |
No |
8. The customer agrees to purchase the product. |
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Yes |
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9. Is the credit card payment acceptable? |
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Yes |
No |
10. Transaction completed. |
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13. EQUIPMENT EVALUATION AND SELECTION |
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EQUIPMENT EVALUATION AND SELECTION |
Another important issue which may be considered by management in some service-oriented companies, depending upon the nature of their activities, relates to Equipment Evaluation And Selection. A typical Equipment Range in various types of service companies is outlined below. |
EQUIPMENT RANGE IN SERVICE COMPANIES |
Type Of Service |
Equipment Required |
Accounting, architectural |
Computers, office equipment, drafting equipment. |
Catering, restaurant |
Food service equipment, computers, office equipment, refrigeration equipment, specialized furniture. |
Cleaning |
Cleaning equipment, computers, and office equipment. |
Electrical, maintenance, plumbing, repair shop |
Working equipment, machinery, special tools, computers, and office equipment. |
Child care service |
Child playground equipment and accessories, computers, and office equipment. |
Electroplating |
Electroplating plant and equipment, special fixtures, computers, and office equipment. |
Equipment rental |
Equipment for rent, computers, and office equipment. |
Transportation |
Vehicles and transportation equipment, computers, and office equipment. |
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Thus, depending upon the particular service operation, it may be helpful for management to become familiar with various issues related to Equipment Evaluation And Selection. |
EQUIPMENT SELECTION ISSUES |
1. |
Equipment evaluation and selection questions. |
2. |
Lean operational guidelines related to equipment evaluation and selection. |
3. |
Important factors in the process of equipment evaluation and selection. |
4. |
The new equipment economic viability investigation. |
5. |
Accounting-rate-of return method. |
6. |
Payback period method. |
7. |
Discounted cash flow method. |
8. |
Methods of obtaining new equipment. |
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Equipment Evaluation And Selection are discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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14. PLANT AND EQUIPMENT LAYOUT |
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PLANT AND EQUIPMENT LAYOUT |
Another important issue which may be considered by management in some service-oriented companies, depending upon the nature of their activities, relates to Plant And Equipment Layout.
Typical issues related to the plant layout in various types of service companies are summarized below. |
PLANT LAYOUT ISSUES |
1. |
What is plant layout? |
2. |
Lean operational guidelines related to plant layout. |
3. |
Advantages of a good plant layout. |
4. |
Importance of a good plant layout. |
5. |
Key factors in a plant layout design process. |
6. |
Two stages in a traditional plant layout design. |
7. |
Three traditional types of plant layout. |
8. |
Process layout. |
9. |
Advantages of the process layout. |
10. |
Disadvantages of the process layout. |
11. |
Product layout. |
12. |
Advantages of the product layout. |
13. |
Disadvantages of the product layout. |
14. |
Fixed position layout. |
15. |
Which type of plant layout will meet your needs? |
16. |
Just-In-Time plant layout. |
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Plant Layout in discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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15. EQUIPMENT MAINTENANCE AND REPLACEMENT |
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EQUIPMENT MAINTENANCE AND REPLACEMENT |
Another important issue which may be considered by management in some service-oriented companies, depending upon the nature of their activities, relates to Equipment Maintenance And Replacement.
Typical issues related to equipment maintenance and replacement in various types of service companies are summarized below. |
EQUIPMENT MAINTENANCE AND REPLACEMENT ISSUES |
1. |
Purpose of equipment maintenance. |
2. |
Lean operational guidelines related to equipment maintenance. |
3. |
How to implement effective equipment maintenance? |
4. |
How large should the maintenance team be? |
5. |
The common objectives of the equipment maintenance team. |
6. |
Main objective of the preventive maintenance program. |
7. |
Six steps in planning and control of maintenance work. |
8. |
Preventive maintenance schedule. |
9. |
Maintenance work progress report. |
10. |
Maintenance work order. |
11. |
Equipment maintenance record. |
12. |
Objectives of equipment replacement program. |
13. |
Equipment replacement factors. |
14. |
Steps in developing the equipment replacement program. |
15. |
Equipment replacement program guidelines. |
16. |
Equipment replacement study. |
17. |
Equipment annual costs. |
18. |
Advantages of the equipment replacement study. |
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Equipment Maintenance And Replacement are discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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16. TOOL CONTROL |
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TOOL CONTROL |
Another important issue which may be considered by management in some service-oriented companies, depending upon the nature of their activities, relates to tools, jigs, and fixtures control. Tool Control issues, outlined below, are important to various service companies which may use a broad range of tools.
Typical issues related to tool control in various types of service companies are summarized below. |
SERVICE COMPANIES USING VARIOUS TOOLS |
1. |
A repair shop. |
2. |
Electroplating service company. |
3. |
Tooling service company. |
4. |
Maintenance service company. |
5. |
Plumbing service company. |
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TOOL CONTROL ISSUES |
1. |
Classification of tools. |
2. |
Tool control requirements. |
3. |
Lean operational guidelines related to tool control. |
4. |
Advantages of tool control. |
5. |
Tooling cost-effectiveness factors. |
6. |
Tooling requirement evaluation questions. |
7. |
Tooling make-or-buy decision factors. |
8. |
Tooling cost estimates. |
9. |
Tool costing sheet. |
10. |
Toolroom work planning and control. |
11. |
Toolroom work progress report. |
12. |
Tool testing procedures. |
13. |
Tool trial report. |
14. |
Tool standardization program. |
15. |
Tool performance and maintenance records. |
16. |
Tooling storage facility. |
17. |
Factors related to tooling storage facility. |
18. |
Tool distribution methods. |
19. |
Guidelines for good toolkeeping. |
20. |
Tool distribution systems. |
21. |
Tool maintenance. |
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Tool Control in discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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17. COST ESTIMATING |
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COST ESTIMATING |
Another important issue which must be considered by management in all service-oriented companies relates to Cost Estimating.
Cost estimating is important for obvious reasons - inaccurate cost estimates will undermine the efficiency of the entire service operation and may turn expected profits into real losses. Hence, it is essential that management becomes familiar with cost estimating issues outlined below. |
COST ESTIMATING ISSUES |
1. |
Purpose of the cost estimating procedure. |
2. |
Cost factors which influence the cost estimating procedure. |
3. |
Difference between costing and pricing hourly rates. |
4. |
Standard cost estimating procedure. |
5. |
Two basic cost accounting methods. |
6. |
The job order costing method. |
7. |
The process costing method. |
8. |
A cost estimating sheet. |
9. |
Make-or-buy decisions. |
10. |
Determination of delivery dates. |
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Cost Estimating is discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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18. THREE BASIC TYPES OF SERVICE OPERATIONAL PLANNING |
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SERVICE OPERATIONAL PLANNING |
Once the service has been designed and tested, it must be implemented as a part of the company's regular business activities. An efficient Implementation Of Services necessitates a detailed operational planning and control of all related activities.
Service Operational Planning represents an integral part of an efficient service process. Operational planning necessitates a continuous formulation of methods and procedures required for completion of services in the most cost-effective manner and fully acceptable to customers.
The prime Purpose Of Effective Planning is to ensure the most economical utilization of human skills, energy, and equipment available in the organization. There are three basic types of service operational planning outlined below. |
THREE BASIC TYPES OF SERVICE OPERATIONAL PLANNING |
1. |
Planning Relates To The Service Volume And Synchronization Of Service Operations.
This type of operational planning depends upon seasonal fluctuations in service demands, such as preparation of tax returns or renewal of an insurance policy. This method specifies the required level of service efforts in accordance with such demands. This method also assists in achieving synchronization of service operations with specific sales requirements. |
2. |
Planning Relates To A Particular Service Method.
This type of operational planning depends upon the nature of the service method, namely custom service or standard service. |
3. |
Planning Relates To Specific Timing To Meet Desired Results.
This type of operational planning conforms to particular timing such as promised completion dates or specific time limitations imposed on the service process. |
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ADDITIONAL INFORMATION ONLINE |
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19. OPERATIONAL PLANNING SEQUENCE IN A SERVICE ORGANIZATION |
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PRINCIPLES OF OPERATIONAL PLANNING |
The fundamental Principles Of Operational Planning are similar for most service companies as outlined below. |
TWO BASIC PRINCIPLES OF
OPERATIONAL PLANNING IN A SERVICE COMPANY |
1. |
The operational plan should include all services or groups of services handled by the organization. |
2. |
The operational plan should be expressed in clear terms meaningful to company employees. |
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COMPLEXITY OF OPERATIONAL PLANNING IN A SERVICE COMPANY |
Operational Planning of custom services is generally more complex than planning of standard services since there is a much broader range of services offered to customers. Irrespective of service method, however, it is necessary to ascertain that the service activity is constantly coordinated with a company's revenue and expenditure budgets for a particular fiscal period.
Operational planning sequence of Service Operations is illustrated below. |
OPERATIONAL PLANNING IN A SERVICE COMPANY |
Service Fees And Expenditures Forecast Details |
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Type And
Volume Of
Service |
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Human
Resource
Requirements |
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Operational
Capacity
Requirements |
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Consumable
Level
Requirements |
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Operations Plan:
A long-term forecast that outlines overall objectives of the operations department, also known as Aggregate Planning (not exceeding one year).
Master Operations Schedule:
A short-term plan that outlines the details of services to be rendered and specifies operational dates in accordance with existing operational capacity and manpower resources.
Spare Parts And Consumables Requirement Planning (If Applicable):
A detailed list of spare parts and/or consumables needed to fulfill Master Operations Schedule requirements (specific quantity required, order release dates, and order receipt dates).
Operational Capacity Requirements Planning:
A detailed summary of equipment capacity needed to fulfill Master Operations Schedule requirements. |
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20. AGGREGATE PLANNING OF SERVICE OPERATIONS |
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AGGREGATE PLANNING IN A SERVICE COMPANY |
The planning process normally starts with an Annual Service Forecast which considers overall operational requirements. This type of planning, discussed in detail in the context of manufacturing activities, is termed Aggregate Planning. There are three basic variables of aggregate planning for service operations as illustrated below. |
THREE BASIC VARIABLES OF AGGREGATE PLANNING IN A SERVICE COMPANY |
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Operational
Output
Requirements |
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Operational
Human
Resource
Requirements |
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Consumable
Level
Requirements
(Optional) |
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NON-UNIFORM PLANNING AND CONTROL OF SERVICE OPERATIONS |
If the demand for services remains steady during the fiscal period, operational planning and control become relatively simple. Most service companies, however, experience a Non-Uniform Demand For Services.
This necessitates that business owners and managers develop suitable strategies for dealing with such conditions. Some of these Planning Strategies are discussed in detail in Tutorial 4. Service operations may benefit from the aforementioned strategies considering that inventory requirements are excluded. |
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21. STRATEGIES FOR PLANNING AND CONTROL OF SERVICE OPERATIONS |
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ADDITIONAL STRATEGIES FOR PLANNING AND CONTROL |
Additional Strategies For Planning And Control frequently utilized by service companies are summarized below. |
STRATEGIES FOR PLANNING AND CONTROL
OF SERVICE OPERATIONS |
Methods |
Costs |
Advantages And Disadvantages |
Strategy 1 : Absorb Demand Fluctuations By Shifting Manpower Capacity. |
Moving employees from one position to another where the demand is higher. |
No additional cost is involved except perhaps the cost of additional training of employees. |
The motivation level of some employees may decrease as a result of a frequent shifting to different positions. |
Strategy 2 : Use Part-Time Employees. |
Hire part-time employees when the demand increases. |
Additional costs of searching for and compensating part-time employees. |
Part-time employees may not perform effectively enough if they do not get sufficient training. |
Strategy 3 : Use Existing Employees For Overtime. |
Work overtime to accommodate peak demands. |
Additional cost of overtime. |
Additional compensation may enhance motivation of employees. |
Strategy 4 : Reschedule The Vacation Period Of Employees. |
Rescheduling the vacation period to accommodate peak demands. |
No additional cost except perhaps an "appreciation" bonus. |
Occasionally, employees may get dissatisfied for not having vacations when they want them. |
Strategy 5: Use Variable Work Shifts. |
Assign employees to various work shifts to meet specific operational requirements. |
No additional costs except perhaps increased pay rate for night shifts. |
Sometimes employees may get discouraged through not working steady hours. |
Strategy 6: Stabilize Demand Pattern For Services. |
Offer special price reductions or discounts during a period of low demand. |
Cost of discounts. |
Stabilizing demand pattern may create a more uniform operational procedure. |
Strategy 7: Use An Appointment Procedure. |
Develop and maintain an appointment schedule for specialized services. |
No additional cost, except for cancellations of appointments. |
Stabilizing the equipment and human resource capacity utilization. |
Strategy 8: Use A Reservation Procedure. |
Develop and maintain a reservation schedule for standardized services. |
No additional costs, except for cancellations of reservations. |
Stabilizing the equipment and human resource capacity utilization. |
Strategy 9: Use A Priority Procedure. |
Develop and maintain a priority procedure to accommodate the operational demands. |
No additional cost. |
Stabilizing the equipment and human resource capacity utilization. |
Strategy 10: Use A Delayed Delivery Procedure. |
Develop and maintain a delayed delivery schedule to meet operational requirements. |
No additional cost. |
Stabilizing the equipment and human resource capacity utilization. |
Strategy 11: Maintain A Fixed Operational Schedule. |
Develop and maintain a fixed operational schedule for standard services. |
Cost of service is reduced to a minimum. |
This is one of the most popular methods of rendering a standard service. |
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22. SUPPLY CHAIN AND MATERIALS MANAGEMENT |
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SUPPLY CHAIN AND MATERIALS MANAGEMENT |
Another important issue, which may be considered by management in some service-oriented companies, depending upon the nature of their activities, relates to Supply Chain Management And Materials Management.
This issue relates specifically to those companies, which use various materials, spare parts or consumables during the service rendering process. Typical issues related to supply chain management and materials management in various types of service companies are summarized below. |
SUPPLY CHAIN AND MATERIALS MANAGEMENT ISSUES |
1. |
What is supply chain management? |
2. |
Elements of an effective supply chain management strategy. |
3. |
Lean operational guidelines related to supply chain and materials management. |
4. |
Value analysis. |
5. |
Material management. |
6. |
Material purchasing. |
7. |
Steps in material purchasing procedure. |
8. |
Elements of purchasing control. |
9. |
Purchase requisition. |
10. |
The supply sources evaluation. |
11. |
Material purchase control report. |
12. |
Purchase order. |
13. |
Purchasing control procedures. |
14. |
The supplier's delivery note and invoice. |
15. |
Material received report. |
16. |
Automation of the purchasing procedure. |
17. |
Traveling requisition. |
18. |
Inventory control. |
19. |
Inventory costs. |
20. |
Two basic material ordering systems. |
21. |
Reorder point system. |
22. |
Economic order quantity model. |
23. |
Periodic review system. |
24. |
Two types of inventory control. |
25. |
Perpetual inventory record card. |
26. |
ABC inventory analysis. |
27. |
Cycle counting. |
28. |
Material storage types. |
29. |
Material storage location options. |
30. |
Duties of a storekeeper. |
31. |
Material dispatch. |
32. |
The transport control. |
33. |
A daily shipping schedule. |
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Supply Chain And Materials Management are discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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23. TOTAL QUALITY MANAGEMENT |
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TOTAL QUALITY MANAGEMENT |
Another highly important issue, which must be considered by management in any service-oriented company relates to Total Quality Management (TQM).
Typical issues related to total quality management in various types of service companies are summarized below. |
TOTAL QUALITY MANAGEMENT ISSUES |
1. |
What is quality control? |
2. |
Lean operational guidelines related to quality control. |
3. |
TQM comparison with traditional companies. |
4. |
Two basic objectives of TQM. |
5. |
The problem-solving steps. |
6. |
The process improvement steps. |
7. |
The main contributors to TQM. |
8. |
The Plan-Do-Study-Act Cycle. |
9. |
The Deming's 14 Points. |
10. |
The Seven Deadly Diseases by Deming. |
11. |
Juran's 10 Steps for quality improvement. |
12. |
Feigenbaum's philosophy on quality control. |
13. |
Crosby's philosophy on quality control. |
14. |
Ishikawa's contribution to TQM. |
15. |
The Cause and Effect Diagram. |
16. |
The Seven Basic Tools for TQM. |
17. |
The elements of TQM implementation. |
18. |
Quality Assurance Program. |
19. |
Three elements of a Quality Assurance Program. |
20. |
Quality of design. |
21. |
Quality of conformance. |
22. |
Quality of performance. |
23. |
Three stages of quality control inspections. |
24. |
Advantages of a quality control system. |
25. |
Cost of Quality Assurance Program. |
26. |
Quality circles. |
27. |
Six Sigma. |
28. |
ISO 9000. |
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Total Quality Management is discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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24. KAIZEN IN SERVICE-ORIENTED COMPANIES |
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KAIZEN IN SERVICE-ORIENTED COMPANIES |
Kaizen represents another important methodology which should be considered by management in any service-oriented company. Kaizen, which in Japanese language means "continuous and gradual improvement", represents the fundamental Japanese Approach to business management. Kaizen also represents one of the main building blocks of Lean Management methods discussed in detail in Tutorial 1.
Typical issues related to kaizen in various types of service companies are summarized below. |
KAIZEN RELATED ISSUES |
1. |
Introduction to kaizen. |
2. |
What really is kaizen? |
3. |
Kaizen company comparison with traditional companies. |
4. |
The main purpose of kaizen. |
5. |
The kaizen umbrella. |
6. |
Guidelines for kaizen implementation. |
7. |
Kaizen and Total Quality Control. |
8. |
Comparison between Japanese and Western approach to quality control. |
9. |
TQC emphasis on managing the previous process. |
10. |
TQC emphasis on managing the next process as a customer. |
11. |
Kaizen and the suggestion system. |
12. |
Process-oriented management versus result-oriented management. |
13. |
Kaizen and innovation. |
14. |
Problem-solving cycle in a kaizen company. |
15. |
Cross-functional management and training in a kaizen company. |
16. |
Practical implementation of kaizen within a company. |
17. |
Management-oriented kaizen. |
18. |
Practical applications of kaizen. |
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Kaizen is discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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25. JUST-IN-TIME METHODOLOGY IN SERVICE-ORIENTED COMPANIES |
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JUST-IN-TIME METHODOLOGY IN SERVICE-ORIENTED COMPANIES |
Although Just-In-Time (JIT) Methodology has been developed by Toyota for specific manufacturing purposes, this unique Japanese methodology has become one of the main building blocks of Lean Management which offers cost-effective guidelines to many non-manufacturing companies.
The JIT methodology is of particular importance to Standard Service-Oriented Companies involved in repetitive tasks of specialized service operations, e.g. electroplating plant, packaging plant, or any kind of service plant.
Typical issues related to just-in-time methodology in various types of service companies are summarized below. |
JUST-IN-TIME METHODOLOGY RELATED ISSUES |
1. |
What is Just-In-Time methodology? |
2. |
JIT pyramid. |
3. |
Prime objectives of Just-In-Time methodology. |
4. |
Value added analysis. |
5. |
Expected results from Just-In-Time methodology implementation. |
6. |
Basic principles and tasks of JIT methodology. |
7. |
JIT operation planning. |
8. |
JIT plant layout. |
9. |
JIT production synchronization and balancing of the production flow. |
10. |
JIT operations control. |
11. |
JIT purchasing. |
12. |
Advantages of JIT purchasing. |
13. |
JIT quality control. |
14. |
JIT plant maintenance. |
15. |
Implementation of JIT methodology in your company. |
16. |
Advantages of JIT operations in comparison with the traditional operations. |
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Just-In-Time Methodology is discussed in detail in Tutorial 4. |
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Lean Management is discussed in detail in Tutorial 4. |
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ADDITIONAL INFORMATION ONLINE |
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You can obtain additional information about service operations management online from Service Operations Management Association. |
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26. FOR SERIOUS BUSINESS OWNERS ONLY |
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ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY? |
Reprinted with permission. |
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27. THE LATEST INFORMATION ONLINE |
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LESSON FOR TODAY:
If You Think That A Service Operation Is Simple - Think Again!
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Go To The Next Open Check Point In This Promotion Program Online. |
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