1. OPERATIONS MANAGEMENT INTEGRATING MANUFACTURING AND SERVICES FIFTH EDITION Mark M. Davis Janelle Heineke Copyright ©2005, The McGraw-Hill Companies, Inc. PowerPoint Presentation by Charlie Cook, The University of West Alabama

2. CHAPTER PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 The McGraw-Hill Companies. All rights reserved. Waiting Line Management 16

3. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–3 CHAPTER OBJECTIVES Emphasize the importance of providing fast service as a competitive advantage to companies. Show the relationship between customer expectations, customer perceptions, and customer satisfaction as they pertain to waiting time. Identify the factors that can affect customer satisfaction with waiting time and provide a framework for showing managers which of these factors are under their control. Demonstrate how service managers can design their operations and train their employees to provide faster service without incurring additional costs. Illustrate how technology can assist companies to provide faster service to their customers.

4. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–4 Managerial Issues Customers have many more ways to wait today and they still don’t like waiting. Tighter supply chains and fewer intermediaries can cause waits to quickly become critical and more obvious to customers. Learning how to manage customers’ waiting times even before than they become customers is an important lesson for manufacturing and service managers in preventing and avoiding customer dissatisfaction.

5. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–5 Waiting Time Actual Waiting Time –Time, as measured by a stopwatch, of how long a customer has to wait prior to receiving service. Perceived Waiting Time –Amount of time customers believe they have waited prior to receiving service. –Has a greater effect on customer satisfaction than actual waiting time.

6. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–6 How People Spend Their Time Exhibit 16.1 Source: From “Where the Time Goes,” U.S. News & World Report, January 30, 1989, p. 81. Copyright 1989 U.S. News and World Report, L. P. Reprinted with permission.

7. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–7 The Importance of Good Service Reasons for Increased Emphasis on Good Service –Providing a level of service acceptable to customers offers a strong competitive advantage. Time has become more valuable in highly developed countries. Customer loyalty (i.e., the future of the customer relationship) is significantly impacted by good service. Technological advances have made possible better and faster service.

8. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–8 Customer Waiting Time versus Process Efficiency: The Trade-Off in Waiting Line Management Problems with Waiting Line Management –Difficult to measure cost of having an external customer wait. –Differences in inanimate (in-process) inventory and actual people waiting for service. –Overcoming the traditional tradeoff of increased service costs and customer waiting through innovation in services.

9. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–9 The Trade-Off in Waiting Line Management Exhibit 16.2

10. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–10 The Internet continues to be an increasingly important tool in providing fast and convenient service to customers. The ability to buy, sell, make reservations, and obtain information at any time and any place has dramatically changed how we do business.

11. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–11 Defining Customer Satisfaction Definition of Customer Satisfaction –A measure of the customer’s reaction to a specific service encounter. Customer Expectations –Preconceived notions of what will occur at a service operation, often influenced by prior experience, advertising, and word-of-mouth. –Disconfirmation A marketing measure of the difference between the customer’s expectations from an service operation and a customer’s perception of its performance.

12. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–12 The Role of Satisfaction in a Customer Behavior Model Exhibit 16.3 SATISFACTION Source: Reprinted with permission from the Journal of Marketing Research 17 by the American Marketing Association, R. L. Oliver, “The Role of Satisfaction in a Customer Behavior Model,” November 1980.

13. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–13 Factors Affecting Customer Satisfaction with Waiting Firm-Related –Unfair versus fair waits –Uncomfortable versus comfortable waits –Unexplained versus explained waits –Initial versus subsequent waits Customer-Related –Solo versus group waits –Waits for more valuable versus less valuable services –Customer value systems –Customer’s current attitude

14. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–14 Factors Affecting Customer Satisfaction with Waiting (cont’d) Both Firm and Customer-Related Factors –Unoccupied versus occupied waits –Anxious versus calm waits

15. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–15 A Focus on Providing Fast Service Service System Design Concepts –Front-of-the-house Portion of the service operation that is in full sight of the customer. –Back-of-the-house Behind-the-scenes portion of the service operation with which the customer does not come in contact and can be performed without the presence of the customer.

16. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–16 A Focus on Providing Fast Service (cont’d) Service System Design Concepts (cont’d) –Reduced setup times Reducing the time lost when a worker has to switch from one job function to another. –Cross-training of employees Training employees to perform a variety of tasks (inventorying skills) increases their flexibility in providing a fast and efficient service operation.

17. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–17 Why Faster Service Is Still “Optimal” Exhibit 16.4

18. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–18 How Technology Can Provide Faster Service Eliminate Customer Waiting Time (24x7 service) –Automated teller machines (ATMs) –Internet access to customer accounts Reduce Customer Waiting Time –Bar-code scanners –Optical character recognition (OCR) –Menu-driven databases

19. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 16–19 The Impact of Technology on Waiting Times and Costs Exhibit 16.5