Service Facilities and Process Flows MD854 Management of Service Operations Professor Joy Field

Environmental Orientation Considerations Need for spatial cues to orient visitors Formula facilities draw on previous experience Entrance atrium allows visitors to gain a quick orientation and observe others for behavioral cues Orientation aids and signage such as “You Are Here” maps reduce anxiety

Servicescapes Designing physical surroundings to affect employee and customer behavior  Ambient conditions Background characteristics such as noise level, music, lighting, temperature, and scent.  Spatial layout and functionality Reception area, circulation paths of employees and customers, and focal points.  Signs, symbols, and artifacts Selection, orientation, location, and size of objects.

Typology of Servicescapes

Facility Design Considerations Nature and objectives of service organization Land availability and space requirements Flexibility Security Aesthetic factors The community and environment How are Fulton Hall and this classroom designed with respect to these considerations?

Process Analysis Terminology for Managing Flow Bottleneck is the operation or resource that limits production. Process Cycle Time is the average time between completions of successive units and is limited by the bottleneck operation. Capacity is a measure of the maximum output per unit time. Capacity Utilization is a measure of how much output is achieved relative to the actual capacity. Throughput Time is the time to complete a process from time of arrival to time of exit. It is the sum of the critical path operations times plus any waiting time.

Process Flow Diagram of Mortgage Service What is the throughput time for this process? How could the process be changed to improve its flow? Property Survey CT=90 min. Credit Report CT=45 min. Title Search CT=30 min. Unapproved Mortgages Approved Mortgages Completed Applications Mortgage Applications Final Approval CT=15 min. Yes No

Facilities Layout Facilities should be laid out to:  Create an environmental orientation  Affect employee and customer behavior  Reflect the service design goals  Manage flow Comment on the layout of the following facility: Ultimate Fitness ClubUltimate Fitness Club

Strategic Location Considerations Flexibility of a location is a measure of the degree to which the service can react to changing economic conditions.  Elasticity of demand, location risk management (portfolio approach), responsiveness Competitive positioning refers to methods by which the firm can establish itself relative to its competitors.  Barriers to competition, establishing market awareness Demand management is the ability to control the quantity, quality, and timing of demand.  Especially important when capacity is relatively fixed. Focus is offering the same narrowly defined service at many locations.  Makes expansion easier but can result in cannibalization.

Location Planning Considerations Competitive clustering (among competitors)  e.g. auto dealers, motels Saturation marketing (same firm)  Urban and high traffic areas, e.g. Au Bon Pain Marketing intermediaries as a distribution channel  e.g. credit cards, insurance Substitute Communication for Travel  e.g. remote health care, direct deposit Separation of front from back office  Co-location vs. efficiency considerations (e.g. remote fast-food ordering) Impact of the Internet on service location  Virtual location and visibility (e.g. Amazon.com, eBay) Site-specific considerations (e.g. traffic, zoning, regulations)

Front Office and Back Office Location Considerations Front OfficeBack Office External Customer (consumer) Is travel out to customer or customer travel to site? Can electronic media substitute for physical travel? Is location a barrier to entry? Is service performed on person or property? Is co-location necessary? How is communication accomplished? Internal Customer (employee) Availability of labor? Are self-service kiosks an alternative? Are economies of scale possible? Can employees work from home? Is offshoring an option?

Analytical Tools for Location Decisions Regression modeling (determining location factors that drive profitability) Optimization techniques  e.g. minimize average distance travelled (euclidean or metropolitan metric), maximize market share (Huff model) Multiple location techniques  Location set covering or maximal covering Location intelligence products