Copyright Atomic Dog Publishing, 2004 Chapter Eleven Managing Supply, Demand, and Productivity
Copyright Atomic Dog Publishing, 2004 Managing Supply and Demand Firm capacity Optimal capacity Perishability nature of services No buffer for services from demand Demand volatile Optimal, maximum demand for professional and business services
Copyright Atomic Dog Publishing, 2004 Matching Supply and Demand Determine demand pattern Assess causes of demand variations Develop methods for managing supply Develop methods for managing demand
Copyright Atomic Dog Publishing, 2004 Managing Supply Part-time employees Employees work overtime Peak-time operating procedures Cross-training of employees Increase customer participation Shared facilities Outsourcing
Copyright Atomic Dog Publishing, 2004 Part-Time Employees Reduce costs Increase capacity Less training Lower performance Lower productivity Poor attitude Less knowledgeable Less personalization Higher turnover BenefitsConcerns
Copyright Atomic Dog Publishing, 2004 Employees Work Overtime Employees knowledgeable Employees know customers Cost effective for some services Increase capacity Lower service quality due to fatigue Higher costs BenefitsConcerns
Copyright Atomic Dog Publishing, 2004 Peak-Time Operating Procedures Keep operations at capacity Identifying peak routines Lack of personal attention Incomplete job Crowded facility Feeling of being cheated BenefitsConcerns
Copyright Atomic Dog Publishing, 2004 Cross-Training of Employees Keep operation at capacity Reduce bottlenecks Fill-in for absent employees Lower service quality Lower productivity BenefitsConcerns
Copyright Atomic Dog Publishing, 2004 Increased Customer Participation Increase productivity Maximize capacity Reduce costs Customers lack expertise Conflict of scripts Lower service quality Sometimes decrease productivity—if customer is too slow BenefitsConcerns
Copyright Atomic Dog Publishing, 2004 Shared Facilities or Equipment Reduce capital investment costs Maximize facility utilization Efficient scheduling Access to facility or equipment Customer confusion Benefits Concerns
Copyright Atomic Dog Publishing, 2004 Outsourcing Expand capacity Expand supply Level of service quality Stealing of customers Conflicts as to who was hired BenefitsConcerns
Copyright Atomic Dog Publishing, 2004 Managing Demand Shift demand from high to low demand periods Decrease demand during peak demand periods Stimulate demand during low demand periods
Copyright Atomic Dog Publishing, 2004 Shifting Demand Business is not lost Service quality is not adversely affected Increased efficiency Customers may not want to shift Customers may not have control over the way they use the service AdvantagesDisadvantages
Copyright Atomic Dog Publishing, 2004 Reducing Demand Service quality is normally improved Increased efficiency Lost revenue Not a good strategy for firms in the for- profit sector AdvantagesDisadvantages
Copyright Atomic Dog Publishing, 2004 Stimulating Demand Increased efficiency Increased income Increased utilization of facility May not be profitable May cause some current customers to shift usage AdvantagesDisadvantages
Copyright Atomic Dog Publishing, 2004 Tools for Managing Demand Reservation system Differential pricing Communication
Copyright Atomic Dog Publishing, 2004 Enhancing Productivity Quality of workforce Capital equipment Automating tasks Customer/service interaction Customer contact and support functions Self-service options Outsourcing
Copyright Atomic Dog Publishing, 2004 Changing the Service Process Develop customer trust Understand customer habits Pretest innovation Teach customers Promote benefits Stimulate trial usage Monitor performance