1. F O U R T H E D I T I O N Waiting Line Management © The McGraw-Hill Companies, Inc., 2003 chapter 11 DAVIS AQUILANO CHASE PowerPoint Presentation by Charlie Cook

2. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–2 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 various 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 any additional costs.

3. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–3 Chapter Objectives (cont’d) Illustrate how technology can assist companies in providing faster service to their customers.

4. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–4 The Importance of Good Service Reasons for Increased Emphasis on Good Service –Time has become more valuable in highly developed countries. –Customer loyalty is significantly impacted by good service. –Technological advances have made possible better and faster service. –Providing a level of service acceptable to customers offers a strong competitive advantage.

5. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–5 How People Spend Their Time Exhibit 11.1 Source: U.S. News & World Report, January 30, 1989, p. 81.

6. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–6 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.

7. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–7 The Trade-Off in Waiting Line Management Exhibit 11.2

8. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–8 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.

9. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–9 Defining Customer Satisfaction (cont’d) 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.

10. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–10 Factors Affecting Customer Satisfaction with Waiting Firm-Related Factors –Unfair versus fair waits –Uncomfortable versus comfortable waits –Unexplained versus explained waits –Initial versus subsequent waits Customer-Related Factors –Solo versus group waits –Waits for more valuable versus less valuable services –Customer value systems –Customer’s current attitude

11. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–11 The Role of Satisfaction in a Customer Behavior Model Exhibit 11.3

12. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–12 Factors Affecting Customer Satisfaction with Waiting Both Firm and Customer-Related Factors –Unoccupied versus occupied waits –Anxious versus calm waits

13. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–13 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.

14. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–14 A Focus on Providing Fast Service 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.

15. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–15 Why Faster Service is Still “Optimal” Exhibit 11.4

16. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–16 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

17. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 200311–17 The Impact of Technology on Waiting Times and Costs Exhibit 11.5