RESOURCE ALLOCATION TO IMPROVE SERVICE QUALITY PERCEPTIONS IN MULTISTAGE SERVICE SYSTEMS

Service quality improvement has become an imperative in today's service firms. In this paper, we present a modeling framework that combines marketing and operations viewpoints for resource allocation. The framework can be used to allocate resources to the different stages of a multistage service system, where the manager's goal is to improve customers' perceptions of service quality, given some budget. Optimal allocation guidelines are provided, and the interplay of three factors on the resulting allocation scheme is captured. These factors are the current level of customers' perceptions of service quality at each stage, the cost of implementing a service quality improvement at each stage, and the importance placed by customers at each stage. Sensitivity analysis to provide additional managerial insights is also performed. We demonstrate the applicability of the modeling framework, using data from a real life health care environment. Model limitations and future research are also discussed.     

PRODUCT AND SERVICE QUALITY: THE ANTECEDENTS OF CUSTOMER LOYALTY IN THE AUTOMOTIVE INDUSTRY

Prior literature has examined product quality and service quality separately as antecedents of customer loyalty. In the context of the automotive industry, we present a framework that examines the simultaneous impact of product and service quality on consumers' purchase intentions. The framework is operationalized as several hypotheses that posit relationships between service quality, service satisfaction, product quality, and customer loyalty. The hypotheses are tested using three sources of data: (i) archival data on product quality and customer purchases, (ii) consumersíresponses to a survey instrument, and (iii) Consumer Reports. Results indicate general support for main hypotheses proposed.     

THE MARKET SHARE IMPACT OF SERVICE FAILURES

This paper develops a simple but powerful model that relates service satisfaction/dissatisfaction to market share. The model is based on an intuitive service satisfaction framework that relates three service system parameters (service success rate, complaint rate, and service recovery rate) to the percent of satisfied customers. A dynamic model is then posited that relates the defection rate and the addition rate to market share changes. The service satisfaction/market share model yields useful insights into how market share is influenced by these service system parameters. The surprisingly simple model predicts changes in market share due to changes in customer satisfaction.     

A LONGITUDINAL STUDY OF THE EFFECT OF A SERVICE GUARANTEE ON SERVICE QUALITY

This paper develops a theoretical framework that relates a service guarantee to service quality. The framework hypothesizes that a service guarantee can positively affect service quality through its positive effect on both learning through service failure and employee motivation and vision. A longitudinal, empirical study was conducted to test these hypotheses. Surprisingly, the service guarantee was not found to have a direct effect on learning through service failure. However, the service guarantee clearly had a positive effect on service quality primarily through its positive effect on employee motivation and vision. The research strongly supports using a service guarantee to improve service quality.     

ADAPTING THE QFD APPROACH TO EXTENDED SERVICE TRANSACTIONS

This paper proposes an adaptation of quality function deployment (qfd) for services, more specifically extended service transactions. We propose two modifications to service applications of Qfd. One is the inclusion of higher-level customer needs (consequences, benefits, experiences, and personal values) to incorporate the experiential and personal nature of extended service transactions into the process. The second modification is to use customers' knowledge and expertise regarding service production and delivery as input beyond the house of quality. An interviewing method is proposed for a comprehensive assessment of customer needs at multiple levels. Results from an empirical application of this technique to luxury business hotels support the proposed modifications to Qfd to increase its potential for application to services.     

SERVICE SYSTEM DESIGN FOR THE PROPERTY AND CASUALTY INSURANCE INDUSTRY

This paper describes the changes that are forcing property and casualty insurance firms to rethink their service system design and in particular their distribution strategies. A set of questions related to distribution that are uppermost in the minds of executives in this industry are presented along with a literature survey of models that can be used to answer some of these questions. Based on the survey, a normative framework for designing the distribution system is proposed. Qualitative and quantitative analysis based on the proposed framework is presented along with empirical data to demonstrate the usefulness of the framework. The paper concludes with an agenda for further research.     

EMPLOYEE DEVELOPMENT: AN EXAMINATION OF SERVICE STRATEGY IN A HIGH‐CONTACT SERVICE ENVIRONMENT

A critical component of service strategy in high‐contact environments is service encounter management. Effective service encounters are a result of the quality of employee development, including systems for work and job design, training and development, and attention to employee well being. Results of empirical analysis indicate that service strategies reflecting the dimensions of employee development drive employee outcomes such as productivity and satisfaction. Employee outcomes are significantly associated with customer satisfaction, but only some linkages to financial performance are significant. This study illustrates the importance of employee development in service strategy design for managing service encounters in high contact service environments.     

HOW PROFESSORS OF OPERATIONS MANAGEMENT VIEW SERVICE OPERATIONS?

This study empirically tests assumptions that underlie operations management (OM) scholars' belief that service operations should be managed differently. Respondents were self-classified into manufacturing and service types. There is a significant statistical difference between the views held by each group with regard to statements such as “service Om should be taught as a separate course” and “service operations should be managed differently from manufacturing.” There was general consensus on the service research agenda with the exception of three research areas: time standards, technology, and productivity. The survey also revealed that customer influence has the greatest impact on service Om strategies and decisions.     

GREENING THE SERVICE PROFIT CHAIN: THE IMPACT OF ENVIRONMENTAL MANAGEMENT PRACTICES

This paper explores the relationship between environmental practices and performance in services and the impact of such practices on the external portion of the service profit chain. Using structural equation modeling, it tests the hypotheses developed with data from the European hospitality industry. The findings suggest that environmental practices are positively related to performance through the mediating effect of enhanced customer satisfaction and loyalty. The paper's contributions include: the conceptual development of the relationship between environmental practices and performance in services, the incorporation of environmental practices within the service profit chain, and the testing of their impact on customer satisfaction.     

WHY FIRMS SEEK ISO 9000 CERTIFICATION: REGULATORY COMPLIANCE OR COMPETITIVE ADVANTAGE?

Proponents of iso 9000 certification claim that it is a low-cost signal of a firm's commitment to quality and a meaningful component of total quality management (TQM). Critics claim that it has little relation to TQM and is a tariff on international trade. We test the hypothesis that firms obtain ISO 9000 certification to comply with government and customer demands by estimating a probit model of the certification decision. The results support the view of proponents of ISO 9000. After controlling for regulatory and customer pressures to obtain ISO 9000, other factors related to quality management and quality-based competition explain the adoption decision.     

A MARKET UTILITY‐BASED MODEL FOR CAPACITY SCHEDULING IN MASS SERVICES

Only a small set of employee scheduling articles have considered an objective of profit or contribution maximization, as opposed to the traditional objective of cost (including opportunity costs) minimization. In this article, we present one such formulation that is a market utility‐based model for planning and scheduling in mass services (MUMS). MUMS is a holistic approach to market‐based service capacity scheduling. The MUMS framework provides the structure for modeling the consequences of aligning competitive priorities and service attributes with an element of the firm's service infrastructure. We developed a new linear programming formulation for the shift‐scheduling problem that uses market share information generated by customer preferences for service attributes. The shift‐scheduling formulation within the framework of MUMS provides a business‐level model that predicts the economic impact of the employee schedule. We illustrated the shift‐scheduling model with empirical data, and then compared its results with models using service standard and productivity standard approaches. The result of the empirical analysis provides further justification for the development of the market‐based approach. Last, we discuss implications of this methodology for future research.     

THE IMPACT OF HUMAN ERROR ON DELIVERING SERVICE QUALITY

This paper opens a new avenue for investigation of quality issues in services. We take the viewpoint that a substantial portion of service failures is the result of human error in the delivery process. Drawing upon the Generic Error Modeling System (gems) from the cognitive science literature, we develop a framework for understanding the role of human error in service failures. An empirical investigation assesses the applicability of this framework to services, identifies which error mechanisms are important sources of service failure, and clarifies how the different roles of customers and providers affect the errors made by each.     

QUALITY MANAGEMENT: UNIVERSAL OR CONTEXT DEPENDENT?

Quality management has often been advocated as being universally applicable to organizations. This is in contrast with the manufacturing strategy contingency approach of Operations Management that advocates internal and external consistency between manufacturing strategy choices. This article empirically investigates whether quality management practices are contingent on a plant's manufacturing strategy context, by examining the use of process quality management practices—a critical and distinctive subset of the whole set of quality management practices—across plants representative of different manufacturing strategy contexts. The study strongly suggests that process quality management practices are contingent on a plant's manufacturing strategy, and identifies mechanisms by which this takes place.     

SERVICE TYPOLOGIES: A STATE OF THE ART SURVEY

Services comprise an ever-expanding source of employment in the world's economies and are of significant interest to both academicians and practitioners. In this study, historical perspectives from which to view service typologies are provided and four decades of service typologies are chronicled. The interest in services demonstrated by academicians is tracked over time as are the purposes for which typologies have been developed. A unified schematic representation of services is developed in which the common themes underlying service typology development are identified from both a macro and micro level. Based on this study, areas for future research are identified.     

APPOINTMENT POLICIES IN SERVICE OPERATIONS: A CRITICAL ANALYSIS OF THE ECONOMIC FRAMEWORK

In this paper we review the literature on appointment policies, specifically in terms of the objective function commonly used and the assumptions made about the behavior of demand. First, we provide an economic framework to analyze the problem. Based on this framework we make a critical analysis of the objective functions used in the literature. We also question the validity of the assumption made throughout the literature that demand is exogenous and independent of customers' waiting times. We conclude that the objective functions used in the literature are appropriate only in the case of a central planner facing a demand that is unresponsive to waiting time. For other scenarios, such as a private server facing a demand that does react to waiting time, these objective functions are only shortcuts for the real objective functions that must be used. A more general model is then proposed that fits these scenarios well. Finally, we determine the impact of using the literature's objective functions on optimal appointment policies.     

INSIGHTS ON SERVICE SYSTEM DESIGN FROM A NORMAL APPROXIMATION TO ERLANG'S DELAY FORMULA

We show how a simple normal approximation to Erlang's delay formula can be used to analyze capacity and staffing problems in service systems that can be modeled as M/M/s queues. The numbers of servers, s, needed in an M/M/s queueing system to assure a probability of delay of, at most, p can be well approximated by s ≅ p + z_***I-p+, where z_1-p, is the (1 - p)th percentile of the standard normal distribution and ρ, the presented load on the system, is the ratio of Λ, the customer arrival rate, to μ, the service rate. We examine the accuracy of this approximation over a set of parameters typical of service operations ranging from police patrol, through telemarketing to automatic teller machines, and we demonstrate that it tends to slightly underestimate the number of servers actually needed to hit the delay probability target—adding one server to the number suggested by the above formula typically gives the exact result. More importantly, the structure of the approximation promotes operational insight by explicitly linking the number of servers with server utilization and the customer service level. Using a scenario based on an actual teleservicing operation, we show how operations managers and designers can quickly obtain insights about the trade-offs between system size, system utilization and customer service. We argue that this little used approach deserves a prominent role in the operations analyst's and operations manager's toolbags.     

RETAIL INVENTORY CONTROL WITH LOST SALES,SERVICE CONSTRAINTS,AND FRACTIONAL LEAD TIMES

This paper describes a periodic review, fixed lead time, single-product, single-facility model with random demand, lost sales and service constraints that was developed for potential application at a Western Canadian retailer. The objective of this study was to determine optimal (s, S) policies for a large number of products and locations. To this end, we evaluate the long run average cost and service level for a fixed (s, S) policy and then used a search procedure to locate an optimal policy. The search procedure is based on an efficient updating scheme for the transition probability matrix of the underlying Markov chain, bounds on S and monotonicity assumptions on the cost and service level functions. A distinguishing feature of this model is that lead times are shorter than review periods so that the stationary analysis underlying computation of costs and service levels requires subtle analyses. We compared the computed policies to those currently in use on a test bed of 420 products and found that stores currently hold inventories that are 40% to 50% higher than those recommended by our model and estimate that implementing the proposed policies for the entire system would result in significant cost savings.     

AMPLIFICATION IN SERVICE SUPPLY CHAINS: AN EXPLORATORY CASE STUDY FROM THE TELECOM INDUSTRY

Evidence on the impact of amplification effects on supply chain performance primarily has been derived from studies in manufacturing industries. In this article we reported on a case study from the telecommunication industry and aimed to analyze relevant root causes and associated countermeasures of the amplification phenomenon in service supply chains. Our case findings confirm the occurrence of upstream amplification of workload in the service supply chain, workload being a more appropriate measure for amplification effects in service supply chains than inventory levels. Not all of the root causes for amplification effects known from research in manufacturing environments were found to apply in this particular service context, especially those related to the use of inventory. In addition, our telecom case study highlighted a new root cause for amplification: interactions of high workloads and reduced process quality that start reinforcing each other once workloads pass a certain threshold. In this particular case, many of the known countermeasures to eliminate amplification did not apply, because of the specific characteristics of the service process, or yielded only limited results. A potentially very powerful countermeasure identified was to implement quality improvements throughout the service chain. This quality dimension links our research to the literature on service management in general, where service quality is on top of the research agenda.     

TOURING A SUPPLY CHAIN WITH STUDENTS: PEDAGOGICAL AND PRACTICAL CONSIDERATIONS

This paper describes the supply chain tour, an expansion of the widely used facility tour pedagogy. A supply chain tour is a tour of facilities sequentially related in the creation of value that is designed to expose critical linkages and illustrate Supply Chain Management concepts and theories. Effectively using the supply chain tour pedagogy requires the instructor to create a standardized approach to managing the facility tour; a checklist is provided for this purpose. An example supply chain tour, used in the author's classes, is described.