SERVICE MANAGEMENT

MANAGEMENT REPORT : KEY OPERATIONAL CONSIDERATIONS FOR CREATING AND MANAGING A HIGH PERFORMANCE SERVICE ORGANISATION

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CONTENTS

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EXECUTIVE SUMMARY

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2. INTRODUCTION
2.1 The Service Concept : As products and services are becoming more and more similar and as it becomes easier for organisations to copy others products and services, organisations may choose to compete through something that transcends their service offering the service concept (Johnston and Clark, 2008). Johnston and Clark (2008) further state that the service concept is a shared understanding of the nature of the service provided and received. It is complex, more emotional than a business model. Customers do not merely buy the elements of service but something much greater and intangible. 2.2 A Customer Perspective : As stated before, customers buy more than just the elements of service. According to Gronroos (2007), customers buy the benefits provided by the goods and services. He further elaborates that customers look for solutions and packages that would add value to their purchases. A function of service should be provided to the customers regardless of what they buy. It is this that service organisations should consider when designing products or services. 2.3 Aim of the Report : This report is aimed at evaluating service concepts and theories and discussing their practical use with regards to The Park, Visakhapatnam (refer to Appendix A). It is also aimed at providing recommendations to the organisation in relation to the theories to manage its service better and improve performance.

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3. DISCUSSION
3.1 Operation Strategy 3.1.1 What is Strategy ? The term strategy is a very debatable topic in regard o its definition and meaning. It is believed that to arrive at a single definition for strategy w[ould be misleading. It is assumed that w[hen an organisation articulate its strategies, it means that the organisation w[ill follow[ a specific set of rules. (Slack et al., 2004) 3.1.2 Operation Strategy : Slack et al. (2004) state that operation strategy is the pattern of strategic decisions that determines the role, objectives and activities of an organisation. 3.1.2.1 Content of Operation Strategy :

Top-Dow[n Perspective : This includes the corporate strategy of

the organisation, the business strategy and the functional strategy. Corporate strategy governs the entire organisation, business strategy the smaller business units and functional strategy the functions of a single unit. The top-dow[n perspective follow[s this hierarchy of perspectives.

Bottom-Up Perspective : Many strategic ideas generate from

exposure to operations. This perspective follow[s the hierarchy opposite that of the top-dow[n perspective in formulating the operation strategy.

Market Requirements Perspective : The primary goal of an

organisation is to satisfy its target market. W[ith an understanding of w[hat the market requires, the operation strategy is formulated.

Operations Resources Perspective : This provides a resourcebased view[ to formulating operational strategies. (Slack et al., 2004) 3.1.2.2 Process of Operation Strategy : This refers to the procedures w[hich can be used to formulate the operation strategy of an organisation. They are :

The Hill Methodology : It is 5-step procedure based on top

dpw[n and market requirement perspectives.

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The Platts-Gregory Procedure : It is a 3-step process of

evaluating market position, assessing operation capabilities and finally developing new[ operation strategies. 3.1.3 3.2 The Service Delivery Process 3.3 Managing the Physical Evidence of Services 3.3.1 Physical Evidence : Zeithaml and Bitner (2003) as cited in Jauhari et al. (2009) defines physical evidence as the environment in which the service is delivered and where the firm and the customer interact, and any tangible components that facilitate performance or communication of service. In relation to The Park, Visakhapatnam, the environment where the service is provided includes the lobby, the rooms and the restaurants and the bar. The lobby is where the reception is and where all the check ins and check outs are handled which are services provided to the guests and so, the lobby forms the environment where these services are delivered. Similarly rooms are the primary product of the hotel and provide the service of lodging to the guest. It is also the environment where specialised services such as room service an inroom dining are rendered. The restaurants and the bar are the places where food service is given to the guest. Finally, the hotel as a whole provides the environment where all the aforementioned services are delivered. 3.3.2 Managing Physical Evidence : Jauhari et al. (2009) said that physical evidences are the verifications of the existence of a service or its completion. There are also peripheral evidences such as cash at bank, for a debit card which is the main evidence. Shostack (1977) as cited in Jauhari et al. (2009) states that customers constantly search for surrogates or cues to judge a firms capability to overcome the intangibility factor. Therefore, it is important that service organisations make the utmost effort to design the services and their tangible elements so that high levels of customer satisfaction are achieved every time the service is delivered. According to Turley and Fugate (1992) as cited in Jauhari et al. (2009), while designing the physical evidence for a service, the following categories are to be considered : Locational Perspective where the service is being delivered.

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Atmospheric and Image Perspective the atmosphere in which the service will be delivered and the image the organisation wants of the service. Operational Perspective the business strategy of the organisation Consumer use Perspective the purpose of the product or service to the customer and the customers perception. Contact Personnel Perspective the people who will be in contact with the customer and actually deliver the service. The products and the accompanying services provided by The Park, Visakhapatnam are in accordance with the above points. For example, the hotel is situated on the seaside. So, all the 66 rooms have been so constructed that they are sea-facing. The rooms are designed keeping in mind the business clientele that the hotel mainly caters to and sometimes leisure travellers. The hotel markets itself as the first 5-star hotel in Andhra Pradesh and the only one in Visakhapatnam. The menu has a lot of seafood items included and also contains a lobster speciality dish. All the products are in sync with the business strategy of the hotel and helps in achieving the monthly sales target of the hotel. In keeping with the boutique hotel image of the Park brand, the service personnel are given uniforms different than one would find at a 5-star hotel. They are also groomed to be more stylish than reserved according to the companys specifications. 3.4 Service Quality and Total Quality Management 3.4.1 Service Quality : British Standard 4778 (1997) as cited in Jauhari et al. (2009) defines service quality as the totality of features and characteristics of a product or service that bear on its ability to satisfy a stated or implied need. The need in this regard is that of the customer (Lockwood et al., 1996 as cited in Jauhari et al., 2009). From the definition, it can be understood that quality of a product is its capability to satisfy the customers need to the level of the customers expectation and beyond. The Park, Visakhapatnam is very consistent in terms of quality of the products on offer. Being the only 5-star hotel in Visakhapatnam, it gets a lot of business from the corporate clientele and most of them are frequent guests. Th biryani of the Indian speciality restaurant, Bamboo Bay, is famous all over Visakhapatnam. People are willing to pay premium prices for the lobster speciality dish. The Someplace Else Bar mostly has regular guests. All these are proof of the quality of the products and services provided by the hotel.

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Garvin (1984) as cited in Jauhari et al. (2009) has put down approaches to defining quality : Transcendent View This view states that quality cannot be analysed or defined, but can only be recognised through experience. Product-Based View This view suggests that quality is precise, measurable and quantifiable. User-Based View As the name suggests, this view tells that definition of quality depends solely on the consumer of the product or service. Manufacturing-Based View This view suggests that quality of a product is what the manufacturer proposes. Value-Based View This view tells that quality is not dependent on only one factor but the combined value generated by the product. 3.4.2 SERVQUAL Model : Parasuraman et al. (1988) as cited in Jauhari et al. (2009) developed the SERVQUAL model on the basis that quality includes dimensions of service such as reliability, responsiveness, assurance, empathy and tangibles and service quality is evaluated by inconsistencies in the customers expectation and perception of service (Gupta et al.,2005 in Jauhari et al., 2009)The SERVQUAL model can be described as follow[s (Parasuraman et al., 1988 in Jauhari et al., 2009) : Reliability It is the consistent ability to perform the promised service w[ith speed and accuracy. Responsiveness This is the w[illingness to help and provide timely service Assurance This is w[hen the service provider gives assurance of the quality of a product. Empathy This is the provision of caring and individualised attention. Tangibles This takes into account the appearance of the physical facilities, equipment, personnel and communication material. 3.4.3 Servicescape : Servicescape includes the tangible elements of service such as machines, equipments, employee appearance and the ambience of the organisation (Jauhari et al., 2009). If servicescape is managed, the follow[ing benefits can be obtained (Jauhari et al., 2009): The service offering can be better packaged.

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Favourable response can be gained from the customers by appealing to their emotions. Positive customer behaviour can be facilitated and effective flow[ of activities ensured. Competitive advantage can be achieved Customers perception of w[aiting time may be influenced.

3.4.4 Total Quality Management (TQM) : Total Quality Management aims at embedding quality in every aspect of an organisation. It connects the technical aspects of quality and the involvement of people in quality such as customers, every single person associated [with a product in an organisation and also suppliers (www.wiley.com). Total Quality Management can be defined as the holistic approach to long term success that view[s continuous improvement in all aspects of an organisation as a process and not as a short term goal (www.businessdictionary.com). 3.4.4.1 Features of TQM : Customer Focus : The company focuses on the customers. The goal is to assess and meet customer needs and exceed expectations. Continuous improvement : TQM focuses on continuous improvement. Traditionally, it w[as considered that once an organisation reached a certain level of quality and reliability, improvement w[as not required. But TQM [works on the philosophy that continuous improvement is required to exceed customer expectations every single time. Employee Empowerment : Employees are empow[ered and encouraged to seek out quality problems w[ith products and are rew[arded for it. Use of Quality Tools : Since employees are empow[ered to point quality problems, they require proper training on how[ to assess quality and for this quality tools such as flow[charts and cause-and-effect diagrams are used. Product Design : An important aspect of integrating quality in a product is product design. The product design should meet the customer needs and expectations. Process Management : TQM states that quality product comes from quality processes. This means that quality is embedded in the process. It is alw[ays better to discover quality problems at the root rather than discard finished products.

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Managing Supplier Quality : The concept of quality is extended to the suppliers in TQM. It ensures that suppliers engage in the same quality practices. If the suppliers quality meets the prescribed standard, then inspection is not needed by the receiving organisation. (www.wiley.com) Fe[w aspects of TQM are follow[ed by The Park, Visakhapatnam. Continuous improvement is follow[ed in relation to the room service and the restaurant menus. The menu is changed periodically to offer something ne[w. The Product design philosophy is also follow[ed. The products and services are so designed that they meet the customers needs. 3.5 Managing Customer Satisfaction and Service Failures 3.5.1 3.6 Managing Service Employees 3.7 Managing Service Capacity 3.8 Supply Chain Management 3.9 JIT & MRP

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CONCLUSION

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Recommendations
Managing Physical Evidence as a Strategy : To make the physical evidence a business strategy, Jauhari et al. (2009) suggests that they should meet the following requirements : It should be in accordance with the corporate vision, mission and goal of the organisation. The strategic layout of services should keep in mind the vision, mission and goal. The roles of servicescapes self-service, interpersonal service or remote service, should be clarified. The serviscapes should be planned according to their role in the organisation.

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References
1. Clark, Graham; Johnston, Robert, 2008. Service operations management : improving service delivery 2nd edition. [e-book] India : Pearson Education Available at : http://books.google.com/books?id=vNhBqNRgXlsC&pg=PA85&dq=Service +Operations+Management:+Improving+Service+Delivery(2nd+Ed.)&hl=en &ei=9kvFTvqjEsT3rQfkibXICw&sa=X&oi=book_result&ct=result&resnum= 1&ved=0CDUQ6AEwAA#v=onepage&q&f=false [Accessed 17th November, 2011] 2. Gronroos, Christian, 2007. Service management and marketing : customer management in service competition 3rd edition. [e-book] India : Wiley India (P.) ltd. Available at : http://books.google.co.in/books?id=2cbteRrlf3IC&printsec=frontcover&dq= Service+Management+and+Marketing:+Customer+Management+in+Servi ce+Competition.&hl=en&ei=XUzFTv_pL9HprQe5n8XoCw&sa=X&oi=book _result&ct=result&resnum=2&ved=0CDMQ6AEwAQ#v=onepage&q&f=fals e [Accessed 17th November, 2011] 3. Slack, Nigel; Chambers, Stuart; Johnston, Robert, 2004. Operations management 4th edition. [e-book] Prentice Hall Available at : http://lib.myilibrary.com/Open.aspx?id=60096&src=2 [Accessed 16th November, 2011]

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4. http://www.businessdictionary.com/definition/total-quality-managementTQM.html [Accessed 21st November, 2011] 5. Total quality management (chapter 5). [online] Available at : http://www.wiley.com/college/sc/reid/chap5.pdf [Accessed 20th November, 2011] 6. Slack, Nigel; Chambers, Stuart; Johnston, Robert, 2004. Operations management 4th edition. [e-book] UK : Prentice Hall Available at : http://lib.myilibrary.com/Open.aspx?id=60096&src=2 [Accessed 19th November, 2011] 7.