Service Management: Operations, Strategy, Information Technology

564 Pages·2010·18.83 MB·English

by  James A. Fitzsimmons

The Most Comprehensive Introduction to Service Operations
Balancing conceptual and applied coverage of all aspects of the management and operation of services,
the seventh edition of Service Management: Operations, Strategy, Information Technology Seventh
remains the most comprehensive and widely used introduction to service operations on the market. This Edition Seventh Edition
edition is designed to develop students’ skills in both strategic and operational issues pertaining to services.
New Features in the Seventh Edition Include:
I n Chapter 2, The Nature of Services, a new section on Service-Dominant Logic has been added. It
is a service-centered alternative to the goods-centered paradigm for describing economic exchange
and value creation, the foundation of a new fi eld of study championed by IBM called Service Science,
Management, and Engineering (SSME).
SERVICE MANAGEMENT
A new section has been added to Chapter 3, Service Strategy, on the topic of Porter’s Five Forces
Model and SWOT analysis.
I n Chapter 8, Proces Improvement, the discusion of Six-Sigma has been expanded to include the Operations, Strategy, Information Technology
topic of “process capability.” A section on Lean Service has also been added. A new case, Senora
County Sheriff, and several end-of-chapter exercises have been added.
I n Chapter 11, Managing Capacity and Demand, strategies for managing customer-induced
variability using either accommodation or reduction is explored. The economic foundation for
yield management is illustrated using as an example airline pricing for a coach seat on a
cross-country fl ight.
To learn more about this book, please visit www.mhhe.com/fi tzsimmons7e
Visit our Operations Management Center: www.mhhe.com/pom
James A. Fitzsimmons Mona J. Fitzsimmons

MD DALIM #1071914 2/5/10 CYAN MAG YELO BLK
Fitzsimmons SERVICE MANAGEMENT
Fitzsimmons Operations, Strategy, Information Technology
Confirming Pages
S ervice
Management
O perations, Strategy,
Information Technology S eventh Edition
J ames A. F itzsimmons
S eay Professor of Business Emeritus
U niversity of Texas at Austin
M ona J. Fitzsimmons
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SERVICE MANAGEMENT: OPERATIONS, STRATEGY, INFORMATION TECHNOLOGY, SEVENTH EDITION
Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the
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ISBN 978-0-07-340335-9
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Library of Congress Cataloging-in-Publication Data
Fitzsimmons, James A.
Service management: operations, strategy, information technology / James A.
Fitzsimmons, Mona J. Fitzsimmons.—7th ed.
p. cm.—(The McGraw-Hill/Irwin series operations and decision sciences)
ISBN 978-0-07-340335-9 (alk. paper)
1. Service industries—Management. I. Fitzsimmons, Mona J. II. Title.
HD9980.5.F549 2011
658—dc22
2010000230
www.mhhe.com
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The McGraw-Hill/Irwin Series Operations and Decision Sciences
OPERATIONS MANAGEMENT Hill, Seppanen, Kumar, and Chandra,
Manufacturing Strategy: Text & Cases, Process Analysis and Improvement,
Beckam and Rosenfield,
Third Edition First Edition
Operations Strategy: Competing in the
21st Century, First Edition Hopp, Simchi-Levi, Kaminsky, and Simchi-Levi,
Supply Chain Science, Designing and Managing the Supply Chain:
Benton,
First Edition Concepts, Strategies, Case Studies,
Purchasing and Supply Chain Management,
Third Edition
Second Edition Hopp and Spearman,
Factory Physics, Sterman,
Bowersox, Closs, and Cooper,
Third Edition Business Dynamics: Systems Thinking and
Supply Chain Logistics Management,
Modeling for Complex World,
Third Edition Jacobs, Berry, Whybark, and Vollmann
First Edition
Manufacturing Planning & Control for
Brown and Hyer,
Supply Chain Management, Stevenson,
Managing Projects: A Team-Based
Sixth Edition Operations Management,
Approach, First Edition
10th Edition
Jacobs and Chase
Burt, Petcavage, and Pinkerton,
Operations and Supply Management: Swink, Melnyk, Cooper, and Hanley,
Supply Management, Eighth
The Core, Managing Operations Across the Supply
Edition
Second Edition Chain, First Edition
Cachon and Terwiesch,
Jacobs and Chase Thomke,
Matching Supply with Demand: An
Operations and Supply Management, Managing Product and Service
Introduction to Operations Management,
Thirteenth Edition Development: Text and Cases,
Second Edition
First Edition
Jacobs and Whybark,
Finch,
Why ERP? Ulrich and Eppinger,
Interactive Models for Operations and
First Edition Product Design and Development,
Supply Chain Management,
Fourth Edition
First Edition Larson and Gray,
Project Management: The Managerial Zipkin,
Fitzsimmons and Fitzsimmons,
Process, Fifth Edition Foundations of Inventory Management,
Service Management: Operations, Strategy,
First Edition
Information Technology, Leenders, Johnson, Flynn, and Fearon,
Seventh Edition Purchasing and Supply Management,
QUANTITATIVE METHODS AND
Thirteenth Edition
Gehrlein, MANAGEMENT SCIENCE
Operations Management Cases, Nahmias,
Hillier and Hillier,
First Edition Production and Operations Analysis,
Introduction to Management Science:
Sixth Edition
Harrison and Samson, A Modeling and Case Studies Approach
Technology Management, Olson, with Spreadsheets, Fourth Edition
First Edition Introduction to Information Systems
Stevenson and Ozgur,
Project Management, Second Edition
Hayen, Introduction to Management Science with
SAP R/3 Enterprise Software: Schroeder, Goldstein, Rungtusanetham, Spreadsheets, First Edition
An Introduction, Operations Management: Contemporary
First Edition Concepts and Cases,
Fifth Edition
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T o Our Family:
M ichael, Kate, and Colleen
Gary
S amantha and Jordan
Melba Jett

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A bout the Authors
J ames A. Fitzsimmons, Seay Professor of Business Emeritus, McCombs School of
Business, The University of Texas at Austin received a B.S.E. from the University of
Michigan, an MBA from Western Michigan University, and a Ph.D. with distinction from
the University of California at Los Angeles. His research in the area of emergency ambu-
lance location won the Stan Hardy Award in 1983 for the best paper published in the field
of operations management. Consulting assignments include the RAND Corporation; the
U.S. Air Force; the cities of Los Angeles, Denver, Austin, Melbourne, and Auckland;
the Texas comptroller; General Motors; La Quinta Motor Inns; Greyhound; TRICON
Restaurants International; and McDonald’s. Teaching experience includes faculty appoint-
ments at the University of California at Los Angeles, California State University at
Northridge, the University of New Mexico, Boston University Overseas Graduate Program,
California Polytechnic State University at San Luis Obispo, Seoul National University,
and the Helsinki School of Economics and Business. He is a registered professional engi-
neer in the state of Michigan and has held industrial engineering positions at Corning
Glass Works and Hughes Aircraft Company. He served in the U.S. Air Force as an officer
in charge of base construction projects. During his tenure at the University of Texas, he
was Ph.D. graduate advisor, chair of the undergraduate programs committee, and nomi-
nated for six teaching awards. In 2004 he received an IBM Faculty Award in recognition
for his contributions to the field of service operations management. He serves on the edito-
rial board of the J ournal of Service Research.
M ona J. Fitzsimmons, a graduate of the University of Michigan, received her under-
graduate degree in journalism with major supporting work in chemistry and psychology.
Her graduate work was in geology and she has taught in public and private schools and
at the university level. She has done writing and editing for the Encyclopaedia Britannica
Education Corporation and for various professional journals and organizations.
With James Fitzsimmons she edited N ew Service Development: Creating Memorable
Experiences published in 2000 by Sage Publications. Her nonprofessional activities have
included volunteer work for the Red Cross aquatics program and in wildlife rehabilita-
tion. She has particular interests in the areas of environmental issues and the responsibili-
ties of patients and physicians in health care.
v
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Preface
S ervices touch the lives of every person in this country every day: food services, com-
munication services, and emergency services, to name only a few. Our welfare and the
welfare of our economy are now based on services. The activities of manufacturing and
agriculture always will be necessary, but we can eat only so much food and we can use
only so many goods. Services, however, are largely experiential, and we will always have
a limitless appetite for them.
S ervice operations management is firmly established as a field of study that embraces
all service industries. The discipline was first recognized as an academic field by the
Decision Sciences Institute (DSI) at its 1987 Boston meeting. In 1989 the International
Journal of Service Industry Management was inaugurated. The First International
Research Seminar in Service Management was held in France in 1990.
T he J ournal of Service Research was first published in August 1998 and quickly
became the leading journal of the field. At the 2004 Boston meeting of Production and
Operations Management Society (POMS), a College on Service Operations was estab-
lished. In 2005 the IBM Almaden Research Center launched an initiative to establish
a new discipline called Service Science, Management, and Engineering (SSME). Visit
the Academic Initiative SSME Web site at h ttp://www.ibm.com/developerworks/spaces/
ssme to find articles, case studies, and lecture materials.
T his edition continues to acknowledge and emphasize the essential uniqueness of
service management. These are some key features:
• T he book is written in an engaging literary style, makes extensive use of examples,
and is based on the research and consulting experience of the authors.
• T he theme of managing services for competitive advantage is emphasized in each
chapter and provides a focus for each management topic.
• T he integration of technology, operations, and human behavior is recognized as cen-
tral to effective service management.
• E mphasis is placed on the need for continuous improvement in quality and productiv-
ity in order to compete effectively in a global environment.
• T o motivate the reader, a vignette of a well-known company starts each chapter, illus-
trating the strategic nature of the topic to be covered.
• E ach chapter has a preview, a closing summary, key terms and definitions, service
benchmark, topics for discussion, an interactive exercise, solved problems and exer-
cises when appropriate, and one or more cases.
• Available on the text’s Online Learning Center, www.mhhe.com/fitzsimmons7e, is access
to Mortgage Service Game, a facility location Excel spreadsheet, chapter quizzes, and
Web sites. Service Model simulation software is also available using the passcode on the
Premium Content card packaged with the text, which is required to access the software.
• The instructor’s side of the text Web site contains an instructor’s manual, case analy-
ses, exercise solutions, sample syllabi, yield management game, and lists of supple-
mentary materials.
Key Updates in the Seventh Edition
We have benefited from the many suggestions from students, colleagues and review-
ers. Based on these comments as well as our own experience, we have made numerous
changes to this edition. In particular, the following changes have been made:
• In Chapter 2, The Nature of Services, a new section on Service-Dominant Logic has been
added. It is a service-centered alternative to the goods-centered paradigm for describing
economic exchange and value creation, the foundation of a new field of study champi-
oned by IBM called Service Science, Management, and Engineering (SSME).
vii
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viii Preface
• A new section has been added to Chapter 3, Service Strategy, on the topic of Porter’s
Five Forces Model and SWOT analysis.
• The topic of intellectual property has been added to Chapter 4, New Service Development.
• In Chapter 6, Service Quality, the topic of Walk-through-Audit has been expanded
and compared to the traditional Customer Satisfaction Survey.
• The topic of Process Analysis in Chapter 7, Supporting Facility and Process Flows,
has been significantly expanded and includes new tools such as the Swim Lane
Flowchart.
• In Chapter 8, Process Improvement, the discussion of Six-Sigma has been expanded
to include the topic of “process capability” and its measurement. A section on Lean
Service has also been added. A new case, Senora Count Sheriff, and several end-of-
chapter exercised have been added.
• The discussion of the Service Encounter Triad has been expanded in Chapter 9, The
Service Encounter.
• In Chapter 11, Managing Capacity and Demand, strategies for managing customer-
induced variability using either accommodation or reduction is explored. The eco-
nomic foundation for yield management is illustrated using as an example airline
p ricing for a coach seat on a cross country flight.
• A Field Study and end-of-chapter questions have been added to Chapter 12, Managing
Waiting Lines.
S pecial thanks and acknowledgment go to the following people for their valuable
reviews of the first edition: Mohammad Ala, California State University, Los Angeles;
Joanna R. Baker, Virginia Polytechnic Institute and State University; Mark Davis, Bentley
College; Maling Ebrahimpour, University of Rhode Island; Michael Gleeson, Indiana
University; Ray Haynes, California Polytechnic State University at San Luis Obispo; Art
Hill, the University of Minnesota; Sheryl Kimes, Cornell University; and Richard Reid,
the University of New Mexico.
T he second edition benefited from the constructive comments of the following
rev iewe rs: Kimberly Bates, New York University; Avi Dechter, California State
University, Northridge; Scott Dellana, East Carolina University; Sheryl Kimes, Cornell
University; Larry J. LeBlanc, Vanderbilt University; Robert Lucas, Metropolitan State
College of Denver; Barbara Osyk, University of Akron; Michael Showalter, Florida State
University; and V. Sridharan, Clemson University.
T he following reviewers contributed their experience and wisdom to the third edition:
Sidhartha Das, George Mason University; Avi Dechter, California State University at
Northridge; Byron Finch, Miami University of Ohio; Edward M. Hufft, Jr., Metropolitan
State College of Denver; Ken Klassen, California State University at Northridge; Richard
Reid, University of New Mexico, Albuquerque; Ishpal Rekki, California State University
at San Marcos; and Ronald Satterfield, University of South Florida.
T he fourth edition reflects the insights and suggestions of the following reviewers:
Sanjeev Bordoloi, College of William and Mary; Sid Das, George Mason University;
John Goodale, Ball State University; Ken Klassen, California State University,
Northridge; Peggy Lee, Penn State University; Matthew Meuter, California State
University, Northridge; Jaideep Motwani, Grand Valley State University; Elzbieta
Trybus, California State University, Northridge; Rohit Verma, University of Utah;
and Janet Sayers, Massey University, New Zealand. A special thanks to colleagues Ed
Anderson and Doug Morrice for permission to include their Mortgage Service Game
and to Mark Linford, an MBA student at the University of Texas at Austin, for prepar-
ing the computer software.
T he fifth edition benefited from insights gathered at a focus group session in
Washington, DC, at the 2003 Decision Sciences Institute annual meeting. We are grateful
for the many suggestions provided by the following participants: Uday Apte, Southern
Methodist University; Sanjeev Bordoloi, College of William and Mary; Joe Felan,
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Preface ix
University of Arkansas at Little Rock; Richard Franze, Kennesaw State University;
Craig Froehle, University of Cincinnati; Yung Jae Lee, St. Mary’s College of California;
Katherine McFadden, Northern Illinois University; Mary Meixell, George Mason
University; Elliott (Chip) Minor, Virginia Commonwealth University; and Jake Simons,
Georgia Southern University. We are also indebted to Mrs. Margaret Seay who continues
her generous support.
T he sixth edition has benefited greatly from the thoughtful suggestions of an outstand-
ing group of reviewers: Sanjeev Bordoloi, University of Illinois-Urbana; Robert Burgess,
Georgia Institute of Technology; Maureen Culleeney, Lewis University; Dick Fentriss,
University of Tampa; Craig Froehle, University of Cincinnati; Susan Meyer Goldstein,
University of Minnesota; Jaideep Motwani, Grand Valley State University; Rodney
Runyan, University of South Carolina; and Rajesh Tyagi, DePaul University. We give
special thanks to Ravi Behara, Florida Atlantic University for his comprehensive revision
plan.
The following reviewers contributed their generous time and expertise to the seventh edi-
tion: Michael Bendixen, Nova Southeastern University; Dan Berg, Rensselaer Polytechnic
Institute; Elif Kongar, Bridgeport University; Stephen Kwan, San Jose State University;
Mary McWilliams, LeTourneau University; Kenneth Shaw, Oregon State University;
and Donna Stewart, University of Wisconsin-Stout. We appreciate the contributions for
improvements from Jeanne Zilmer, Copenhagen Business School.
We wish to acknowledge two students who assisted us. Fang Wu, Ph.D. student at the
University of Texas at Austin, assisted in the development of some exercises and prepara-
tion of the PowerPoint lecture presentations for the second edition. Edmond Gonzales, an
MBA student at Texas, prepared the chapter quizzes for the third edition CD-ROM. A spe-
cial thanks is extended to Rob Bateman of the ProModel Corporation for the preparation
of the Pronto Pizza simulation case and assistance in our adoption of the ServiceModel
software.
W e express special appreciation to all of our friends who encouraged us and tolerated
our social lapses while we produced this book. In particular, we are indebted for the sup-
port of Richard and Janice Reid, who have provided lively and stimulating conversations
and activities over many years, and who generously allowed us the use of their mountain
retreat. The beginning of the first edition was written in the splendid isolation of their part
of the Jemez Mountains of New Mexico. No authors could want for better inspiration.
J ames A. F itzsimmons
M ona J. F itzsimmons
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