BDPO3103 – Introductory Operation Management

Question 1

According to Jay Heizer and Barry Render in their book on Operations Management 7th Edition, quality is defined as the ability of a product or service to meet customer need. In today’s challenging environment, most of organizations stressed more on quality management especially on their customer service. This is because company that had good customer service can survive in today’s competitive business world. Customer may seek to other product available in the market if the customer is not happy with the service provided by the company as today there are a lot of alternative product available in the market. This is the reason why customer service quality is important as customer satisfaction not only come by using the product but also by getting a good customer service from the company that sells the product.

Today, most of all the companies in the world are implementing customer relationship management (CRM) in order to maintain their customer and service quality. CRM is defined by Wikipedia as a broad term that covers concepts used by companies to manage their relationships with customers, including the capture, storage and analysis of customer information broad term that covers concepts used by companies to manage their relationships with customers, including the capture, storage and analysis of customer information.

Customer service not only covers after sales service. It also covers a lot of angle such as knowledgeable personal, good presentations, friendliness of personal and access to it such as accessible via telephone and website.

There are so many reasons why customer service is important nowadays. By having a good customer service provided by a company, it will not only benefit the company in term of financial but it also can benefited the company non-financially.

Wikipedia defined customer service as Customer service is the provision of service to customers before, during and after a purchase. Its importance varies by product, industry and customer. As an example, an expert customer might require less pre-purchase service (i.e., advice) than a novice. In many cases, customer service is more important if the purchase relates to a “service” as opposed to a “product”. Customer service may be provided by a person (e.g., sales and service representative), or by automated means called self-service. Examples of self service are Internet sites.

Below are some of the reasons why customer service is important to the company that it only benefited the company financially but also non-financially.

  1. Company Reputation/Image

By having a good customer service especially after sales service, a company would be having good reputation not only from the customer itself but also in the industry. Good reputation give the company competitive advantages over their competitors Competitive advantages is a position that a firm occupies in its competitive landscape. For instance in telecommunication industry although DiGi only maintained one number which is 016, DiGi still able to compete with other companies such as Maxis (012/017) and Celcom (019/013). This is because level of customer service quality provided by DiGi is high compared to their competitors. Having good company reputation, DiGi is not only benefited in terms of brand name but it also benefits DiGi in financial term which was proved in its stock price. The stock price for DiGi rose from RM6.01 in 2005 to RM17.00 per share as at 2007.


  1. Repeatable Buyers

– Good customer service can make the buyer to buy repeatly on the company product. This is because existing customer will not only satisfy with the product that they bought but also satisfied with the customer service served to them. For example in McDonalds restaurant chains not only sell their burgers to the customer but the restaurants also had friendly personnel. This can make the customer to come and dine again at McDonalds since the environment that McDonalds had so homely. Recently, most of McDonald’s restaurants are equipped with play-land. This can cater for families as they dine their children can go to the play-land to play.

  1. Customer Networking

– Company that has good customer service will have good networking with their customer. The customer loyalty to use the company’s product also is very high due to the good customer service that they received from the company. The customer service not only received during purchasing the product but also after sale service plays major role in order to maintain good networking with the customers. By having good customer networking, company’s product also can be reached easily to new customer. This is because current customer may recommend to their immediate families and friends to purchase products or services offered by the company. This can help the company to lower its marketing cost indirectly.

  1. Product Differentiation

– In today’s market, there are a lot of alternative available for the same product. Such for electrical appliances there are thousand of brand name available to meet the needs of the customers. As such company that offer their products with good customer service such as after sales service, hand-on training on the product can make the product sold by the company different with other same product under different company. For instance, Electrolux offer on site after sales service to its customer. By having this kind of after sales service, its project differentiation of Electrolux products with other product sold by other leading brand name in electrical appliances.

  1. New Market Penetration

– With today’s globalization environment, company that offer new product can be easily reach to the new market. However, to ensure their product survived and success in the new market, the company needs to offer good customer service also. As today market scenario, customers not only look at the product features and quality but also the customer service offered to them. Customer services mean not only for after sales service but it covers also the product knowledge that offered to the customer. For example recently newly finance institution opened in Malaysia which is Al-Rajhi Bank. They just operate in Malaysia for four months but it already managed more than 5000 account holders. This is because the company not only offering good line of products but it also offers good customer service that is reachable and easy to access.


Question 2

There are five important reasons to be made in managing service operations with the customer as the focus. The five reasons are as follows:

  1. Layout

In managing service operations, layout is one important thing that needs to consider. Layout not only covers the organization personnel workplace but it also covers the customer area such as waiting area, sitting area, toilet and customer lounge. Good layout will not only portray the level of the organization professionalism but also the most important is the will make the work process flow fluently. This is where the input (entrance for the customer), process (area where customer is attended by company’s personnel) and output (exit for the customer) can be done smoothly. For example in order to prepare food for the customer quick, McDonald’s have their own standard kitchen layout. This layout can be seen and is the same with McDonald’s restaurant in Malaysia as well McDonald’s restaurant in Singapore. This is to ensure that food can be prepared in appropriate time because McDonald’s not only depends on the food sales revenue but they also wants to maintain its corporate image as one of a leading company in fast food industry.

  1. Quality

Quality also plays important roles in managing service industry. Although quality is a subjective topic that difficult to be measured, it does not mean it must not to be considering in managing service industry. Level of quality service given in service industry in to be consistent especially if the company has several branches. By having certain standard for instance ISO standard can help the company to maintain the level of service given to their customer. For instance DHL courier service have opted ISO standard in delivery service operation. By having the standard operating procedures, product that sent through DHL courier service can be delivered and reached to customer at specific time period although the delivery was made from other countries.

  1. Technology

Usage of technology plays critical factor in ensuring the success of the company. In managing service operation with customer oriented, there are many ways that technology can be used in order to increase productivity and to make the customer satisfy. The usage such as website, SMS service and email service are such ways that can be used by the company in order to make their customer happy. The customer may browser the entire product offered by the company through the company’s website instead going to a shop to get the brochure. For instance, Argos Plc. UK has their brochure online via its website at http://www.argos.co.uk. This mean the product and service offered by that can reach not only for UK customer but also other customer from other countries. Pos Malaysia also is now using tracking system in order for its customer to track the delivery made by them through Pos Malaysia’s Pos Ekspress service.

  1. Time

In order to be successful company especially with customer oriented based, time also is one of the critical success factor in ensuring that service operations can be successful. Company have to identify whether the service offered by them should be operating 24hours 7 days a week or for certain period only. For example, Association Automobile of Malaysia (AAM) offers their car breakdown service to its member 24hours regardless its public holiday or weekend. This is to ensure that their customers happy with the service charge that they have paid. For Courier Services Company, delivery time is very important in their operations. This is because customers paid the company to deliver a product within certain timeframe. However, Pos Ekspress service offered by Pos Malaysia have clearly indicate that some of locations in Malaysia, the goods will be delivered a bit later than 1 day. With this kind of declaration, it can make the customer happy since the customer should know that not all destinations will be received the delivery at the same time.

  1. Cost

Company also needs to consider the cost incurred by them or its customers in managing its services. This is because the lower cost that the company incurred the better financial flow will be. Although company will try to lower its operating cost in order to raise their profit, the customer rights should not be neglected. The cost of services offered also should not be raised. For example, company can offer toll free phone number to its customer in order to purchase the company services or products. Air Asia for instance provides toll free number for their customer to purchase air tickets from them. Customer can make bookings through toll free phone 1-300-88-9933 without incurring any call charges.

  1. Personnel

As a company that serves customer as its main focus, personnel or people who are working in the company also is important parts that need to be look in ensuring success in its operations. Person that worked in the company need to be knowledgeable on only on the company products but also on the troubleshooting in the event that a customer call for product faulty. The workers also need to well train in communication skill so that all calls can be handle in friendly manner. For instance for banking institutions workers, they need also to know on other financial products offered by the bank not only on opening an account but also must have the ability to advice its customer for investment since today banking industry is now moving towards bancassurance.

  1. Convenient

Similar with marketing mix, convenient here represent place where the services offered by the company can be obtained by the customers. Strategic location spot can help the company to be reached by its customer easily. Company also needs to decide whether the services offered should or not to be extending to 24 hours daily. By having 24 hours daily operation it also can cater for other countries market. Services offered also need to be decided whether can it be conducted on site whereby the company send its personnel to perform the service or the customer need to come to the premise to get the service offered. For example Dell computers and laptop users can obtained free on site troubleshooting if the warranty period still valid. This kind of service provide convenient and save time for its customer. Its also can help to increase the customer royalty to its product.


References

  1. http://www.thestar.com.my
  2. http://www.airasia.com
  3. http://www.pos.com.my
  4. http://www.argos.co.uk

5. Prof. Dr. Ansary Ahmed et. al. (2007). Open University Malaysia: Introductory Operation Management BDPO 3103. Kuala Lumpur. Meteor Doc. Sdn. Bhd.

  1. Jay Heizer & Barry Render (2005). 7th Edition Operations Management: Student Lecture Guide. New Jersey USA. Pearson Education Inc.
  2. What is customer service?

http://en.wikipedia.org/wiki/Customer_service

8. Derek Rowntree (1999). A new way with words in distance education from http://www-iet.open.ac.uk/pp/D.G.F.Rowntree/derek.html

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