Continuous Improvement Programs

Operations Management for Service Industries

Written by Andrew Goldman for Gaebler Ventures

By increasing quality and efficiency, small businesses in the service industry will experience tremendous improvements, including increased customer satisfaction and cost-savings. Embracing these fundamentals of operations management is critical to small business success.

If you are in the service industry, there are two components that should supersede everything else that you do: quality and efficiency.

If you are not striving to improve quality and increase efficiency, your profits are less and costs are greater.

Within many service industries it's easy to get wrapped up in the main goal of delivering the final product. While the deliverable is the final measure, constant scrutiny needs to be placed on all aspects of the process.

Maintain Employee Communication

In order to get these improvements, all employees within the organization need to be involved.

Complacency is the enemy, as there is always room for improvement. One of the basic principles of operations management is the concept of continuous improvement. By making a series of incremental advances, your small business will see major increases to quality, and decreases in costs. Offering idea incentives or other fun forms of compensation will help get all employees on board.

The quality of your product or service greatly depends upon the process. Mistakes that reach the customer result from mistakes somewhere along your process chain.

The key is to identify where the error initially occurred, what caused it, and how you can prevent it from reoccurring. If those involved in the process never mention the error, or try and solve the issue themselves, the problem will likely continue. Train your employees to document all errors that occur throughout your process. Taking time to document and discuss problems does have an added cost, but it is minimal when compared to the costs of rendering defective services.

Pay Attention to Your Customer Service

Recently I consulted for a company that offered pharmaceutical consultation. They have customer service representatives who arranged phone calls between the customers and the on-staff pharmacists.

The company was losing repeat customers and profits were dwindling. One of the first pieces of data I examined were the scheduled phone call start times, versus actual start times. What I found was alarming; in nearly three-quarters of the phone calls, the pharmacist was late in calling the customer.

A late phone call is part of defective service. This trend had been getting worse over the course of the year, and the customer service department received negative feedback regarding start times. Unfortunately, the company had no discussion forum for these issues, and feedback was rarely provided to the pharmacists. When the feedback was delivered, no real action was ever taken.

Simply solving the problem is not enough to prevent future reoccurrences. A system needs to be implemented to identify problems as soon as they occur. Once you have this system in place, your company will be better poised to solve issues and improve quality.

Andrew Goldman is an Isenberg School of Management MBA student at the University of Massachusetts Amherst. He has extensive experience working with small businesses on a consulting basis.

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