First National Healthcare (FNH) runs a large network of hospitals and has worked to systematically reduce waiting times in its emergency departments. One of FNH's regional networks has run a successful marketing campaign promoting its low ED waiting times that other regions want to emulate. The corporate quality manager must now determine whether to allow these campaigns to be rolled out and, if so, which waiting time estimates to use. Are the numbers currently being reported accurate? Is there a more accurate way of estimating patient waiting time that can be easily understood by consumers?
Bruce-Alfred Technologies (BAT) has built a successful business selling packaged software. Its marketing has long promised free technical support to all customers, a key point of differentiation from BAT's competitors. However, the call center providing tech support is now in crisis. Wait times for callers are unacceptably high, leading to low customer satisfaction and negative press. BAT managers are evaluating the Fast Track Proposal, which would create two classes of calls. Fast Track calls would be promised a one-minute wait but pay for service. Standard calls would still be free but be given lower priority and have no wait time guarantee. Considers both the operational impact of this change and the strategic considerations of backing away from free tech support.
This is an MIT Sloan Management Review article. The practice of pushing product by building inventory in anticipation of demand has fallen out of favor in recent years. Many companies prefer to build product only in response to actual demand. This permits firms to avoid costly supply and demand mismatches. Given how successful product-based firms have been with this approach, it is only natural to wonder how it would apply to service firms. Some argue that services cannot be inventoried. Yet, this view relies on an extremely narrow definition of inventory as finished product waiting for customers. In practice, the authors say, inventory also serves as a way to store work that functions as "service inventory." As with physical inventories, service inventories allow firms to buffer their resources from the variability of demand and reap benefits from economies of scale while benefiting customers. By using the correct form of service inventory, companies have the opportunity to offer better quality, faster response times and more competitive pricing. Using examples from the travel, hospitality, and insurance industries, discusses how service firms can use inventory as a strategic lever in designing and managing service offerings.
Since Blockbuster began sharing rental revenues with its suppliers, both parties have seen increased profits. The authors say revenue sharing will work for many products and services.