ABSTRACT
The characteristics of service processes and their challenges are discussed, and a simulation that illustrates their effects is presented. With the exception of manufacturing personnel making tangible items, every working professional provides a service to customers. These jobs often have internal customers where benefits of especially good service may not be evident. At the same time, costs of poor service are hidden from view of executives. Service processes are diverse in nature but they have common characteristics. A service process will consist of intangible inputs and outputs in the form of information. In addition, inventory cannot be used to ensure resource availability when demand is uncertain. Service activity durations are highly variable, which makes the application of many successful manufacturing practices infeasible. In many firms, service processes flow across functional boundaries, leading to information handoff miscommunications. Departmental-based incentives may be inconsistent with the needs of customers. The hidden costs and benefits associated with service processes require strong leadership commitment. With highly variable activity durations, coupled with uncertain demand and the inability to inventory a service, the output of a service process will vary significantly. This variation can result in mismanagement when administrators attribute performance changes to nonexistent causes.
