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Service Operations Presentation

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Kirstin Anderson

on 29 April 2010

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Transcript of Service Operations Presentation

demand and capacity management service strategy The old mission statement is:
"To establish Starbucks as the premier purveyor of the finest coffees in the world while maintaining our uncompromising principles as we grow."
Now, Starbucks has changed their mission statement to:

"To inspire and nurture the human spirit -
One person, One cup, and One Neighborhood at a time."
What are their competitive priorities?

How do they create value for the customer? Transformation Process
Also the intangible “experience”

How do customers perceive the service concept? Strategy then guides service design elements:
strategy: Location
Facility design
Service encounter
Capacity and demand management
Capacity and demand management: Comparing a neighborhood Starbucks to Hillside Café
-similar menu, similar ambiance

Variability: two types
What type of drink order takes the longest?
What is the demand pattern?
What is the throughput time?
What are the lines like? Are they ever too long?
How Starbucks has improved : Average throughput time is three minutes
Down 30 seconds from a few years ago
2009 – focus on efficiency because of economic downturn

Small changes – bigger ice scoops
Placement of items
Added a “floater” staff member
Scott Heydon - VP of Lean Thinking
"Motion and work are two different things. Thirty percent of the partners' time is motion; the walking, reaching, bending."
Store labor is 24% of revenue annually
But can Starbucks get too efficient? -Had started grinding large batches of beans in the mornings
-Now they are going back to the old way
- “reinvention of brewed coffee” Schultz says
-He came back in January 2008 to get the company back on track
That speaks to the “experience” side of Starbucks
Is McDonalds really one of their competitors?
Was Starbucks VIA Ready Brew Instant coffee a good idea?
What customers are saying: "Who was the genius that took away in-store grinding to save money?
Hopefully he was fired."

"Dear Starbucks: You are a lifestyle experience, a luxury, a novelty,
Don't mess with that, it is not worth the savings. The aroma is half
the value of your price."

From mystarbucksidea.com

Don't slow down service

"The new 'one at a time' for drinks by the Barista is really hurting
service during the morning rush hours. Starbucks has to be sensitive
to the volume of customers too, not just being customer friendly.
The direction given to my local store to make drinks one at a time
and talk more with customers sounds like good customer service
until you see the long lines between 7 and 9 AM. Long enough
that many don't wait...."

A barista explains:
"The direction being given to us is to steam milk according to the demand,
so effectively making one drink at a time. If someone orders a tall latte and
you have a line out the door you are only supposed to steam enough milk
for that tall latte. It's stupid, but true. " Suggestions for Hillside: -BCDS projected that Hillside would handle about 1,000 transactions
a day when it opened in fall 2002; instead, Hillside was tallying 3,500
daily transactions within the first two months.

-Queue configuration - 2 lines plus pick up station
-Consider a coffee-only line
-Queue discipline – shortest processing time
-Add some type of diversion
-Capacity - Add more servers during peak demand
Full transcript