Monday, July 14, 2008

Managing Customer Introduced Variability

BREAKING THE TRADE-OFF Between Efficiency and Service.
By: Frei, Frances X.,
Harvard Business Review,
November 2006, Vol. 84, Issue 11

Customers introduce variability to service operations in no fewer than five ways, so it is critical to sort out which type is causing mischief before designing interventions.

Arrival variability.
Request variability.
Capability variability.
Effort variability.
Subjective preference variability.

The four strategic responses are: classic accommodation, classic reduction, low-cost accommodation, and uncompromised reduction.

An example of an uncompromised reduction approach:

A company can greatly reduce the impact of variability on its operating environment without compromising the service experience by targeting customers on the basis of variability type. If, for example, a college fears that admitting students of varying intellectual capabilities will complicate its operations, it can choose only students whose standardized test scores fall within a narrow band. The students get the benefit of a tailored curriculum without the school's having to support more than one.

Frances X. Frei ( is an associate professor of business administration in the Technology and Operations Management unit at Harvard Business School in Boston.

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