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Matching Supply & Demand & CRM
The document discusses strategies for matching supply and demand in service industries. It explains the underlying issues of capacity constraints for services and the implications of different demand patterns on balancing supply and capacity. The key strategies proposed are shifting demand to match capacity by changing pricing and promotions, or flexing capacity to meet demand by adjusting staffing levels and outsourcing. Yield management strategies are also covered. The benefits and risks of different approaches are outlined. Customer relationship management and its focus on customer retention over just acquisition is also briefly defined.
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Matching Supply & Demand & CRM
- 1. MATCHING SUPPLY &DEMAND IN SERVICE INDUSTRY , CRM & MGMT STRATEGY BY DEVANAND MENON PRATHAMESH PARAB
- 2. OBJECTIVE • Explain: • theunderlying issue for capacity-constrained services • the implications of capacity constraints • the implications of different types of demand patterns on matching supply and demand • Lay out strategies for matching supply and demand through: • shifting demand to match capacity or • flexing capacity to meet demand • Demonstrate the benefits and risks of yield management strategies • Provide strategies for managing waiting lines
- 3. Fundamental Issue the underlyingissue for capacity-constrained services Lack of inventory perishability (cannot store up) simultaneous product and consumption (cannot be transported from one place to another)
- 4. Managing Demand andCapacity No buffer for services from demand. Demand volatile Goal: supply and demand balanced at optimum capacity Under utilizing when demand is below optimum capacity If demand is above capacity then quality may suffer
- 5. What is theNature of Demand Relative to Supply? Extent to which supply is constrained Peak demand can usually be met without a major delay Peak demand regularly exceeds capacity Wide Narrow 1 2 Electricity Natural gas Telephone Hospital maternity unit Police and fire emergencies Insurance Legal services Banking Laundry and dry cleaning 4 Accounting and tax preparation Passenger transportation Hotels and motels Restaurants 3 Services similar to those in 2 but which have insufficient capacity for their base level of business
- 6. Understanding Capacity Constraintsand Demand Patterns Capacity Constraints Time, labor, equipment and facilities Optimal versus maximal use of capacity Demand Patterns • Charting demand patterns • Predictable cycles • Random demand fluctuations • Demand patterns by market segment
- 7. Managing Demand Shift demandfrom high to low demand periods. Decrease demand during peak demand periods. Stimulate demand during low demand periods.
- 8. Strategies for ShiftingDemand to Match Capacity Demand Too High Demand Too Low Shift Demand • • • • • Use signage to communicate busy days and times Offer incentives to customers for usage during non-peak times Take care of loyal or regular customers first Advertise peak usage times and benefits of non-peak use Charge full price for the service-no discounts • • • • • Use sales and advertising to increase business from current market segments Modify the service offering to appeal to new market segments Offer discounts or price reductions Modify hours of operation Bring the service to the customer
- 9. Shifting Demand Advantages Disadvantages Business isnot lost. Customers may not Service quality is not want to shift. Customers may not have control over when they use the service. adversely affected. Increased efficiency.
- 10. Reducing Demand Advantages Disadvantages Service qualityis Lost revenue. normally improved. Increased efficiency. Not a good strategy for firms in the for-profit sector.
- 11. Stimulating Demand Advantages Disadvantages Increased May notbe efficiency. Increased income. Increased utilization of facility. profitable. May cause some current customers to shift usage.
- 12. Tools for ManagingDemand Reservation system. Differential pricing.
- 13. Strategies for FlexingCapacity to Match Demand Demand Too High • • • • • • • Flex Capacity Stretch time, labor, facilities and equipment Cross-train employees Hire part-time employees Request overtime work from employees Rent or share facilities Rent or share equipment Subcontract or outsource activities • • • • Demand Too Low Perform maintenance renovations Schedule vacations Schedule employee training Lay off employees
- 14. Who are thecustomers in a hospital? Patients Family members Referral Doctors Suppliers Employees Who is the key customer in the hospital?
- 15. What is patientsatisfaction? Patient Satisfaction is “hospital services and its perception by the patient” minus ”patient expectations” 0 = Patient Satisfied - = Patient Dissatisfied + = Patient Delighted Patient satisfaction measures need to be developed from the patients perspective Patients are becoming better informed Involve patients for making improvements Patient satisfaction is not Static but Dynamic
- 16. Patient Expectations Good MedicalCare Cleanliness Good Nursing Care Good Coordination Less Waiting Time Cooperation among Excellent Hospitality the Staff Discipline Communication & Information Transparency in charges and procedures Personal Attention Courteous Behavior Affordable Charges
- 17. Challenges in ServiceMarketing Giving a feel for the “product” Managing Demand Fluctuations Maintaining Quality Cost Containment Attitudinal block in using proven marketing principles in service marketing
- 18. Factors that promoteDemand Perspective Services are available for longer or convenient hours Patients are provided information through Brochures, Publicity, etc on services available Services are reliable and offered promptly Required equipment are available Patient friendly Systems & Procedures
- 19. Factors that promoteDemand - Accessibility Perspective Good public transportation Centrally located Outreach Programs to reach out to the Rural People
- 20. Factors that promoteDemand - Affordability Perspective Standard pricing structure Charges affordable by most of the people in the Community Transparency in Patient Fees – no hidden charges Simple procedure for getting free/subsidized care
- 21. Factors that increaseDemand - Promotion Avenues Structured approach with designated staff Good Rapport with Community Publicity through different media Promotion at Outreach activities Meetings/seminars for other doctors Developing a referral network Promotion through satisfied patients Industrial tie-up for routine examination of their employees
- 22. Factors that affectDemand - Attitude Perspective Reasons for Low Demand: Sophisticated technology will automatically trigger demand Belief that patients, if need eye care, will definitely come to us Providing Service as per Providers’ Convenience Systems & Procedures are not patient friendly Gap between Patients’ Expectations & Providers’ Perception Lack of patient orientation
- 23. Factors that demandattitude :- perspective Skilled Doctor & other staff Standard Clinical Protocol Good Administrative System & Procedures Courtesy & Politeness Proper Explanation Clean environment and comforts meeting or exceeding expectations Systems to monitor clinical outcomes & Patient satisfaction
- 24. Factors that promoteDemand - to the Rural areas & the poor Reasons for Low Demand: No one to Escort Fear of Surgery Ignorance No desire for surgery No time for Surgery No money for surgery Promoting Demand: Counseling to build confidence that Staff will take care Health education Explain benefits Free Transport/Food Free/subsidized Surgery
- 25.
- 27. What is CRM? • Theapproach of identifying, establishing, maintaining, and enhancing lasting relationships with customers.” • CRM “is a business strategy that aims to understand, anticipate and manage the needs of an organisation’s current and potential customers”. (know,target,sell,service) • CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers
- 45.