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What generic approach to service system design is illustrated by




What generic approach to service system design is illustrated by Commuter Cleaning, and what com?petitive advantages does this design offer?;Attachment Preview;commuter cleaning.docx;CASE: COMMUTER CLEANING_A NEW VENTURE PROPOSAL7;The service vision of Commuter Cleaning is to provide dry cleaning services for individuals with;careers or other responsibilities that make it difficult for them to find the time to go to traditional;dry cleaners. The company's goals are to provide a high-quality dry cleaning service that is both;reliable and convenient;The targeted market consists of office workers who live in the suburbs of large metropolitan;areas. The service will be marketed primarily to single men and women as well as dual-career;couples, because this segment of the population has the greatest need for a quality dry cleaning;service but does not have the time to go to the traditional dry cleaners. The targeted cities are;those surrounded by suburbs from which many people commute via mass transit.;The facilities where customers will drop-off and pick-up their dry cleaning will be located at;sites where commuters meet their trains or buses into the downtown area (i.e., park-and-ride;locations and commuter train stations). For each city, it will be necessary to determine who owns;these transit stations and how land can be rented from the owner. In some locations, facilities;where space could be rented already exist. In other locations, there may not be any existing;facilities, and the pick-up and drop-off booths will need to be built.;The facilities for laundry pick-up and drop-off need not be large. The building or room at the;station need only be large enough to accommodate racks for hanging the finished dry cleaning.;Initially, it may be necessary to restrict the service to laundering business-wear shirts, because;these are the easiest of all clothing articles to clean and also will;7;Prepared by Mara Segai under the supervision of Professor James A. Fitzsimmons.;allow the operations to be simplified. Typically, a man or woman will need a clean shirt for each;workday, so a large demand exists. One drawback would be the diminished customer;convenience, because dry cleaning of garments would necessitate a separate trip to a traditional;dry cleaner. If dry cleaning were outsourced, however, it would be possible to offer full-service;cleaning very quickly, because a plant and equipment need not be purchased.;A decision also needs to be made about providing same-day or next-day service. One factor;in this decision will be whether competitors in the area offer same-day service. These cleaners;represent a serious threat only if they open early enough and close late enough to be convenient;and accessible to customers. Most important, same-day service should be provided only where it;is feasible to deliver on this promise consistently.;All advertisements will include a phone number that potential customers can call to inquire;about the service. When a customer calls, he or she can request the service. That same day, the;customer will be able to pick up a Commuter Cleaning laundry bag with the customer's name;and account number on it and a membership card that is coded with the account number.;The delivery system will be a hub-and-spoke system, similar to the one that FedEx uses for;package handling. Customers will have the convenience of dropping off their laundry at;numerous neighborhood commuter stations. AH dry cleaning will be picked up and delivered to;one central plant, and once the shirts are clean, they will be returned to the customer's drop off;point. Same-day service is possible with pick-ups beginning at 8:00 am and returns completed by;5:00 pm.;The customer will place the dirty shirts in the bag at home and simply leave the bag at the;station on the way to work. The station worker will attach a color-coded label on the bag to;identify the location where the shirts were dropped off so that they can be returned to the same;station. A laundry pick-up route will be established to bring bags from each location to the;central cleaning plant. Once the bag reaches the central plant, the items will be counted and the;number entered into the billing database. After the shirts have been cleaned, they will be put on;hangers with the customer's laundry bag attached. The cleaned shirts will be segregated;according to the location to which they need to be returned and then placed on a truck in reverse;order of the delivery route. The customer will provide the station worker with his or her;membership card, which will be used to identify and retrieve the customer's clothing and bag.;Because all customers will be billed monthly, the time to pick up the laundry should be expedited;and waiting lines avoided.;Initially, cleaning will be outsourced to a large dry cleaner with excess capacity. A favorable;rate should be negotiated because of the predictable volume, convenience of aggregating the;demand into one batch, and performing the pick-up and delivery service. Contracting for the;cleaning will reduce the initial capital investment required to build a plant and buy equipment;and it also will provide time for the business to build a customer base that would support a;dedicated cleaning plant. Further, contracting will limit the financial risk exposure if the concept;fails. If the cleaning is outsourced, there will be no need to hire and manage a workforce to;perform the cleaning, therefore, management can focus on building a customer base instead of;supervising back-office activities. Also, with contract cleaning, it is more feasible to offer dry;cleaning services in addition to laundering business shirts.;In the long run, however, contract cleaning may limit the potential profitability, expose the;business to quality problems, and prevent the opportunity to focus cleaning plant operations;around the pick-up-and-delivery concept. Ideally, once Commuter Cleaning has built a large;client base and has access to significant capital, all cleaning will be done internally.;Most of the hiring will be targeted to area college students. Initially, two shifts of workers;will be needed for the transit station facilities but just one van driver at any given time. As;business expands, additional vans will be acquired and additional drivers hired. The first shift of;drop-off station workers will begin at 6:00 am and finish at 9:00 am, at which time the van driver;will transport the items from the drop-off sites to the cleaning site. The number of drivers needed;and the hours they work will depend on how many pick-up and drop-off sites exist, their;proximity to each other, the cleaning plant location, and the ability to develop efficient routing;schedules. The second shift of drivers will deliver the cleaning from the plant to the transit;stations from about 3:30 to 5:00 pm. The second shift of transit-site workers will begin at 5:00;pm and end when the last train or bus arrives, usually about 8:30 pm. Once cleaning is done;internally, it will be possible to have plant employees also pick up the laundry and deliver it to;the stations each day. This will allow Commuter Cleaning to hire some full-time workers, and it;also will bring the back-office workers closer to the customers so that they can be more aware of;problems and customer needs.;College students will be the best candidates for workers, because their schedules vary and;classes usually are held in the middle of the day, from about 10 am to 3 pm. Also, depending on;course loads, some students may only have time to work 3 hours a day, while others may choose;to work both the first and second shifts. The starting salary will be set slightly above the wage for;typical part-time service jobs available to college students to discourage turnover.;When Commuter Cleaning is first introduced into a city, additional temporary workers will;be needed to manage the customer inquiries for initiating the service. The week before;introduction of the service, representatives will be at the station facilities to answer questions and;perform the paperwork necessary to initiate service for interested customers. Because all;advertisements will include the customer service number, it will be necessary to have additional;representatives manning the phones to handle the inquiries. All employees will have the title;customer service representative" to stress the function of their jobs. These workers will be;encouraged to get to know their Customers and reach a first-name basis with them.;When customers initiate service, they will be encouraged to open an account for monthly;billing rather than to pay each time that items are picked up. At this time, the customer service;representative will collect all the necessary information, including name, address, phone number;location from where they commute, and credit card number. If a customer desires, the amount;owed will be charged to the credit card each month. This is the most desirable form of payment;because it is efficient and involves no worry of delayed payments. This method also is becoming;more common, and people generally now are comfortable having their credit card billed;automatically. Each month, statements will be sent to all customers with transactions to verify;the bill and request payment from those who do not use a credit card. If a customer is late in;paying, a customer service representative will call and ask if he or she would like to begin paying;with a credit card. Repeatedly delinquent customers will be required to pay at the time of pickup, a stipulation that will be included in the customer's initial agreement for service. The;customer service representatives will be responsible for answering all customer inquiries;including the initiation of new service, and one customer service representative will be;responsible for customer billings. Each day, the laundry delivered to the plant will be entered;into a data base that accumulates each customer's transactions for the month.;A smooth demand throughout the week is desirable to create a stable work load, however;actions likely will be needed to control fluctuations in demand and to avoid imbalances in the;work load. One method of controlling demand is through price specials and promotions. Offering;a discount on certain days of the week is common practice for dry cleaners, and one approach;would be to offer special prices to different customer segments to entice them to bring in their;laundry on a certain day. For example, Friday may be the busiest day of the week and Monday;and Tuesday the slowest. In this case, the customer base could be divided (e.g., alphabetically);and each segment offered a discount price on a particular day. Other ideas include providing a;complimentary cup of coffee to anyone bringing in laundry on Monday. These promotions can be;implemented once demand fluctuations are observed. Attention also must be given to holidays;which may create temporary surges or lulls in business.


Paper#34435 | Written in 18-Jul-2015

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