Interview Questions

Managing Customer Waiting Lines and Reservations

Cutting the Wait for Customers In Retail Banking

How should a big retail bank respond to increased competition from new financial service providers? A large bank in Chicago decided that enhancing service to its customers would be an important element in its strategy. One opportunity for improvement was to reduce the amount of time that customers spent waiting in line for service in the bank's retail branches a frequent source of complaints. Recognizing that no single action could resolve the problem satisfactorily, the bank adopted a three-pronged approach.

First, technological improvements were made to the service operation, starting with introduction of an electronic queuing system that not only routed customers to the next available teller station but also provided supervisors with online information to help match staffing to customer demand. Meantime, computer enhancements provided tellers with more information about their customers, enabling them to handle more requests without leaving their stations. And new cash machines for tellers saved them from selecting bills and counting them twice (yielding a time savings of 30 seconds for each cash withdrawal transaction).

Second, changes were made to human resource strategies. The bank adopted a new job description for teller managers that made them responsible for customer queuing times and expediting transactions. It created an officer-of-the-day program, where a designated officer was equipped with a beeper and assigned to help staff with complicated transactions that might otherwise slow them down.

A new job category of peak-time teller was introduced, paying premium wages for 12 to 18 hours of work a week. Existing full-time tellers were given cash incentives and recognition to reward improved productivity on predicted high-volume days. Management also reorganized meal arrangements. On busy days, lunch breaks were reduced to half-hour periods and staff received catered meals; in addition, the bank cafeteria was opened earlier to serve peak-time tellers.

A third set of changes centered on customer-oriented improvements to the delivery system. Quick-drop desks were established on busy days to handle deposits and simple requests, while newly created express teller stations were reserved for deposits and check cashing. Lobby hours were expanded from 38 to 56 hours a week, including Sundays. A customer brochure, How to Lose Wait, alerted customers to busy periods and suggested ways of avoiding delays.

Subsequently, internal measures and customer surveys showed that the improvements had not only reduced customer wait times but also increased customer perceptions that this bank was "the best" bank in the region for minimal waits in teller lines. Studies also showed that extended lobby hours had transferred some of the "noon rush" customers to before-work and after-work time periods.

WAITING TO GET PROCESSED

It's estimated that Americans spend 37 billion hours a year (an average of almost 150 hours per person) waiting in lines, "during which time they fret, fidget, and scowl," according to The Washington Post.2 Similar (or worse) situations seem to prevail around the world. Richard Larson suggests that, when everything is added up, the average person may spend as much as half-an-hour per day waiting in line, which would translate to 20 months of waiting in an 80-year lifetime!3

Nobody likes to be kept waiting. It's boring, wastes time, and is sometimes physically uncomfortable. And yet waiting for a service process is an almost universal phenomenon. Like the bank in our opening vignette, virtually every organization faces the problem of waiting lines somewhere in its operation.

People are kept waiting on the phone, they line up with their supermarket carts to check out their grocery purchases, and they wait for their bills after a restaurant meal. They sit in their cars waiting for traffic lights to change, to enter drive-in car washes, and to pay at tollbooths.

Physical and inanimate objects wait for processing, too. E-mails pile up in an executive's in-box, equipment sits on racks waiting to be fixed at a repair shop, checks wait to be cleared at a bank, an incoming phone call waits to be switched to a customer service rep. In each case, a customer is waiting for the outcome of that work.

As the previous examples suggest, not all queues take the form of a physical waiting line in a single location. Some queues are geographically dispersed. For example, travelers wait at many different locations for the taxis they have ordered by phone to arrive and pick them up. And some queues are virtual rather than physical.

When customers deal with a service supplier at arm's length, as in information-processing services, they interact from home, office, or college using telecommunication channels like voice telephone or the Internet.

Calls are typically answered in the order received, often requiring customers to wait their turn in a virtual line. The advent of sophisticated Web sites has created additional opportunities for virtual waits.

Although companies often promote the time savings that can be obtained, accessing the Web can sometimes be slow due to the virtual queuing that occurs when too many customers try to log on to a company's site or use the same server to go online simultaneously.

In an ideal world, nobody would ever have to wait to conduct a transaction at a service organization. But since services are performances, they can't typically be stored for later use during periods of excess demand. For example, a bank teller cannot prepackage a check cashing transaction for the following day it must be done in real time. This results in delays in service delivery when too many people want the same service at the same time.

As we discussed in Chapter, there are a number of ways to balance supply and demand. But what should a manager do when the possibilities for shaping demand and adjusting capacity have been exhausted, and supply and demand are still out of balance? Leaving customers to sort things out themselves is no recipe for service quality or customer satisfaction.

Rather than allowing matters to degenerate into a random free-forall, customer-oriented firms implement strategies for ensuring order, predictability, and fairness in their service delivery processes. In businesses where demand regularly exceeds supply, managers often try to manage demand in one of two ways: (1) by asking customers to wait in line (queuing), usually on a first-come, first-served basis; or (2) by offering them the opportunity to reserve or book space in advance

The Nature of Queues

Waiting lines known to operations researchers (and also the British) as "queues"4occur whenever the number of arrivals at a facility exceeds the capacity of the system to process them. Queues are basically a symptom of unresolved capacity management problems. The analysis and modeling of waiting lines is a well-established branch of operations management.

Queuing theory has been traced back to 1917, when a Danish telephone engineer was given the responsibility of determining how large the switching unit in a telephone system had to be to keep the number of busy signals within reason. Queuing systems can be divided into seven elements, take a look at each, recognizing that strategies for managing waiting lines can exercise more control over some elements than others.

  1. The customer population—the population from which demands for service originate (sometimes known to operations researchers as the "calling population")
  2. The arrival process—the times and volumes of customer requests for service
  3. Balking—a decision by an arriving customer not to join a queue
  4. Queue configuration—the design of a system in terms of the number, location, and arrangement of waiting lines
  5. Reneging—a decision by a customer already in a queue who has not yet been served to leave the line rather than wait any longer
  6. Customer selection policies—formal or ad hoc policies about whom to serve next (also known as queue discipline)
  7. The service process—the physical design of the service delivery system, the roles assigned to customers and service personnel, and the flexibility to vary system capacity

Customer Population

When planning queuing systems, operations managers need to know who their customers are and something about their needs and expectations. There is a big difference between a badly injured patient arriving at a hospital emergency unit and a sports fan arriving at a stadium ticket office obviously, the hospital needs to be more geared for speed than the stadium. Based upon customer research, the population can often be divided into several distinct market segments, each with differing needs and priorities.

Arrival Process

The rate at which customers arrive over time relative to the capacity of the serving process, and the extent to which they arrive individually or in clusters, will determine whether or not a queue starts to form. We need to draw a distinction between the average arrival rate (e.g., 60 customers per hour = one customer every minute) and the distribution of those arrivals during any given minute of that hour.

In some instances, arrival times are largely random (for instance, individuals entering a store in a shopping mall). At other times, some degree of clustering can be predicted, such as arrivals of students in a cafeteria within a few minutes of classes ending. Managers who anticipate surges of activity at specific times can plan their staff allocations around such events (for instance, opening an additional checkout line).

Balking

If you're like most people, you tend to be put off by a long line at a service facility and may decide to come back later (or go somewhere else) rather than waiting. Sometimes "balking” is a mistake, as the line may actually be moving faster than you think. Managers can disguise the length of lines by having them wind around corners, as often happens at theme parks like Disneyland. Alternatively, they may indicate the expected wait time from specific locations in the queuing area by installing information signs.

Queue Configuration

There are a variety of different types of queues. Here are some common queue configurations that you may have experienced yourself in people-processing services.

  • Single line, single stage. Customers wait to conduct a single service transaction. Waiting for a bus is an example of this type of queuing system.
  • Single line, sequential stages. Customers proceed through several serving operations, as in a cafeteria line. In such systems, bottlenecks will occur at any stage where the process takes longer to execute than  at previous stages. Many cafeterias often have lines at the cash register because the cashier takes longer to calculate how much you owe and to make change than the servers take to put food on your plate (or you take to serve yourself).
  • Parallel lines to multiple servers (single or sequential stages). This system offers more than one serving station, allowing customers to select one of several lines in which to wait. Fast-food restaurants usually have several serving lines in operation at busy times of day, with each offering the full menu. A parallel system can have either a single stage or multiple stages. The disadvantage of this design is that lines may not move at equal speed. How many times have you chosen  what looked like the shortest line only to watch in frustration as the lines on either side of you move at twice the speed because someone in your line has a complicated transaction?

  • Designated lines. Different lines can be assigned to specific categories of customer. Examples include express lines (six items or less) and regular lines at supermarket checkouts, and different check-in lines for first-class, business-class, and economy-class airline passengers.
  • Single line to multiple servers ("snake"). Customers wait in a single line, often winding back and forth between rope barriers (hence the name). As each person reaches the head of the queue, he or she is directed to the next available serving position. This approach is encountered frequently in bank lobbies, post offices, and at airport check-ins. Its big advantages are fairness and reduced anxiety. The presence of ropes or other barriers makes it difficult for inconsiderate people to break into line. It may also discourage customers from leaving the line before being served.
  • Take a number. In this variation of the single line, arriving customers take a number and are then called in sequence, thus eliminating the need to stand in a queue. This procedure allows them to sit down and relax (if seating is available) or to guess how long the wait will be and do something else in the meantime but risk losing their place. Users of this approach include ice cream parlors like Baskin-Robbins, large travel agents, or supermarket departments, such as the butcher or baker. Some restaurants use a high-tech version of this queuing strategy. For example, customers who are waiting for tables at the Olive Garden or Outback Steakhouse are given electronic pagers that are numbered by order of arrival. This provides them with more freedom in occupying themselves (e.g., window shopping if the restaurant is located in a mall with other stores) until their pagers vibrate, signaling that their tables are ready.

Hybrid approaches to queue configuration also exist. For instance, a cafeteria with a single serving line might offer two cash register stations at the final stage. Similarly, patients at a small medical clinic might visit a single receptionist for registration, proceed sequentially through multiple channels for testing, diagnosis, and treatment, and conclude by returning to a single line for payment at the receptionist's desk.

Reneging You know the situation perhaps all too well! The line is not that long, but it's moving at a snail's pace. The person at the front of the queue has been there for at least five minutes and his problem seems nowhere near resolved. There are two other people ahead of you and you have an uneasy feeling that their transactions are not going to be brief either. You look at your watch for the third time and realize that you only have a few minutes left before your next appointment.

Frustrated, you leave the line. In the language of queue management, you have reneged. It's important for service Providers to determine how long a wait has to be before customers are likely to start

Reneging, because the consequences may include irritated customers who return later as well as business that is permanently lost.

Customer Selection Policies Most waiting lines work on the principle of first come, first served. Customers tend to expect this it's only fair, after all. In many cultures (but not all), people get very resentful if they see later arrivals being served ahead of them for no obvious reason. But not all queuing systems are organized on a first-come, first-served basis. Market segmentation is sometimes used to design queuing strategies that set different priorities for different types of customers. Allocation to separate queuing areas may be based on the following:

  • Urgency of the job at many hospital emergency units, a triage nurse is assigned to greet incoming patients and decide which ones require priority medical treatment and which can safely be asked to register and then sit down while they wait their turn. Airline personnel will allow passengers -whose flights are due to leave soon to check in ahead of passengers taking later flights.
  • Duration of service transaction banks, supermarkets, and other retail services often provide "express lanes" for shorter, less-complicated tasks.
  • Payment of a premium price airlines usually offer separate check-in lines for first-class and economy-class passengers, with a higher ratio of personnel to passengers in the first-class line (which results in reduced waits for those who have paid more for their tickets).
  • Importance of the customer special processes may be reserved for members of frequent user clubs. National Car Rental provides express pickup and drop-off procedures for its Emerald Club members and promises these customers "no waiting, no paperwork, no hassles."

Service Process Poorly designed service processes can lead to waits that are longer and more burdensome than necessary. The root cause is sometimes one or more backstage delays, resulting in customer-contact employees that are kept waiting for a necessary action to occur somewhere else in the system. Flowcharts, employee interviews, and analysis of past service failures can help pinpoint where such problems might occur. The physical design of the front-stage service delivery system also plays a key role in effective queue management. Important design issues include:

  • How customers are served (batch processes serve customers in groups, while flow processes serve them individually).
  • Whether personnel, self-service equipment, or a combination of the two will serve customers.
  • How fast service transactions can be executed, thus determining capacity.
  • Whether service comes to customers or whether they must come to the service site and move from one step to another.
  • The quality of the serving and waiting experiences, including personal comfort and design issues such as impression created by the services cape.

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