V. Gliatis, I. Minis, K. M. Lavasa

The Impact of Failures in Service Operations, Under Review in Journal of Service Management, 2010

Purpose – Failures represent an important source of variability in service operations and a major performance challenge. As a consequence, the effective management of failures is a prerequisite to achieve lean services. In this paper we focus on the operational perspective of failures; that is we attempt to quantify the impact of critical failure parameters on key system performance measures, such as cycle time and work-in-process. We also examine various operational concepts, or management practices, that service organizations use to address the effects of failures.
Design/methodology/approach – We use discrete event simulation to model the behavior of a typical two-stage service system (front-office, back-office), and design of experiments to estimate the impact of significant parameters that characterize service failures, on key system performance measures. In a final experiment we analyze three of the most common practices used by management to address failures, and the impact of these practices on system performance under different conditions.
Findings – The results of this study suggest that failures and rework degrade the performance of service systems. The impact is reinforced, if specific inputs of the system deteriorate, such as the ability of the service organization to deliver appropriate quality, to detect failures early and to be capable enough to recover timely and efficiently from failures. In addition, the results show that the various management practices have strengths and weaknesses depending on the characteristics of failures. If this is not taken into consideration, the above managerial practices may lead only to short-term improvements, while the main causes of failures will remain unsolved.
Originality/value – Monitoring and assessing failures in a real service environment is a challenging task. In this paper, we complement the existing literature on service failures by focusing on the operational aspect. With the use of simulation, we manage to quantify and hence visualize failures and their impact on the behavior of a service system. We also provide useful insight into the parameters that determine the effectiveness of various management practices used to address failures.
Keywords: lean services, service failures, quality in service operations