105 – Some characteristics of services demands that are important.

Posted by Lancing Farrell                                                              1100 words

operations typology 2

Image from Operations Management, 1998.

Some time ago I posted on high performance job design using four characteristics or spans; control, accountability, influence and support. At the time I linked the concept to the operations typology describing four characteristics of design of operations for high performance. This post picks up that discussion to look at the characteristics of demands that it is essential to understand if you want to design and manage your operations for high performance or excellence in local government.

A number of recent books on public sector management have discussed demands and how it is essential to understand them in public services because payment is not made at the time of service consumption and, therefore, price does not directly influence the amount and nature of demands placed on the system.

In his Vanguard Method John Seddon describes the importance of fulfilling purpose if failure demand is to be avoided. He also talks about understanding flow in relation to how work enters a system. Both of these ideas relate to demands. If purpose (i.e. the value sought by someone or their demand on the system) is not correctly understood the work system will not meet their need. They will come back.

Mark H. Moore includes operational capacity in his ‘strategic triangle’ concept linking decisions from the authorising environment to the public value provided. An organisation must have the operating capacity (or capability as Moore describes it in his earlier book Creating Public Value) to deliver on the political commitment to create particular public value. If the public value proposition is accurate it will pick up effectively on demands present in the community. Failure to understand demands will lead to creation of value that is not required or appreciated. There will be dissatisfaction.

Looking to the private sector, Francis Frei has discussed the variability introduced by customers into operations. This is another way to describe an aspect of demands that is important to understand in the public sector. The variability described by Frei is timing (i.e. when people want a service); range (i.e. the services wanted), ability (i.e. the ability to access services), effort (i.e. how much will people expend to get a service), and opinion (i.e. what they think it is to be treated well). This variability is an important aspect of demands because it is the part that public services frequently attempt to make more efficient by standardising services processes . Deciding whether to accept or manage customer introduced variability is a key decision in smoothing the flow of demands entering works systems for organisations using an efficiency-based business model.

This is the model espoused by most local governments to reinforce their focus on productivity and waste minimisation in giving their taxpayers value for money. It is the traditional ‘roads, rates (taxes) and rubbish’ role of councils where universal services to properties  are provided cost-efficiently. The more recent move to providing services to people (not properties) requires a more value-based business model and greater acceptance of customer variability in order to properly fulfil purpose or value expectations.

An operations management approach to understanding demand focuses on the characteristics of demands and how they are presented. The first is the volume of demand. Is the volume for the demand high or low? High means that there is sufficient demand to justify dedicated operations or facilities on a scale large enough to return economies through asset and resource utilisation. The cost of each unit of production is low.

The second characteristic is variety in demand. How many different demands, each requiring different facilities, skills or resources, are flowing into the operations? A work system suitable for one type of demand may be entirely unsuitable for another and have high costs or error rates if used for it. For example, if you recruit a skilled computer programmer and provide them with high end technology to do their work and then ask them to offer a Help Desk service to people with basic computer knowledge and problems, you will end up having over-capitalised and with a dissatisfied employee (and probably some upset customers). Variety requires greater flexibility in operations.

The third is variation in levels or volumes of demand. Does the amount of demand vary from day to day or week to week, across seasons or over periods of years? This is important to understand because it affects the throughput of the operations or facilities and the extent to which assets and resources are fully utilised. If throughput varies significantly and operations or facilities are idle or underutilised for periods of time the units costs go up.

The fourth characteristic, and in some ways the most important in local government, is the amount of customer contact. The customer is either present or involved in the production of services. The intensity of interaction required between the person delivering the service and the person receiving it is an important characteristic of demand. It drives ‘front’ and ‘back’ office separation and links to Frei’s discussion about variability introduced by customers and whether or not it is accommodated.

This is a key issue in the design of services delivered in response to resident requests (e.g. potholes or tree pruning) when the person reporting the item wants to be involved in its resolution. Most work planning systems are not good at ensuring that the requester is contacted when the service is actually delivered. And the workers fixing potholes don’t always have good customer skills.

An effective operations manager will design operations in accordance with the business model. Let’s assume it is efficiency-based when the primary objective is to fully utilise capacity. This requires demands to be ‘smoothed’, i.e. they must flow into the work process in the way the process has been designed to accept them. The most efficient operations would have high volume, low variety, low or predictable variation, and low customer contact. If the service is to repair potholes when requested, the most efficient way to do this would be to accumulate requests to ‘batch’ them and repair them all at the same time.

As you can already imagine, this is not always possible because potholes can affect road useability and safety, and requestors are likely to want to see a repair made in a timeframe that meets their threshold for risk. Batching is still possible unless it is a large pothole in a hazardous location but there are time limits that will sometimes require a more rapid response to individual potholes.

A high performance local government organisation would design operations to separate rapid response potholes from those that can be batched and they would be assigned to a different work process. This approach to understanding the characteristics of demands needs to be applied across all services if customer purpose (or value or needs) are to be met effectively and efficiently – first time, every time.

Slack, Nigel, Chambers, Stuart, Harland, Christine, Harrison, Alan, and Johnston, Robert 1998. Operations Management, 2nd Edition.