How can companies serve customers more efficiently without greater resources?
I don’t like waiting, and I’ve never met anybody who does. At the same time, there’s a trade-off going on. We can eliminate waiting if we throw a ton of money at the problem. If you think about a grocery store, you could have 1,000 checkouts and no waiting, but that would be incredibly expensive. You’d be paying employees to sit idle a lot of the time.
And it’s not just about grocery-store cashiers; it’s about resources—like machines on factory floors, agents at call centers, or computers in server farms.
Instead of considering how to eliminate waiting, I think about how companies can deliver the desired service quality at a minimum cost—or vice versa, how they can ensure minimum waiting times given the resources available. That’s the trade-off. I work on solving problems like that.
In today’s online world, there is a sense that we can get what we want immediately, exactly when we want it. This suggests customers’ tolerance for waiting has gone down a lot in the past 10 years, which is forcing companies to be more efficient with what they have. It begs the question of how companies can improve in this area. How can they be more efficient with what they have?
There are two main decisions that have a nontrivial impact on how long people wait. One has to do with resources—that is, how many people to staff or machines to buy. The other concerns how to schedule requests. If a company doesn’t want to pay for more resources—to employ more people or to buy more machines—it had better be using those resources super efficiently.
One way companies can decrease waiting without adding more resources is by segmenting customers more. By putting some into VIP classes, a company can ensure almost no waiting for certain groups. Computer scientists have been doing this for a long time. Google, for example, has a ton of machines handling different tasks, but search requests coming in are a top priority.
A company can serve customers in the order they come in. Or, for example, if a company knows a customer has a large following on Twitter, it may make sure she gets faster service, although that means someone else will wait longer. Say Mr. Important wants an order. A company might give him priority and schedule him first. Then if Amy wants an order, she’s made to wait a little bit.
And here is the trade-off. On one hand, this is giving consumers a choice—the voice to express if something is highly valued and deserves to be addressed instantly. But this segmentation has to be weighed against the inequality of having the other customers bear all the congestion costs.
Amy R. Ward is Rothman Family Professor of Operations Management at Chicago Booth.
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