University of Pennsylvania ScholarlyCommons Operations, Information and Decisions Papers Wharton Faculty Research 2003 Telephone Call Centers: Tutorial, Review, and Research Prospects Noah Gans University of Pennsylvania Ger Koole Avishai Mandelbaum Follow this and additional works at: https://repository.upenn.edu/oid_papers Part of the Business Administration, Management, and Operations Commons, Growth and Development Commons, Human Resources Management Commons, and the Operations and Supply Chain Management Commons Recommended Citation Gans, N., Koole, G., & Mandelbaum, A. (2003). Telephone Call Centers: Tutorial, Review, and Research Prospects. manufacturing & Service Operations Management, 5 (2), 79-141. http://dx.doi.org/10.1287/ msom.5.2.79.16071 This paper is posted at ScholarlyCommons. https://repository.upenn.edu/oid_papers/136 For more information, please contact [email protected]. Telephone Call Centers: Tutorial, Review, and Research Prospects Abstract Telephone call centers are an integral part of many businesses, and their economic role is significant and growing. They are also fascinating sociotechnical systems in which the behavior of customers and employees is closely intertwined with physical performance measures. In these environments traditional operational models are of great value—and at the same time fundamentally limited—in their ability to characterize system performance. We review the state of research on telephone call centers. We begin with a tutorial on how call centers function and proceed to survey academic research devoted to the management of their operations. We then outline important problems that have not been addressed and identify promising directions for future research. Keywords telephone call center, contact center, teleservices, telequeues, capacity management, staffing, hiring, workforce management systems, ACD reports, queueing, abandonment, Erlang C, Erlang B, Erlang A, QED regime, time-varying queues, call routing, skills-based routing, forecasting, data mining Disciplines Business Administration, Management, and Operations | Growth and Development | Human Resources Management | Operations and Supply Chain Management This journal article is available at ScholarlyCommons: https://repository.upenn.edu/oid_papers/136 Telephone Call Centers: Tutorial, Review, and Research Prospects Noah Gans∗ Ger Koole† Avishai Mandelbaum‡ ∗ The Wharton School, University of Pennsylvania,Philadelphia, PA 19104, U.S.A. [email protected] http://opim.wharton.upenn.edu/∼gans † Vrije Universiteit, De Boelelaan 1081a, 1081 HV Amsterdam, The Netherlands [email protected] http://www.cs.vu.nl/∼koole ‡ Industrial Engineering and Management, Technion, Haifa 32000, Israel [email protected] http://ie.technion.ac.il/Home/Users/avim.phtml March 17, 2003 Abstract Telephone call centers are an integral part of many businesses, and their economic role is significant and growing. They are also fascinating socio-technical systems in which the behavior of customers and employees is closely intertwined with physical performance measures. In these environments traditional operational models are of great value – and at the same time fundamentally limited – in their ability to characterize system performance. We review the state of research on telephone call centers. We begin with a tutorial on how call centers function and proceed to survey academic research devoted to the management of their operations. We then outline important problems that have not been addressed and identify promising directions for future research. Acknowledgments The authors thank Lee Schwarz, Wallace Hopp and the editorial board of M&SOM for initiating this project, as well as the referees for their valuable comments. Thanks are also due to L. Brown, A. Sakov, H. Shen, S. Zeltyn and L. Zhao for their approval of importing pieces of [36, 112]. Financial support was provided by National Science Foundation (NSF) Grants SBR-9733739 and DMI-0223304 (N.G. and A.M.), The Sloan Foundation (N.G. and A.M.), The Wharton Financial In- stitutions Center (N.G. and A.M.), The Wharton Electronic Business Initiative (N.G.), Israeli Science Foundation (ISF) Grants 388/99 and 126/02 (A.M.), and the Technion funds for the promotion of research and sponsored research (A.M.). Some data originated with member companies of the Call Center Forum at Wharton, to whom we are grateful. Some material was adapted from the Service Engineering site prepared by A.M. and S. Zeltyn (http://ie.technion.ac.il/serveng/). Parts of the manuscript were written while A.M. was visiting the Vrije Universiteit and the Wharton School. The hospitality of the hosting institutions is greatly appreciated. Key Words: telephone call center, contact center, tele-services, tele-queues, capacity management, staffing, hiring, workforce management systems, ACD reports, queueing, Erlang C, Erlang B, Erlang A, QED regime, time-varying queues, call routing, skills-based routing, forecasting, data mining. Contents 1 Introduction 1 1.1 Additional Resources .................................... 2 1.2 Reading Guide ....................................... 3 2 Overview of Call-Center Operations 3 2.1 Background ......................................... 3 2.2 How an Inbound Call is Handled ............................. 5 2.3 Data Generation and Reporting .............................. 8 2.4 Call Centers as Queueing Systems ............................ 10 2.5 Service Quality ....................................... 12 3 A Base Example: Homogeneous Customers and Agents 13 3.1 Background on Capacity Management .......................... 13 3.2 Capacity Planning Hierarchy ............................... 14 3.3 Forecasting ......................................... 20 3.4 The Forecasting and Planning Cycle ........................... 21 3.5 Longer-Term Issues of System Design .......................... 21 4 Research within the Base-Example Framework 22 4.1 Heavy-Traffic Limits for Erlang C ............................. 22 4.1.1 Square-Root Safety Staffing ............................ 23 4.1.2 Operational Regimes, Pooling and Economies of Scale ............. 25 4.2 Busy Signals and Abandonment .............................. 29 4.2.1 Busy Signals: Erlang B .............................. 29 4.2.2 Abandonment: Erlang A .............................. 30 4.3 Time-Varying Arrival Rates ................................ 32 4.4 Uncertain Arrival Rates .................................. 34 4.5 Staff Scheduling and Rostering .............................. 35 4.6 Long-Term Hiring and Training .............................. 37 4.7 Open Questions ....................................... 38 4.7.1 Simple Multi-Server Queues in the QED Regime ................ 38 i 4.7.2 Staffing and Hiring models ............................ 40 5 Routing, Multimedia, and Networks 41 5.1 Skills-Based Routing .................................... 41 5.1.1 Capacity Planning under Skills-Based Routing ................. 43 5.1.2 Call Routing and Staffing ............................. 44 5.1.3 Skills-Based Routing in the Efficiency-Driven Regime ............. 46 5.1.4 Skills-Based Routing in the QED Regime .................... 48 5.2 Call Blending and Multi-Media .............................. 49 5.3 Networking ......................................... 51 6 Data Analysis and Forecasting 52 6.1 Types of Call Center Data ................................. 53 6.2 Types of Data Analysis and Source of Model Uncertainty ............... 54 6.3 Models for Operational Parameters ............................ 56 6.3.1 Call Arrivals .................................... 56 6.3.2 Service Duration .................................. 58 6.3.3 Abandonment and Retrials ............................ 59 6.3.4 System Performance ................................ 62 6.4 Future Work in Data Analysis and Forecasting ..................... 63 7 Future Directions in Call-Center Research 65 7.1 A Broader View of the Service Process .......................... 65 7.2 An Exploration of Intertemporal Effects ......................... 66 7.3 A Better Understanding of Customer and CSR Behavior ................ 67 7.4 CRM: Customer Relationship/Revenue Management .................. 68 7.5 A Call for Multi-Disciplinary Research .......................... 69 8 Conclusion 71 A Glossary of Call-Center Acronyms 71 ii 1 Introduction Call centers and their contemporary successors, contact centers, have become a preferred and preva- lent means for companies to communicate with their customers. Most organizations with customer contact – private companies, as well as government and emergency services – have reengineered their infrastructure to include from one to many call centers, either internally managed or out- sourced. For many companies, such as airlines, hotels, retail banks, and credit card companies, call centers provide a primary link between customer and service provider. The call center industry is thus vast and rapidly expanding, in terms of both workforce and economic scope. For example, a recent analyst’s report estimates the number of agents working in U.S. call centers to have been 1.55 million in 1999 - more than 1.4% of private-sector employment - and to be growing at a rate of more that 8% per year [47, 148]. In 1998, AT&T reported that on an average business day about 40% of the more than 260 million calls on its network were toll- free [1]. One presumes that the great majority of these 104 million daily “1-800” calls terminated at a telephone call center. The quality and operational