Design of Design of Services Services

To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.

Service Design DefinitionsService Design Definitions

• Service–Something that is done to, or for, a customer

• Service delivery system–The facilities, processes, and skills needed

to provide a service• Product bundle

–The combination of goods and services provided to a customer

Service DesignService Design

Begins with a choice of service strategy, which

determines the nature and focus of the service, and

the target market

– Key issues in service design

• Degree of variation in service requirements

• Degree of customer contact and involvement

Characteristics of ServicesCharacteristics of Services (1 of 3)(1 of 3)

1. Services are acts, they are intangible but highly visible to the customers

2. Most services contain a mix of tangible and intangible attributes

3. Services have customer contact

4. Service performance can be affected by workers’ personal factors

5. Services are created and delivered at the same time and are not consumed but experienced, cannot be inventoried.

Characteristics of ServicesCharacteristics of Services (2 of 3)(2 of 3)

6. Services are idiosyncratic

7. Everyone is an expert on service

8. In service business quality of work is not quality of service

9. Services have low barriers to entry

10. Services are perishable

11. Location is important for service

Characteristics of ServicesCharacteristics of Services (3 of 3)(3 of 3)

12. Services are inseparable from delivery

13. Service requirements are variable

14. Services tend to be decentralized and dispersed

15. Services are consumed more often than products

16. Services can be easily emulated

17. Services often take the form of cycles of encounters involving face-to-face, phone, Internet, electromechanical, and/or mail interactions

Service BusinessesService Businesses

• Facilities-based services: Where the customer must go to the service facility

• Field-based services: Where the production and consumption of the service takes place in the customer’s environment

A service business is the management of organizations whose primary business requires interaction with the customer to produce the service

Internal ServicesInternal Services

Internal Supplier

Internal Supplier

Internal

Customer

External

Customer

Internal services are the ones that are required to support the activities of the larger organization. Services including data processing, accounting, etc

Service Demand VariabilityService Demand Variability

Demand variability creates waiting lines and idle service resources

Service design perspectives:Cost and efficiency perspectiveCustomer perspective

Attempts to achieve high efficiency may depersonalize service and change customer’s perception of quality

Customer participation makes quality and demand variability hard to manage

Differences Between Product and Differences Between Product and Service Design (1 of 2)Service Design (1 of 2)

Service design often focuses more on intangible factors

Less latitude in finding and correcting errors before the customer, so training & process design are important

As services are noninventoriable, capacity issues are very important

Differences Between Product and Differences Between Product and Service DesignService Design (2 of 2)(2 of 2)

Services are highly visible to consumers and must be designed with that in mind

Some services have low barriers to entry and exit, so service design has to be innovative and cost-effective

As convenience is a major factor, location is important to service design

Service design with high customer contact generally requires inclusion of the service delivery package

Service Delivery SystemService Delivery System

Components of service delivery system: Facilities Processes Skills

Service DesignService Design

• Service design involves– The physical resources needed– The goods that are purchased or

consumed by the customer– Explicit services– Implicit services

Performance PrioritiesPerformance Priorities in Service in Service DesignDesign

• Treatment of the customer

• Speed and convenience of service delivery

• Price

• Variety

• Quality of the tangible goods

• Unique skills that constitute the service offering

Phases in Service DesignPhases in Service Design

Conceptualize Identify service package components Determine performance specifications Translate performance specifications into

design specifications Translate design specifications into delivery

specifications

Three Contrasting Service DesignsThree Contrasting Service Designs

• The production line approach (ex. McDonald’s)

• The self-service approach (ex. automatic teller machines)

• The personal attention approach (ex. Ritz-Carlton Hotel Company)

The Service Design ProcessThe Service Design Process

Performance SpecificationsPerformance Specifications

Service

Delivery SpecificationsDelivery Specifications

Physical Physical itemsitems

Sensual Sensual benefitsbenefits

Psychological Psychological benefitsbenefits

Design SpecificationsDesign Specifications Service Provider

Customer

Customer Customer requirementsrequirements

Customer Customer expectationsexpectations

ActivitiesActivities FacilityFacility Provider Provider skillsskills

Cost and time Cost and time estimatesestimates

ScheduleSchedule DeliverablesDeliverables LocationLocation

Service ConceptService Concept Service PackageService Package

Desired service Desired service experienceexperience

Targeted Targeted customercustomer

Service SystemsService Systems

Service systems range from those with little or no

customer contact to very high degree of customer

contact such as:

– Insulated technical core (software development)

– Production line (automatic car wash)

– Personalized service (hair cut, medical service)

– Consumer participation (diet program)

– Self service (supermarket)

Service-System Design MatrixService-System Design Matrix

Mail contact

Face-to-faceloose specs

Face-to-facetight specs

PhoneContact

Face-to-facetotal

customization

Buffered core (none)

Permeable system (some)

Reactivesystem (much)

High

LowHigh

Low

Degree of customer/server contact

Internet & on-site

technology

SalesOpportunity

ProductionEfficiency

Design for High-Design for High-and-Low and-Low Contact Contact ServicesServices (1 of 2) (1 of 2)

DESIGN DECISIONDESIGN DECISION HIGH-CONTACT SERVICEHIGH-CONTACT SERVICE LOW-CONTACT SERVICELOW-CONTACT SERVICE

Facility locationFacility location Convenient to customerConvenient to customer Near labor or Near labor or transportationtransportation

Facility layoutFacility layout Must look presentable, Must look presentable, accommodate customer accommodate customer needs, and facilitate needs, and facilitate interaction with customerinteraction with customer

Designed for efficiencyDesigned for efficiency

Quality controlQuality control More variable since customer More variable since customer is involved in process; is involved in process; customer expectations and customer expectations and perceptions of quality may perceptions of quality may differ; customer present when differ; customer present when defects occurdefects occur

Measured against Measured against established standards; established standards; testing and rework possible testing and rework possible to correct defectsto correct defects

CapacityCapacity Excess capacity required to Excess capacity required to handle peaks in demandhandle peaks in demand

Planned for average Planned for average demanddemand

Design for High-Design for High-and-Low and-Low Contact Contact ServicesServices (2 of 2) (2 of 2)

DESIGN DECISIONDESIGN DECISION HIGH-CONTACT SERVICEHIGH-CONTACT SERVICE LOW-CONTACT SERVICELOW-CONTACT SERVICE

Worker skillsWorker skills Must be able to interact well Must be able to interact well with customers and use with customers and use judgment in decision makingjudgment in decision making

Technical skillsTechnical skills

SchedulingScheduling Must accommodate customer Must accommodate customer scheduleschedule

Customer concerned only Customer concerned only with completion datewith completion date

Service processService process Mostly front-room activities; Mostly front-room activities; service may change during service may change during delivery in response to delivery in response to customercustomer

Mostly back-room Mostly back-room activities; planned and activities; planned and executed with minimal executed with minimal interferenceinterference

Service packageService package Varies with customer; includes Varies with customer; includes environment as well as actual environment as well as actual serviceservice

Fixed, less extensiveFixed, less extensive

Service BlueprintingService Blueprinting

Service blueprintingA method used in service design to describe

and analyze a proposed service A useful tool for conceptualizing a service

delivery system

Major Steps in Service Major Steps in Service BlueprintingBlueprinting

1. Establish boundaries2. Identify sequence of customer interaction3. Prepare a flowchart4. Develop time estimates5. Identify potential failure points6. Determine which factors can influence

profitability

Example of Service BlueprintingExample of Service Blueprinting

Brushshoes

Applypolish

Failpoint

BuffCollect

payment

Cleanshoes Materials

(e.g., polish, cloth)

Select andpurchasesupplies

Standardexecution time

2 minutes

Total acceptableexecution time

5 minutes

30secs

30secs

45secs

15secs

Wrongcolor wax

Seen bycustomer 45

secs

Line ofvisibility

Not seen bycustomer butnecessary toperformance

Blueprint for an Installment Lending OperationBlueprint for an Installment Lending OperationLoan Loan

applicationapplication BranchBranch OfficerOfficerPay bookPay book

Line of visibilityLine of visibility

DenyDeny

1 day1 day 2 days2 days 3 days3 days

Co

nfi

rmC

on

firm

Fail pointFail point Customer waitCustomer wait Employee decisionEmployee decision

F

F

F

F

F

F

WW

30 min. – 1 hr.30 min. – 1 hr.

Decline

Receive payment

Final payment

Notify customer

Close account

Confirm

Delinquent

Issue check

Print payment

bookAccept

Verify income

data

Initial screening

Employer

Bank accounts

Credit check

Credit bureau

Data base records

Branch records

Accounting

Verify payor

WWWW

Service BlueprintService Blueprint

Service Fail-safingService Fail-safingPoka-Yokes (A Proactive Approach)Poka-Yokes (A Proactive Approach)

• Keeping a mistake from becoming a service defect

• How can we fail-safe the three Ts?

Task

TangiblesTreatment

Have we Have we compromised compromised

one of the one of the 3 Ts?3 Ts?

1. Task

2. Treatment

3. Tangible

1. Task

2. Treatment

3. Tangible

The front-end and back-end of the encounter are not created equal

Segment the pleasure, combine the pain

Let the customer control the process

Pay attention to norms and rituals

People are easier to blame than systems

Let the punishment fit the crime in service recovery

Applying Behavioral Science to Applying Behavioral Science to Service EncountersService Encounters

Characteristics of a Well-Designed Characteristics of a Well-Designed Service SystemService System (1 of 2) (1 of 2)

1. Each element of the service system is consistent with the strategic and operating focus of the firm

2. It is user-friendly

3. It is robust and easy to sustain

4. It is structured so that consistent performance by its people and systems is easily maintained

FedEx

Characteristics of a Well-Designed Characteristics of a Well-Designed Service SystemService System (2 of 2) (2 of 2)

5. It provides effective links between the back office and the front office so that nothing falls between the cracks

6. It manages the evidence of service quality in such a way that customers see the value of the service provided

7. It is cost-effective

8. It ensures reliability and high quality

Challenges of Service DesignChallenges of Service Design

1. Variable requirements

2. Difficult to describe

3. High customer contact

4. Service – customer encounter

Guidelines for Successful Service Guidelines for Successful Service DesignDesign

1. Define the service package

2. Focus on customer’s perspective

3. Consider image of the service package

4. Recognize that designer’s perspective is different from the customer’s perspecticve

5. Make sure that managers are involved

6. Define quality for tangible and intangibles

7. Make sure that recruitment, training and rewards are consistent with service expectations

8. Establish procedures to handle exceptions

9. Establish systems to monitor service