Service Process Selection and Design

Learning Objectives

• The Nature of Services• Service Strategy: Focus & Advantage• Service-System Design Matrix• Service Blueprinting • Service Fail-safing • Characteristics of a Well-Designed Service

Delivery System

The Nature of Services

1. Everyone is an expert on services

2. Services are idiosyncratic

3. Quality of work is not quality of service

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

The Nature of Services

5. High-contact services are experienced, whereas goods are consumed

6. Effective management of services requires an understanding of marketing and personnel, as well as operations

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

Service Businesses & Internal Services

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

• 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

Internal ServicesDefined

• Internal services is the management of services required to support the activities of the larger organization. Services including data processing, accounting, etc.

Internal Supplier

Internal Supplier

InternalCustomer

ExternalCustomer

The Customer Centered View

• A philosophical view that suggests the organization exists to serve the customer, and the systems and the employees exist to facilitate the process of service.

The ServiceStrategy

EmployeeSupportSystems

TheCustomer

An Operational Classification of Services

• General approach of classifying service organization is based on; - Who is the customer? (individual or businessman) - The service they provide. (financial, health, transportation, etc.)• O. M. approach of classifying service organization is based on; - The extent of the customer contact in the creation of the service.

• With this conceptualization, the service system are classified as: * High-Contact System - where there is a high degree of customer contact * Low-Contact System

- where there is a low degree of customer contact

Designing Service Organizations

• Distinctive characteristic of services:

- Services cannot be inventoried. - We must meet demand as it arises. - Capacity is a dominant issue.

Designing Service Organizations

• Designing a service organization involves four major elements:

# Identification of the target market (Who is our customer?) # The service concept (How do we differentiate our service in

the market?) # The service strategy (What is our service package and the

operating focus of our services?) # The service delivery system (What are the actual processes,

staff, and facilities by which the service is created?)

Service Strategy: Focus and Advantage. Performance Priorities

• Treatment to the customer - Friendliness and helpfulness

• Speed and convenience of service delivery

• Price

• Variety - essentially a one-stop shopping philosophy

• Quality of the tangible goods

• Unique skills that constitute the service offering – such as hair styling, brain surgery, etc

Service-System Design Matrix(Structuring The Service Encounter)

Buffered core (none)

Permeable system (some)

Reactive system (much)

Mail contact

Internet and on-site technology

Phone contact

Face-to-face tight specs

Face-to-face loose specs

Face-to-face total

customization

Degree of customer/server contact

High

Low High

Low

Production efficiency

Sales Opportunity

Strategic Uses of the Matrix(Extended Design Matrix)

Worker requirements

Clerical Skills

Helping Skills

VerbalSkills

ProceduralSkills

TradeSkills

DiagnosticSkills

Focus of operations

Paper handling

Demand Management

ScriptingCalls

FlowControl

Capacity Management

Client Mix

Technological innovations

Officeautomation

Routingmethods

ComputerDatabases

Electronicaids

Self-serve Client/worker teams

Degree of customer/server contactLow High

Characteristics of Workers, Operations and Innovations Relative to the Degree of Customer/Service Contact

Service Blueprinting and Fail-safing

• Service Blueprint – is a flowchart prepared to emphasize the importance of process design

• A unique feature of service blueprint is the distinction made with a “line of visibility” on the flowchart

• The distinction is made between the high customer contact aspects of the service (the parts of the process that the customer sees) and those activities that the customer does not see.

• Basic blueprinting describes the features of the service design but does not provide any direct guidance for how to make the process conform to that design.

Service Blueprinting and Fail-safing

• An approach to this problem is the application of Poka-yokes – translated from the Japanese as “avoid mistakes”.

• It is a procedure that block the inevitable mistake from becoming a service defect.

• Poka-yokes are common in factories and consists of such things as fixtures to ensure that parts can be attached only in the right way, electronic switches that automatically shut off equipment if a mistake is made, and/or checklists to ensure that the right sequence of steps is followed.

Service Fail-safing(Poka-yokes approach)

• The application of Poka-yokes to the services can be classified into:

# warning methods

# physical or visual contact methods and# the Three T’s – the task to be done (Was the car fixed right?) - the treatment accorded to the customer (Was the service manager courteous?) - the tangibles or environmental features of the service facility (Was the waiting area clean and comfortable?)# to fail-safing the actions of the customer as well as the service

worker

Service Fail-safing(Poka-yokes approach)

• e.g.- height bars at amusement parks, - beeper on ATMs to warn people to take their cards out of the machine, - indented trays used by surgeons to ensure that no instruments are left in the patient, - chains to configure waiting lines, - take-a-number system, - reminder calls for service, etc.

Three Contrasting Service Designs (Approaches to delivering on-site service)

• The Production-Line Approach (e.g. McDonald’s Corporation) – By Theodore Levitt.

• The Self-Service Approach (e.g. ATMs and gas stations) – By C. H. Lovelock & R. F. Young.

• The Personal Attention Approach (e.g. Nordstrom Department Stores and the Ritz-Carlton Hotel Company) – By Tom Peters.

Characteristics of a Well-Designed Service System

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

2. It is user friendly.

3. It is robust.

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

Characteristics of a Well-Designed Service System (continued…)

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.

Applying Behavioral Science To Service Encounters

• Three aspects of the encounter: - The flow of the service experience (what’s happening)- The flow of time (how long it seems to take)- Judging encounter performance (what you thought about it later) • Principles:1. The front-end and back-end of the encounter are not created

equal

2. Segment the pleasure, combine the pain

3. Let the customer control the process

4. Pay attention to norms and rituals

5. People are easier to blame than systems

6. Let the punishment fit the crime in service recovery

Service Guarantees as Design Drivers

• Service Guarantee – A promise of service satisfaction backed up by a set of actions that must be taken to fulfill the promise.

• Recent research suggests:– Any guarantee is better than no guarantee– Involve the customer as well as employees in the design– Avoid complexity or legalistic language– Do not quibble or wriggle when a customer invokes a

guarantee– Make it clear that you are happy for customers to invoke

the guarantee