Service Process Selection and Design

Chapter 7

Differences Between Services and Manufacturing

Unique Attributes of Services
Services are intangible The output of services is heterogeneous

Customers are more involved in the production of services than they are in manufacturing

Service Businesses
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 customers environment

Difference between Services and Manufacturing

Many service attributes are intangible
Cannot be inventoried or carried in stock over long period of time

Outputs of services are heterogeneous

No two services are exactly the same

Production and consumption of services occur simultaneously

Difference between Services and Manufacturing

Customer contact
More involved in the production of services than in production of goods
Customer co-production (self-serve) Difficult to plan capacity (variation in arrival)

Varying customer demand makes providing the service difficult (unpredictable) The interaction between customers and services promotes control and customization

Internal Services Defined

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 Customer External Customer Internal Supplier

Difference between Services and Manufacturing

Internal versus External Services
External customers
Customer pays the bill

Internal customers
In-house, data processing Can be outsourced

Voluntary and Involuntary Services

Voluntary service
Customers choose on their own Hotel, restaurant, bank, etc

Involuntary service
Vague expectation about the service Prison, police department, etc

Difference between Services and Manufacturing

Availability of Data
Because services attributes are often intangible, it is sometimes difficult to obtain hard data relating to services.

Product Liability
In services, liability issues often relate to malpractice, whereas in manufacturing liability issues typically relate to safety concerns

How Are Service Quality Issues Similar to Those of Manufacturing?

For both manufacturing and service firms, the customer is the core of the business, and customer needs provide the major input to design.

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.

Exhibit 7.1

The Service Strategy

The Customer

The Systems

The People

What Do Service Customers Want?

Dimensions of Service Quality

Tangibles Reliability Responsiveness Assurance Empathy

Designing & Improving the Services Transaction

Services Blueprinting
A services blueprint is a flowchart that isolates potential fail points in a process. There are four steps to developing a service blueprint:
1. Identify processes 2. Isolate fail points 3. Establish a time frame 4. Analyze profits

Designing & Improving the Services Transaction (Services Blueprinting)

Standard execution time 2 minutes Apply polish 30 seconds Fail point Seen by customer Clean shoes 45 seconds Line of visibility Not seen by customer but necessary to performance Materials (e.g., polish, cloth)

Brush shoes

Buff

Collect payment 15 seconds

30 seconds

45 seconds

Select and purchase supplies

Standard execution time 2 minutes

Verbalize Order
30 seconds

Enter Order

Prepare Food
60 seconds

Collect payment
15 seconds

15 seconds Fail point Correct Order 20 seconds

Front Office

Materials (e.g., food, paper)

Line of visibility

Not seen by customer but necessary to performance

Select and purchase supplies

Back Office

Designing & Improving the Services Transaction Moments of Truth

Expectations of Customer vs Reality Different Points of Contact The Bottom Line:
When the customer expects something to happen, it has to happen!

Service Strategy: Focus and Advantage Performance Priorities

Treatment of the customer
Speed and convenience of service delivery Price Variety Quality of the tangible goods Unique skills that constitute the service offering

Service-System Design Matrix

Degree of customer/server contact High
Buffered core (none) Permeable system (some) Reactive system (much)
Face-to-face total customization

Exhibit 7.6

Low

Sales Opportunity
Phone Internet & Contact on-site technology Mail contact

Face-to-face loose specs

Face-to-face tight specs

Production Efficiency

Low

High

Three Contrasting Service Designs

The production line approach (ex. McDonalds)

The self-service approach (ex. automatic teller machines) The personal attention approach (ex. RitzCarlton Hotel Company)

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

Service Fail-safing Poka-Yokes (A Proactive Approach)

Keeping a mistake from becoming a service defect How can we failsafe the three Ts?
Treatment

Task

Tangibles

Have we compromised one of the 3 Ts?

1. Task

2. Treatment
3. Tangible

Designing & Improving the Services Transaction Poka-yoke

Isolate Fail Points Fail-safe the Process
Warning Methods Physical Contact Methods Visual Contact Methods