Design of Services

To Accompany Russell and Taylor, Operations Management, 4th Edition,

2003 Prentice-Hall, Inc. All rights reserved.

Service 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 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 Services
(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 Services
(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 Services
(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 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

Internal Services

Internal services are the

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

Internal Supplier
Internal
Customer
External
Customer
Internal Supplier

Service Demand Variability

Demand variability creates waiting lines and idle
service resources
Service design perspectives:
Cost and efficiency perspective
Customer perspective
Attempts to achieve high efficiency may
depersonalize service and change customers
perception of quality
Customer participation makes quality and demand
variability hard to manage

Differences Between Product and

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

Service Design (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 costeffective
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 System

Components of service delivery system:
Facilities
Processes
Skills

Service Design
Service design involves
The physical resources needed
The goods that are purchased or
consumed by the customer
Explicit services
Implicit services

Performance Priorities in Service

Design
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 Design

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

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)

The Service Design Process

Desired service
experience

Service Concept

Service Package
Targeted
customer

Physical
items

Sensual
benefits

Psychological
benefits

Performance Specifications
Customer
requirements
Customer

Customer
expectations

Design Specifications

Activities

Facility

Provider
skills

Cost and time

estimates

Delivery Specifications
Schedule

Deliverables
Service

Service
Provider

Location

Service 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 Matrix

Degree of customer/server contact
High

Buffered
core (none)

Permeable
system (some)

Face-to-face
loose specs

Sales
Opportunity
Internet &
on-site
Mail contact technology

Low

Reactive
system (much)

Phone
Contact

Face-to-face
tight specs

Low

Face-to-face
total
customization

Production
Efficiency

High

Design for High-and-Low Contact

Services (1 of 2)
DESIGN DECISION

HIGH-CONTACT SERVICE

LOW-CONTACT SERVICE

Facility location

Convenient to customer

Near labor or
transportation

Facility layout

Must look presentable,

accommodate customer
needs, and facilitate
interaction with customer

Designed for efficiency

Quality control

More variable since customer

is involved in process;
customer expectations and
perceptions of quality may
differ; customer present when
defects occur

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

Capacity

Excess capacity required to

handle peaks in demand

Planned for average

demand

Design for High-and-Low Contact

Services (2 of 2)
DESIGN DECISION

HIGH-CONTACT SERVICE

LOW-CONTACT SERVICE

Worker skills

Must be able to interact well

with customers and use
judgment in decision making

Technical skills

Scheduling

Must accommodate customer

schedule

Customer concerned only

with completion date

Service process

Mostly front-room activities;

service may change during
delivery in response to
customer

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

Service package

Varies with customer; includes Fixed, less extensive

environment as well as actual
service

Service Blueprinting
Service blueprinting
A 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

Blueprinting
1.
2.
3.
4.
5.
6.

Establish boundaries
Identify sequence of customer interaction
Prepare a flowchart
Develop time estimates
Identify potential failure points
Determine which factors can influence
profitability

Example of Service Blueprinting

Standard
execution time
2 minutes

Brush
shoes
30
secs

Total acceptable
execution time
5 minutes
Seen by
customer

Line of
visibility

Not seen by
customer but
necessary to
performance

Clean
shoes
45
secs

Apply
polish
30
secs

Fail
point

Buff

Collect
payment

45
secs

15
secs

Wrong
color wax
Materials
(e.g., polish, cloth)

Select and
purchase
supplies

Blueprint for an Installment Lending Operation

Loan
application

Branch

Officer

30 min. 1 hr.

Pay book

Line of visibility
Receive
payment
Notify
customer

Decline
Deny
Verify
income
data

Credit
check

1 day

Initial
screening

F
Employer

Accept

2 days

Credit
bureau

Bank
accounts

Issue
check

Confirm

Print
payment
book

Delinquent

3 days
Confirm

F
Verify
payor

Branch
records

Accounting

Data base
records

Fail point

Customer wait

Final
payment

Employee decision

F
Close
account

Service Blueprint

Service Fail-safing
Poka-Yokes (A Proactive Approach)
Keeping a mistake
from becoming a
service defect
How can we failsafe the three Ts?

Task

Treatment

Tangibles

Have we
compromised
one of the
3 Ts?
1.
1. Task
Task
2.
2. Treatment
Treatment
3.
3. Tangible
Tangible

Applying Behavioral Science to

Service Encounters
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

Characteristics of a Well-Designed
Service System (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
sustain

FedEx
to

4. It is structured so that consistent performance by

its people and systems is easily maintained

Characteristics of a Well-Designed
Service System (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 Design

1.
2.
3.
4.

Variable requirements
Difficult to describe
High customer contact
Service customer encounter

Guidelines for Successful Service

Design
1.
2.
3.
4.
5.
6.
7.
8.
9.

Define the service package

Focus on customers perspective
Consider image of the service package
Recognize that designers perspective is different from
the customers perspecticve
Make sure that managers are involved
Define quality for tangible and intangibles
Make sure that recruitment, training and rewards are
consistent with service expectations
Establish procedures to handle exceptions
Establish systems to monitor service